Public Transport Corporation v Eames
[1996] IRCA 292
•5 Jul 1996
DECISION NO: 292/96
C A T C H W O R D S
INDUSTRIAL LAW - JURISDICTION OF COMMISSION - Whether log of claims capable of supporting apprentices award in respect of TERMINATION OF EMPLOYMENT and RETRENCHMENT PAYMENTS - CONSTITUTIONAL LAW - IMPLIED LIMITATION on AWARD-MAKING POWERS of Commission in respect of STATE EMPLOYEES - Whether implied limitation applies to apprentices employed by the Public Transport Corporation - Whether the implied limitation applies to delivery of public transport services
Tramway and Omnibus Public Transport (Victoria) Award 1992
Victorian Public Transport (Post-Indenture Retrenchment) Award 1993
Victorian Public Transport Apprentices (Termination Pay) Award 1995
Amalgamated Metals Foundry & Shipwrights Union v BHP Co Whyalla (1984) 294 CAR 175; (1984) 295 CAR 673
Australian Railways Union v Victorian Railways Commissioners & Others (1930) 44 CLR 319
Deputy Commissioner of Taxation v State Bank (NSW) (1992) 174 CLR 219
Re Amalgamated Metal Workers Union of Australia & Others; ex parte Shell Company of Australia Ltd & Others (1992) 174 CLR 345
Re Australian Education Union & Others; ex parte State of Victoria & Another (1995) 128 ALR 609
Re Australian Railways Union and Others; ex parte Public Transport Corporation (1993) 117 ALR 17
Re Federated Storemen & Packers Union of Australia & Another; ex parte Wooldumpers (Victoria) Ltd (1989) 166 CLR 311
State of Victoria v Commonwealth of Australia (1971) 122 CLR 353
The Queen v Alley; ex parte New South Wales Plumbers & Gasfitters Employees Union (1981) 153 CLR 376
PUBLIC TRANSPORT CORPORATION -v- EAMES & Ors
No. VI 95/6073
and
PUBLIC TRANSPORT CORPORATION -v- BOULTON & Ors
No. VI 95/6074
Before: Spender, Moore and North JJ
Place: Melbourne
Date: 5 July 1996
IN THE INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
No VI 95/6073
BETWEEN:
PUBLIC TRANSPORT CORPORATION
Applicant
AND
BRENDAN EAMES, a Commissioner of the Australian Industrial Relations Commission
First Respondent
THE HONOURABLE KEITH HANCOCK, a Senior Deputy President of the Australian Industrial Relations Commission;
THE HONOURABLE JENNIFER ACTON, a Deputy President of the Australian Industrial Relations Commission; and
MICHAEL GAY, a Commissioner of the Australian Industrial Relations Commission
Second Respondent
AUSTRALIAN MUNICIPAL, ADMINISTRATIVE, CLERICAL AND SERVICES UNION
Third Respondent
AUSTRALIAN RAIL, TRAM AND BUS INDUSTRY UNION
Fourth Respondent
AUSTRALIAN RAILWAY PROFESSIONAL OFFICERS ASSOCIATION
Fifth Respondent
ASSOCIATION OF PROFESSIONAL ENGINEERS, SCIENTISTS AND MANAGERS, AUSTRALIA
Sixth Respondent
COMMUNICATIONS, ELECTRICAL, ELECTRONIC, ENERGY, INFORMATION, POSTAL, PLUMBING AND ALLIED SERVICES UNION OF AUSTRALIA
Seventh Respondent
and AUTOMOTIVE, FOOD, METALS, ENGINEERING, PRINTING AND KINDRED INDUSTRIES UNION
Eighth Respondent
MINUTES OF ORDER
JUDGES: Spender, Moore and North JJ
PLACE: Melbourne
DATE: 5 July 1996
THE COURT ORDERS THAT:
The application for prohibition, mandamus and certiorari is refused.
NOTE: Settlement and entry of orders is dealt with by Order 36 of the Industrial Relations Court Rules
IN THE INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
No VI 95/6074
B E T W E E N :
PUBLIC TRANSPORT CORPORATION
Applicant
AND
THE HONOURABLE JUSTICE ALAN BOULTON, THE HONOURABLE DEPUTY PRESIDENT IAN WATSON and COMMISSIONER MICHAEL GAY, members of the Australian Industrial Relations Commission
First Respondents
AUSTRALIAN RAIL, TRAM AND BUS INDUSTRY UNION;
AUTOMOTIVE, FOOD, METALS, ENGINEERING, PRINTING & KINDRED INDUSTRIES UNION; and
COMMUNICATIONS, ELECTRICAL, ELECTRONIC, ENERGY, INFORMATION, POSTAL, PLUMBING AND ALLIED SERVICES UNION OF AUSTRALIA
Second Respondents
MINUTES OF ORDER
JUDGES: Spender, Moore and North JJ
PLACE: Melbourne
DATE: 5 July 1996
THE COURT ORDERS THAT:
The application for prohibition and certiorari is refused.
NOTE: Settlement and entry of orders is dealt with by Order 36 of the Industrial Relations Court Rules..
IN THE INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
No VI 95/6073
BETWEEN:
PUBLIC TRANSPORT CORPORATION
Applicant
AND
BRENDAN EAMES, a Commissioner of the Australian Industrial Relations Commission
First Respondent
THE HONOURABLE KEITH HANCOCK, a Senior Deputy President of the Australian Industrial Relations Commission;
THE HONOURABLE JENNIFER ACTON, a Deputy President of the Australian Industrial Relations Commission; and
MICHAEL GAY, a Commissioner of the Australian Industrial Relations Commission
Second Respondents
AUSTRALIAN MUNICIPAL, ADMINISTRATIVE, CLERICAL AND SERVICES UNION
Third Respondent
AUSTRALIAN RAIL, TRAM AND BUS INDUSTRY UNION
Fourth Respondent
AUSTRALIAN RAILWAY PROFESSIONAL OFFICERS ASSOCIATION
Fifth Respondent
ASSOCIATION OF PROFESSIONAL ENGINEERS, SCIENTISTS AND MANAGERS, AUSTRALIA
Sixth Respondent
COMMUNICATIONS, ELECTRICAL, ELECTRONIC, ENERGY, INFORMATION, POSTAL, PLUMBING AND ALLIED SERVICES UNION OF AUSTRALIA
Seventh Respondent
and AUTOMOTIVE, FOOD, METALS, ENGINEERING, PRINTING AND KINDRED INDUSTRIES UNION
Eighth Respondent
No VI 95/6074
B E T W E E N :
PUBLIC TRANSPORT CORPORATION
Applicant
AND
THE HONOURABLE JUSTICE ALAN BOULTON, THE HONOURABLE DEPUTY PRESIDENT IAN WATSON and COMMISSIONER MICHAEL GAY, members of the Australian Industrial Relations Commission
First Respondents
AUSTRALIAN RAIL, TRAM AND BUS INDUSTRY UNION;
AUTOMOTIVE, FOOD, METALS, ENGINEERING, PRINTING & KINDRED INDUSTRIES UNION; and
COMMUNICATIONS, ELECTRICAL, ELECTRONIC, ENERGY, INFORMATION, POSTAL, PLUMBING AND ALLIED SERVICES UNION OF AUSTRALIA
Second Respondents
MINUTES OF ORDER
JUDGES: Spender, Moore and North JJ
PLACE: Melbourne
DATE: 5 July 1996
REASONS FOR JUDGMENT
THE COURT:
INTRODUCTION
The Court heard applications numbered VI 95/6073 and VI 95/6074 together. The former concerns an award of the Australian Industrial Relations Commission (“the Commission”) which requires the Public Transport Corporation (“PTC”) to classify employees into a higher classification if the employees have been acting in the higher classification for six months in a 12-month period (“the classification matter”). The latter concerns an award of the Commission requiring the PTC to make termination payments to about 127 apprentices (“the apprentices matter”). We will deal first with the apprentices matter.THE APPRENTICES MATTER
2.1The Award
In circumstances described later in these reasons, the Commission made the Victorian Public Transport Apprentices (Termination Pay) Award 1995 (“the Apprentices Award”) on 24 July 1995. Clauses 3 and 4 of the Apprentices Award provide:“3 - DEFINITIONS
For the purposes of this award:
‘the first apprentices’ means persons who entered into an Indenture of Apprenticeship with the Corporation which Indenture expired in or about January, 1993 and who were not employed by the Corporation beyond the expiration of the said Indenture;
‘the second apprentices’ means persons who entered into an Indenture of Apprenticeship with the Corporation which Indenture expired in or about February, 1994 and who were not employed by the Corporation beyond the expiration of the said Indenture.
4 - TERMINATION PAYMENTS
The Corporation shall make the following termination payments upon the completion of service of the first apprentices and the second apprentices:
(a) to the first apprentices, an amount equivalent to eight weeks’ pay at the rate of pay applicable to them at the time of their completion of service;
(b) to the second apprentices, an amount equivalent to six weeks’ pay at the rate of pay applicable to them at the time of their completion of service.
The above termination payments shall be in addition to, and not in substitution for, any other entitlements due and payable to the said apprentices upon the completion of their service with the Corporation.”
The award binds the PTC, the three unions which are named as the second respondents, and their officers and members.
2.2Background to the making of the Apprentices Award
A detailed history of the events which led up to the making of the Apprentices Award is set out in the judgment of the High Court in Re Australian Railways Union and Others; ex parte Public Transport Corporation (1993) 117 ALR 17, which dealt with an earlier controversy in the history of this matter. Consequently, a summary description of those events will suffice for the purpose of these reasons.
In February 1989, 166 apprentices were engaged by the PTC. Their indentures were for four years. As part of a general reduction of staff towards the end of 1992, the PTC determined not to offer employment to 70 of those apprentices who were about to finish their apprenticeships in February 1993. In the past, apprentices indentured to the PTC had almost always been employed by the PTC following completion of their apprenticeship. The refusal of the PTC to retain the 70 apprentices led to notifications of dispute to the Commission by the PTC and the second respondents or their predecessors (“the unions”). The unions sought an interim award preserving the status quo pending a final award dealing with the redundancy of PTC employees generally. The Commission determined that the application for an interim award would be heard by a Full Bench of the Commission. The Full Bench heard the application for an interim award and determined to make a final award, the Victorian Public Transport (Post-Indenture Retrenchment) Award 1993, on 5 February 1993. This award treated each apprentice as an employee employed on an open-ended continuing basis and conferred retrenchment benefits on the apprentices equivalent to the benefits available to other employees of the PTC employed on open-ended contracts. The PTC successfully challenged the making of this award in the High Court, on the ground that the PTC had not been accorded procedural fairness, in that it had responded to an application for an interim award and was denied an opportunity to put evidence or submissions before the Commission in relation to the making of the final award.
Following the decision of the High Court, which was made on 20 October 1993, the unions applied to the Commission for the matters to be re-listed so that they could seek an award providing for retrenchment benefits for apprentices whose employment was not extended beyond the end of the period of indenture by reason of redundancy. By this time, the situation of the apprentices who commenced in the following intake in February 1990 was also in contention. In February 1990, the PTC had engaged 147 apprentices, also on four-year indentures. The PTC indicated that 57 of these apprentices would not be retained after February 1994. The application was heard by a Full Bench of the Commission constituted by the members named as the first respondent. The PTC submitted that the Commission had no jurisdiction to make the award sought and that, in any event, it should not do so on the merits. On 11 July 1995, the Full Bench rejected the jurisdictional argument and found in favour of the unions on the merits. On 24 July 1995, it made the Apprentices Award.
The jurisdiction of the Commission to make the Apprentices Award binding on the unions was grounded on paper disputes found by the Commission, on 27 May 1986 and 26 September 1991, to exist as a result of the failure of the PTC to accede to logs of claims served on it by the Amalgamated Metal Workers Union, the predecessor of the secondnamed second respondents (“the Metals log”), and the Australian Railways Union, the predecessor of the firstnamed second respondents (“the ARU log”) respectively.
2.3 The present proceedings
On 29 November 1995, the PTC sought from Dawson J in the High Court orders nisi for the issue of writs of prohibition and certiorari in respect of the Apprentices Award. The application was remitted to this Court on that day.
2.4The jurisdiction of the Commission - the scope of the logs
Clauses 84 and 85 of the ARU log made claims in the following terms:
“COMMENCEMENT, TERMINATION AND REINSTATEMENT OF EMPLOYMENT
84.No employer shall have the sole right to commence or terminate employment. If an employer wishes to terminate employment the employer must discuss the matter with the union both before and after the notice of termination.
In addition the following shall apply:
(a)The employer shall not dismiss any employee (whether or not such dismissal takes place before the making of any award or agreement made in settlement of the log of claims); and
(b)The employer shall reinstate forthwith any employee dismissed (whether or not such dismissal takes place before the making of any award or agreement made in settlement of this log of claims).
(c)On termination of employment an employer shall give an employee twenty weeks notice of termination for each year of service of the employee or payment in lieu thereon.
(d)An employee shall be entitled to terminate his/her employment by giving one day’s notice of termination.
(e)During the period of notice of termination an employee shall be allowed up to six weeks time off without loss of pay to seek other employment.
(f)An employer shall provide to an employee a written statement of the employee’s employment record upon termination.
REDUNDANCY & RETRENCHMENT
85.(a) At least two years before any decision with redundancy implications is taken, an employer shall consult with employees and their unions. For the purposes of the consultation, the employer shall provide the union or unions with all relevant information relating to the decision to be taken.
(b)The consultation referred to in this section shall include examination of measures to minimise or to avoid terminations of employment due to redundancy.
(c)Union members shall be accorded preference over other employees in retention in employment and in respect of all other benefits or opportunities accorded by an employer in a redundancy situation. Redundancy shall be considered only after all avenues of retraining have been exhausted.
(d)Where an employee is transferred to other duties due to redundancy, an employer shall:-
(i)provide income maintenance payments calculated by reference to the previous wage rate of the employee;
(ii)pay all relocation expenses incurred by the employee and his/her defendants [sic] in respect of taking up the new duties; and
(iii)provide training and re-training for the employee where appropriate.
(e)Where the union agrees terminations of employment due to redundancy are unavoidable, an employer shall:-
(i)determine together with employees and the union the criteria to be applied in the selection of employees for termination;
(ii)after a decision to terminate the employment of employees has been made, notify the Commonwealth Employment Service of the impending terminations;
(iii)provide and [sic] employee whose employment is to be terminated with -
* at least two years’ notice of termination or payment in lieu thereof.
* redundancy pay of twenty weeks’ pay for each year of service;
* income maintenance payments calculated by reference to the wage rate and usual allowances of the employee;
* payment of all relocation expenses likely to be incurred by an employee in finding new employment.
* assistance in finding suitable alternative work and training and retraining as part of this assistance; and
(iv)accord preference in re-employment with continuity of service to employees whose employment is terminated due to redundancy.
(f)An employee shall be entitled to the above mentioned benefits and payments in full notwithstanding that the employee leaves his/her employment during the period of notice of termination given by the employer.”
The claims made in clauses 17 and 18 of the Metals log were in different terms, but the differences are not relevant for present purposes. The common features of the claims will determine the issues before the Court.
The PTC submitted to the Commission and to this Court that these clauses were not concerned with contracts of employment for a fixed term, where the employment relationship came to an end by the effluxion of time. Rather, the claims were directed to the ending of a contract of employment by the action of the employer or employee. The PTC contended that the apprentices were employed on contracts which expired by the passing of the period of the indenture. Consequently, the PTC argued, the claims did not support an award requiring retrenchment payments to the apprentices.
The Commission rejected this argument. It assumed for its purposes that the apprentices were employed on fixed term agreements. It then held that the claims made in the logs were not expressly limited to open ended employment. A log of claims should be approached having regard to the general context in which it was made: Re Amalgamated Metal Workers Union of Australia and Others; ex parte Shell Company of Australia Ltd and Others (1992) 174 CLR 345 at 360; Re Federated Storemen & Packers Union of Australia and Another; ex parte Wooldumpers (Victoria) Ltd (1989) 166 CLR 311 at 335. It was a central step in the argument of the PTC that the claims were limited to a termination of the employment contract. A consideration of the context in which the logs were served shows that the claims were directed to both the ending of the contracts of employment and, also, to the ending of employment arrangements. The arrangements may or may not have had contractual force. That was immaterial. The arrangements were so much a part of the employment circumstances of the apprentices that where the claims speak of “employment” they must be seen as including reference to the arrangements. The claims related to employment in the practical sense and hence could fairly apply to a situation where the apprentices were in employment with a real prospect of continuing employment.
In determining the merits of the application of the unions for an award providing retrenchment benefits for apprentices, the Commission found that employees of the PTC who were not on limited term contracts of employment had been offered payment upon voluntary departure or retrenchment which occurred as part of the general reduction in the workforce of the PTC. The apprentices were caught up in the same workforce reduction. In order to assess whether the apprentices deserved similar treatment as a matter of industrial equity, the Commission examined the terms on and the arrangements by which apprentices were employed. The Commission found:
“We are satisfied upon our reading of the evidence, including the evidence given by Mr B.D. James, Manager of the Workshops Division of the PTC, that there was a custom and practice in the PTC up to 1993 and the change of Victorian Government whereby apprentices were traditionally offered continued employment. We are also satisfied that assurances were given in the course of apprenticeships that a career path with the PTC was certain, even though the Employment Conditions document signed by each apprentice states in part that ‘I am not guaranteed employment on completion of my apprenticeship’. It is evident that there were expectations of secure employment being available for PTC apprentices until the developments of late 1992 and early 1993 and that these expectations were fostered by the PTC. We consider that the representations made with respect to PTC apprenticeships and the expectations held about continued employment went beyond what is usually the case under apprenticeship arrangements.”
The Commission further found:
“There is ample evidence to suggest that the apprentices were treated by the PTC as having on-going employment.”
Thus, when the logs were served, the practice was that apprentices were retained in the service of the predecessor of the PTC after the completion of the indenture period. The Commission did not, and did not need to, determine whether the continued employment was required by contract. For the purposes of the claims, it was immaterial whether continued employment beyond the term of the indenture was a contractual requirement or not. The union serving the log would have intended, and the PTC receiving the log would have appreciated, that a termination of employment as referred to in the log’s clauses included the PTC refusing to retain apprentices after the end of the period of indenture. That refusal constituted a termination of their employment in a practical sense.
The PTC contended that, taking into account the context in which the logs were served, it was significant that the claims presently in contention were in the same terms as the claims which gave rise to the decision of the Commission in Amalgamated Metals Foundry and Shipwrights Union v BHP Co Ltd Whyalla (1984) 294 CAR 175; (1984) 295 CAR 673 (“Termination, Change and Redundancy case”). Further, one of the applicants in the Termination, Change and Redundancy case was the Australian Railways Union, the predecessor of the firstnamed second respondents, and in that case the Australian Council of Trade Unions argued that the termination, change and redundancy provisions being sought should apply to apprentices, on the basis that they needed protection in the period of their indenture. Thus, the PTC submitted that the unions which served the log of claims in the present form would have intended that the claims sought protection for the period of the indenture alone. But the fact that the Australian Council of Trade Unions argued only for protection during the period of the indenture does not mean that the log of claims was incapable of supporting an award applicable to the period after the completion of the indenture period. It means only that the Australian Council of Trade Unions did not seek such an award in those terms at that time.
Thus, the logs of claims were capable of supporting the Apprentices Award.
2.5The jurisdiction of the Commission - the implied constitutional limitation
In Re Australian Education Union and Others; ex parte State of Victoria and Another (1995) 128 ALR 609 (“Re AEU”), a majority of the High Court (Mason CJ, Brennan, Deane, Toohey, Gaudron and McHugh JJ) enunciated the limits on the award-making powers of the Commission in respect of State employees. It confirmed the power of the Commission under s.51(xxxv) of the Constitution to make awards binding the States: at 623. It rejected the proposition that the States were immune from award regulation in respect of government functions and, in so doing, affirmed that awards may regulate the pay and conditions of employees carrying out functions of the State. As to the rationale and effect of the implied limitation, the majority said, at 628:
“To say that the limitation protects the existence of the States and their capacity to function as a government is to give effect more accurately to the constitutional foundation for the implied limitation identified by Dixon J in the passages earlier quoted from Australian Railways Union, including s.106 of the Constitution. To press the limitation as far as the prosecutor seeks to take it would travel beyond the language of s.106 and would confer protection on the exercise of powers by the States to an extent which is inconsistent with the subordination of those powers to the powers of the Commonwealth through the operation of s.109 of the Constitution. And the argument, if successful, would protect a substantial part of a State’s workforce from the impact of federal awards, notwithstanding that the operation of those awards in relation to school teachers, health workers and other categories of employees would not destroy or curtail the existence of the State or its capacity to function as a government.
The fact is that the existence of the States and their Constitutions and their capacity to function as governments would not be impaired by the operation of federal awards made in respect of the vast majority of the employees sought to be covered by the logs of claims, at any rate if the award provisions were confined to minimum wages and working conditions which take appropriate account of any special functions or responsibilities which attach to them. The freedom of State governments to determine terms and conditions of employment of employees would be restricted but that is a consequence of the application of the arbitration power to States. Whether the making of a comprehensive award would result in a relevant impairment is another question we leave for later discussion.”
The majority formulated the limitation as a prohibition against laws of general application which operate to destroy or curtail the continued existence of the States, or their capacity to function as governments: at 629. In amplifying the meaning of the concept of the States’ capacity to function as governments, the majority said, at 630-631:
“At this point it is convenient to consider South Australia’s argument based on impairment of a State’s ‘integrity’ or ‘autonomy’. Although these concepts as applied to a State are by no means precise, they direct attention to aspects of a State’s functions which are critical to its capacity to function as a government. It seems to us that critical to that capacity of a State is the government’s right to determine the number and identity of the persons whom it wishes to employ, the term of appointment of such persons and, as well, the number and identity of the persons whom it wishes to dismiss with or without notice from its employment on redundancy grounds. An impairment of a State’s rights in these respects would, in our view, constitute an infringement of the implied limitation. On this view, the prescription by a federal award of minimum wages and working conditions would not infringe the implied limitation, at least if it takes appropriate account of any special functions or responsibilities which attach to the employees in question. There may be a question, in some areas of employment whether an award regulating promotion and transfer would amount to an infringement. That is a question which need not be considered. As with other provisions in a comprehensive award, the answer would turn on matters of degree, including the character and responsibilities of the employee.
In our view, also critical to a State’s capacity to function as a government is its ability, not only to determine the number and identity of those whom it wishes to engage at the higher levels of government, but also to determine the terms and conditions on which those persons shall be engaged. Hence, ministers, ministerial assistants and advisers, heads of departments and high level statutory office holders, parliamentary officers and judges would clearly fall within this group. The implied limitation would protect the States from the exercise by the Commission of power to fix minimum wages and working conditions in respect of such persons and possibly others as well. And, in any event, ministers and judges are not employees of a State.”
The majority then applied the formulation to the facts of the cases before the Court and said, at 631:
“However, the rejection of the arguments put forward by the prosecutor and the intervening States - arguments which would have given the implied limitation a wide-ranging operation - means that the Commission has power to make awards binding the States and their agencies in relation to minimum wages and working conditions which take account of the special functions and responsibilities, if any, of a broad range of public servants and employees, including many members of the SPSF. On the other hand, as we have indicated, the operation of the implied limitation would preclude the Commission from making an award binding the States in relation to qualifications and eligibility for employment, term of appointment and termination of employment, at least on the ground of redundancy. It would also preclude the Commission from making an award binding the States in relation to the terms and conditions of employment or engagement of persons such as ministers, ministerial assistants and advisers, heads of department and senior office holders - as well as parliamentary officers and judges. What impact the implied limitation would have on the power of the Commission to make an award prescribing particular minimum terms and conditions of employment for particular classes of employees, eg, term of appointment, procedures and criteria for promotion and transfer, and termination on grounds other than redundancy, was a question which was not explored in detail in the arguments presented to this Court. Obviously these are matters to be considered in the Commission if the proceedings are taken further in that tribunal.”
The High Court made orders which quashed two interim awards which had been made by the Commission. The awards applied to health workers employed by the State of Victoria. The awards infringed the implied constitutional limitation because they attempted to prohibit the State of Victoria from terminating the employment of its employees on grounds of redundancy.
The Commission rejected the challenge to jurisdiction on the basis that the Apprentices Award was distinguishable from the interim awards invalidated by the High Court in Re AEU in three respects. First, the long standing authority of the High Court in Australian Railways Union v Victorian Railways Commissioners and Others (1930) 44 CLR 319 had established that terms and conditions of employment of State railway employees could be regulated by comprehensive federal awards. Second, the apprentices were engaged by the PTC, which was a statutory corporation, while the interim awards invalidated in Re AEU were directed to health workers who were directly employed by the State of Victoria. Third, the Apprentices Award did not curtail, in a relevant sense, the right of the State of Victoria to determine the number and identity of the persons it wished to dismiss with or without notice on redundancy grounds and, hence, did not impair the capacity of the State of Victoria to function as a government.
Before this Court, the PTC submitted that the Commission erred in its conclusions on each of the three grounds by which it distinguished the Re AEU decision. Each ground will now be addressed in turn.
In Australian Railways Union, the State Railway Commissioners argued that State railway employees were entirely outside award regulation, because s.51(xxxv) of the Constitution did not extend to the regulation of State railway employees. This argument was rejected in the light of the decision in Amalgamated Society of Engineers v Adelaide Steamship Company (1920) 28 CLR 129, but the decision did not establish that the power to regulate State railway employees was without qualification. On the contrary, Dixon J, at 390, with whom Rich J agreed, expressly referred to certain limitations on the power, including the prohibition on discriminatory laws. This discussion about the limitation on the power contained in s.51(xxxv) was referred to by the majority in Re AEU, at 625, as the starting point for the examination of the present scope of the implied constitutional limitation. It is clear, especially from Re AEU, that the decision in Australian Railways Union does not mean that all award provisions binding State railway workers are permitted. Re AEU places limits on the sort of award provisions which can be made, and these limits apply to State railway employees as to other State employees.
The next argument addressed concerns the status of the PTC as a statutory corporation. The majority in Re AEU, at 631-2, referred to the constitutional limitation as applying to both the States and their agencies. Although the argument was put to the Commission that the PTC, as a statutory corporation, was not subject to the constitutional limitation, it was not developed in any substantial way. In particular, no reference was made by the PTC to Deputy Commissioner of Taxation v State Bank (NSW) (1992) 174 CLR 219 which was referred to before this Full Court. That case was concerned with s.114 of the Constitution which expressly prohibits the Commonwealth imposing a tax on any property of a State. The High Court held that the State Bank of New South Wales was an agency or instrumentality of the State and was therefore entitled to the protection of the prohibition in s.114. The Court expressed the view that the State railways are agencies or instrumentalities of the State for the purpose of express references to the States in the Constitution. At 230‑231 it said:
“The activities of government are carried on not only through the departments of government but also through corporations which are agencies or instrumentalities of government. Such activities have, since the nineteenth century, included the supply on commercial terms of certain types of goods and services by government owned and controlled instrumentalities with independent corporate personalities. Railways are a notable example. As early as 1906, in Federated Amalgamated Government Railway and Tramway Service Association v New South Wales Railway Traffic Employés Association (“the Railway Servants Case”) ((1906) 4 CLR 488), this Court recognized that the railway undertakings of the colonial governments carried on by incorporated Railway Commissioners were instrumentalities of those governments (ibid, at p.535, per Griffith CJ).”
By parity of reasoning, the PTC is an agency of the State for the purposes of the application of the implied constitutional limitation expounded in Re AEU.
The way in which the implied limitation applies was the subject of wide divergence in the argument put by the parties. Mr Tracey QC, who appeared with Mr Kaufman for the PTC, submitted that the Apprentices Award provided for a payment on the occasion of termination on the grounds of redundancy. As it is an impairment to the capacity of the State to function as a government to prevent the State from terminating employees on the grounds of redundancy with or without notice, it is an impairment, so it was contended, to place a financial impost on that very act. Mr Kenzie QC, who appeared for the secondnamed second respondents, and who appeared with Mr Borenstein for the first and thirdnamed second respondents, put an argument in the alternative. First, he argued that in Re AEU the majority accepted the distinction proposed by the Solicitor-General for South Australia between internal services of the State and external services of the State. Internal services included policy formulation, reporting to parliament, collection and administration of government revenue, the provision of services to parliament and the courts. Internal services were protected from award regulation, external services were not. Apprentices fell within the category of the providers of external services and were thus not protected from award regulation. This argument does not reflect the way in which the majority in the High Court referred to the internal/external services submission. The majority did not accept the dichotomy. Having rejected the administrative services of the State as a viable criterion for the operation of the constitutional limitation, and having rejected the dichotomy between governmental and non-governmental functions as a basis for the operation of the constitutional limitation, the majority did not put forward the internal/external services dichotomy as a new formulation. This is especially evident from the fact that the majority did not define external services at all. It is unlikely that the dichotomy was advanced as the basis of the constitutional limitation without any definition being provided for one of the two criteria on which the limitation was to operate. In any event, it is evident from the language of the majority that the reference to the external/internal services argument was for the purpose of utilising the conceptual basis of the dichotomy as an assistance in defining the concept of impairment of the capacity of the State to function as a government. The Solicitor-General for South Australia had based the external/internal services dichotomy on the constitutional requirement for the preservation of the autonomy and integrity of the States. It was this basis which was adopted by the majority as helpful in explaining the concept of the capacity of the State to function as a government. The internal/external services dichotomy was not itself adopted as the criterion upon which the implied constitutional limitation was to operate.
In the alternative, Mr Kenzie argued that the requirement to pay a termination benefit, even if activated by a termination on the ground of redundancy, was not an impairment in the sense meant by the majority in Re AEU. In our view, this argument is correct. The majority held that an award could not prescribe the number or identity of persons to be employed by the State, but it could prescribe minimum wages of employees who were engaged. The setting of minimum wages establishes a financial consequence on the engagement of employees, but it does not impair the State in its capacity to function as a government. By parity of reasoning, while an award must not impair the State in determining how many, or whom, it wishes to dismiss on grounds of redundancy, it may impose a financial consequence flowing from the action. The latter is outside the implied constitutional limitation. An analogous situation was referred to by Menzies J in State of Victoria v Commonwealth of Australia (1971) 122 CLR 353 at 392-3, as follows:
“Of course the payment of the tax by an employer upon wages paid is a burden, whether or not the employer is a State. Every tax is a burden. This tax could not, however, be described as an interference with the function of employers who are not States. Such employers remain free to carry on their businesses as they choose. All that is required is that they pay the tax. Similarly, the payment of the tax by a State does not interfere with the performance of its functions. Crown servants may still be employed at the will of the State. It was argued that, because the State needs Crown servants to carry out its functions of government, the payment of tax upon wages paid to such servants interfered with the performance of those functions. This I do not accept. At this point, I think, the argument for the State moved from the operation of the laws to their economic consequence, an entirely different matter. The most that can be said is that, because the State pays the tax to the Commonwealth, it has so much less money with which to carry out the functions of government. Such a consequence does not spell invalidity. The same sort of consequence follows, if, by reason of the imposition of a customs duty, a State has to pay the Commonwealth tax upon imports which it needs to carry out its functions, or if, by reason of an award of the Commonwealth Conciliation and Arbitration Commission, a State has to pay its railway employees higher salaries. None of such laws operate to interfere with the performance by the State of its constitutional functions. A Commonwealth tax upon State tax revenues would be an instance of a very different kind.”
In the result, the Commission, on the third ground, correctly concluded that the Apprentices Award was within the jurisdiction of the Commission.
THE CLASSIFICATION MATTER
3.1The award variations
An example of the terms of the award variation with which we are concerned in the classification matter can be seen in the variation to part of clause 18 of the Tramway and Omnibus Public Transport (Victoria) Award 1992, which is in the following terms:
“The Public Transport Corporation shall reclassify any employee to a personal classification at the level of the higher position in which an employee has acted in for any period or periods which amount to six months or greater than six months (in any continuous twelve month period) provided that the higher position does not have a permanent incumbent appointed to it and is a vacant position.
Should an employee be appointed to a personal classification in accordance with the above criteria the Public Transport Corporation shall not reduce the employee’s personal classification back to the employee’s former classification level for the reason that the higher position has been restructured or abolished.
When the Public Transport Corporation has made a definite decision that a vacant position under review is to be unchanged and retained, the position will be advertised and filled in accordance with the process agreed between the Public Transport Corporation and the relevant unions.
When the Public Transport Corporation has made a definite decision that a vacant position is to be restructured or abolished the Public Transport Corporation shall notify any employee acting in that position in accordance with the Introduction of Change Provisions agreed between the Public Transport Corporation and the Union.”
3.2Background to the making of the award variations
For several years prior to 1995, the PTC was engaged in a restructure of its workforce. It had delayed the reclassification of some employees into higher classifications until the restructure was completed. This meant that some employees were employed in positions requiring a higher classification than the classification held by the employee, and the employee, although being paid at the rate of the higher classification, was liable to be returned to a lower classification at any time, with the consequence that the pay rate of the employee would revert to the lower classification pay rate. The unions, which are the third to eighth respondents, believed that employees were being retained at higher classification rates for too long without being reclassified permanently into the higher classification. Therefore, they applied to the Commission for variations to the following awards, which covered their members employed by the PTC:
Municipal Officers’ (Metropolitan Transit Authority) Award 1984
Railway Salaried Officers Award 1960
Railway Metal Trades Grades Award 1953
The Railway Miscellaneous Grades Award 1960
Railways Traffic, Permanent Way and Signalling Wages Staff Award 1960
Locomotive Operating Grades (State Transport Authority, Victoria) Award 1987
Tramway and Omnibus Public Transport (Victoria) Award 1992
The Railways Professional Officers Award 1974
On 15 March 1995, Commissioner Eames, the first respondent, determined to make variations in the form referred to earlier in these reasons. The variations were then made on 31 March 1995 and 1-2 May 1995. Following the decision of Commissioner Eames, the High Court delivered judgment in Re AEU. The PTC appealed to the Full Bench of the Commission, constituted by the members referred to as the second respondents, against the decision of Commissioner Eames to vary the awards. The Full Bench refused leave to appeal on the merits, but heard argument from the PTC that the Commission did not have jurisdiction to make the award by operation of the implied constitutional limitation enunciated in Re AEU. On 24 August 1995, the Full Bench of the Commission rejected these arguments and dismissed the appeal.
3.3 The present proceedings
On 29 November 1995, the PTC sought orders nisi from Dawson J in the High Court for the issue of writs of prohibition, mandamus and certiorari in respect of the award variations. The application was remitted to this Court on that day.
3.4The jurisdiction of the Commission - the implied constitutional limitation
The Full Bench determined that the delivery of public transport services lies outside the area of the implied constitutional limitation altogether. It relied on the decision of the Full Bench of the Commission in the apprentices matter and referred in particular to Australian Railways Union as authority for the proposition that State railway workers may be covered by federal awards.
As explained earlier in relation to the apprentices matter, the authority of Australian Railways Union must be read together with the developments in Re AEU. Thus, while State railway employees remain subject to federal award regulation, the terms of a particular award covering State railway employees must not infringe the implied constitutional limitations enunciated in Re AEU.
The Full Bench was also influenced by the internal/external services dichotomy referred to in Re AEU. It held that State railway workers were not providers of internal services and suggested that, as a consequence, the State was unprotected from award regulation in respect of its railway workers. Mr Kenzie QC, who appeared with Mr Borenstein for the third to seventh respondents, and who also appeared for the eighth respondent, sought to support the decision of the Full Bench on this basis. As discussed earlier in these reasons, the significance of the internal/external services dichotomy in Re AEU was explained. It was not the basis upon which the majority in the High Court relied for the application of the implied constitutional limitation. Thus, the Full Bench of the Commission was not justified in finding in favour of jurisdiction for that reason.
Mr Tracey QC, who appeared with Mr Devries for the PTC, argued that, if the implied constitutional limitation did apply to the employees of the PTC, the limitation had the effect of invalidating the award variations under consideration.
It is necessary to deal separately with the separate paragraphs of the variation, commencing with the first two paragraphs. They require the PTC to reclassify an employee who has been acting in a position carrying a higher classification for six months or more in a continuous 12 month period into that higher classification, and not to reduce the classification for the reason that the position has been restructured or abolished. Mr Tracey pointed to the decision of the majority in Re AEU, at 630, that a federal award could not determine the number or identity of persons the State wished to employ. The majority said, at 631, that a federal award could not bind the States in relation to the qualifications and eligibility of candidates for employment. Mr Tracey then contended that this prohibition must extend, not only to the initial appointment of a State employee, but to successive “appointments” by way of promotion and transfer. It would be anomalous, he argued, if a federal award could not regulate the number and identity of employees which the State engaged, but could regulate who and how many are promoted or transferred once employed. The majority did, however, deal separately and differently with promotion and transfer in passages at both 630 and 631. While any award provision which determines the number and identity of persons whom the State is to employ is beyond constitutional competence, a provision regulating promotion or transfer may or may not be beyond constitutional competence, depending on matters of degree, including the character and responsibilities of the employee: see 630. Consequently, the prohibition against award regulation goes only to initial appointment of State employees, and not to the regulation of their progress once employed. There is a qualitative difference between the regulation of the appointment of State employees and the regulation of such persons once employed. While the regulation of appointment of State employees, insofar as qualification and eligibility for employment are concerned, impairs the capacity of the State to function as a government, the regulation of promotion and transfer may or may not affect that capacity. The award variations under consideration do not regulate the number and identity of persons the State wishes to engage. They do not affect the initial employment of State workers. Consequently, they are not necessarily beyond legislative competence.
If the award variations in question regulate transfer or promotion, the majority in Re AEU determined that the validity of such provisions would depend on matters of degree, including the character and responsibilities of the employees bound. Even if the variations cannot be properly described as regulating transfer or promotion, they are provisions akin to such provisions and should be tested against the same criteria.
Mr Tracey argued that, if so tested, the award provisions were invalid. The PTC submitted to the Full Bench of the Commission on appeal that the constitutional validity of the award variations depended on an analysis of the work done by the persons in each classification. The Full Bench was bound, Mr Tracey argued, to investigate the character and responsibilities of the employees subject to the award variations. The Full Bench did not conduct this investigation and hence, it is argued, fell into reviewable error.
The vice in this argument is that the PTC did not put any evidence to the Full Bench about the work done by persons bound by the award variations. It suggested that the matter be remitted to Commissioner Eames for consideration of the question. It did not ask for an adjournment so that further proceedings could be pursued before Commissioner Eames. The Full Bench was not bound to remit the matter to Commissioner Eames. In the absence of any further evidence on which to assess the character and responsibilities of the employees bound by the award variations, the Full Bench determined that no lack of jurisdiction had been shown. There was no error of jurisdiction in the Full Bench failing to remit the matter to Commissioner Eames. Once the Full Bench retained the matter, the evidence was that the State railway workers fell within several hundred classifications which, by way of example from the Railways Metal Trades Grades Award 1953, included train maintainer, fitter, machinist, mechanic, production assistant, toolmaker, telephone technician, line man, welder, boilermaker, foundry labourer, and process worker. On the face of the classifications, there was no reason to regard the employees falling within the classifications as having responsibilities, the regulation of which would curtail the ability of the State of Victoria to function as a government. In the absence of any further evidence of the character and responsibilities of the employees bound by the award variations, the Full Bench could not have found that it lacked jurisdiction.
The failure to place any further evidence before the Full Bench or before this Full Court was a choice made by the PTC. Its failure to provide any further evidence gave rise to no error on the part of the Full Bench. The onus of establishing a lack of jurisdiction in an application for prerogative relief lies upon the applicant: The Queen v Alley; ex parte New South Wales Plumbers & Gasfitters Employees Union (1981) 153 CLR 376 at 392. The PTC has failed to satisfy that onus. If further evidence is available, the PTC remains able to activate further proceedings in the Commission.
The third paragraph of the award variation is now considered. It provides that vacant positions which the PTC determines are to be retained will be advertised and filled in accordance with “the process agreed between the PTC and relevant unions”. The Full Bench held that the paragraph would have infringed the constitutional limitation were it to have applied to PTC because it impaired the ability of the State to determine the identity of persons whom it wished to employ. Mr Kenzie sought to justify the paragraph and contended that “the agreed process” meant such process as was agreed from time to time between the PTC and the unions. If this were the meaning of the paragraph, it could not infringe the implied constitutional limitation because the meaning of the award was subject to the terms of the agreement with the State of Victoria as it existed from time to time. A more likely meaning is that the agreed process referred to is the process in place and subject to an existing agreement. The effect of the award was to make the terms of the existing agreement unalterable except by variation of the award. Otherwise, apart from considerations of enforcement, there would have been little purpose in making an award provision which was to reflect only a position as agreed from time to time. There was no evidence before the Full Bench of the Commission or this Court of the contents of the agreed process other than fairly generalised statements from the bar table. From what the Full Bench was told they were able to conclude that the agreement might exclude “headhunting”, that is, external recruitment.
The Commission may be asked to consider the validity of paragraph 3 in the future. If the terms of the agreement referred to in paragraph 3 of the award are brought before the Commission, and it appears that paragraph 3 of the award determines the number or identity of persons the PTC can employ, the Commission would be bound to hold that the paragraph was invalid in accordance with Re AEU. It is inappropriate for the Court to grant prerogative relief in favour of the PTC while the terms of paragraph 3 of the award remain clouded in uncertainty. As the PTC seeks prerogative relief in this application, it has the onus of showing any lack of jurisdiction. In refusing prerogative relief in respect of paragraph 3 of the award, the Court is not making a positive determination either in favour of or against the validity of paragraph 3 of the award. The refusal reflects the fact that the Court cannot, in the present state of evidence, determine that matter.
The fourth paragraph of the award variations required notification to an employee acting in a vacant position if the position was to be restructured or abolished. Notification was to follow the “Introduction of Change” provisions of the existing award, which provided:
“INTRODUCTION OF CHANGE
Employer’s duty to notify
(a)(i) Where the Corporation has made a definite decision to introduce major changes in production, program, organisation, structure or technology that are likely to have significant effects on employees, the Corporation shall notify the employees who may be affected by the proposed changes and their union or unions.
(ii)‘Significant effects’ include termination of employment, major changes in the composition, operation or size of the Corporation’s workforce or in the skills required; the elimination or diminution of job opportunities, promotion opportunities or job tenure; the alteration of hours of work; the need for retaining or transfer of employees to other work or locations and the restructuring of jobs. Provided that where the award makes provision for alteration of any of the matters referred to here an alteration shall be deemed not to have significant effect.
Employer’s duty to discuss change
(b)(i) The Corporation shall discuss with the employees affected and their union or unions, inter alia, the introduction of the changes referred to in subclause 32(a) hereof, the effects the changes are likely to have on employees, measures to avert or mitigate the adverse effects of such changes on employees and shall give prompt consideration to matters raised by the employees and/or their unions in relation to the changes.
(ii)the discussions shall commence as early as practicable after a definite decision has been made by the Corporation to make the changes referred to in subclause 32(a) hereof.
(iii)For the purposes of such discussion, the Corporation shall provide in writing to the employees concerned and their union or unions, all relevant information about the changes including the nature of the changes proposed, the expected effects of the changes on employees and any other matters likely to affect employees provided that the Corporation shall not be required to disclose confidential information the disclosure of which would be inimical to the Corporation’s interests.”
The Full Bench held that the fourth paragraph imposed an obligation on the PTC to notify a person acting in a vacant position that the position was to be restructured or abolished. It did not deal with the topic of termination of employment at all. This is a correct construction. In the absence of the fourth paragraph, the obligation contained in subclause (a)(i) to notify a person acting in a higher classification of the impending change would be nullified by the proviso in the last three lines of that subclause. The fourth paragraph ensures that the obligation to notify contained in subclause (a)(i) does apply when a vacant position is to be restructured or abolished. Consequently, the fourth paragraph does not infringe any constitutional limitation. It does no more than require the PTC to notify a person acting in a higher classification of the impending abolition or restructure of the vacant position in which the person is acting.
For these reasons, the Commission correctly concluded that paragraphs 1, 2 and 4 of the award variation were within the jurisdiction of the Commission.
I certify that this and the preceding thirtythree (33) pages are a true copy of the reasons for judgment of the Court.
Associate:
Dated: 5 July 1996
No VI 95/6073
Counsel for the applicant: R.R.S. Tracey QC and G.A. Devries
Solicitor for the applicant: Victorian Government Solicitor
Counsel for 1st & 2nd respondents: No appearance
Solicitor for 1st & 2nd respondents: Australian Government Solicitor
Counsel for 3rd-7th respondents: R. C. Kenzie QC and H. Borenstein
Solicitors for 3rd-7th respondents: Ryan Carlisle Thomas
Counsel for 8th respondent: R. C. Kenzie QC
Solicitors for 8th respondent: Ryan Carlisle Thomas
No VI 95/6074
Counsel for the applicant: R.R.S. Tracey QC and L. Kaufman
Solicitor for the applicant: Victorian Government Solicitor
Counsel for 1st respondent: No appearance
Solicitor for 1st respondent: Australian Government Solicitor
Counsel for 1st & 3rd named 2nd respondents: R. C. Kenzie QC and H. Borenstein
Solicitors for 1st & 3rd named 2nd respondents: Slater & Gordon
Counsel for 2nd named 2nd respondents: R. C. Kenzie QC
Solicitors for 2nd named 2nd respondents: Ryan Carlisle Thomas
Date of hearing: 8-9 February 1996
Date of judgment: 5 July 1996
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