[2017] FWC 2981

FAIR WORK COMMISSION

DECISION

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

Health Services Union
v
St John of God Health Care
(C2016/4639)

COMMISSIONER WILSON

MELBOURNE, 9 JUNE 2017

Alleged dispute arising under an enterprise agreement. Whether consultation required and taken place; whether comparable alternative employment found; whether redundancy payments required.

[1] This decision concerns an application by the Health Services Union #4 Branch Victoria (HSU#4) for the Fair Work Commission to deal with a dispute pursuant to the provisions of s.739 of the Fair Work Act 2009 (the Act). The Respondent in the matter is St John of God Health Care, and the HSU#4 application submits that jurisdiction for the Commission to deal with a dispute arises from the St John of God Pathology Victoria – Health Services Union – Caregiver Enterprise Agreement 2015 1 (the Agreement).

[2] The name of the Respondent, St John of God Health Care, is abbreviated in several ways in the material before the Commission, with the abbreviation being variously SJOGHC or SJGHC. This decision employs the abbreviation SJOGHC, however it has left unchanged the abbreviations used in direct quotations of the parties’ evidence or documents. The abbreviation SJGP is sometimes also used, which refers to St John of God Pathology, which is a division of SJOGHC.

[3] Through its application to the Commission, the HSU#4 characterised the dispute as being about a failure by SJOGHC to consult with the union about its decision to make medical scientists and laboratory technicians redundant in the pathology laboratories of the Respondent in several locations in Victoria. In the draft determinations provided to the Commission for the hearing of this matter, the HSU#4 seeks a finding that consultation was required, but did not take place; that the required consultation should have taken place over a period of 4 to 6 weeks from the time that a definite decision had been made to make employees redundant; further, it seeks a finding that the Respondent failed to pay the payments to the affected employees to which they were entitled.

[4] Both parties sought representation in the proceedings by a lawyer, relying on the criteria within s.596(2)(a) of the Act in that it would enable the matter to be dealt with more efficiently, taking into account the complexity of the matter. I was satisfied that this was the case, and Simone Bingham, of Counsel, appeared for the Applicant and John Tuck, of Corrs Chambers Westgarth Solicitors, appeared for the Respondent.

LEGISLATION

[5] The HSU#4’s application to the Commission is made pursuant to s.739 of the Act, which provides jurisdiction to deal with disputes in certain circumstances set out within the section and s.738, namely where a “term” of a modern award, an agreement or a contract or Public Service Determination allows. Arbitration of a dispute may only be where the parties have agreed for that to occur, in accordance with the term. The Commission’s powers to deal with a dispute under the section are constrained in the ways set out in the section, and most particularly in the way set out in sub-section (5), such that the Commission may not make a decision that is inconsistent with the Act or a fair work instrument applicable to the parties.

[6] Sections 738 and 739 provide;

738 Application of this Division

This Division applies if:

(a) a modern award includes a term that provides a procedure for dealing with disputes, including a term in accordance with section 146; or

(b) an enterprise agreement includes a term that provides a procedure for dealing with disputes, including a term referred to in subsection 186(6); or

(c) a contract of employment or other written agreement includes a term that provides a procedure for dealing with disputes between the employer and the employee, to the extent that the dispute is about any matters in relation to the National Employment Standards or a safety net contractual entitlement; or

(d) a determination under the Public Service Act 1999 includes a term that provides a procedure for dealing with disputes arising under the determination or in relation to the National Employment Standards.

739 Disputes dealt with by the FWC

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

(2) The FWC 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 the FWC dealing with the matter; or

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

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

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

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

Note: The FWC 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), the FWC must not make a decision that is inconsistent with this Act, or a fair work instrument that applies to the parties.

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

RELEVANT AGREEMENT TERMS AND DRAFT DETERMINATION AND ORDER

[7] The Agreement gives employees the name “Caregiver”. 2

[8] The terms relevant to the resolution of this dispute are to be found in several parts of the Agreement, owing to some unique features of its drafting;

There is a main body to the Agreement which includes a dispute resolution clause (37) and a clause dealing with the subject matters of the introduction of change, redundancy and consultation (33);

There is then Schedule B to the Agreement providing certain provisions for medical scientists and related professionals, originally stemming from a legacy award, the Health Services Union of Australia (Victoria – Private Sector – Medical Scientists, Psychologists and Pharmacists) Award 2004 3 (the 2004 Award). That Schedule provides a further dispute resolution clause (10) and further clauses dealing with the introduction of change and redundancy (17 and 17A);

Finally, the Commission incorporated as part of the Agreement an undertaking which incorporates into the Agreement the model consultation term. 4

[9] The dispute resolution clause in the main body of the Agreement deals with disputes in relation to a matter arising under the Agreement or the National Employment Standards, with the Commission authorised to deal with disputes referred to it “by conciliation and, where the matter in dispute remains unresolved, arbitration”. 5 The Disputes Avoidance/Settlement Procedure in Schedule B allows a “grievance” to be referred to the Commission for decision.6

[10] The fact that there are so many clauses in the overall Agreement with such similar or overlapping functions is not a feature of good drafting and impedes the development of a coherent and accurate construction of the Agreement. Why the parties felt an affinity for provisions of legacy awards that have long since functioned independently as an award in relation to the employees covered by this Agreement is by no means clear. Rather than being a feature of good drafting, it is poor or even lazy drafting, and should be avoided by parties as otherwise sophisticated as these. Poorly drafted agreements are more difficult to interpret; they potentially give rise to unnecessary disputes; and those disputes which arise are inexorably harder to resolve.

[11] Clause 33 of the main body of the Agreement is entitled “Introduction of Change, Redundancy and Salary Maintainence (sic)”, and the HSU#4 argues that the dispute “primarily” concerns the application of clauses 33(e) and 33(j) which respectively deal with the union being notified and involved in discussions over major change and redundancy payments not being payable in certain circumstances involving a transmission of business. Clause 33 is in the following terms;

“33. INTRODUCTION OF CHANGE, REDUNDANCY AND SALARY MAINTAINENCE (sic)

Interpretation

(a) In this clause:

(i) "Caregiver" does not include a Caregiver engaged on a casual or temporary basis or on a fixed term contract.

(ii) "redundant" means being no longer required by the Employer to continue doing a job because the Practice has decided that the job will not be done by any Caregiver.

(b) For the purposes of this clause, an action of the Employer has a "significant effect" on a Caregiver if:

(i) there is to be a major change in the composition, operation or size of, or skills required in the Employer's workforce that will affect the Caregiver; or

(ii) there is to be elimination or reduction of a job opportunity, promotion

opportunity or job tenure for the Caregiver; or

(iii) the guaranteed hours of the Caregiver's work are to significantly increase or decrease; or

(iv) the Caregiver is required to be retrained; or

(v) the Caregiver is to be required to transfer to another job or work location; or

(vi) the Caregiver's job is to be restructured.

Caregiver to be Informed

(i) take action that is likely to have a significant effect on a Caregiver; or

(ii) make a Caregiver redundant, the Caregiver is entitled to be informed by the Employer, as soon as reasonably practicable after the decision has been made, of the action or the redundancy, as the case may be.

Discussions to occur

(d) The Employer shall thereafter hold discussions with the Caregiver affected as to:

(i) the likely effects of the action or the redundancy in respect of the Caregiver; and

(ii) measures that may be taken by the Caregiver or the Employer to avoid or minimise a significant effect.

Provided that the Practice shall not be required to disclose confidential information the disclosure of which may seriously harm the Employer's interests.

Union to be informed

(e) Where the Employer has made a definite decision to introduce major changes that are likely to have significant effects on Caregivers, the Employer shall notify and hold discussions with the Union.

Discussion before Termination

(f) Where the Employer has made a definite decision to introduce a major change to production, program, organisation, structure, or technology in relation to its enterprise; and the change is likely to have a significant effect on Caregivers of the Employer, the Employer shall consult with affected Caregivers in accordance with the consultation regarding change provision of this Agreement.

Severance Pay

(g) In addition to the period of notice prescribed in relevant awards for ordinary termination, a Caregiver whose employment is terminated on the grounds of redundancy shall be entitled to the following amount of severance pay in respect of a continuous period of service:

Period of Continuous Service	Redundancy Payment
less than 1 year	Nil
1 year but less than 2 years	4 weeks
2years but less than 3 years	6 weeks
3 years but less than 4 years	7 weeks
4 years but less than 5 years	8 weeks
5 years but less than 6 years	10 weeks
6 years but less than 7 years	12 weeks
7 years but less than 8 years	14 weeks
8 years but less than 9 years	16 weeks
9 years but less than 10 years	18 weeks
10 years but less than 11 years	20 weeks
11 years but less than 12 years	22 weeks
12 years but less than 13 years	24 weeks
13 years but less than 14 years	26 weeks
14 years but less than 15 years	28 weeks
15 years and over	30 weeks

"Weeks Pay" means the ordinary weekly rate of wage for the Caregiver concerned.

(h) For the purpose of this clause continuity of service shall not be broken on account of:

(i) any absence from work on account of personal sickness or accident for which a Caregiver is entitled to claim sick pay as prescribed by this award or on account of leave lawfully granted by the Employer; or

(ii) any absence with reasonable cause, proof whereof shall be upon the Caregiver; or

(iii) any absence on approved leave without pay.

Provided that in the calculation of continuous service under this subclause any time in respect of which a Caregiver is absent from work except time for which a Caregiver is entitled to claim annual leave, sick pay, long service leave and public holidays as prescribed by this Agreement shall not count as time worked.

(i) Service by the Caregiver with a business which has been transferred from another employer to the Employer and the Caregiver's service has been deemed continuous then it shall also constitute continuous service for the purpose of this clause.

(j) Redundancy shall not be payable in the event of a transmission of business where comparable alternative employment is offered and accepted.

Caregiver leaving During Notice

(k) A Caregiver whose employment is to be terminated on the grounds of redundancy may terminate employment during the period of notice and, if so, shall be entitled to the same benefits and payments under this clause had the Caregiver remained with the Employer until the expiry of such notice. Provided that in such circumstances the Caregiver shall not be entitled to payment in lieu of notice.

Alternative Employment

(l) The Employer, in a particular redundancy case, may make application to the FWC to have the general severance pay prescription varied if the Employer obtains acceptable alternative employment for a Caregiver.

Provided that where a Caregiver is offered and accepts alternative employment at another St John of God Health Inc. facility continuity of service shall not be broken and any accrued entitlements shall be carried over to the new facility. The Caregiver shall not be entitled to the benefits prescribed in subclause (b) of this Clause.

Salary Maintenance

(m) A Caregiver who is redeployed to a lower classification shall be entitled to salary maintenance. Salary Maintenance will be made on the basis of the St John of God National policy and / or practice as it applies from time to time:

1-2 years service	3 months salary maintenance
2-5 years service	5 months salary maintenance
5-7 years service	7 months salary maintenance
7-10 years service	10 months salary maintenance
10 years and thereafter	12 months salary maintenance

Leave for Job Interviews

(n) A Caregiver who has been given notice that he or she has been, or will be, made redundant shall during the period of notice of termination be entitled to be absent from work up to a maximum of 8 ordinary hours during each week of notice without deduction of pay for the purpose of being interviewed for further employment.

(o) A Caregiver who claims to be entitled to paid leave under paragraph (i) shall, at the request of the Employer, be required to produce reasonable proof of attendance at an interview or the Caregiver shall not receive payment for the time absent.”

[12] The contentions by the HSU#4 in relation to these clauses include the following;

“5. The Union contends in circumstances where St John of God Health Care (SJOGHC) has made a definite decision to make medical scientists and laboratory technicians redundant:

(a) It has an obligation to and should hold discussions with the Union regarding ameliorating the impact of the redundancies upon the Union’s members effected by the decision;

(b) Those medical scientists and laboratory technicians made redundant by SJOGHC are entitled to a severance payment pursuant to clause 33(g) of the Agreement;

(c) Where a “transmission of business” has occurred (a matter that is not conceded by the HSU#4), employment offered by Australian Clinical Laboratories Limited (ACL) to those medical scientists and laboratory technicians made redundant by SJOGHC, is not comparable employment to that presently offered by SJOGHC; and

(d) Even if comparable employment was offered by ACL to the medical scientists and laboratory technicians made redundant by SJOGHC (which is not conceded by HSU#4) then if that employment is rejected, those employees will be entitled to severance pay pursuant to clause 33(g) of the Agreement.” 7

[13] Schedule B, the incorporated 2004 Award, sets out a Disputes Avoidance/Settlement Procedure, which commits the parties to various matters in relation to redundancy, as defined within the Schedule, including the provision of information and discussions over the disputes that may arise on the subject, and consultation on measures to avert or minimise proposed redundancies (see Schedule B, clauses 17 and 17A).

[14] The model consultation term was incorporated into the Agreement for the reason that the Agreement as drafted did not comply with s.205(1A) of the Act which requires firstly, the consultation term within an agreement to require certain consultative steps to be taken by an employer contemplating changes to an employee’s regular roster or ordinary hours of work, and secondly, if the agreement does not deal with those matters, the model consultation term is taken to be a term of the agreement (s.205(2)). The effect of the incorporation of the model consultation term into an agreement was dealt with by the Full Bench in relation to another agreement applying to St John of God Health Care Inc., in which it was commented, without determination of the point, that the model term (as it was then drafted under the then operating legislation) operates by regulating only the employer’s obligations in respect of consultations it must undertake, and provides for the right of an employee to be represented in those consultations;

“[27] Finally, we should comment on the concern raised by the respondent as to the practical effect of the ruling we have made. In our opinion, noting in the approval decision that the model consultation term is taken to be a term of the Agreement does not extend access to the enhanced redundancy payments to employees beyond those clause 44 identified as having those entitlements. The model consultation term regulates only the respondent’s obligations in respect of consultations it must undertake and provides for the right of an employee to be represented in those consultations. We should observe that we did not understand the CFMEU to be asserting to the contrary. Certainly we did not take the union to submit that the impact of the model consultation term being taken to be a term of the Agreement was such as to displace all of the provisions of clause 44. If that was so it would exclude the enhanced redundancy payments from those employees identified in the clause. The issues raised in this decision suggest that it may be better in any future enterprise agreements for the parties to separate the consultation term from any term providing for substantive employee entitlements.” 8 (underlining added)

[15] CFMEU v St John of God Health Care Inc; CEPU; AMWU was decided in2014, and related to an agreement made before commencement of the provisions in s.205(1A), which apply to agreements made after 1 January 2014. I take the Full Bench to be putting forward that, without deciding the matter, the model consultation term applies to the extent that it creates additional rights and obligations on the subject matters required by the legislation, but not dealt with in an agreement’s text.

[16] In response to the Commission’s Directions for the hearing of its application, the HSU#4 filed the following Draft Determination and Order, with its submissions and evidence aimed at supporting the matters set out within the draft;

“1. St John of God Health Care (SJOGHC) wrongly failed consult with the Health Services Union #4 Branch Victoria (HSU#4) pursuant to Clause 33 of the St John of God Pathology Victoria – Health Services Union - Care Giver Enterprise Agreement 2015 (the Agreement) regarding its decision to make medical scientists and laboratory technicians redundant at their pathology laboratories operated from:

(a) Barwon Health Geelong;

(b) Mildura Base Hospital;

(d) Kyabram District Health Service;

(e) Ararat Health Service; and

(f) St John of God Health Care Private Hospital Ballarat.

2. The period of consultation under clause 33 of the Agreement should have taken place over a period of 4 -6 weeks commencing from the date a definite decision to make those medical scientists and laboratory technicians employed by SJOGHC at the sites referred to in order 1(a) – 1(f) referred to in order 1 above redundant.

3. SJOGHC wrongly failed pay those medical scientists and laboratory technicians employed by SJOGHC at the sites referred to in order 1(a) – 1(f) a severance payment pursuant to clause 33(g) of the Agreement.

FURTHER TO THE DETERMINATIONS MADE ABOVE, IT IS ORDERED THAT:

4. SJOGHC pay those medical scientists and laboratory technicians that were employed by SJOGHC at the sites referred to in order 1(a) – 1(f) and were made redundant by it a severance payment pursuant to clause 33(g) of the Agreement.” 9

[17] SJOGHC argue the Draft Determination is beyond the power of the Commission to make, with the Applicant inviting the Commission to make an order that could be enforced under the Act as an order. It further argues that paragraph 3 of the Draft involves determination of a dispute that no longer exists and that since the power to determine a dispute by way of arbitration depends on the existence of a dispute, the Commission should not proceed to determine the question of severance payments. 10

RELEVANT FACTUAL BACKGROUND

[18] Evidence in this matter was provided for the Applicant by Paul Elliott, Branch Secretary of the Health Services Union – Victoria No 4 Branch, who is also the Executive Officer of the Medical Scientists Association of Victoria. Robert Pini, Group Manager Industrial Relations for St John of God Health Care Inc., gave evidence on behalf of the Respondent.

[19] SJOGHC is a major Australian health care provider. As part of its services the organisation operated, at least until October 2016, pathology services in Western Australia and Victoria and in doing so employed more than 1250 people. 620 of these employees were employed in Victoria in various pathology roles, with their employment being subject to the Agreement. 11 Not all of those employees are the subject of this dispute, with the Agreement involving three different branches of the Health Services Union. Mr Pini’s evidence was that about 140 employees covered by the Agreement were employed by the pathology division in Victoria.12 The HSU#4, which has as part of its organisation the Medical Scientists Association of Victoria, submitted that it has 68 members employed by St John of God Healthcare in the pathology laboratories it operated in several public hospitals and its private hospital in Ballarat.13 The public hospitals in Victoria are located at Barwon Health in Geelong, Mildura Base Hospital, Kerang District Health, Kyabram District Health Service, and Ararat Health Service.14

[20] In June 2016, SJOGHC advised the HSU#4 and its employees that it had made a decision to sell its pathology division to Australian Clinical Laboratories, also known as Clinical Labs, which is described as being Australia’s third-largest pathology provider. The announcement made by SJOGHC was communicated in various ways, including a public media release, a letter to the Medical Scientists Association of Victoria, staff meetings and a memorandum to affected staff, all given on 22 June 2016. Amongst other things the communications advised that “[s]ubject to regulatory approvals, ownership of St John of God Pathology’s 19 laboratories and more than 180 collection centres in Victoria and Western Australia is expected to be transferred to Clinical Labs by late September”. 15 The communication to the MSAV/HSU included a letter to Mr Elliott, as well as a Frequently Asked Questions (FAQ) document. Both communications are shown as an Attachment to this decision (noting that the attached FAQ document is the first of 7 versions in evidence before the Commission).

[21] The following chronology, subsequent to the above notifications, has been taken into account, noting that only the events considered to be relevant to this decision are referred to;

22 June 2016 – Mr Elliott acknowledges receiving correspondence on 22 June 2016 from SJOGHC as described above. 16

24 June 2016 – Mr Elliott called Mr Pini and raised the issue of potential redundancies that may arise as a result of the sale of St John of God pathology to Clinical Labs. In the conversation Mr Elliott also requested a meeting with Mr Pini which was arranged to take place on 30 June 2016. 17

28 June 2016 – an updated FAQ was circulated. 18

29 June 2016 – the HSU#4 convened a joint union meeting with other HSU branches at Barwon Health which was attended by Mr Elliott. 19

30 June 2016 – Mr Pini met with Mr Elliott. Although the meeting was short, with Mr Elliott saying that it was only 30 minutes in duration and that the meeting did not constitute “discussion for the purpose of clause 33(e) of the Agreement and made a point during the meeting that SJOGHC must consult with the HSU and members in accordance with the relevant provisions of the Agreement”, 20 Mr Pini records that;

“At this meeting Mr Elliott raised three specific questions about the sale of the SJGP business. These questions were:

a) Whether SJGP employees who were offered positions with Clinical Labs would be entitled to redundancy payments;

b) Whether SJGHC would make an ex-gratia payment to SJGP employees. In this regard, Mr Elliott said to me that he considered that SJGHC had a ‘moral obligation’ to make an ex-gratia payment to SJGP employees; and

c) What allowance would be made in relation to salary sacrifice arrangements. In response to this query, I advised Mr Elliott that the issue of salary sacrificing was a tax benefit, which could change at any time, not a condition of employment.” 21

30 June 2016 – Mr Elliott sent the following email to Mr Pini by email confirming the claims he made in the course of that meeting;

“Dear Rob

Further to today's meeting in your office I write to confirm the claims made on behalf of SJOG staff impacted by the sale of pathology to Clinical Labs:

1. Payment of redundancy/severance pay to staff who are terminated by SJOG as a result of the sale of SJOG Pathology to Clinical Labs;

2. An ex gratia payment of an amount equal to the amount of 12 months salary packaging benefit for each employee.

3. Agreement to allow employees the option to accelerate their salary sacrifice a yearly amount over the next six or so pays.

As discussed during the meeting, our members made it clear at yesterday's union meeting in Geelong that staff by and large have long service (up to 20 years) with SJOG, and that SJOG management should give particular consideration to this factor when assessing its response to the above claims.

Regards

Paul Elliott

Executive Officer

Medical Scientists Association of Victoria

Victorian Psychologist Association

Association of Hospital Pharmacists

Health Services Union Number 4 Branch” 22

1 July 2016 – the FAQs were further updated and circulated. 23

5 July 2016 – a joint union meeting was held with Ballarat laboratory staff which was attended by Mr Elliott. 24

6 July 2016 – Mr Pini sent an email to Mr Elliott rejecting the claims that had been made by Mr Elliott in the course of their meeting on 30 June 2016 and confirmed in Mr Elliott’s email correspondence of the same date;

“Hello Paul - responses to your claims are as per below. I've also attached FYI the latest version of the FAQ that I have, and will update you as they are added to/amended.

1. Payment of redundancy/severance pay to staff who are terminated by SJOG as a result of the sale of SJOG Pathology to Clinical Labs.

There are only eight caregivers of approximately 1250 currently employed by SJG Pathology who will not be offered positions by Clinical Labs and SJGHC have arranged, or are in the process of arranging, redeployment to suitable roles. Where a suitable role is unable to be identified, redundancy provisions will apply.

The offer of employment from Clinical Labs recognises the statutory entitlements and the key terms of the caregiver's contract of employment with SJGHC. If the caregiver decides not to accept the offer of employment, they will be considered to have resigned from their position with SJGHC and their employment will end on the day before the transfer to Clinical Labs.

There will be no redundancy/severance pay offered to employees who resign from SJGHC as a result of not accepting comparable employment with Clinical Labs.

2. An ex gratia payment of an amount equal to the amount of 12 months' salary packaging benefit for each employee.

Salary packaging is a tax benefit enjoyed by Caregivers, not an entitlement, so an ex gratia payment is not appropriate.

3. Agreement to allow employees the option to accelerate their salary sacrifice a yearly amount over the next six or so pays.

SJGHC has approved accelerated salary packaging for all SJGP caregivers transferring to Clinical Labs. Further details on how to make these arrangements have been provided directly to caregivers.

Regards,

Rob Pini / Group Manager Industrial Relations

St John of God Health Care Inc.” 25

7 July 2016 – Mr Elliott wrote to Mr Pini by email advising that his union did not accept SJOGHC’s reasons for refusing its claim for redundancy and severance pay. The communication set out the following;

“Rob

I write further to your email response (below) to the claims raised by the respective Unions on behalf of staff impacted by the sale of SJOG pathology to Clinical Labs. I am surprised and concerned by SJOG's rejection of all of the claims. The rejection of the redundancy claim on the grounds staff will be offered a position by Clinical Labs lacks credibility, particularly given Clinical Labs has foreshadowed job losses of up to 200 positions.

In any event, it is clear the provisions of clause 33 (g) establish that an employee "whose employment is terminated on the grounds of redundancy shall be entitled to" redundancy/severance pay in accordance with the table of payments contained in that clause, plus payment of notice period. SJOG's argument for refusing this entitlement on the grounds that a job offer by Clinical Labs annuls your responsibility to make this payment is, in my view, erroneous. In short, SJOG employees who will finish employment with SJOG as a result of the sale of pathology have an entitlement to the payments contained in clause 33 (g).

We will discuss SJOG's response to the claims with staff as a matter of urgency. I will go through Kim to discuss arrangements for a meeting.

I have on two previous occasions raised the matter of formal consultation with the Unions in relation to the proposed sale of pathology with Rita Maguire. Clause 33 Introduction of Change, Redundancy and Salary Maintenance of the SJOG Pathology Victoria - Health Services Union - Caregiver Enterprise Agreement 2015 requires that SJOG to hold discussions with the Union. I therefore request that SJOG immediately enter into formal consultation with the Union in accordance with clause 33 of the Agreement. I request that SJOG submit a Change Impact Statement in relation to the sale as a matter of urgency.

Please advise SJOG's availability to commence consultations as soon as possible.

Regards

Paul Elliott

Executive Officer

Medical Scientists Association of Victoria

Victorian Psychologist Association

Association of Hospital Pharmacists

Health Services Union Number 4 Branch” 26

20 July 2016 – Mr Elliott wrote to a colleague of Mr Pini, Rita Maguire, setting out claims in respect of his members employed at SJOGHC Ballarat Private Hospital laboratory. The claims related to the continuation of concessional car parking at the hospital; continuation of favourable health insurance benefits; continuation of the policy of reduced cost admissions for family members to the hospital; and the continuation of bulk billing arrangements for pathology and medical imaging services;

“Dear Rita

I write further to a phone discussion last week and on behalf of members who are currently employed in SJOG pathology services in SJOG private hospitals. This group of employees has the following additional staff benefits/concessions:

• car parking (@ $4 per day in Ballarat). Particularly important for employees working late shifts and on-call for safety reasons.

• BUPA health insurance - corporate rate. Pay the second highest level of cover but get top level of cover. No admission fee for hospital admissions.

Additional benefits for employees, their spouses and dependent children:

• Reduced cost of admission to our Emergency Department. [The current agreement states: The discount provided for Emergency Department charges will be 50% of the Medical Consultation/Procedure Fee after acceptance of the Medicare rebate]

• Reduced rates for admission to the hospital. [Currently: The discount provided for Hospital Services is 10% of hospital charges, or the gap between the Hospital Charges and the rebate provide by the Health Fund, whichever is the lesser amount. This discount will be applied to Hospital Charges relating to bed fees and theatre fees only (e.g. excluding prostheses)).

• Bulk billing for Pathology services

• Bulk billing for services provided by Lake Imaging Ballarat (x-ray, MRI, CT, ultrasounds etc.)

Please advise your response asap.

Regards

Paul Elliott

Executive Officer

Medical Scientists Association of Victoria

Victorian Psychologist Association

Association of Hospital Pharmacists

Health Services Union Number 4 Branch” 27

26 July 2016 – the alleged dispute that is the subject of this application was notified to the Fair Work Commission.

12 August 2016 – a conciliation conference in this matter was held by Commissioner Cribb.

On or around 12 August 2016 - HSU#4 members reported receiving offers of employment dated 10 August 2016 from Clinical Labs. The offers referred to an expectation that final settlement of the sale between Clinical Labs and SJOGHC would take place in late September 2016. The offers also set out the following;

“Dear '

As you are aware, Clinical Laboratories Pty Ltd (ABN 62 006 823 089} trading as Australian Clinical Labs ("Clinical Labs") will be acquiring St John of God Pathology ("SJGP") from St John of God Health Care Inc ("SJGHC"). Subject to completion of all contractual requirements we anticipate that the final settlement will take place in late September 2016 ("Settlement Date"). Once this date is confirmed, you will be notified.

We are delighted to offer you ongoing employment with Clinical Labs from the Settlement Date, in your current role.

This offer is subject to the following:

1. The Acquisition taking place;

2. You continuing to be an employee of St John of God Health Care Inc (SJGHC) until the date immediately before the Settlement Date; and

3. You acknowledging that you are transferring employment from SJGHC to Clinical Labs and will no longer be employed by SJGHC.

On commencement of employment with Clinical Labs, Clinical Labs will recognise your prior service with SJGHC for all service related entitlements. Your accrued entitlements to all leave, including but not limited to, annual leave, personal leave and long service leave will be transferred to Clinical Labs. In making this offer of employment, Clinical Labs will honour your current contract hours, status and salary with SJGHC.

The terms and conditions of this offer are in accordance with the terms and conditions of the Pathology East Medical Scientists Agreement (Industrial Instrument). A summary of the terms and conditions of this offer are shown at Schedule 1 to this document.

This offer of employment applies throughout your employment with Clinical Labs regardless of your position and replaces any earlier employment agreement(s) including with SJGHC.

Your employment is also covered by the National Employment Standards (NES) contained in the Fair Work Act 2009 (Cth).

Where this Offer is more favourable than the NES or a provision of the Industrial Instrument, the provisions of this Offer will apply.

The Industrial Instrument and the provisions of the Fair Work Act 2009 (Cth) which may apply to your employment from time to time, do not form part of your contract of employment.

This offer satisfies our obligation to provide you with a suitable offer of employment upon a transmission of business and is in accordance with the Fair Work Act 2009.

If you choose not to accept the offer, as the Pathology division of SJGHC will no longer exist your employment will terminate on the date immediately before the Settlement Date.

In the unlikely event that the sale does not complete, this offer will be of no effect.

You will not be required to complete a probationary period with Clinical Labs.

Acceptance

To accept your offer of employment, please sign and return a copy of this letter. The checklist details other necessary documents which must be returned to Clinical Labs. Documents should be returned within 2 weeks of the date of this letter and can be returned by post using the reply paid envelope supplied. It is recommended you keep a copy of all documents for your personal records.

If you do not return the acceptance but attend for work on your employment start date, Clinical Labs will otherwise treat your attendance as an acceptance of your offer of employment.

Please email [email protected] if you have any query in relation to the information in this offer.

However, unless otherwise notified by us to you in writing, this offer of employment is based on the above information.

We look forward to your successful future with Clinical Labs.

Yours sincerely,

Clinical Laboratories Pty Ltd” 28

Immediately beneath this text was a signature slip inviting the address to sign that they “have read, and fully understand all the terms and conditions outlined in this offer of employment with Clinical Labs and formally accept this offer of employment”. Attached to the letter were four and a half pages of terms and conditions for the offer.

15 August 2016 – the FAQs were further updated. 29

16 August 2016 – as was agreed in the conciliation conference on 12 August 2016, a meeting was held between Mr Elliott, Mr Pini and Ms Maguire through video link. Mr Elliott records that the meeting did not result in resolution of any of the issues between the parties. 30 Mr Pini says about the meeting that;

“During this videoconference Mr Elliott said that SJGHC had not presented any solutions to the concerns he had raised in relation to the sale of the SJGP business. I explained to Mr Elliott that each of his issues were not solely in control of SJGHC and we had been liaising with the relevant third parties, such as Clinical Labs and the private health providers to ensure the most appropriate outcome for all staff. I gave Mr Elliott an update of progress against these issues and advised I would email him shortly with further updates on these questions. …

During the video conference Mr Elliott also requested further paid unions meetings with SJGP staff. Ms Maguire agreed to this request and proposed that the meetings be arranged so as to allow the Employer to speak to caregivers as well.” 31

24 August 2016 – a meeting was held at the Geelong laboratory between staff management representatives and union representatives. 32

30 August 2016 – a meeting was held at the Ballarat laboratory between staff, management representatives and union representatives. 33

13 September 2016 – the FAQs were further updated. 34

28 September 2016 – the date of sale of SJOGHC was officially announced as being 10 October 2016. There was a communication about this subject to staff and unions together with an information sheet. 35

3 October 2016 – the FAQs were again updated with a copy being provided to union representatives. 36

[22] As set out in the chronology above, employees were provided with numerous versions of the FAQs, commencing on 22 June 2016 with the last provided on 3 October 2016. The HSU#4 is critical of the FAQs in several respects; firstly, the distribution of the material within the FAQs cannot be construed as an act of consultation; secondly, the material within the documents is dense and may well have been confusing as the different versions were distributed, possibly with the reader not discerning particularly well the changes which may have been made between each version. SJOGHC put forward that the purpose of the FAQs “was to ensure that employees were provided with the most up to date information in relation to the sale of SJGP insofar as it was relevant to their employment” and that after the first three editions new information was highlighted both in a different colour print as well as the outstanding matters being highlighted on the first page. 37

[23] The HSU#4 also put forward that an important part of the FAQs was misleading and designed to cover over the rights employees had. The matter was dealt with in the FAQs from the start, concerning the question of “what happens if I do not want to work for Clinical Labs?”, with the FAQ answer putting forward words to the effect that an employee who chose not to work for Clinical Labs would be deemed to have resigned. That question and answer was followed by another;

“Q. If I don’t accept the offer will I receive a redundancy payment?

No. Clinical Labs is recognising all of your existing statutory entitlements and offering comparable employment to you so it is hoped that you will accept the offer.

There is no redundancy package being offered to employees who resign from SJGHC as a result of not accepting comparable employment with Clinical Labs. You will also not be entitled to redeployment to other areas of SJGHC.” 38

[24] The question and answer referred to above were maintained in successive versions of the FAQs until Issue 7, dated 15 August 2016, when several of the key employment questions and answers had changed appreciably, including the two referred to immediately above. The FAQ document now included this information; 39

“Q. What will happen to my role if an equivalent role already exists within Clinical Labs?

After the transfer of ownership to Clinical Labs, all transferring employees will perform jobs with Clinical Labs comparable to what they are currently performing with SJGHC.

If there are changes proposed to your role or any other positions within Clinical Labs, Clinical Labs will provide further information to you and discuss any proposals with you at the appropriate time.

Q. What is considered a comparable position?

A comparable position is generally considered to be one that is consistent with the current role performed i.e. level of responsibility, skill set and remuneration (salary) before tax.

Other considerations include working hours, location and the individual circumstances of the employee. Individual circumstances will be determined in discussion with Clinical Labs and the impacted employee.”

“Q If I transfer to Clinical Labs and then my role becomes redundant, will I be able to return to SJGHC and will my leave and service be recognised?

No. If you transfer to Clinical Labs, your contract will end with SJGHC and you will become a Clinical Labs employee.

This means that if you wish to return to SJGHC as an employee, you will need to be selected for a vacant role via the usual recruitment and selection processes. Your leave and service will not be recognised as you will be considered a new employee.

Q If I transfer to Clinical Labs and then my role becomes redundant, will I be eligible for a redundancy payment from SJGHC and what other support will I be provided?

As you will no longer be an employee of SJGHC, you will not receive a redundancy payment from SJGHC if your role with Clinical Labs becomes redundant. …”

“Q. What happens if I don’t want to work for Clinical Labs?

The offer of employment from Clinical Labs recognises all of your statutory entitlements and the key terms and conditions of either the Enterprise Agreement or the transfer of business provisions in the Fair Work Act if you are not covered by an agreement.

Clinical Labs looks forward to working with you in the future and we encourage you to accept the offer.

If you decide not to accept the offer of employment, your position at SJGP will no longer exist and your employment with SJGHC will end on the day before the transfer to Clinical Labs.

Q. If I don’t accept the offer, will I be eligible for a redundancy payment?

As Clinical Labs is recognising all of your existing statutory entitlements including leave, length of service and offering comparable employment to you, it is hoped that you will accept the offer.

However, if you decide not to accept the offer of employment from Clinical Labs, we believe that you will not be eligible to receive a redundancy payment from SJGHC.”

[25] The HSU#4 puts forward that this change was only made at the time it was because the date by which employees were expected to accept the Clinical Labs employment offer had passed. That is, it is put forward that SJOGHC wanted their employees to at all times believe they had no redundancy rights and that they must therefore accept Clinical Labs’ employment offer.

[26] These assertions are relevant to the extent they connect with the matters defined by the HSU#4 as the matters in dispute, namely that employees were entitled to information and consultation which was not provided to them, and that they are entitled to severance payments because the employment offered to them at Clinical Labs was not “comparable alternative employment”.

CONSIDERATION

[27] As referred to earlier, there are two dispute resolution clauses within the Agreement.

[28] Clause 37 of the main body of the Agreement provides for the progression of disputes about “a matter arising under this Agreement or the National Employment Standard ("NES")”. If such disputes are unresolved at the workplace level, “the dispute may be referred to the Fair Work Commission ("FWC") for resolution by conciliation and, where the matter in dispute remains unresolved, arbitration”. Procedurally, “[i]f arbitration is necessary the FWC may exercise the procedural powers in relation to hearings, witnesses, evidence and submissions which are necessary to make the arbitration effective”.

[29] Schedule B, applying to medical scientists and the like who are the subject of this dispute, provides for grievances to be raised; wherein it is stated that it is “the objective of this procedure to ensure that grievances are resolved by negotiation and discussion between the parties”. After discussion at the local level, “[i]f the grievance still exists the matter will be referred to the Commission for decision.” 40

[30] In dealing with a dispute such as this the Commission is not undertaking an exercise of judicial power but is instead exercising a power of private arbitration, with that power deriving from the parties’ agreement to submit their differences for decision by a third party. The resultant arbitrator’s award is not binding of its own force but instead its effect depends on the law which operates with respect to it. 41 It is accepted that while not exercising judicial power, the Commission “may legitimately form and act upon opinions about legal rights and obligations as a step in the exercise of its own functions and powers”.42

[31] A useful summary of the applicable considerations in matters of this sort, the powers to be exercised by the Commission and their boundaries, was articulated by Commissioner Saunders in Construction, Forestry, Mining and Energy Union v Mt Arthur Coal Pty Ltd; 43

“Legal principles concerning the proper characterisation of the dispute

[6] The test under s.739 of the FW Act is whether the dispute settlement procedure in the enterprise agreement “requires or allows” the Commission to deal with the dispute. It is therefore necessary to look at the text of the dispute settlement procedure, understood in light of its industrial context and purpose, to determine whether the dispute, properly characterised, falls within it. 44

[7] The scope of a dispute settlement procedure in an enterprise agreement should not be narrowly construed; “to do so would be contrary to the notion that certified agreements are intended to facilitate the harmonious working relationship of the parties during the operation of the agreement.” 45

[8] In characterising the nature of a dispute the Commission is not confined to the application filed to deal with the dispute. 46 The entire factual background is relevant, and may be ascertained from the submissions advanced by the parties on the question of jurisdiction.47 Further, a dispute may evolve during proceedings in the Commission. It may therefore be necessary in some cases when ascertaining the character of a dispute to have regard to both the nature of the dispute alleged in an originating application and the factual circumstances as they evolve.48

[9] It is also important to note that the character of the dispute is distinguishable from any relief which may be sought, or granted, following an arbitration of the dispute. 49 However, the relief sought may cast light on the true nature of the dispute in some cases.50

[10] If the Commission has jurisdiction to deal with the dispute, the nature of the relief that the Commission may grant in such circumstances will depend on the limitation in s.739(5) of the FW Act 51 and the agreement of the parties as recorded in their enterprise agreement, provided that such relief is reasonably incidental to the application of the Enterprise Agreement to which the dispute relates.52” (Original references)

[32] The same matter considered the Commission’s role as a private arbitrator;

“[18] When the Commission is arbitrating a dispute pursuant to a dispute settlement clause in an enterprise agreement it is not exercising judicial power, but is instead exercising a power of private arbitration. 53 As a private arbitrator, the Commission is authorised to make decisions as to the legal rights and liabilities of parties to whom the enterprise agreement applies.54 That involves deciding “all questions both of law and of fact”55 that arise in the dispute, subject to any limitation on power in the dispute settlement clause56 and a requirement not to make a decision that is inconsistent with the FW Act, or a fair work instrument that applies to the parties.57” (Original references)

[33] In Endeavour Energy v Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia, 58 decided shortly after Commissioner Saunders’ analysis in CFMEU v Mt Arthur Coal, the Full Court of the Federal Court of Australia considered in detail the Commission’s role under s.739. The Full Court’s judgment in that matter held the following matters of relevance;

“29. Turning to s 739 of the FW Act, it would be a mistake to seek to identify its purpose solely through the prism of s 186(6): the section applies to other situations as well. But s 739 is concerned with the role of the Commission under a dispute-settling term in an enterprise agreement. Although the grammatical reading of subs (3) presents difficulties, the Explanatory Memorandum to the relevant Bill makes the meaning clear:

Where such a term requires or allows [the Commission] to deal with a dispute, it can exercise all of its powers under Subdivision B of Division 3 of Part 5-1 (see subclause 595(4)), unless those powers are limited by the term (subclause 739(3)).

That is to say, if the term places limits on the powers that may be exercised by the Commission in settling disputes, the Commission must remain within those limits.

30. Critical to the significance of subs (3) and (4) of s 739 is the circumstance that, under the FW Act, the Commission has no general power of arbitration. By s 595(1), the Commission may deal with a dispute only if it is expressly authorised to do so under or in accordance with another provision of the FW Act. Then s 595(2) does provide such an express authorisation in relation to disputes, but arbitration is excluded. To put the matter completely beyond doubt, s 595(3) provides that the Commission may deal with a dispute by arbitration only if it is expressly authorised to do so under or in accordance with another provision of the FW Act.

31. Section 739(4) is such a provision. But it is limited in two ways. First, the parties must, by the relevant term in the agreement, have agreed that the Commission may arbitrate. And secondly, by subs (5), in the arbitration the Commission must not make a decision that is inconsistent with the FW Act or a fair work instrument that applies to the parties.

32. In the light of this understanding of the relevant provisions of the FW Act in the context of the history of broadly corresponding provisions since 1992, does the introduction of s 739(5) into the analysis warrant the conclusion that the Full Court in ALS 59 was plainly wrong in its characterisation of the Commission’s relevant role as that of private arbitration?

33. We would hold not. Section 739(5) does not alter the character of the arbitration which the Commission undertakes under an enterprise agreement in the terms of the Agreement. It merely places a limit on the range of arbitrated (but not conciliated, it may be noted) outcomes available to the Commission in those cases in which the parties have agreed that the Commission may arbitrate (using, in this respect, the same formula as appears as subs (4) of s 740, on any view a private arbitration provision). In our view, the more likely explanation of the absence of any reference to s 739(5) in the reasoning of the Full Court in ALS is that their Honours considered it to make no more than an inconsequential contribution to the disposition of the issue on which they ruled. With respect, we would agree with that assessment of the situation.

34. There may be a question as to how a party to an arbitrated outcome in a dispute-setting process of the kind contemplated in s 739 of the FW Act might go about alleging that the Commission had overstepped the limitations for which subs (5) provides. In the present case, the applicant does allege that the Full Bench decision was inconsistent with a fair work instrument, namely, the Agreement. But the inconsistency is said to reside wholly in the circumstance that the decision was wrong; that is to say, the Full Bench reached the wrong conclusion on the very matter which was given to it for arbitration. Whatever else s 739(5) means, it does not, in our view, produce an outcome of the kind sought by the applicant. Otherwise, we had the benefit of no more than the most tangential of references to the matter in the submissions made in the present case.”

[34] Interpretation of an enterprise agreement requires construction of the words of the instrument, with the Full Bench in AMIEU v Golden Cockerel Pty Ltd 60 (Golden Cockerel), setting out the principles for such task. In that matter, and after an extensive analysis of the subject, the Full Bench summarised the principles to be applied in the following way;

“[41] From the foregoing, the following principles may be distilled:

1. The AI Act 61 does not apply to the construction of an enterprise agreement made under the Act.

2. In construing an enterprise agreement it is first necessary to determine whether an agreement has a plain meaning or contains an ambiguity.

3. Regard may be had to evidence of surrounding circumstances to assist in determining whether an ambiguity exists.

4. If the agreement has a plain meaning, evidence of the surrounding circumstances will not be admitted to contradict the plain language of the agreement.

5. If the language of the agreement is ambiguous or susceptible to more than one meaning then evidence of the surrounding circumstance will be admissible to aide the interpretation of the agreement.

6. Admissible evidence of the surrounding circumstances is evidence of the objective framework of fact and will include:

(a) evidence of prior negotiations to the extent that the negotiations tend to establish objective background facts known to all parties and the subject matter of the agreement;

(b) notorious facts of which knowledge is to be presumed;

7. The resolution of a disputed construction of an agreement will turn on the language of the Agreement understood having regard to its context and purpose.

8. Context might appear from:

(a) the text of the agreement viewed as a whole;

(b) the disputed provision’s place and arrangement in the agreement;

9. Where the common intention of the parties is sought to be identified, regard is not to be had to the subjective intentions or expectations of the parties. A common intention is identified objectively, that is by reference to that which a reasonable person would understand by the language the parties have used to express their agreement.

10. The task of interpreting an agreement does not involve rewriting the agreement to achieve what might be regarded as a fair or just outcome. The task is always one of interpreting the agreement produced by parties.”

[35] In this matter the contentions are that when SJOGHC made the sale referred to above, firstly it failed to consult (Draft Determinations 1 and 2) and secondly it failed to find comparable alternative employment and was obliged to treat employees as redundant and make severance payments (Draft Determinations 3 and 4).

[36] The Respondent contends that the determination sought by the Applicant either does not relate to a dispute which continues to exist (Draft Determinations 1, 2, and 3) or are beyond the power of the Commission to make (Draft Determination 4).

[37] These arguments of SJOGHC come about because of the circumstances of the alleged dispute: a sale was announced and executed; there was activity, to use a neutral term, of some sort involving the HSU#4 and SJOGHC and its employees up to the sale date (10 October 2016); and on that date affected employees ceased to be employed by SJOGHC, with most then becoming employed by Clinical Labs. In effect, SJOGHC argue that information was provided to all parties who were required to be provided with it; the discussions it convened amounted to consultation and, with the employees no longer being employed by SJOGHC, any dispute then ceased.

[38] SJOGHC argue that the Commission can only deal with a dispute by arbitration, including by making orders, only if it is expressly authorised to do so under or in accordance with another provision of the Act. 62 It then submits that the Commission is empowered under s.595(3) and s.739(4) to arbitrate the matter for reason of the provisions of clause 37(c) of the Agreement, but with the power of arbitration being constrained by s.739(5) of the Act which provides that in arbitrating the dispute the Commission must not make a decision that is inconsistent either with the Act or the enterprise agreement. In this regard, SJOGHC draw attention to the provisions of the Dispute/Grievance Resolution clause in the main part of the Agreement, which provides the following in clause 37(c), being potentially the bounds of the Commission’s jurisdiction;

“(c) If a dispute in relation to a matter arising under the Agreement or the NES is unable to be resolved at the workplace, and all agreed steps for resolving it have been taken, the dispute may be referred to the Fair Work Commission ("FWC") for resolution by conciliation and, where the matter in dispute remains unresolved, arbitration.”

[39] In relation to Draft Determinations 1, 2 and 3, SJOGHC contends that the underlying dispute in this matter no longer exists, having ended in October 2016 with the sale of the organisation’s pathology division to Clinical Labs. It submits that it is not disputed that SJOGHC no longer has a pathology division and that by corollary there is no longer a dispute between it and the HSU#4. 63 The Respondent further submits that where the dispute no longer exists in the relevant sense under the Agreement the Commission has no power to make a determination since the power to determine a dispute by way of arbitration depends on the existence of a dispute. It further submits that by the request to make determinations concerning circumstances that have moved on is analogous to the Commission being asked to declare rights in respect of a hypothetical situation. It put forward that there is no evidence before the Commission from employees of any ongoing issues regarding the acceptance of employment with Clinical Labs.64

[40] In relation to these propositions, regarding Draft Determinations 1, 2 and 3, surrounding the existence of a dispute and the utility of the Commission proceeding, SJOGHC further argued that the matter of dealing with a dispute no longer in existence was considered by the Full Bench in Bechtel Construction (Australia) Pty Ltd v Maritime Union of Australia 65 (Bechtel v MUA). That matter considered an application made under s.505 of the Act for the Commission to resolve a right of entry dispute. The dispute concerned Bechtel’s refusal to allow officials of the MUA right of entry to any of its three LNG construction sites on Curtis Island in Queensland, with the decision at first instance making an order that would allow the MUA to enter Bechtel’s premises “on Curtis Island for the purpose of holding discussions with one or more of the excavator operators at the Condock should they wish to participate”.66 Upon appeal the argument was developed that Bechtel was no longer using excavators to unload aggregate at Curtis Island, and that the change had only taken place since the initial order. The argument was put by the MUA on appeal that the appeal was now hypothetical and pointless.67

[41] The decision of the Full Bench was to refuse permission to appeal for reasons that included the following;

“[9] We accept the submission of the MUA that there is no practical utility in granting permission to appeal. It is well established that disputes of an industrial nature are not static, but may change their nature and character over time. In United Firefighters’ Union of Australia v Metropolitan Fire and Emergency Services Board a Full Bench said:

“In Re PKIU; Ex parte Vista Paper Products Pty Ltd Gaudron J (with whom Brennan, Dawson and Toohey JJ relevantly agreed) noted that:

“…an industrial dispute is not necessarily fixed and definite, either in terms of its subject-matter or in terms of the parties to it; a dispute "may be diminished or ended or enlarged or altered during ... proceedings in the Commission" (R v Bain; Ex parte Cadbury Schweppes Australia Ltd (1984) 159 CLR 163, per Murphy J at p 168) or, for that matter, at any stage during the course of the dispute itself”.

Although that comment was made in the context of an “industrial dispute” within the meaning of s.4 of the Industrial Relations Act 1988, it is equally applicable to a dispute notified pursuant to a dispute settlement procedure in a certified agreement.”

[10] We would likewise consider that the comment of Gaudron J quoted by the Full Bench is equally applicable to a right of entry dispute.

[11] When it first applied to the Fair Work Commission for it to deal with a right of entry dispute under s.505 of the Act, the dispute identified by the MUA was broad in compass, concerning as it did a claim for entry of MUA officials to all three Bechtel sites on Curtis Island. By the time of the hearing before the Commissioner, the MUA, although it never abandoned its broader claim, was focussing upon only certain categories of workers employed at the QCLNG Project site. The Commissioner found in the MUA’s favour only in respect of the excavator operators at the Condock on the QCLNG Project site, and given that the MUA did not seek permission to appeal from the Commissioner’s decision and Order, the compass of the dispute was necessarily narrowed to the issue of whether the MUA should be allowed entry to the QCLNG Project site in order to access that small group of employees. As a result of the changed factual situation described in the agreed statement of facts, we consider that there is now nothing remaining of the subject matter of the dispute, with the result that to hear and determine the appeal would serve no practical utility. Lack of utility is a well-established basis for the refusal of permission to appeal.

[12] It is theoretically possible that the use of excavator operators to unload aggregate at the Condock on the QCLNG Project site might resume at some future stage. That is unlikely, given that it was an agreed fact that the bulk of aggregate transportation to the site has concluded, and given also that the Condock is itself a temporary facility being used in a project which will necessarily have a finite life. In any event, as was properly conceded by counsel for the MUA, if the use of excavator operators to unload aggregate at the Condock were to resume, and a right of entry dispute then arose with respect to such employees between Bechtel and the MUA, that would be a new dispute and not simply a continuation of the existing dispute which the MUA has characterised as having come to an end because of the changed factual circumstances. That being the case, the Order, assuming its validity, could not apply with respect to that new dispute. A valid order made under s.505(2) can only be made for the purpose of “deal[ing] with the dispute” which is the subject of the arbitration being conducted by the Commission; it cannot operate to declare forever the rights of the parties so as to determine the outcome of future disputes that have not yet come before the Commission. Given that the MUA has submitted, and we accept, that the dispute which was the subject of the arbitration before the Commissioner has effectively come to an end due to changed factual circumstances, it necessarily follows that the Order can have no ongoing operative effect and is spent. That conclusion underlines the practical inutility in granting permission to appeal.

[13] Bechtel’s concern that the Order may have some application to its other two sites on Curtis Island is answered by the conclusion that the Order is spent. Even if that were not the case, the reference in paragraph A1 of the Order to the MUA being entitled to enter Bechtel premises on Curtis Island “for the purpose of holding discussions with ... excavator operators at the Condock” means that the Order could only ever have application to the QCLNG Project site, since the location of the excavator operations at the Condock within that site meant that the identified purpose of entry could not exist at any other site. Bechtel’s further concern that the Commissioner’s decision and Order may have precedential value at other construction sites appears to us to have little substance; the precise factual scenario upon which the Commissioner determined to make the Order, including the finding that the excavator operators spent approximately 60% of their time unloading from the barges, was unusual and not something we have encountered in our collective experience before.” 68 (references omitted)

[42] In support of their argument in relation to Draft Determination 4, SJOGHC rely upon authority originally drawn from the High Court in the matter of Construction, Forestry, Mining and Energy Union v Australian Industrial Relations Commission and Another 69 (CFMEU v AIRC) in which the High Court confirmed the capacity of the then Australian Industrial Relations Commission when dealing with agreed dispute resolution procedures was to exercise a power of arbitration with the precise power depending upon the form of the agreement of the parties.

[43] SJOGHC further noted that the Full Bench had recently considered the application of CFMEU v AIRC to a dispute settlement provision in an agreement made under the current legislation with the Full Bench holding;

“[60] In the extract of the High Court decision in CFMEU v AIRC above it is made clear that the exercise of judicial power results in an order that is binding of its own force. So too is an order made under the Act pursuant to a specific power to make orders of binding force. In the case of private arbitration, however, the arbitrator's powers depend on the agreement of the parties, usually embodied in a contract, and the arbitrator's award is not binding of its own force. An arbitrator’s decision in a private arbitration should be expressed as a determination because it cannot be enforced under the Act as an order.

[61] In submitting to the contrary the MFB seeks to conflate the terms of ss.595 and 739 of the Act. Such reliance is misplaced. Section 595(3) is a limitation on arbitration powers and the issuing of orders in the absence of express authority to do so. Section 739 permits the Commission to arbitrate a dispute if the parties have authorised it to do so under a term of an enterprise agreement. The parties cannot confer a statutory power to make orders of a binding force on the Commission. All they can do is agree, as a matter of contract, to accept the outcome of arbitration. The power to arbitrate is created by the parties’ agreement and is enforceable as a matter of contract. The decision of the Full Bench in Victoria University v National Tertiary Education Industry Union[2015] FWCFB 2892 is not inconsistent with these principles.” 70

[44] The application of Bechtel v MUA referred to by SJOGHC in relation to Draft Determinations 1, 2 and 3 is dealt with briefly by the HSU#4, noting the Full Bench’s findings in another right of entry matter, Construction, Forestry, Mining and Energy Union and Others v Bechtel Construction (Australia) Pty Ltd and Another. 71 That matter related to a dispute over future entry rights, drawing upon past conduct;

“[11] At first instance, the CFMEU raised a jurisdictional objection in relation to the application. The CFMEU submitted that the Commission had no jurisdiction to hear the dispute as the application was concerned with past conduct. The CFMEU asserted that the Commission’s jurisdiction was solely to deal with a dispute about the operation of Pt. 3-4 of the FW Act, and that such a dispute must relate to an ongoing dispute about entry in the future, as opposed to the determination of past rights and obligations.

[12] The Commissioner rejected the CFMEU’s jurisdictional objection, accepting Bechtel’s arguments that the dispute was about the regulation of future rights of entry in relation to past conduct, and that there was no cogent evidence that the respondents at first instance had acquired an understanding of the proper use of rights of entry or that the CFMEU had taken steps to improve its training in this respect.” 72

[45] In relation to the capacity of the Commission to deal with the dispute, the Full Bench found;

“[21] We are satisfied that the dispute before the Commissioner was properly characterised as one falling within the jurisdiction of the Commission to deal with pursuant to s.505 of the FW Act. We do not agree that there was any inconsistency in the manner in which the Commissioner characterised the dispute. The Commissioner’s comments on the nature of the dispute must be read in the context of her comments in paragraphs 27–30, which frame the dispute as one about the future conduct of CFMEU officials in light of their past conduct. In this context, there is no inconsistency in dealing with the dispute by examining the past conduct of permit holders.” 73 (underlining added)

[46] The proposition that CFMEU v AIRC has application in the way set out by the Respondent in relation to Draft Determination 4 is not contested by the Applicant, although it refers to a further Full Bench decision dealing with a dispute originally raised under s.739, Kentz (Australia) Pty Ltd v Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia, 74 (Kentz v CEPU) arguing that the Full Bench in that matter applied the principles in CFMEU v AIRC to deal with a dispute in which the remaining employees were working out their notice and would shortly finish and no new employees would be engaged;

“[29] Kentz submitted that on the evidence at the time of hearing on 29 January 2016 (and the date of the Commissioner’s decision of 3 February 2016), the part of the Ichthys Project to which the Kentz Agreement applied was effectively coming to a close, no further employees would be engaged under the Kentz Agreement and the dispute as to notice and R&R had no application to the remaining employees who were given notice that their employment would cease on 6 February 2016 and were working out their notice period. Kentz submitted that the dispute concerned past events only and, as a result, extended beyond the remit of clause 18 of the Kentz Agreement. Kentz submitted that the “Commission may arbitrate if expressly authorised by the parties under a term of an enterprise agreement to do so and must do so within the limits of that term”.

[30] Kentz submitted that in the “particular circumstances of the case and the facts in existence at the time that the matter came on for hearing, there was no dispute” in relation to a matter arising under the Kentz Agreement “that was capable of being arbitrated by the Commission”. In effect the Commission was being asked to “step into another realm, namely the exercise of judicial power” and to pronounce an opinion about the legal meaning and effect of clauses 7.3 and 8.6 by reference to past events only, with no evident potential to resolve any dispute about the current or future application of those clauses under the Kentz Agreement.” 75 (references omitted)

[47] After analysing the nature of the Commission’s role under a dispute settlement procedure of an enterprise agreement, the Full Bench in Kentz v CEPU found the relevant enterprise agreement placed no limit of the nature contended by Kentz;

“[59] Clause 18 of the Kentz Agreement confers the authority of the parties on the Commission to arbitrate any disagreement or dispute in respect of any matters arising under the Kentz Agreement for the purpose of resolving the dispute. It affords the Commission a power of private arbitration in relation to such disputes. It does not limit the scope of an arbitration to preclude the resolution of disputes in relation to past events or about rights and obligations under an agreement. There is no basis for reading an unstated limitation on the scope of the dispute resolution provision in the context of the broad scope which is expressed in it – “[A]ny disagreement or dispute”. Clause 18 does not provide or purport to provide an authority that exceeds what is permitted either by The Constitution or by the Act.” 76

[48] The same decision accepted that the “cessation of employment under the Kentz Agreement did not have the effect of changing the character of the dispute commenced in respect of former employees, whilst they were employed, or extinguishing the right to have the dispute resolved”; 77 that the Commissioner at first instance was exercising a power of private arbitration granted by the agreement and that in doing so the decision-maker does not exercise judicial power;78 and;

“[71] In exercising the power of private arbitration afforded to the Commission, the Commissioner had power to arbitrate an outcome to resolve the dispute over matters arising under the Kentz Agreement. In doing so she was authorised to form conclusions as to the legal rights and liabilities of the parties to the Kentz Agreement and give a decision expressing a conclusion as to the operation of the relevant terms of the Kentz Agreement, in order to discharge her role in the dispute resolution procedure to resolve disputes between the parties to the Kentz Agreement, in furtherance of the objective of the parties of avoiding the escalation and providing prompt resolution of disputes or grievances.

[72] Commissioner Bissett received submissions and evidence in relation to the issues in contention, considered them and made findings in relation to the matters of fact and interpretation in dispute, in order to discharge her responsibility in private arbitration to resolve the dispute. The Commissioner was authorised to make findings in the course of the private arbitration concerning the operation of the relevant provisions of the Kentz Agreement for the purpose of resolving the dispute. The Commissioner was not “declaring [an] opinion about the legal position and only doing that for its own sake”.

[73] The Commissioner’s conclusions were not a binding declaration of rights. The findings involved the formation of an opinion on a matter of interpretation required in discharging the arbitral function afforded to her by the parties for the purpose of resolving the dispute before her. The Commissioner did not seek to or purport to make a judicial determination. The dispute was clearly one in respect of a matter arising under the Kentz Agreement and, in our view, the Commissioner did not consider any matters outside the jurisdiction reposed in the Commission by the dispute settlement procedure in clause 18 of the Kentz Agreement.

[74] The decision of the Commissioner arising from the arbitration is not a conclusive or legally binding determination of the rights and obligations of the parties in the Kentz Agreement by way of a judicial determination reserved for a Chapter III Court. Having been made on the basis of a power of private arbitration afforded to her by the agreement of the parties, the Commissioner’s decision is not binding of its own force. Rather, its effect, depends on the law which operates with respect to it, having regard to the terms of the Kentz Agreement.” 79 (reference omitted)

[49] In relation to the Commission’s jurisdiction in this matter, the HSU#4 sets forward the following submissions;

“8. It is submitted that SJOGHC and the HSU have agreed pursuant to the dispute resolution clause to submit their differences to a third party, the Commission, for decision. With respect to this dispute the Union has not sought the exercise of any judicial power but rather the exercise of the power of private arbitration.

9. It is further submitted that the Commission is not bound to make the determinations and orders as provided for in the draft determination and order. In any event the Commission may deal with the dispute by making a recommendation or the expression an opinion.” 80 (reference omitted)

[50] In the circumstances, and having regard to the decision of the Full Bench in Kentz v CEPU, it is apparent that the subject matters of Draft Determinations 1, 2, and 3 are capable of being dealt with by the Commission pursuant to the combination of s.739 and the applicable Agreement dispute resolution clauses, even though the employees in question are no longer employed by SJOGHC. In particular, the Commission is authorised to arbitrate “a dispute in relation to a matter arising under the Agreement or the NES” (clause 37(c)). The dispute is about the application of the Agreement to circumstances in which consultation may or may not be required and whether there may be an entitlement to severance payment.

[51] Even so, it is equally apparent that the language of three of the Draft Determinations may well be beyond the power of the Commission, having regard to the authorities referred to above.

[52] Draft Determination 1 seeks a determination by the Commission that SJOGHC “wrongly failed [to] consult”; Draft Determination 3 seeks a determination by the Commission that SJOGHC “wrongly failed [to] pay” a severance payment to certain employees; and Draft Determination 4 seeks a determination by the Commission that “SJOGHC pay” a severance payment to certain employees.

[53] In each case, the Draft Determinations go beyond a discharge of the arbitral function afforded by the Agreement, which is to determine a dispute between the parties about a matter arising under the Agreement or the examining of the operation of the relevant provisions. A determination that SJOCHC was “wrong”, or that it “must make a payment” would be an invitation to the Commission to go well beyond consideration of the proper operation of the disputed provisions of the Agreement. Findings by the Commission about Draft Determinations 1, 3 and 4 against those argued for by SJOGHC would therefore have to consider whether the language sought by the Applicant required modification.

[54] The language of Draft Determination 2 appears consistent with the Commission’s power to determine a dispute by examining the operation of the relevant provisions of the Agreement.

[55] Notwithstanding my concerns about the language of three of the four draft determinations, I will consider each according to the merits of the substance of the issue raised.

[56] I turn to consider each of the Draft Determinations and whether the relevant Agreement provisions have been complied with.

Draft Determinations 1 and 2

[57] Draft Determinations 1 and 2 relate to the contention that SJOGHC had an obligation to consult with the HSU#4 about the sale of its pathology division and the expected impact on employees, but failed to do so. That argument goes to a matter of substance, of whether there actually was consultation within the meaning of the Agreement, as well as a matter of form; of whether the Respondent complied with the Agreement’s mandated procedures about consultation. In particular, the HSU#4 argues;

“9. Clause 33(e) of the Agreement requires SJOGHC not only to notify the HSU#4 that it has made a definite decision to introduce a major change but also to hold discussions with the union.

10. The only notification received by the HSU#4 was an email on 22 June 2016, which at best could only be described as “informal notification”. The usual formal manner in which “a definite decision to introduce a major change is communicated to the union is via an impact statement. This did not occur.” 81

21. In clause 33(j) of the Agreement the phrase “transmission of business” is used by its drafters as opposed to the language used in clause 33(i). It is submitted the only conclusion available is that the drafters of this agreement must mean something different to the situations referred to in Part 2-8 of the FW Act.

22. Relevantly there is no mention of employment being offered by another or new employer in clause 33(j). Further the clause must be read in the context of the fact that SJOGHC operated its business from numerous sites and that the term “transmission of business” must be given meaning in that context. It is submitted that the offer of comparable employment must come from SJOGHC.

23. If it is contended that the offer of employment can come from a new employer (which is not conceded by HSU#4) then although clause 33(j) does not expressly state it there must be an obligation placed upon SJOGHC to have obtained the comparable alternative employment referred to in clause 33(j) for each employee for the clause to have effect. The HSU#4 is not aware of the steps taken by SJOGHC to secure the employment of its redundant employees with ACL.” 87

[81] In contrast, SJOGHC submit that what happened was a transmission of business, 88 and that the HSU#4’s contentions are not consistent with a construction based on the accepted principles of interpretation of industrial instruments;

“The terms 'transmission of business' and 'transfer of business' are commonly used as interchangeable terms by industrial participants. It is acknowledged that the circumstances that will give rise to a 'transfer of business' under the FW Act are broader than the circumstances giving rise to a 'transmission of business' under the WR Act. However, SJGHC contends that the sale of the SJGP business to Clinical Labs would give rise to a transfer of business under the FW Act and a 'transmission of business' under the WR Act. Further, Schedule B of the Agreement (which applies to the relevant employees) defines a 'transmission of business' which would include the sale of SJGP to Clinical Labs.

25 For the reasons outlined above, it follows that the Applicant's contention that the offer of employment referred to in clause 33(j) must come from SJGHC (see paragraph [22] of the Applicant's submissions) is, with respect, nonsensical. It is clear that where there is a 'transmission of business', the offer of employment will come from a new employer, in this case Clinical Labs.

26 The Applicant further contends that if clause 33(j) operates so that the offer of employment can come from a new employer, an obligation must be placed on SJGHC to have 'obtained' the comparable alternative employment (see paragraph [23] of the Applicant's submissions). The Applicant is requesting the FWC to add additional words to clause 330), where no additional words are required for the clause to operate. Clause 33(1) makes reference to a requirement that the employer 'obtain' acceptable alternative employment. It follows that if the parties intended that clause 33(j) of the Agreement would only operate if SJGHC 'obtained' comparable alternative employment, the parties would have specified this, as they did in clause 33(1) of the Agreement.” 89

[82] It is noted that Schedule B of the Agreement, accepted by both parties as applying to the employment and dispute in question provides the following clause;

“6. INCIDENCE OF AWARD

6.4 Transmission of business

6.4.1 Where a business is before or after the date of this award, transmitted from an employer (in this clause called the transmittor) to another employer (in this clause called the transmittee) and an employee who at the time of such transmission was an employee of the transmitter in that business becomes an employee of the transmittee:

6.4.1(a) the continuity of the employment of the employee shall be deemed not to have been broken by reason of such transmission; and

6.4.1(b) the period of employment which the employee has had with the transmittor or any prior transmittor shall be deemed to be service of the employee with the transmittee.

6.4.2 In this clause business includes trade, process, business or occupation and includes any part of any such business and transmission includes transfer, conveyance, assignment or succession whether by agreement or by operation of law and transmitted has a corresponding meaning.”

[83] Within the same Schedule, clause 16.4 provides that the amount of notice of termination for a redundant employee is to take account of service of an employee that continues through a transmission of business; clause 17.1.4 restates the definition of “transmission” in the Schedule’s clause 6.4.1; and clause 17.7.1 provides another definition of “transmission of business” within the context of a clause dealing specifically with redundancy. Schedule B, clause 17.7.1 is in these terms;

“17.7 Transmission of business

17.7.1 The provisions of this clause are not applicable where a business is before or after the date of this award, transmitted from an employer (in this subclause called the transmittor) to another employer (in this subclause called the transmittee), in any of the following circumstances:

17.7.1(a) Where the employee accepts employment with the transmittee which recognises the period of continuous service which the employee had with the transmittor and any prior transmitter to be continuous service of the employee with the transmittee; or

17.7.1(b) Where the employee rejects an offer of employment with the transmittee:

• in which the terms and conditions are substantially similar and no less favourable, considered on an overall basis, than the terms and conditions applicable to the employee at the time of ceasing employment with the transmittor; and

• which recognises the period of continuous service which the employee had with the transmittor and any prior transmittor to be continuous service of the employee with the transmittee.”

[84] It is also noted that the term “transfer of business” is used only once in the Agreement, in clause 12 of the main body of the Agreement, as follows;

“12. SALARY PACKAGING

(a) The Employer has Concessional Tax Status ("CTS") for Fringe Benefits Tax purposes and as a result is able to offer salary packaging to its Caregivers.

(b) Where the Employer or the new Employer, through a transfer of business, do not enjoy CTS with the Australian Taxation Office (ATO), the Employer or the Employer as described above will not be obliged to salary package and may at any time cease the salary packaging arrangements with the Caregiver.

[remainder of clause omitted, subclauses (c) to (i)]”

[85] While the word “transferred” is used many times in the agreement, its main use appears to be in the sense of a person whose job has been transferred within the same employer, either from one site to another, or one job to another. With one exception, the word is used only once in the context of a change of employer, and that is in clause 33(i), set out above. The exception referred to is in Schedule C, which applies to work formerly covered by the Health and Allied Services - Private Sector - Victoria Consolidated Award 1998, with clause 34.2.5, dealing with the accumulation of personal leave and providing a limit on accumulation of leave “where the business of an employer is transferred on or after 2 September 1980 to a successor(s) and an employee of the employer becomes an employee of the successor(s)”.

[86] There is nothing within the evidence that would lead to the view that the use of the term “transmission of business” within clause 33(j) is to be given something other than its ordinary meaning, or a meaning different to the definition of the term in two places within Schedule B. Accordingly, I do not find the term in clause 33(j) to be ambiguous. Instead, I find that the phrase “transmission of business” has the meaning set out in Schedule B, clause 17.1.4, and relevantly “[t]ransmission includes transfer, conveyance, assignment or succession whether by agreement or by operation of law and transmitted has a corresponding meaning”.

Failure to pay a severance payment

[87] Draft Determination 3 alleges that SJOGHC failed to pay medical scientists and laboratory technicians within its employment the severance payments it says are required by clause 33(g) of the Agreement. While that is the language of draft Determination 3, it is apparent from the way that the matter has been dealt with before the Commission, including the HSU#4’s submissions and the evidence of Mr Elliott, that, further to the contention within the draft itself, that the proposition employees might be entitled to severance pay rests upon a broader foundation than clause 33(g). In particular, the claim is founded upon the propositions that;

there is agreement between the parties that the employees concerned were terminated on the ground of redundancy (which is the threshold requirement within clause 33 (g)); 90

clause 33(j) has no application to the circumstances, with that clause providing that redundancy payments are not payable in the event of a transmission of business “where comparable alternative employment is offered and accepted”, since what has transpired is not “comparable alternative employment”; 91

in any event there has not been a transmission of business; 92

clause 33(j) makes no mention of comparable alternative employment being offered by another or new employer, implying that the exclusion must operate with effect to transmissions of business between SJOGHC sites, leading to the conclusion that the offer of comparable employment must come from SJOGHC; 93

in the event that clause 33(j) does have application to employment offered by another or new employer, then SJOGHC must be seen to have an obligation to have obtained the comparable alternative employment. 94

[88] The matter of whether there was a transmission of business has been dealt with above, with the finding made there was a transmission of business.

[89] The argument is developed that SJOGHC’s obligations to secure ongoing employment for its employees in order to avoid the need for severance pay include that “although clause 33(j) does not expressly state it there must be an obligation placed upon SJOGHC to have obtained the comparable alternative employment referred to in clause 33(j) for each employee for the clause to have effect”. 95 Its submissions in this regard developed the proposition that authority from an Australian Industrial Relations Commission decision on the meaning of the word “obtains” would lead to use of the dictionary meaning of the term as a verb being “to procure or gain as a result of purpose and effort” flowing to an expectation that;

“… the employer by purpose and effort may establish an opportunity which suits the employee and which crystallises as an alternative employment of an acceptable kind …

The intention is not to impose an absolute test on the employer’s ability to “obtain” alternative employment but rather it refers to an action which causes acceptable alternative employment to become available to the redundant employee. The employer must be a strong moving force towards the creation of the available opportunity.” 96

[90] In relation to the proposition of whether or not the Respondent was a “strong moving force” in relation to offers of employment from Clinical Labs, the following evidence is relevant, but by no means the only evidence available on the subject;

Meetings of staff were held on 22 June 2016 in various centres including Geelong and Ballarat at which company managers spoke to the company’s decision using prepared speaking notes. Those speaking notes included these statements about ongoing employment; 97

“• Importantly the sale to Clinical Labs includes the offer of employment to virtually all of our caregivers.”

“• When the sale is finalised our caregivers, laboratories, collections centres and assets will transfer to Clinical Labs.”

“• Clinical Labs will offer virtually all our people jobs and future career opportunities.

• Caregivers offered employment with Clinical Labs must be offered comparable terms and conditions to those they have at present.

• You can expect to receive offers of employment from Clinical Labs within the next few weeks.

• As Clinical Labs is offering employment opportunities in line with your current contract of employment, we would urge you to accept the offer.”

On the same day, Michael Hogan the Chief Executive Officer of St John of God pathology, circulated a memorandum to all employees which included this statement about employment;

“Nearly all of our caregivers will be automatically offered jobs with Clinical Labs, as a condition of the sale agreement and under the same terms and conditions that you currently experience. These offers of employment will be forwarded to you by Clinical Labs over the coming weeks.” 98

Also on 22 June 2016 the first edition of the FAQ document was circulated to staff, which reiterated the proposition that there would be ongoing employment by Clinical Labs for “virtually all” employees; advised that between the date of the FAQ and the transfer of ownership there would be regular communications and information provided on the subject of the sale and that; 99

“You will be offered comparable employment with Clinical Labs and your position and pay will remain unchanged. Your service with SJGHC will be recognised as continuous by Clinical Labs after the transfer of ownership.”

“If you accept the offer of employment, you will become an employee of Clinical Labs and will continue to work your current role or a substantially similar position.”

“After the transfer of ownership to Clinical Labs, all transferring employees will perform comparable jobs with Clinical Labs to what they are currently performing with SJGHC.”

The commentary within the initial FAQ document was restated in the further editions of the document.

[91] Because of the foregoing, after applying the test advocated by the HSU#4 that “[t]he employer must be a strong moving force towards the creation of the available opportunity”, the finding can be made that SJOGHC obtained the ongoing employment with Clinical Labs of the affected employees.

[92] As to the proposition that the employment so obtained was not “comparable alternative employment”, the HSU#4 submits that there must be an objective assessment;

“The Commission and its predecessor tribunals have considered that the concept of acceptable alternative employment must be assessed in reference to objective factors. The objective factors that the Commission may take into account include:

(a) the nature of the work to be performed in the alternative employment;

(b) the pay to be received by the employee in the alternative employment;

(d) the hours to be worked by the employee in the alternative employment;

(e) the duties to be performed by the employee in the alternative employment;

(f) the location of the alternative employment.” 100 (references omitted)

[93] Mr Elliott’s evidence on the subject includes, after an analysis of offers of employment made to his members and compared with the conditions of employment he understands them to have been previously working under, the opinion that the offers of employment made by Clinical Labs are not comparable in at least seven key respects; 101

salary packaging – for the reason that Clinical Labs does not have the necessary concessional tax status employees will not have access to favourable salary packaging arrangements they had with SJOGHC;

“Loss of staff benefits such as car parking, discounted private health insurance cover and access to other hospital services, particularly for staff in the Ballarat laboratory”;

his belief that job security of his members will be detrimentally affected. In that regard he relates that Clinical Labs “has said it will axe up to 200 jobs”;

“This position was confirmed by Melinda McGrath, CEO of ACL Pathology at a meeting held on 15 July 2016 that I attended with the other Victorian branches of the HSU. Ms McGrath refused a request made at this meeting by me to agree to a ‘moratorium’ period of 12 months during which ACL would guarantee no forced redundancies.”

there would be increased workloads as a result of job losses;

whereas SJOGHC employment contracts did not include a permanent relocation provision, he understood that the Clinical Labs contract of employment permitted permanent relocation of employees;

part-time employees would not have their contract hours guaranteed by Clinical Labs with his members being concerned that their part-time contract hours may be reduced;

part-time employees may be required to change from a fixed roster to a rotating roster arrangement.

[94] The HSU#4 also submits that its members felt forced into having to accept the offers of employment that were made because of the way that the SJOGHC FAQ’s on the subject of acceptance of the offer and its connection with a redundancy payment was phrased. 102

[95] In considering whether or not employment is acceptable alternative employment the test is to be applied objectively 103 and not subjectively from the perspective of the employer and employees.104 Even so, in undertaking this objective test identical employment need not be found and comparability does not rest on there being no detriment to an employee;

“I accept the proposition advanced by Feltex Australia that acceptable alternative employment is not necessarily identical employment and that the AIRC has previously found alternative employment to be acceptable notwithstanding inconvenience to employees and some detrimental alteration to the terms and conditions of employment.” 105

[96] In the matter of Clothing & Allied Trades Union of Australia v Hot Tuna Pty Ltd, the Full Bench considered the broad range of factors required to be taken into account in relation to a clause that allowed exemption from the payment of redundancy benefits if acceptable alternative employment was found;

“We do not propose to repeat here the thoroughly detailed argument presented by counsel for the union. A considerable part of that case was devoted to questions of onus, and to supporting the proposition that the test of acceptability of the alternative employment is an objective one involving a consideration of such matters as pay levels, hours of work, seniority, fringe benefits, workload and speed, job security and other matters. It was argued that the failure of the employer to adduce evidence of such matters caused the company to fail to make out a case for an exemption. We have no doubt that there is an onus on the employer invoking cl 51(c) and that matters of the kind referred to by the union may be relevant in assessing the position in a particular case. We do not believe it to be necessary to make that examination in every case..” 106

[97] The terminology of “acceptable alternative employment” referred in these previous cases is different to that employed by clause 33(j) which excludes redundancy payments where “comparable alternative employment” is offered and accepted in the event of a transmission of employment.

[98] There is little guidance within the parties’ submissions or evidence on the potential difference in terminology between “acceptable alternative employment” and “comparable alternative employment”. The Applicant’s submissions combine a consideration of the Commission’s precedents on the subject of “acceptable alternative employment” with the broader submission that the Respondent “is unable to discharge its onus to show that the employment offered by ACL is in fact comparable to the terms and conditions of employment presently enjoyed by its employees”. 107 The SJOGHC submissions also combine the use of the terms: for example, beneath a heading “Comparable alternative employment”, its submissions then set out principles which can be distilled from certain cases in determining the meaning of the term; “whether the alternative employment is comparable is a matter to be determined on an objective basis”; “the alternative employment must meet the relevant standard”; “the alternative employment must bear a sufficient comparability to the original work”; and “the employer bears the onus of establishing that alternative employment is comparable”.108

[99] The parties themselves appear to consider the terms to have at least a similar function.

[100] The Commission’s authorities in relation to whether alternative employment is acceptable require an objective analysis of the positions in question. As referred to above, the HSU#4 set out seven objections to the employment offered by Clinical Labs. Taking into account the evidence before the Commission about the employment in question with SJOGHC and the offers of employment made by Clinical Labs, the following findings are available about the alternative employment;

Salary packaging

SJOGHC submits that it is inaccurate to say that the salary sacrifice arrangements are a term and condition of employment; instead those arrangements are tax benefits determined by the ATO. 109 The Respondent also points to clause 12(b) of the Agreement which provides that a new employer receiving employees through a transfer of business which does not enjoy confessional tax status is not obliged to continue with the salary packaging arrangements. The prevalence of salary sacrifice arrangements is not within the evidence before the Commission, however it is likely it is widespread and that the benefits for some are significant.

While it was argued that the absence of salary sacrifice arrangements as well as some other non-monetary benefits would have a detrimental effect on employees, the fact that the benefit stems from favourable taxation arrangements subject to Government and ATO policy means that they must have always been regarded as having some element of being at risk of change because of decisions external to the employment relationship.

The crystallisation of the risk at the time of the employment transfer is noted as one with a detrimental effect, however it does not rise to being so significant that the employment is no longer comparable or acceptable.

Other benefits

It can be accepted that the potential loss of staff benefits such as car parking, discounted private health insurance cover and access to discounted hospital services is a change to the overall package of employment enjoyed by employees and that in some respects, but not all, there may be a detriment to employees. While that is so, it is also noted that there were questions raised about those matters by the HSU#4 on behalf of employees to SJOGHC with Mr Pini, who responded in some detail on 16 August 2016 about measures being taken by the Respondent to better deal with the complaints that had been raised. Some of those matters lead to arrangements being put in place that would offset the effect of change that occurred. 110

It is to be firstly noted about these matters that there was some movement in favour of employees in the course of consultation; secondly, it is to be noted that while the matters overall have importance to some employees, they are largely incidental to the overall employment relationship. The fact there is some change, even detriment, does not displace the overall comparability of the alternative employment.

Change in job security/increased workloads as a result of job losses

It may also be accepted that there is a perception of change to the overall scheme of employment for the affected employees in relation to job security and perhaps workload, since Clinical Labs, on the evidence before the Commission, expects to reduce its overall staffing.

However that, in itself, does not lead to a finding that these matters will amount to a change in such a way that the alternative employment is no longer “comparable alternative employment”. There is no evidence before the Commission about the impacts on job security or workload scenarios that may have come about had the St John of God Pathology division not been sold.

Objectively a finding is unable to be made that because the workplace in the future may be featured by job shedding or increases to workload that the offers of employment made and accepted ceased to be comparable alternative employment.

Possible permanent relocation of employees

It has been put forward by the HSU#4 that this is a change of some kind in respect of the terms and conditions of the transferring employees about the location of their employment.

However, there is little evidence before the Commission about the extent to which this could be considered to be a real or impending change likely to affect more than a handful employees. The absence of such evidence leads to the conclusion that, while there may be a change in the overall scheme of employment, it is a change which, if real, is likely to be at the margin. That is, there may well be employees required to change locations, but then again, there might not be such requirements.

While it was Mr Elliott’s evidence that the current contracts of employment do not provide for required changes in location, and the new ones do, there is insufficient evidence before the Commission on the subject to form a view that such potential is anything more than hypothetical. While the HSU#4 argues that an unknown number of employees may be required at some point in the future to change the location of their employment, there is no evidence that this is in any way an impending likelihood, or that the likelihood is of a significant level.

Further is noted that, in defining those matters which have a “significant effect” and are thereby to be the subject of consultation, clause 33(b) provides that one of the matters defined as an action with a “significant effect” is one where “the Caregiver is to be required to transfer to another job or work location”. The Agreement itself countenances required relocations.

Part-time employment

The concern was expressed by the HSU#4 that part-time employees transferring to Clinical Labs, would not have their contracted hours guaranteed, with a particular concern being that their minimum weekly hours may be reduced. Further there is a concern that part-time employees may be required to change from a fixed roster to variable rostering arrangements.

While this potential may come about, there is little more than speculation on the subject before the Commission at this time. Ultimately the protection that may be relied upon by part-time employees will be the terms of the relevant industrial instrument that covers their employment with Clinical Labs. Since the agreement referred to within the Clinical Labs offer of employment is not before the Commission, it is not possible to be definitive about whether a change in instrument at the time of the transfer of employment would bring about the concern expressed by the HSU#4.

On that basis, it is accepted that this may be, but is not necessarily, a change with some detriment to some employees.

[101] The foregoing analysis indicates that potential differences arise between the employment with SJOGHC and Clinical Labs in respect of some of the concerns held by the union, however, even cumulatively, those matters do not displace the proposition that the alternative employment is comparable. The weight of the evidence before the Commission is that, even though the alternative employment is not identical, it has features of broad and sufficient comparison with the former employment with SJOGHC. In particular the evidence would lead to a finding that the nature of the work to be performed; the payments received by them; the skills to be utilised by them; the generality of the hours to be worked and the duties they would perform are broadly comparable.

[102] Therefore, overall in relation to Draft Determination 3, while there has been a transmission of business, it is also found that comparable alternative employment has been offered and accepted.

[103] It follows that there was no obligation on SJOGHC to pay severance payments under the redundancy clause, which in turn determines Draft Determination 3.

[104] It follows there is no such necessity to determine Draft Determination 4.

CONCLUSION

[105] As a result of the foregoing findings;

the subject matter, but not the language, of Draft Determination 1 going to the question of whether SJOGHC consulted in the manner required by the Agreement is within the jurisdiction of the Commission to determine, and is determined in the negative;

Draft Determination 2, going to the question of the time frame for consultation, is within the jurisdiction of the Commission to determine, and is determined in the negative;

the subject matter, but not the language, of Draft Determination 3 going to the question of whether employees were entitled to severance payments is within the jurisdiction of the Commission to determine, and is determined in the negative; and

it is unnecessary to determine Draft Determination 4.

[106] Accordingly, the HSU#4’s application is dismissed.

COMMISSIONER

Appearances:

Ms S Bingham, of counsel, for the HSU#4.

Mr J Tuck, Corrs Chambers Westgarth solicitors, for the Respondent.

Hearing details:

2017.

Melbourne:

March 6, 7.

Final written submissions:

Applicant: 31 March 2017.

Respondent: 17 March 2017.

Attachment 1

Attachment 2

1 AE418287.

2 AE418287 cl 7(a).

3 AP833755.

4 [2016] FWCA 1757.

5 AE418287 cl 37(a), 37(c).

6 AE418287 Schedule B, cl 10.1.2(f).

7 Exhibit A1, Outline of Submissions of the Applicant, [5].

8 CFMEU v St John of God Health Care Inc; CEPU; AMWU[2014] FWCFB 4011 [27].

9 Exhibit A2, Applicant’s Draft Determination and Order, [1](e) as amended in hearing, 6 March 2017.

10 Further Submission of the Respondent: Powers of the Commission, 17 March 2017 [14], [19]–[21].

11 Exhibit R1, Witness Statement of Robert Pini, [16]

12 Ibid.

13 Exhibit A3, Witness Statement of Paul Elliott, [4].

14 Ibid [5].

15 Exhibit R1 Attachment RP-1.

16 Exhibit A3 [9].

17 Exhibit R1 [28].

18 Ibid [29], Attachment RP-10.

19 Exhibit A3 [14].

20 Ibid [16].

21 Exhibit R1 [32].

22 Exhibit A3 Attachment PE-7.

23 Exhibit R1 [36], Attachment RP-12.

24 Exhibit A3 [14].

25 Ibid Attachment PE-7.

26 Ibid [18], Attachment PE-7.

27 Ibid [20], Attachment PE-8.

28 Ibid Attachment PE-11.

29 Exhibit R1 [47]; Exhibit A3 Attachment PE-9.

30 Exhibit A3 [25].

31 Exhibit R1 [48]–[49].

32 Ibid [50].

33 Ibid [51].

34 Ibid [52].

35 Ibid [53].

36 Ibid [54], Attachment RP-25.

37 Ibid [22].

38 Ibid Attachment RP-5.

39 Ibid Attachment RP-9.

40 AE418287 Schedule B, cl 10.1.1, cl 10.1.2(f).

41 Construction, Forestry, Mining and Energy Union v The Australian Industrial Relations Commission [2001] HCA 16; (2001) 203 CLR 645 [30]–[32]; cited in Endeavour Energy v Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia [2016] FCAFC 82 at [25].

42 Construction, Forestry, Mining and Energy Union v Wagstaff Piling Pty Ltd [2012] FCAFC 87 [21], cited in Kentz (Australia) Pty Ltd v Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia[2016] FWCFB 2019 [52].

43 [2016] FWC 2959.

44 CEPU v Thiess Pty Ltd (2011) 212 IR 327 at [42], [47]; CFMEU v AIRC [2001] HCA 16.

45 SDA v Big W Discount Department Stores PR924554 at [23].

46 AMWU v Holden Limited PR940366 at [47]; MUA v ASP Shipping Management Pty Ltd[2015] FWC 4523 at [23].

47 Ibid.

48 MUA v ASP Shipping Management Pty Ltd[2015] FWC 4523 at [19], [23]; R v Bain; Ex parte Cadbury Schweppes Australia Ltd (1984) 159 163 at 168; United Firefighters’ Union v Metropolitan Fire and Emergency Services Board PR973884.

49 MUA v Australian Plant Services Pty Ltd PR908236; MUA v ASP Shipping Management Pty Ltd[2015] FWC 4523 at [21]-[22].

50 United Firefighters’ Union v Metropolitan Fire and Emergency Services Board PR973884 at [20].

51 The Commission must not make a decision that is inconsistent with the FW Act, or a fair work instrument that applies to the parties.

52 MUA v Australian Plant Services Pty Ltd PR908236 at [63]; Seven Network (Operations) Ltd v CPSU (2003) 122 IR 97 at [31]-[32].

53 CFMEU v AIRC (2001) 203 CLR 645 at [30]-[31]; Linfox Australia Pty Ltd v TWU [2013] FCA 659 at [19]-[24]; AMWU v ALS Industrial Australia Pty Ltd [2015] FCAFC 123 at [34]-[36].

54 CFMEU v AIRC (2001) 203 CLR 645 at [32]; Linfox Australia Pty Ltd v TWU [2013] FCA 659 at [19]-[24]; AMWU v ALS Industrial Australia Pty Ltd [2015] FCAFC 123 at [34]-[36].

55 AMWU v ALS Industrial Australia Pty Ltd [2015] FCAFC 123 at [36].

56 Fair Work Act 2009 (Cth) s 739(3).

57 Fair Work Act 2009 (Cth) s 739(5).

58 [2016] FCAFC 82.

59 Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union v ALS Industrial Australia Pty Ltd (2015) 235 FCR 305 [85].

60 [2014] FWCFB 7447.

61 Acts Interpretation Act 1901 (Cth).

62 Further Submissions of the Respondent: Powers of the Commission [7].

63 Ibid [18].

64 Ibid [19]–[20].

65 [2013] FWCFB 4250.

66 Ibid [1], [4].

67 Ibid [7].

68 Ibid [9]-[13].

69 (2001) 203 CLR 645.

70 Metropolitan Fire and Emergency Services Board v United Firefighters’ Union of Australia; Garth Duggan[2016] FWCFB 8120 [60]-[61].

71 [2015] FWCFB 946.

72 Ibid [11]-[12].

73 Ibid [21].

74 [2016] FWCFB 2019.

75 Ibid [29]-[30].

76 Ibid [59].

77 Ibid [66].

78 Ibid [69]–[70].

79 Ibid [71]-[74].

80 Applicant’s Submission in Reply to the Respondent’s Submission Dated 17 March 2017, 31 March 2017, [8]-[9].

81 Exhibit A1 [9]-[10].

82 Exhibit A3 [9]-[11].

83 Ibid Attachment PE-4.

84 Exhibit A1 [13]-[14].

85 Exhibit A3 [26].

86 [2010] FCA 591, (2010) 198 IR 382 [57]–[58].

87 Exhibit A1 [20]-[23].

88 Exhibit R2 [23].

89 Ibid [24]-[26].

90 Exhibit A1 [16].

91 Ibid [27]; Exhibit A3 [29]–[32].

92 Exhibit A1 [5(c)].

93 Ibid [22].

94 Ibid [23].

95 Ibid [23].

96 Ibid [24], with reference to Clothing Trades Award 1992; Re: Derole Nominees Pty Ltd [1990] 140 IR 123.

97 Exhibit R1 Attachment RP-3.

98 Ibid Attachment RP-4.

99 Ibid Attachment RP-5.

100 Exhibit A1 [26].

101 Exhibit A3 [32].

102 Ibid [33]–[35].

103 Clothing Trades Award 1992; Re: Derole Nominees Pty Ltd [1990] 140 IR 123, p.128; see also Clothing and Allied Trades Union of Australia v Hot Tuna Pty Ltd (1998) 27 IR 226, pp.230 – 231.

104 Feltex Australia Pty Ltd v Textile, Clothing and Footwear Union of Australia (2006) 158 IR 428, [89]

105 Ibid.

106 (1998) 27 IR 226, pp.230 – 231.

107 Exhibit A1 [28].

108 Exhibit R2 [29].

109 Ibid [35].

110 Exhibit R1 [56].

Printed by authority of the Commonwealth Government Printer

Health Services Union v St John of God Health Care

[2017] FWC 2981

9 JUNE 2017

DECISION

LEGISLATION

RELEVANT AGREEMENT TERMS AND DRAFT DETERMINATION AND ORDER

RELEVANT FACTUAL BACKGROUND

CONSIDERATION

CONCLUSION