The Australian Workers' Union of Employees, Queensland v State of Queensland (Department of Communities, Child Safety and Disability Services)

[2014] FWC 1979

[2014] FWC 1979 [Note: An appeal pursuant to s.604 (C2014/4023) was lodged against this decision - refer to Full Bench decision dated 13 August 2014 [[2014] FWCFB 5546] for result of appeal.]

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.786 - Application for an order re failure to notify or consult registered employee associations about terminations

The Australian Workers’ Union of Employees, Queensland
v
State of Queensland (Department of Communities, Child Safety and Disability Services)
(C2014/2624)

VICE PRESIDENT WATSON SYDNEY, 25 MARCH 2014

Consultation with Registered Employee Associations - Termination of more than 15 employees and application for Interim Order - implied limitation in the Federal Constitution - capacity of the Commonwealth Government to make laws that impair the operation of the States as independent entities- ss786,787 Fair Work Act 2009.

Introduction

[1] This decision arises from an application made by the Australian Workers Union of Employees, Queensland (AWUQ) for orders pursuant to s.787 of the Fair Work Act 2009 (the Act) in relation to a decision by the State of Queensland through its Department of Communities, Child Safety and Disability Services (Queensland Government) to restructure its Accommodation, Support and Respite Services Unit (AS&RS Unit).

[2] When this matter came on for hearing on 15 January 2014 the Queensland Government foreshadowed jurisdictional objections to the matter proceeding and sought directions for the filing of evidence and submissions going to these jurisdictional matters and the determination of these issues on a threshold basis. I made directions as sought and heard more detailed argument on these matters in Brisbane on 4 March 2014. At the hearing Mr JW Merrell appeared for the AWUQ and Mr JE Murdoch QC with Mr MD Healy appeared for the Queensland Government.

Background

[3] In July 2012 the AS&RS Unit employed approximately 1,817 employees. In April 2013 the Queensland Government’s Commission of Audit recommended that prior to the full commencement of the National Disability Insurance Scheme all services provided by the AS&RS Unit be transitioned to the private sector. The Queensland Government accepted this recommendation in its response released on 30 April 2013.

[4] On 13 December 2013 the Queensland Government invited organisations to submit an expression of interest for accommodation support and respite services to people with an intellectual disability currently receiving direct disability support services.

[5] The AWUQ contends that the expression of interest reveals that the Queensland Government has made an irrevocable decision to terminate the employment of a large number of employees and has not complied with the terms of s.786 (2) and (3) of the Act. It seeks the following orders:

“A. An interim order pursuant to section 787 of the Act that the Respondent refrain from effecting any or all of the proposed terminations of employment until the final disposition of this application.

B. A decision, pursuant to section 786 of the Act that the Commission is satisfied that:

1. the Respondent has decided to terminate the employment of 15 or more employees for reasons of an economic and or in the alternative structural or similar nature, or for reasons including such reasons;

2. the Respondent has not complied with subsection 786(2) of the Act;

3. the Respondent has not complied with subsection 786(3) of the Act; and

4. the Respondent could reasonably be expected to have known, when it made the decision, that one or more of the employees were members of a registered employee association, namely the Applicant.

C. An order pursuant to section 787 of the Act that:

1. the Respondent notify the Applicant within three days, of the following:

a. the number of employees likely to be affected by the proposed terminations;

b. the category or categories of employees likely to be affected by the proposed terminations;

c. the time when, or the period over which, the Respondent intends to carry out the proposed terminations;

2. within three days of complying with order C 1 hereof, the Respondent provide the Applicant with an opportunity to consult it on:

a. measures to avert or minimise the proposed terminations;

b. measures (such as finding alternative employment) to mitigate the adverse effects of the proposed terminations;

3. the Respondent refrain from effecting any or all of the proposed terminations until and unless it has complied with order C 1 and C 2 hereof;

4. the Applicant give the Respondent an enforceable undertaking not to disclose information provided under order C 1 and, or in the alternative, C2 that is confidential or commercially sensitive; and

5. any dispute arising from the application of the orders C1 and, or in the alternative, C2, and, or in the alternative, C3 shall be referred to the Fair Work Commission for determination.”

[6] On or around 27 May 2013 Together Queensland, an association of employees registered under Queensland legislation filed a notice of dispute in the Queensland Industrial Relations Commission. Conciliation conferences in relation to that dispute notification have been convened before Commissioner Black in the Queensland Industrial Relations Commission on 30 May 2013, 20 December 2013 and 23 January 2014.

The Jurisdictional Arguments

[7] The Queensland Government raises the following jurisdictional arguments:

• The Act does not bind the Crown in Right of the State of Queensland,



• Part 6-4 of the Act does not apply to the Queensland Government because of the implied limitation on Commonwealth legislative power with respect to State Government employees, and



• The application is an abuse of process because of overlapping proceedings in the Queensland Industrial Relations Commission.

[8] The Queensland Government does not press the first of these arguments in these proceedings while making no concession in relation thereto. I turn to consider the second jurisdictional objection.

The Implied Limitation

[9] In Melbourne Corporation v the Commonwealth 1 Dixon J of the High Court described an implication in the Constitution relating to the interaction between Commonwealth laws and State government independence as follows:

“The foundation of the Constitution is the conception of a central government and a number of State governments separately organised. The Constitution predicates their continued existence as independent entities.
...
The efficacy of the system logically demands that, unless a given legislative power appears in its content, context or subject matter so to intend, it should not be understood as authorising the Commonwealth to make a law aimed at the restriction or control of a State in the exercise of its executive authority.” 2

[10] Since this principle was enunciated there have been various judicial considerations of its scope and application to particular circumstances, including in relation to Commonwealth industrial relations laws. In Re Australian Education Union ex parte Victoria 3 Mason CJ, Brennan, Deane, Toohey, Gaudron and McHugh JJ said:

“(g) Conclusion with respect to the scope and content of the implied limitation

54. Our rejection of the particular submissions made by the prosecutor and supporting interveners other than that advanced by South Australia as to the scope and content of the implied limitation leads us, subject to consideration of one gloss put forward by the prosecutor, to express the scope and content of the limitation in this way. The limitation consists of two elements: (1) the prohibition against discrimination which involves the placing on the States of special burdens or disabilities ("the limitation against discrimination") and (2) the prohibition against laws of general application which operate to destroy or curtail the continued existence of the States or their capacity to function as government.

55. The prosecutor relied, in particular, on the formulation of the second element in the limitation which is to be found in the reasons for judgment of Deane J in Queensland Electricity Commission where his Honour stated that its central operation is to preclude the exercise of Commonwealth powers "to control the States" or in a manner which would be inconsistent with the continued existence of the States as independent entities and their capacity to function as such. The exercise of Commonwealth power "to control the States" would be an exercise of power inconsistent with the continued existence of the States as independent entities and their capacity to function as such. So the correctness of the major proposition asserted by the prosecutor may be accepted.

56. In elaborating the concept of "control" for the purposes of the argument, the prosecutor drew attention to observations of Dixon J in Melbourne Corporation where his Honour, in the context of a law aimed at controlling some particular exercise of a State's exercise of its executive power, said:
"Such a law wears two aspects. In one aspect the matter with respect to which it is enacted is the restriction of State action, the prescribing of the course which the Executive Government of the State must take or the limiting of the courses available to it. As the operation of such a law is to place a particular burden or disability upon the State in that aspect it may correctly be described as a law for the restriction of State action in the field chosen. That is a direct operation of the law."
But it is important to appreciate that, in his Honour's view, the implied limitation precluded the exercise of Commonwealth legislative power "for a purpose of restricting or burdening the State in the exercise of its constitutional powers". To do so "brings into question the independence from federal control of the State in the discharge of its functions".

57. 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.

58. 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. (References omitted)

[11] In Victoria v The Commonwealth 4the High Court was called upon to consider the scope of the implied limitation in relation to various provisions of recently enacted Federal industrial relations legislation, the Industrial Relations Reform Act 1993. Of particular relevance to the circumstances in the present case was the conclusion expressed in relation to provisions of the legislation regarding union consultation. In the joint judgement of Brennan CJ, Toohey, Gaudron, McHugh And Gummow JJ their Honours said5:

“137. The challenge to the termination of employment provisions, as they affect the States, is made compendiously by reference to the holding in Re Australian Education Union that the Commonwealth cannot legislate to prevent a State from exercising its "right to determine the number and identity of the persons whom it wishes to employ, the term of appointment of such persons and ... the number and identity of the persons whom it wishes to dismiss with or without notice from its employment on redundancy grounds". The plaintiff States claim that that is what the termination of employment provisions do. In the alternative, they argue that the provisions apply to persons employed by the States at the higher levels of government and are, to that extent, invalid. It is convenient to consider the arguments of the plaintiff States first in relation to the general prohibitions on termination and, then, in relation to the provisions specifically dealing with redundancy.

...

146. The other prohibition which operates specifically with respect to terminations for redundancy is in s 170DG. That section provides that "(a)n employer must not terminate an employee's employment in contravention of an order in force under section 170FA." The latter section provides that, subject to Pt VIA, "the Commission may ... make an order for the purpose of giving effect to ... Article 12 (in so far as it relates to a severance allowance or other separation benefits) or 13 of the Termination of Employment Convention". As already indicated, Art 12 is concerned with severance pay and Art 13 with union consultation.

147. An order for the payment of severance pay and orders requiring union consultation clearly impair a State's right to "determine the number and identity of (those) whom it wishes to dismiss ... on redundancy grounds". However, the effect of the reading down of s 6 is that s 170FA does not apply to the States. It follows that the prohibition in s 170DG has no operation with respect to the States.” (Reference omitted)

[12] More recently, the High Court held that two pieces of Commonwealth Superannuation Contributions Tax legislation were invalid insofar as they purported to create a liability with respect to members of State parliaments. French CJ said the following about the implied limitation 6:

“32. The constitutional implication considered in Austin and its precursors means that the Commonwealth cannot, by the exercise of its legislative power, significantly impair, curtail or weaken the capacity of the States to exercise their constitutional powers and functions (be they legislative, executive or judicial) or significantly impair, curtail or weaken the actual exercise of those powers or functions. The Constitution assumes the existence of the States as "independent entities". This implies recognition of the importance of their status as components of the federation. The "significance" of a Commonwealth law affecting the States' functions is not solely to be determined by reference to its practical effects on those functions. This is not a return to any generalised concept of inter-governmental immunity. It simply recognises that there may be some species of Commonwealth laws which would represent such an intrusion upon the functions or powers of the States as to be inconsistent with the constitutional assumption about their status as independent entities.

The application of the implied limitation is evaluative. It has always been thus. There is a normative element in the criterion of "significance" by which the adverse effects of a Commonwealth law on State capacities or functions must be characterised, before such a law will be held to be invalid. Whether the effects of a law upon the capacities or functions of the States are "significant" is to be judged qualitatively and also, but not only, by reference to its practical effects. To take an extreme example, a law of the Commonwealth purporting to subject the Governor of each of the States to a special "gubernatorial privileges tax" might fix the tax at a level which, in a financial sense, would be of little practical importance to the States or to their Governors. It might be thought, nevertheless, that the nature of such a law would mark it as asserting an intrusive legislative authority with respect to the constitutional office of Governor that was inconsistent with the status of the States as independent entities under the Constitution.”

[13] The joint judgment of Gummow, Heydon, Keiffel and Bell JJ expressed the principle in different terms. Their Honours said:

“65 The fifth point is that in Austin, a majority of the Court, Gleeson CJ and Gaudron, Gummow and Hayne JJ concluded that the notion of "discrimination" by federal law against a State is but an illustration of a law which impairs the capacity of the State to function in accordance with the constitutional conception of the Commonwealth and States as constituent entities of the federal structure. Too intense a concern with identification of discrimination as a necessity to attract the Melbourne Corporation doctrine involves the search for the appropriate comparator, which can be a difficult inquiry and is apt to confuse, rather than to focus upon the answering of the essential question of interference with or impairment of State functions. It also may be that the references to discrimination by Dixon J in Melbourne Corporation use the term in the somewhat different sense of a law which is "aimed at" or places a "special burden" on the States.

This leads to the final point, which indicates the nature of the inquiry for the present appeal. It was made as follows in the joint reasons in Austin:

‘There is, in our view, but one limitation, though the apparent expression of it varies with the form of the legislation under consideration. The question presented by the doctrine in any given case requires assessment of the impact of particular laws by such criteria as 'special burden' and 'curtailment' of 'capacity' of the States 'to function as governments'. These criteria are to be applied by consideration not only of the form but also 'the substance and actual operation' of the federal law. Further, this inquiry inevitably turns upon matters of evaluation and degree and of 'constitutional facts' which are not readily established by objective methods in curial proceedings.’

[14] The provisions of the Act sought to be invoked in the present proceedings are sections 786, 787 and 788. Those sections provide:

“786 FWC may make orders where failure to notify or consult registered employee associations about terminations

(1)  The FWC may make an order under subsection 787(1) if it is satisfied that:

(a)  an employer has decided to terminate the employment of 15 or more employees for reasons of an economic, technological, structural or similar nature, or for reasons including such reasons; and

(b)  the employer has not complied with subsection (2) (which deals with notifying relevant registered employee associations) or subsection (3) (which deals with consulting relevant registered employee associations); and

(c)  the employer could reasonably be expected to have known, when he or she made the decision, that one or more of the employees were members of a registered employee association.

Notifying relevant registered employee associations

(2)  An employer complies with this subsection if:

(a)  the employer notifies each registered employee association of which any of the employees was a member, and that was entitled to represent the industrial interests of that member, of the following:

(i)  the proposed terminations and the reasons for them;

(ii)  the number and categories of employees likely to be affected;

(iii)  the time when, or the period over which, the employer intends to carry out the terminations; and

(b)  the notice is given:

(i)  as soon as practicable after making the decision; and

(ii)  before terminating an employee's employment in accordance with the decision

Consulting relevant registered employee associations

(3)  An employer complies with this subsection if:

(a)  the employer gives each registered employee association of which any of the employees was a member, and that was entitled to represent the industrial interests of that member, an opportunity to consult the employer on:

(i)  measures to avert or minimise the proposed terminations; and

(ii)  measures (such as finding alternative employment) to mitigate the adverse effects of the proposed terminations; and

(b)  the opportunity is given:

(i)  as soon as practicable after making the decision; and

(ii)  before terminating an employee's employment in accordance with the decision.

787 Orders that the FWC may make

(1)  The FWC may make whatever orders it considers appropriate, in the public interest, to put:

(a)  the employees; and

(b)  each registered employee association referred to in paragraph 786(2)(a) or
(3)(a);in the same position (as nearly as can be done) as if the employer had complied with subsections 786(2) and (3).

(2)  The FWC must not, under subsection (1), make orders for any of the following:

(a)  reinstatement of an employee;

(b)  withdrawal of a notice of termination if the notice period has not expired;

(c)  payment of an amount in lieu of reinstatement;

(d)  payment of severance pay;

(e)  disclosure of confidential information or commercially sensitive information relating to the employer, unless the recipient of such information gives an enforceable undertaking not to disclose the information to any other person;

(f)  disclosure of personal information relating to a particular employee, unless the employee has given written consent to the disclosure of the information and the disclosure is in accordance with that consent.

788 Application to the FWC for order

The FWC may make the order only on application by:

(a)  one of the employees; or

(b)  a registered employee association referred to in paragraph 786(2)(a) or (3)(a); or

(c)  any other registered employee association that is entitled to represent the industrial interests of one of the employees.”

[15] The Queensland Government submits that the AEU case and the Industrial Relations Act case provide a true guide as to how to apply the Melbourne Corporation principle to provisions that are in substance the same as sections 786 and 787, sought to be invoked in the present case. It submits that there is no modern view or different test to be applied from more recent authorities. It further submits that Austin’s case and Clarke’s case do not disapprove, distinguish or overrule the AEU case or the Industrial Relations Act case and that these cases establish that orders of the type sought by the AWUQ in the present case impair a State’s rights. The Queensland Government also draws attention to decisions of the Australian Industrial Relations Commission decided after the AEU case that have deleted provisions of awards dealing with consultation with respect to State Government employment.

[16] The AWUQ submits that the question whether s.787 would infringe the Melbourne Corporation principle needs to be considered in the light of more recent authorities, especially given the lack of reasoning of the conclusion in the Industrial Relations Act case concerning the consultation provisions of the Industrial Relations Act. It submits that the ultimate discretion on whether to dismiss employees will always rest with the Queensland Government, a similar conclusion was reached by a Full Court of the Industrial Relations Court of Australia after the AEU case was decided in the High Court, and the legislative provisions now under consideration are different from those dealt with in the Industrial Relations Act case. In that regard it draws particular attention to limitations on the remedies that may be ordered in s.787(2).

[17] In my view the Queensland Government is correct in submitting that there is one implied limitation principle to be applied and that it has not been varied or subject to a different threshold as a result of more recent applications of the principle in the High Court. The test is whether sections 786 and 787 impair, curtail or weaken the capacity of the Queensland Government to exercise its constitutional powers and functions in a material or significant way either conceptually or in its practical effect.

[18] The High Court has held that impairing a State's right to "determine the number and identity of (those) whom it wishes to dismiss ... on redundancy grounds” infringes the implied limitation and a union consultation requirement prior to implementing redundancies, and a remedy with respect to non-observance of the requirement, impairs State rights in an impermissible manner.

[19] In my view sections 786 and 787 entitle the Commission to make a wide range of orders if it is satisfied that consultation of a particular nature has not occurred. The High Court in the Industrial Relations Act case has held that similar provisions are invalid insofar as they apply to State Governments. In my view the proper application of the authorities requires me to find that the implied limitation applies in this case and it is appropriate to dismiss the application on that ground.

Conclusion

[20] For the above reasons I find that the implied limitation in the Federal Constitution on the capacity of the Commonwealth Government to make laws that impair the operation of the States as independent entities applies to this application and that ss 786 and 787 of the Act do not apply to the Queensland Government. The application by the AWUQ in this case must therefore be dismissed. It is not necessary for me to determine the further alternative ground for dismissing the application.

VICE PRESIDENT WATSON

Appearances:

Mr JW Merrell appeared for the Australian Workers Union, Queensland.

Mr JE Murdoch QC with Mr MD Healy appeared for the State of Queensland.

Hearing details:

2014.

Brisbane.

March, 4.

Final written submissions:

Mr JW Merrell, 13 February 2014.

Mr JE Murdoch, 30 January; and 4 March 2014.

 1 (1947) 74 CLR 31.

 2   At [82]-[83].

 3 (1994-1995) 184 CLR 188 at [231]-[233].

 4 (1995-1996) 187 CLR 416.

 5   At [518]-[521].

 6 (2009) 240 CLR 272 at [298].

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