Mr Gareth Lloyd v Australia Western Railroad Pty Ltd T/A ARG an Aurizon Company
[2017] FWCFB 143
•9 JANUARY 2017
[2017] FWCFB 143
The attached document replaces the document previously issued with the above code on 9 January 2017.
Endnote 3 was omitted and is now included.
Associate to Vice President Catanzariti
Dated 10 January 2017
| [2017] FWCFB 143 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.604 - Appeal of decisions
v
Australia Western Railroad Pty Ltd T/A ARG an Aurizon Company
(C2016/5229)
VICE PRESIDENT CATANZARITI | SYDNEY, 9 JANUARY 2017 |
Appeal against decision [2016] FWC 5568 of Commissioner Williams at Perth on 12 August 2016 in matter number C2015/6557.
[1] On 12 August 2016, Commissioner Williams issued a Decision 1 (“the Decision”) in a dispute between Mr Gareth Lloyd (“the Appellant”) and Australian Western Railroad Pty Ltd T/A ARG an Aurizon Company (“the Respondent”) concerning clause 14.1.3 of the Aurizon (Western Australia) Rail Operations Enterprise Agreement 2014 (“the Agreement”). Clause 45 of the Agreement, under conditions that had been met, empowered the Commission to determine disputes about matters arising under the Agreement or the National Employment Standards.
[2] The Appellant was subject to disciplinary action and had been suspended from duty without pay by the Respondent, which had sought to utilise clause 14.1.3 of the Agreement. Clause 14 provides as follows:
“14. DISCIPLINARY MATTERS
14.1 Disciplinary measures that Aurizon may take against an employee include:
14.1.1 a caution or reprimand;
14.1.2 a temporary reduction in position, classification and pay for a period of up to six months;
14.1.3 suspension from duty without pay for a period of up to two weeks;
14.1.4 dismissal with or without notice as applicable.
14.2 Pending the outcome of the disciplinary process employees may be:
14.2.1 withdrawn from the operating roster on guaranteed hours. (Where the employee is subsequently exonerated, the employee will be paid for the rostered hours including, where applicable the allowances at subclauses 27.1, Driver Only Operations Allowance and 27.11, Distributed Power Allowance); or,
14.2.2 placed on alternative duties; or,
14.2.3 re-assessed and returned to normal duties as suitable.
14.3 Any investigation of a matter or incident by Aurizon for the purpose of determining whether or not disciplinary action should be taken must adhere to the principles of natural justice. These principles include:
14.3.1 the employee being made fully aware of the allegations and/or matters that are the subject of an investigation;
14.3.2 the employee being provided with relevant information to enable the provision of an informed response;
14.3.3 the employee being entitled to have a representative of their choice if so requested, present as a witness and to provide support and guidance where necessary at any meetings/interviews.
14.3.4 the employee being given adequate time to prepare a response to any allegations and/or matters which are the subject of the investigation;
14.3.5 the employee being given a reasonable opportunity to put his/her case to those conducting the investigation and those who will make any findings and/or determine the disciplinary measures (if any) to be taken;
14.4 To the extent practicable disciplinary inquiries and investigations will be kept confidential.”
[3] The Appellant disputed the nature and extent of the disciplinary action and sought that the Commission remove or modify the disciplinary sanction.
[4] The Commissioner found that pursuant to clause 14.1.3 of the Agreement, the Respondent could suspend the Appellant from duty without pay for a period of up to two weeks. In this regard, the Commissioner found that section 739(5) of the Fair Work Act 2009 (Cth) (“the Act”) expressly prohibits the Commission from making a decision that is inconsistent with the Agreement. As such, the Commissioner was satisfied that clause 14.1.3 ousted the jurisdiction of the Commission to reverse or otherwise alter the disciplinary action taken by the Respondent against the Appellant and made an Order to that effect on 12 August 2016. 2
[5] On 1 September 2016, the Appellant lodged a Notice of Appeal . We heard the appeal on 16 November 2016 and informed the parties that we would provide our decision and reasons in due course. Our decision and reasons are provided below.
[6] At the hearing on 16 November 2016, Mr M. Ritter of Senior Counsel sought permission to appear for the Appellant and Mr D. Johnston of Counsel sought permission to appear for the Respondent. Given the complexity of the matter, and having regard to section 596 of the Act, permission was granted to both parties to be represented.
The Decision
[7] The Commissioner outlined that it was an agreed fact that the Appellant, a Locomotive Driver, passed a signal at red (“the incident”). As a result of the incident, the Respondent, pursuant to clause 14.1.3 of the Agreement, imposed a disciplinary measure of seven days suspension from duty without pay against the Appellant. As such, the Commissioner found that the dispute between the Appellant and the Respondent could be properly characterised as whether the disciplinary measure of a one week unpaid suspension imposed on the Appellant by the Respondent under clause 14.1.3 of the Agreement should stand or be reversed.
[8] The Commissioner found that, pursuant to section 739(4) of the Act and clause 45 of the Agreement, the parties agreed that the Commission may generally arbitrate matters that arise under the Agreement. However, the Commissioner highlighted that, pursuant to section 739(5) of the Act, the Commission must not make a decision that is inconsistent with the Act, or a fair work instrument that applies to the parties. Relevantly, the Commissioner noted that section 12 of the Act provides that a “fair work instrument” means, amongst other things, an enterprise agreement such as that between the Appellant and the Respondent.
[9] The Commissioner found that any determination that would reverse or alter the disciplinary action taken by the Respondent would be inconsistent with the right provided to the Respondent under the Agreement. He further found that this would mean that any such determination would be inconsistent with the Agreement and as a result, section 739(5) of the Act ousted the jurisdiction of the Commission to deal with the application. .
[10] To the degree that the Appellant was seeking to interfere with what might be considered to be “management prerogative”, the Commissioner discussed the principles outlined in Australian Federated Union of Locomotive Enginemen and State Rail Authority of New South Wales 3 (the XPT case), and found:
“[107] Clearly this is not a case of managerial prerogative at large having been exercised which is now being challenged by the applicant. Rather in this instance there is an express right the employer has under the Agreement which it has chosen to exercise and the applicant now asks the Commission to override this. Consequently this is not a case where the answer to Aurizon’s jurisdictional objection is that the Commission must simply apply the general principles on tribunals reviewing management decisions as enunciated in the XPT case to which the Union referred.”
The Appeal
[11] The Appellant submitted two grounds of appeal which the Respondent disputed.
Appellant’s Submissions
[12] The Appellant contended that permission to appeal should be granted on the basis that the appeal raises questions of general importance concerning the construction of section 739(5) of the Act and the application of the principles in the XPT case.
[13] Two major issues are raised by the Appellant’s appeal. Firstly, the Appellant contended that the Commissioner’s construction and application of section 739(5) of the Act was erroneous. Namely, the Appellant asserted that section 739(5) did not oust the Commission’s jurisdiction to deal with disputes. Rather, the section only provided a limit on the decisions the Commission may make in arbitrating a dispute. The Appellant posited that the correct construction of section 739(5) of the Act was outlined in Endeavour Energy v Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (“Endeavour Energy”), 4 where the Full Court said:
“Section 739(5) does not alter the character of the arbitration which the Commission undertakes under an enterprise 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.”
[14] The Appellant relied upon clause 45.5.2 of the Agreement, which expressly permitted the Commission to arbitrate the dispute, and the terms of section 739(4) of the Act, which authorised the Commission to arbitrate the dispute in accordance with the Agreement. On that basis, the Appellant contended that a binding determination on the dispute was not inconsistent with the terms of the Agreement. The Appellant posited that the Commissioner erred in deciding that the Commission had “no power” to arbitrate the dispute. 5 Further, the Appellant asserted that the approach in Australian Rail, Tram and Bus Industry Union v NSW Trains (“NSW Trains”)6 was correct. In NSW Trains, the Commission arbitrated a dispute about a disciplinary penalty and decided that the penalty imposed upon two employees by their employer should not have been imposed and ordered that a different penalty ought to apply. In support of its contention that the Commission has the requisite jurisdiction to deal with this dispute, the Appellant contended that several other decisions of the Commission have taken a similar approach.7
[15] In terms of s.739(4) of the Act, the Appellant contended that the provision was intended to prevent a “back-door” method of varying, in this case, an enterprise agreement. Further, the Agreement had to be construed as a whole and the dispute resolution procedure giving power to the Commission to arbitrate disputes, formed part of the Agreement itself. Finally, the Appellant contended that a narrow approach to the construction of the Agreement would not be consistent with the objects of the Act or the proper construction of enterprise agreements.
[16] The Appellant noted that the Commissioner had found that the dispute was not a case of managerial prerogative at large and that the principle enunciated in the XPT Case was not applicable. In that regard, the Appellant contended that the principle in the XPT Case was not limited to cases of managerial prerogative in the manner found. 8 The Appellant relied on Police Federation of Australia v Victoria Police/Chief Commissioner of Police,9 whereby Smith DP said:
“It is settled that this Commission, and its predecessors, did not and does not intervene in the prerogative of management to run and organise a business in the way it considers the most efficient manner.
This prerogative is subject to it not being exercised in a manner which can be regarded as harsh, unjust or unreasonable [see XPT Case] … The general proposition is that the employer has the right to manage the business subject to that prerogative not being exercised unjustly or unreasonably.”
[17] On this basis, the Appellant contended that, consistent with the XPT Case, managerial prerogative that is exercised unjustly or unreasonably is subject to review by the Commission in appropriate cases. Further, the Appellant submitted that whilst the XPT Case was not cited in NSW Trains, the disposition of the matter by the Commission was consistent with the XPT Case in that the Commission decided whether the imposition of the penalties was reasonable in all the circumstances.
[18] In light of the above submissions, the Appellant asserted that permission to appeal and the appeal ought to be granted. The Appellant submitted that the Commissioner’s order ought to be set aside and that C2016/6557 be remitted to a Member of the Commission.
Respondent’s Submissions
[19] The Respondent submitted that permission to appeal should not be granted and the appeal should not be upheld on any of the grounds advanced by the Appellant.
[20] The Respondent observed that if the Commission was unable to resolve the dispute through non-determinative means, the Agreement then provided that “the Commission may then arbitrate the dispute”. 10 On this basis, the Respondent asserted that neither the Agreement, nor the Act, compelled the Commission to arbitrate the dispute in this matter. Further, the Respondent posited that section 739(5) provides that whilst the Commission may arbitrate a dispute pursuant to section 739(4) of the Act, the Commission must not make a decision that is inconsistent with Act, or as in this case, a fair work instrument that applies to the parties. In this regard, the Respondent contended that if the decision of the Respondent to impose the penalty on the Appellant were to be reversed, such a decision would be inconsistent with the Agreement by denying the Respondent the right, in its discretion, to impose a disciplinary measure expressly contemplated under the Agreement. As such, the Respondent posited that the relief sought by the Appellant, if granted by the Commission, would deprive the Respondent of its rights under the Agreement and accordingly would be inconsistent with an express term of the Agreement in this matter.
[21] The Respondent also contended that clause 14 of the Agreement provided the right to suspend an employee when certain prerequisites had been met, and these were not in dispute in this matter. In addition, it submitted that it was not appropriate for a decision of the Commission under s.739 of the Act to rewrite the terms of the instrument or remove existing rights and obligations.
[22] The Respondent further contended that there is a distinction between the concept of “managerial prerogative” in the XPT Case and in Construction, Forestry, Mining and Energy Union v HWE Mining Pty Ltd.. 11 (HWE Mining). In the XPT Case, the Respondent noted that the Full Bench stated:
“It seems to us that the proper test to be applied and which has been applied for many years by the Commission is for the Commission to examine all the facts and not to interfere with the right of an employer to manage his own business unless he is seeking from the employees something which is unjust or unreasonable.” 12
[23] The Respondent noted that in HWE Mining, Vice President Lawler observed:
“However, managerial prerogative in relation to employees (including the employer’s right to make and vary policies that employees are required to observe) is subject to legal constraints. It may be constrained by statute or the terms of an award. It may also be constrained by the terms of a contract of employment or a statutory agreement that the employer chooses to make.” 13
[24] The Respondent contends that the Appellant, in his application, was seeking for the Commission to interfere with the right given to the Respondent to make a decision in relation to a disciplinary measure within the constraints provided by the Agreement. Consequently, the Respondent contended that the Commissioner drew a valid distinction between the wide managerial prerogative addressed in the XPT Case and HWE Mining and the exercise by the Respondent of a limited discretion granted to it under the Agreement.
[25] Further, in relation to the Appellant’s submission that the decision of the Commission at first instance was inconsistent with other first instance decisions of the Commission, the Respondent contends that each of the decisions the Appellant relied upon can be distinguished from that in the present matter. Regarding Transport Workers’ Union of Australia v TNT Australia Pty Ltd, 14 the Appellant contends that the enterprise agreement in that case contained no provisions relating to disciplinary matters. On that basis, the Respondent posited that the Commission was being asked to deal with a dispute concerning the exercise of a wide managerial prerogative to discipline employees and, therefore, the application of the XPT Case was appropriate. In particular, the Respondent highlighted that Deputy President Sams stated “there is no jurisdictional challenge to the Commission’s powers in determining this dispute by arbitration.”15 Similarly in Construction, Forestry, Mining and Energy Union v MSS Strategic Medical Pty Ltd; MSS Security Pty Ltd,16 the Respondent asserts that the relevant enterprise agreement did not contain any clause relating to disciplinary matters. Moreover, the Respondent contended that NSW Trains could also be distinguished. The Respondent highlighted that the Dispute Settlement Procedure in the NSW Trains Agreement extended to “matters pertaining to the relationship between the Employer and Employees”, as well as “the operation and application of this agreement”.17 Further, the Respondent noted that the Disciplinary Matters clause specifically allowed for disciplinary matters to be appealed through a legislated appeals process,18 that is, the parties to the NSW Trains Agreement agreed that the disciplinary decisions of the employer may be reviewed.
[26] Finally, the Respondent contended that the decision at first instance was consistent with the decision of the Commission in The Australian Workers’ Union v Alcoa World Alumina Australia Pty Ltd. 19
[27] For the above reasons, the appellant contends that the Commission did not err in its construction and application of section 739(5) of the Act to the application at hand.
Consideration – Permission to Appeal
[28] The FWC will grant permission to appeal only if it is in the public interest to do so. 20 The test of assessing whether a matter is in the public interest is discretionary and involves a broad value judgement.21 In GlaxoSmithKline Australia Pty Ltd v Colin Makin,22 the Full Bench summarised the test for determining the public interest as follows:
“[26] Appeals have lain on the ground that it is in the public interest that leave should be granted in the predecessors to the Act for decades. It has not been considered useful or appropriate to define the concept in other than the most general terms and we do not intend to do so. The expression ‘in the public interest’, when used in a statute, classically imports a discretionary value judgment to be made by reference to undefined factual matters, confined only by the objects of the legislation in question. [Comalco v O’Connor (1995) 131 AR 657 at p.681 per Wilcox CJ & Keely J, citing O’Sullivan v Farrer (1989) 168 CLR 210]
[27] Although the public interest might be attracted where a matter raises issues of importance and general application, or where there is a diversity of decisions at first instance so that guidance from an appellate court is required, or where the decision at first instance manifests an injustice, or the result is counter intuitive, or that the legal principles applied appear disharmonious when compared with other recent decisions dealing with similar matters, it seems to us that none of those elements is present in this case.”
[29] Alternately, the second ground for granting permission to appeal is that the decision is attended with sufficient doubt to warrant its reconsideration or that substantial injustice may result if leave is refused. 23
[30] We find that permission to appeal should be granted in this matter. We are of the view that the appeal raises important questions concerning the application of section 739(5) of the Act in circumstances where the matter in dispute involves an action taken by a party that is contemplated by the Agreement concerned. This includes the Commission’s jurisdiction to review disciplinary action taken by a party within the constraints of a relevant enterprise agreement term dealing with such issues. There is also some diversity amongst first instance decisions. These factors excite the public interest.
Consideration – The Appeal
[31] The decision at first instance was made on jurisdictional grounds, and in particular, the import of s.739(5) of the Act. In our view, this did not involve a matter of discretion at that point. It follows therefore that, if permission to appeal is granted, this Full Bench must determine whether the interpretation and jurisdictional decision made by the Commissioner are correct. 24
[32] The Appellant submits that the Commissioner erred in construing the operation of section 739(5) of the Act to the circumstances of the application.
[33] Sections 739(4) and 739(5) of the Act state as follows:
Disputes dealt with by the FWC
(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.
[34] Section 12 of the Act defines a “fair work instrument” to include an enterprise agreement such as the Agreement in this case. Accordingly, applying section 739(5) of the Act, the Commission must not make a decision that is inconsistent with the Agreement.
[35] In Endeavour Energy, the Full Court said that:
“Section 739(5) does not alter the character of the arbitration which the Commission undertakes under an enterprise 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.”
[36] Applying Endeavour Energy, section 739(5) of the Act only limits the range of outcomes which the Commission may make. The provision does not limit the jurisdiction of the Commission in dealing with a dispute about the terms of an Agreement, but it may impact on the nature of remedy that may be determined under the dispute resolution procedure. The finding by the Commissioner that a jurisdictional limit operated to prevent the Commission from dealing with the dispute was, with respect, not correct.
[37] In the original application, the Appellant was applying for the Commission to determine that there would be no disciplinary penalty, or a lesser penalty, imposed by the Respondent. In approaching the determination of the dispute, it is the common objective intention of the particular terms of the Agreement when considered as a whole that must be taken into account. 25 The Commissioner correctly found that the scope of the dispute resolution procedure within the Agreement included disciplinary matters.26 Clause 14 of the Agreement provided a range of discretionary responses to alleged misconduct. The Agreement did not provide an absolute right or obligation for the employer to apply a particular disciplinary outcome. Given the terms of the Agreement, including the dispute resolution provisions that permitted disputes about matters arising under the instrument to be determined by the Commission, it would not have been inconsistent with the Agreement for the Commission to determine that one of the other disciplinary options, or the chosen option differently applied, should have been implemented by the Respondent. Provided that any determination made to that end would operate within the parameters of the agreed provisions in clause 14, the terms of the Agreement and that determination could coexist and be applied without modifying or contradicting the terms of that instrument.
[38] It follows that the Commissioner had the jurisdiction to deal with the dispute. The fact that the disciplinary penalty applied by the Respondent was contemplated by clause 14 of the Agreement would be an important consideration in terms of any discretionary decision to be made by the Commission. In that regard, the principles within the XPT case would be a relevant starting point for any consideration. 27
[39] We are therefore satisfied that the appeal should be upheld and that we should quash the original Decision. Given the need to deal with the substantive issues within the original application, we consider that the matter should be remitted to the Commissioner to hear and determine the matter.
Conclusion
[40] Permission to appeal is granted.
[41] The appeal is upheld.
[42] The decision is quashed.
[43] The matter is remitted to Williams C to hear and determine having regard to this decision.
VICE PRESIDENT
Appearances:
Mr M. Ritter of Senior Counsel for the Appellant
Mr D. Johnston of Counsel for the Respondent
Hearing details:
Perth
16 November
2016
1 [2016] FWC 5568.
2 PR583990.
3 (1984) 295 CAR 188.
4 [2016] FCAFC 82 (‘Endeavour Energy’).
5 [2016] FWC 5568, [108].
6 [2016] FWC 1553 (‘NSW Trains’).
7 Transport Workers’ Union of Australia v TNT Australia Pty Ltd[2013] FWC 7880 (Sams DP); Construction, Forestry, Mining and Energy Union v MSS Strategic Medical Pty Ltd & Others[2015] FWC 6937 (Gregory C).
8 Transport Workers’ Union of Australia v TNT Australia Pty Ltd[2013] FWC 7880 (Sams DP).
9 [2015] FWC 924.
10 Agreement, cl 45.5.2.
11 [2011] FWA 8288 .
12 Australian Federated Union of Locomotive Enginemen and State Rail Authority of New South Wales (1984) 295 CAR 188.
13 Construction, Forestry, Mining and Energy Union v HWE Mining Pty Ltd[2011] FWA 8288, [10].
14 [2013] FWC 7880.
15 Transport Workers’ Union of Australia v TNT Australia Pty Ltd[2013] FWC 7880, [4] (Sams DP).
16 [2015] FWC 6937.
17 NSW Trains Enterprise Agreement, cl 8.
18 Ibid, subclause 32.8.
19 [2012] FWA 9222..
20 Fair Work Act 2009 (Cth) s 604(2).
21 Esso Australia Pty Ltd v AMWU; CEPU; AWU[2015] FWCFB at [6].
22 [2010] FWAFB 5343 at [27].
23 Esso Australia Pty Ltd v AMWU; CEPU; AWU[2015] FWCFB 210 at [7].
24 Pawel v AIRC (1999) 94 FCR 231.
25 The Australasian Meat Industry Employees Union v Golden Cockerel Pty Limited[2014] FWCFB 7447.
26 [2016] FWC 5568 at [100].
27 See Lend Lease Project Management and Construction (Australia) Pty Limited v Construction, Forestry, Mining and Energy Union[2015] FWCFB 1889 at [27].
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