Tweed Valley Fruit Processors Pty Ltd v Australian Industrial Relations Commission
[1996] IRCA 149
•24 April 1996
DECISION NO: 149/96
INDUSTRIAL LAW - Enterprise flexibility agreement - Approval of implementation of agreement by member of Australian Industrial Relations Commission - Decision set aside by Full Bench of Commission on appeal - Whether Full Bench exceeded its jurisdiction in taking that course - Whether there is any right of appeal to Full Bench against decision approving implementation of agreement, even where there is jurisdictional error - Standings of union to appeal against decision - Whether the Commissioner failed to exercise jurisdiction - Interpretation and application of s.170NC of Industrial Relations Act.
Industrial Relations Act 1988, ss.4, 45, 170NA, 170NB, 170NC, 170ND, 170NG and 170NN.
TWEED VALLEY FRUIT PROCESSORS PTY LTD
v. THE HONOURABLE IAIN JAMES KERR ROSS, A VICE PRESIDENT OF THE AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION, THE HONOURABLE DAVID ANTHONY DUNCAN, A DEPUTY PRESIDENT OF THE AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION and KEITH WILLIAM MAHON ESQUIRE, A MEMBER OF THE AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION and AUTOMOTIVE, FOOD, METALS ANDENGINEERING/PRINTING AND KINDRED INDUSTRIES UNION
No. NI.1169 of 1996
CORAM: WILCOX CJ, MOORE and MARSHALL JJ
PLACE: SYDNEY
DATE: 24 APRIL 1996
THE INDUSTRIAL RELATIONS COURT )
OF AUSTRALIA ) No. NI.1169 of 1996
NEW SOUTH WALES DISTRICT REGISTRY)
BETWEEN:TWEED VALLEY FRUIT PROCESSORS PTY LTD
Applicant
AND:THE HONOURABLE IAIN JAMES KERR ROSS, A VICE PRESIDENT OF THE AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION, THE HONOURABLE DAVID ANTHONY DUNCAN, A DEPUTY PRESIDENT OF THE AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION and KEITH WILLIAM MAHON ESQUIRE, A MEMBER OF THE AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION
First Respondents
AND
AUTOMOTIVE, FOOD, METALS AND ENGINEERING/PRINTING AND KINDRED INDUSTRIES UNION
Second Respondent
CORAM: WILCOX CJ, MOORE and MARSHALL JJ
PLACE: SYDNEY
DATE: 24 APRIL 1996
MINUTES OF ORDER
THE COURT ORDERS THAT:
The motion for the issue of prerogative writs be dismissed.
Note:Settlement and entry of orders is dealt with in Order 36 of the Industrial Relations Court Rules.
THE INDUSTRIAL RELATIONS COURT )
OF AUSTRALIA ) No. NI.1169 of 1996
NEW SOUTH WALES DISTRICT REGISTRY)
BETWEEN:TWEED VALLEY FRUIT PROCESSORS PTY LTD
Applicant
AND:THE HONOURABLE IAIN JAMES KERR ROSS, A VICE PRESIDENT OF THE AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION, THE HONOURABLE DAVID ANTHONY DUNCAN, A DEPUTY PRESIDENT OF THE AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION and KEITH WILLIAM MAHON ESQUIRE, A MEMBER OF THE AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION
First Respondents
AND
AUTOMOTIVE, FOOD, METALS AND ENGINEERING/PRINTING AND KINDRED INDUSTRIES UNION
Second Respondent
CORAM: WILCOX CJ, MOORE and MARSHALL JJ
PLACE: SYDNEY
DATE: 24 APRIL 1996
REASONS FOR JUDGMENT
WILCOX CJ and MARSHALL J: This is a motion for the issue of prerogative writs that was initiated in the High Court of Australia and remitted for determination to this Court by Gaudron J on 22 December 1995.
The parties
The applicant is Tweed Valley Fruit Processors Pty Ltd ("Tweed Valley"). It seeks prerogative writs directed to the members of a Full Bench of the Australian Industrial Relations Commission ("AIRC" or "the Commission") quashing a decision made by them on 21 September 1995 and prohibiting further action in reliance thereon. The members of the Full Bench, Vice-President Ross, Deputy President Duncan and Commissioner Mahon, are the first respondents to the application. However, in accordance with usual practice, they took no part in the hearing in this Court. The second respondent, Automotive, Food, Metals and Engineering/Printing and Kindred Industries Union ("AFME/PKIU"), contested the applicant's claim for relief.
When the application was called for hearing, Mr Leslie Katz SC and Mr C Staker appeared to intervene on behalf of the Attorney General. They claimed to do so as of right, pursuant to s.471 of the Industrial Relations Act 1988. The Attorney General is the "Minister", for the purposes of that section, under the Administrative Arrangements Order made by the Governor- General on the installation of the recently-elected Government. The Court accepted this claim and Mr Katz subsequently put submissions concerning the interpretation and application of s.45(1) of the Act.
Also at the commencement of the hearing, Mr S Benson of counsel sought leave to intervene, pursuant to s.470 of the Act, on behalf of two employees of Tweed Valley, Ruth Moir and Peter Stokes. The Court granted leave and Mr Benson subsequently put submissions that adopted those put by counsel for Tweed Valley, Mr J Trew QC and Mr Peter Newall. Counsel for AFME/PKIU were Mr W R Haylen QC and Mr J Wallace.
The issues
This case has generated considerable comment and publicity, not all of it accurate. It may assist comprehension if we immediately state some of the matters that do not fall for our determination.
First, we are not concerned with the question whether it is desirable or undesirable for Australian industrial legislation to make provision for agreements between employers and employees that override industrial awards or, if so, whether it is desirable or undesirable to provide an opportunity for union involvement in the negotiation of such agreements and/or to require approval of such agreements by an independent body such as the Commission. These are policy issues to be determined by Parliaments, not courts.
Secondly, although this case arises out of an agreement between Tweed Valley and its employees that was the subject of an application to the Commission, we are not required in this case to make findings about the circumstances in which the agreement was adopted or its fairness to Tweed Valley's employees. They are both contentious matters. The Commission has had to consider them and, if the Full Bench's order stands, it may be relevant to the determination of public interest for Commissioner Redmond to make further findings about those matters. But neither matter falls for determination in this Court.
This being an application for prerogative relief, our task is confined to determining a rather dry legal question: whether the Full Bench exceeded its jurisdiction in allowing an appeal by AFME/PKIU against Commissioner Redmond's decision approving the applicant's enterprise flexibility agreement ("EFA"). That question has two aspects: whether there is a right of appeal to a Full Bench in a case such as this, even where the relevant single member has exceeded, or failed to exercise, the Commission's jurisdiction; and, if so, whether Commissioner Redmond failed to exercise that jurisdiction. We are not concerned with other matters and our decision should not be interpreted as a comment about them.
The background facts
Tweed Valley carries on business at Murwillumbah, northern New South Wales, as a processor of fresh fruit. At relevant times it seems to have employed about 30 people.
In late 1994 and early 1995 the General Manager of Tweed Valley, Richard Moran, negotiated with an employees' committee with a view to forming an enterprise flexibility agreement to replace the Food Preservers' (Interim) Award 1986, an award of AIRC that governed the relationship between Tweed Valley and its employees. A document containing the terms of a proposed EFA was prepared and submitted to a secret ballot of employees. It was rejected. Subsequently, Mr Moran amended the document and it was re-submitted to a vote by employees - this time by a show of hands. At a meeting held on 16 June 1995, the employees approved the document by 26 votes to three.
The hearing before Commissioner Redmond
Following that meeting, Tweed Valley applied to AIRC for approval of the agreement. This was done pursuant to s.170NA(2)(b) of the Industrial Relations Act. In order to put that reference into context, it is desirable to observe that s.170NA is the opening section in Division 3 of Part VIB of the Act. Part VIB was inserted into the Act by the Industrial Relations Reform Act 1993 which commenced to operate on 30 March 1994. Division 1 sets out the objects of the Act and some definitions. Division 2 deals with certified agreements. Division 3 relates to enterprise flexibility agreements.
Section 170NA provides:
"170NA(1)An employer that is a constitutional corporation and carries on an enterprise may prepare an instrument that:
(a)applies to the enterprise; and
(b)is about matters pertaining to the relationship between employers and employees.
(2)If an instrument is prepared under subsection (1):
(a)it is taken for the purposes of this Act to be an agreement and to have been made when the instrument was prepared; and
(b)the employer may apply to the Commission to approve implementation of the agreement."
It will be noted that s.170NA(1) applies only to an employer that is a "constitutional corporation". This term is defined in s.4 of the Act as meaning:
"(a)a foreign corporation within the meaning of paragraph 51(xx) of the Constitution; or
(b)a body corporate that is, for the purposes of paragraph 51(xx) of the Constitution, a financial corporation formed within the limits of a Commonwealth; or
(c)a body corporate that is, for the purposes of paragraph 51(xx) of the Constitution, a trading corporation formed within the limits of the Commonwealth; or
(d)a body corporate that is incorporated in a Territory; or
(e)a Commonwealth authority;"
It is apparent that, in enacting Division 3, Parliament relied on its corporations power (Constitution, s.51(xxxv)). This is a matter that assumed some importance in arguments put to the Court by counsel for Tweed Valley and counsel for the Attorney General.
In the present case no difficulty arises out of s.170NA's requirement that the employer be a constitutional corporation. It is accepted on all sides that Tweed Valley fulfils this requirement.
The application for approval of the implementation of the agreement came before Commissioner Redmond at Murwillumbah on 27 July 1995. Kerry Burke, the Employee Relations Advisor of Tweed Valley, appeared on its behalf with Mr Moran. Section 170NB gives a right to be heard, on an application to the Commission to approve implementation of an EFA, to a registered organisation of employees that is bound by an award binding the employer in respect of work performed in the enterprise. AFME/PKIU took advantage of this entitlement. An officer of the organisation, T Thorpe, appeared on its behalf. He submitted that the Commission should reject the agreement.
The Commission's powers and duties in relation to approval of the implementation of an EFA are governed by ss.170NC, 170ND and 170NG. They relevantly provide:
"170NC(1)On an application to the Commission to approve implementation of an agreement, the Commission must do so if, and must not do so unless, it is satisfied that:
(a)the agreement applies only to the enterprise referred to in section 170NA and is only about matters pertaining to the relationship between employers and employees; and
(b)wages and conditions of employment of the employees covered by the agreement are regulated by one or more awards ... that bind the employer; and
(c)the agreement covers all of the employees:
(i)in respect of whom wages and conditions of employment are regulated by one or more awards ... that bind the employer; and
(ii)whom the employer employs to perform work in that enterprise; and
(d)the agreement does not, in relation to their terms and conditions of employment, disadvantage the employees who are covered by the agreement; and
(e)the agreement includes procedures for preventing and settling disputes between the persons bound by the agreement about matters arising under the agreement; and
(f)either:
(i)the agreement establishes a process for the persons bound by the agreement to consult each other about matters involving changes to the organisation or performance of work in the enterprise; or
(ii)the agreement states that it is not appropriate for the agreement to provide as mentioned in subparagraph (i); and
(g)during the negotiations for the agreement, reasonable steps were taken to consult employees who are covered by the Agreement about the agreement; and
(h)before the application for approval was made, reasonable steps were taken:
(i)to inform the employees who are covered by the agreement about the terms of the agreement; and
(ii)to explain to those employees the effect of those terms; and
(iii)in particular, to explain to those employees the procedures referred to in paragraph (e); and
(iv)to inform those employees of the intention to apply to the Commission to approve implementation of the agreement, and about the consequences of approval; and
(i)a majority of the persons who, as at the end of a day that is specified in the application and is not more than 7 days before the day when the application was made, were employees covered by the agreement have, on or before the specified day, genuinely agreed to be bound by the agreement, even if they so agreed at different times; and
(j)the agreement specifies its period of operation.
(2)For the purposes of paragraph (1)(d), an agreement is taken to disadvantage employees in relation to their terms and conditions of employment only if:
(a)approval of implementation of the agreement would result in the reduction of any entitlements or protections of those employees under:
(i)an award ...; or
(ii)any other law of the Commonwealth or of a State or Territory that the Commission thinks relevant; and
(b)in the context of their terms and conditions of employment considered as a whole, the Commission considers that the reduction is contrary to the public interest.
(3) ...
170ND(1)Despite section 170NC, the Commission may refuse to approve implementation of an agreement if the Commission thinks that the agreement includes a term that a provision of this Act (except section 95) or of any other Act would prohibit the Commission from including in an award.
(2)Despite section 170NC, the Commission must refuse to approve implementation of an agreement if the Commission thinks that a provision of the agreement is inconsistent with:
(a)a provision of Part VIA; or
(b)an order by the Commission under that Part; or
(c)an injunction granted, or any other order made, by the Court under that Part.
(3)Despite section 170NC, the Commission may refuse to approve implementation of an agreement if satisfied that, because of exceptional circumstances, approving implementation of the agreement would be contrary to the public interest.
(4)Approving implementation of an agreement is not contrary to the public interest merely because the agreement is inconsistent with principles established by a Full Bench that apply in relation to determining wages and conditions of employment by awards made under Part VI.
(5)...
(6)...
(7) ...
(8) ...
(9) ...
(10)Despite section 170NC, the Commission must refuse to approve implementation of an agreement if it thinks that a provision of the agreement discriminates against an employee because of, or for reasons including, race, colour, sex, sexual preference, age, physical or mental disability, marital status, family responsibilities, pregnancy, religion, political opinion, national extraction or social origin.
(10A) ...
(11) ...
170NG(1)The Commission must comply with this section in performing its functions and exercising its powers in relation to an application to approve implementation of an agreement.
(2)The Commission must identify the employees ('relevant employees'), if any, who are covered by the agreement but whose interests may not have been sufficiently taken into account in the negotiations for, or the terms of, the agreement. Examples of employees whose interests may not have been so taken into account are:
(a)women;
(b)persons whose first language is not English;
(c)young persons.
(3)For the purposes of deciding whether it is satisfied as mentioned in paragraphs 170NC(1)(g) and (h), the Commission must do whatever is necessary to find out:
(a)whether:
(i)the relevant employees were consulted about the agreement, and informed about the matters referred to in subparagraphs 170NC(1)(h)(i) and (iv); and
(ii)the matters referred to in subparagraphs 170NC(1)(h)(ii) and (iii) were explained to the relevant employees;
in ways that were appropriate having regard to their particular circumstances and needs; and
(b)whether the effects on the relevant employees of the terms of the agreement were properly explained to those employees.
(4)If it considers that there has been a failure to consult or explain as mentioned in subsection (3), the Commissioner must make whatever orders it thinks necessary to remedy the failure and its effects."
At the completion of the hearing on 27 July, Commissioner Redmond reserved his decision. He handed it down in Sydney on 16 August 1995. After referring briefly to the history of the application, he noted two "key features" of the agreement: that it was to be read and interpreted in conjunction with the Food Preservers' Interim Award 1986, but to prevail to the extent of any inconsistency, and that it provided a 9% increase in current rates of pay - 6% from 27 July 1995 and 3% from 27 July 1996 with a "productivity bonus subject to a number of productivity targets being met". Commissioner Redmond said he was satisfied that:
"1.The applicant is a constitutional corporation within the meaning of the Act as it is a body corporate that is a trading corporation.
2.Each of the statutory requirements of section 170NC have been met, in particular:
(i)section 170NC(1)(a) the Tweed Valley Fruit Processors Pty Ltd is a business carried on by a single employer and hence is an 'enterprise' within the meaning of section 170LC. The Agreement only applies to the Tweed Valley Fruit Processors Pty Ltd and is only about matters pertaining to the relationship between employers and employees;
(ii)section 170NC(1)(b) the wages and conditions of employment of the employees covered by the Agreement are regulated by the Food Preservers' Interim Award 1986;
(iii)section 170NC(1)(c): the Agreement covers all of the employees employed to perform work in the enterprise in respect of whom wages and conditions of employment are regulated by a Federal award;
(iv)section 170NC(1)(d): the means of determining whether or not the 'no disadvantage' test is met is dealt with in ss.170NC(2). Certification of the Agreement will not result in the reduction of any entitlement or protections of the employees covered by the Agreement under an award or any other law of the Commonwealth or of a State or Territory. The Agreement does not, in relation to their terms and conditions of employment, disadvantage the employees who are covered by the Agreement;
(v)section 170NC(1)(e): Clause 48 of the Agreement sets out a procedure for preventing and settling disputes between the persons bound by the agreement;
(vi)section 170NC(1)(f): Clause 49 of the Agreement establishes a process for the persons to consult each other about matters involving changes to the organisation of the performance of work in the enterprise;
(vii)section 170NC(1)(g) & (h): During the negotiations for the Agreement reasonable steps were taken to consult employees who are covered by the Agreement about the Agreement. The Agreement was negotiated by the Single Bargaining Unit and copies of the minutes of the formal meetings held were posted on a notice board in a space specifically dedicated to Enterprise Bargaining matters.
Before the application was made for the approval of the Agreement reasonable steps were taken to:
-inform employees of the terms of the Agreement;
-explain to the employees the effect of those terms, in particular the dispute settlement clause; and
-inform the employees that an application would be made to the Commission for approval of the Agreement and about the consequences of approval.
Prior to voting on the Agreement all employees were given a copy of the Agreement and invited to approach members of the Single Bargaining Unit to answer any queries they had.
(viii)section 170NC(1)(i)(a): a majority of the employees covered by the Agreement have genuinely agreed to be bound by the Agreement.
(ix)section 170NC(1)(j): clause 5 of the Agreement provides that it will commence from first pay period commencing on or after the date of approval for a period of 2 years.
3.There are no matters arising under s.170ND which would lead me to refuse to approve the implementation of the Agreement."
The Commissioner concluded by saying:
"On the basis of the foregoing I am satisfied that the relevant statutory tests have been met and I will approve the implementation of the Enterprise Flexibility Agreement. Pursuant to section 170NJ the Agreement will come into force from the first pay period on or after 27 July 1995 and shall remain in force for a period of 2 years."
The hearing before the Full Bench
AFME/PKIU sought leave to appeal to a Full Bench of the Commission against Commissioner Redmond's decision. The application for leave was apparently heard in conjunction with argument on the merits of the appeal, if leave were granted. One issue was whether there was an available right of appeal. AFME/PKIU contended that there was, that the case was covered by s.45(1)(g) of the Act because Commissioner Redmond had failed to address the questions that he was required to consider under ss.170NC and 170NG; and therefore had failed to exercise the jurisdiction committed to him. Section 45 relevantly provides:
"45(1)Subject to this Act, an appeal lies to a Full Bench, with the leave of the Full Bench, against:
(a)a decision of a member of the Commission by way of a finding in relation to an industrial dispute or alleged industrial dispute;
(b)an award or order made by a member of the Commission, other than an award or order made by consent of the parties to an industrial dispute;
(c)a decision of a member of the Commission not to make an award or order;
(d)...
(e)a decision of a member of the Commission refusing to certify an agreement under Division 2 of Part VIB;
(eaa)a decision of a member of the Commission refusing to approve under Division 3 of Part VIB implementation of an agreement;
(ea)...
(eb)...
(ec)...
(ed)...
(f)...
(g)a decision of a member of the Commission that the member has jurisdiction, or a refusal or failure of a member of the Commission to exercise jurisdiction, in a matter arising under this Act.
(2)A Full Bench shall grant leave to appeal under subsection (1) if, in its opinion, the matter is of such importance that, in the public interest, leave should be granted.
(3)An appeal under subsection (1) may be instituted:
(a)in the case of an appeal under paragraph (1)(b) that is not against an order under Part VIA - by an organisation or person bound by the award or order;
(aa)in the case of an appeal under paragraph (1)(b) against an order under Part VIA - by a person entitled under section 170JF to institute the appeal;
(b)in the case of an appeal under paragraph (1)(e) - by a party to the agreement;
(baa)in the case of an appeal under paragraph (1)(eaa) - by any person who would have been bound by the agreement if implementation of it had been approved;
(ba)...
(bb)...
(c)...
(d)in any other case - by an organisation or person aggrieved by the decision or act concerned.
(4)...
(5) ...
(6) ...
(7) ...
(8) ...
(9) ..."
The Full Bench gave leave to appeal and upheld the appeal. In a decision announced on 26 October 1995, it quashed the order approving implementation of the agreement and referred the matter back to Commissioner Redmond to be dealt with in accordance with the Full Bench's decision.
The Full Bench's reasons for decision are lengthy. However, as it is submitted that the decision involves jurisdictional error, we must attempt a summary.
The Full Bench commenced by outlining the background to the case and quoting s.45(1) to (3) of the Act. The Full Bench noted the submission made by Mr Newall on behalf of Tweed Valley that s.45(1)(g) should be read down in such a way as to exclude its application to decisions that approve the implementation of an EFA. The Full Bench gave reasons for rejecting that submission.
The members of the Full Bench then dealt with the question whether leave to appeal should be granted. After setting out the parties' contentions on this point, they said:
"In this matter we have decided, on balance, to grant leave to appeal. The matters raised in the appeal are both novel and of general importance. In our opinion the appeal raises real and substantial issues as to jurisdiction which warrant consideration by a Full Bench of the Commission on appeal.
We have reached this conclusion with some reluctance given the wholly inadequate nature of the case presented by the Union at first instance. In other circumstances the appellant's failure to fully debate the matter at first instance would have led us to refuse to grant the application for leave to appeal ...
It is unfortunate that the Commissioner was not given the benefit of the analysis of the Agreement submitted by the Union in these appeal proceedings. The Commissioner was not assisted in his task by the Union's submissions at first instance.
We have formed the opinion that the matters raised by the appeal are of such importance that, in the public interest, leave should be granted. We grant leave to appeal."
The Full Bench then turned to the agreement. The Bench stated that it covered all persons employed by Tweed Valley whose wages and conditions of employment were regulated by the Food Preservers' Interim Award 1986 and was for a term of two years. It noted evidence that, on 16 June 1995, there were 29 employees covered by the agreement including six women, one person under 21 years of age, three part-time employees and one casual employee. The Full Bench did not spell out the significance of its reference to these groups; presumably it had in mind s.170NG of the Act.
The Full Bench then embarked on a comparison of the agreement and the award. The comparison was set out in tabular form and involved a reference to 18 different items of entitlement or protection. Under the heading "Award" the Full Bench set out the terms of the award, in respect of that item, and, under the heading "Agreement", the terms of the agreement (if any) in respect of that item. The Table was prefaced with this comment by the Full Bench:
"A comparison of the Agreement and the Award makes it clear that the implementation of the Agreement has resulted in a reduction in a number of entitlements and protections which the employees covered by the Agreement were previously entitled to under the Award. Some of the significant changes are set out in table below:"
After setting out the Table, the Full Bench said:
"The reductions in award entitlement and protections as a result of the implementation of the Agreement need to be balanced against the benefits provided in the Agreement. Three particular benefits should be noted in this regard.
First, the Agreement provides for hourly rates of pay which are in excess of those provided for in the Award.
In the proceedings at first instance the rates of pay set out in the Agreement were said to be six per cent above the Award rates. There is to be a further three per cent increase in pay rates on 16 August 1996.
The Agreement is a 'closed' agreement in that it provides for no further wage or salary increases during the term of the Agreement, including increases from sources such as award variations or decisions of the Commission, other than the three per cent specified in the Agreement and increases which may result from the productivity bonus and attendance bonus arrangements.
The material provided by the employer at first instance set out the basis upon which the nine per cent wage increase was calculated. The relevant material is set out in Table 2."
Table 2 contained a calculation of the value of award reductions in respect of five items: leave loading, "smokos", public holidays, meal breaks and sick leave. The calculation came to 9.67%. The Full Bench noted that AFME/PKIU challenged the methodology employed in this calculation and had submitted material that suggested that the impact of the agreement on employees "was much more disadvantageous than suggested by the employer".
The Full Bench made a number of comments about the controversy concerning the value of award reductions. They commenced with four general observations:
"-even if the employer's calculations are relied upon it is clear that in the first 12 months of the Agreement's operation non-team member employees are more than 3.5 per cent worse off than they would be under the Award. The extent of the reduction in wages is less in the second 12 months of the Agreement because of the three per cent increases which applies from 16 August 1996.
-the methodology used by the employer is deficient in that it only has regard to a limited number of award reductions. The extent of the award reductions are greater than the five referred to in Table 2 (see Table 1).
-the implementation of the Agreement results in a net reduction in wages for non-team member junior employees over the life of the Agreement.
-the wage increases provided to employees who are team members are considerably greater than those provided to other employees. However the rate of pay for a team member incorporates the shift penalty rates provided in the Award. On the limited material before us we are unable to determine how many employees will be classified as team members."
The second benefit detected by the members of the Full Bench was the clause containing the productivity bonus. They discussed its terms and likely effect.
The third benefit was a clause containing a reconciliation mechanism. This was said to ensure that no permanent adult employee would be worse off, in relation to wages, under the agreement than under the award. The members of the Full Bench examined this clause in detail. We need not reproduce their comments. They contain criticisms of what were seen as unnecessary limitations in its operation.
The Full Bench referred to the consultation process undertaken prior to approval of the agreement, the secret ballot and the subsequent show of hands vote. The Bench then summarised the union's case on appeal:
"The essence of the submissions put by the appellant were that the Commissioner at first instance wrongly exercised jurisdiction or alternatively failed to exercise jurisdiction in that he misconstrued the provisions of Division 3 of Part VIB of the Act. It was submitted that the Commissioner misconstrued or misunderstood the tests he was obliged to apply to the application before him. Three particular points were advanced in this regard.
First, it was alleged that the Commissioner failed to properly consider, or consider at all, the reductions in award conditions which would result from the implementation of the Agreement or alternatively he misconstrued the no disadvantage test under s.170NC(1)(d). In this context the appellant argued that the Commissioner had failed to have sufficient regard to the reduction of certain accepted community standards, namely the abolition of paid sick leave and the loss of three public holidays.
Second, it was alleged that the Agreement contains provisions which discriminate against certain employees, namely juniors, because of their age. As such the Commissioner should have refused to approve the implementation of the Agreement under s.170ND(10).
Third, there is no indication that the Commissioner complied with s.170NG."
The Full Bench noted that counsel for the then Minister for Industrial Relations, intervening in support of the union, had argued that the Commissioner misconstrued the "no disadvantage" test in s.170NC(1)(d); that "it was not open to the Commission on the evidence to find that approval of the implementation of the Agreement would result in no reduction in any award entitlements or protection, as per s.170NC(2)(a)", so it was necessary for the Commissioner to consider whether, in light of the terms and conditions of the agreement as a whole, the reductions were contrary to the public interest as required by s.170NC(2)(b). As the Commissioner had failed to exercise the public interest discretion, it was argued that this amounted to a refusal or failure by the Commissioner to exercise jurisdiction. The Full Bench recorded that the representative of the Australian Council of Trade Unions, who was also given leave to intervene, supported these submissions.
The members of the Full Bench summarised Mr Newall's submissions in response. They said he had:
"advanced a well developed argument to the effect that the Commissioner had not made an error which was amenable to appeal under s.45(1)(g). Mr Newall drew a distinction between the situation where a member of the Commission decides that jurisdiction - that is the legal capacity to deal with a matter - lies or does not lie and the exercise of jurisdiction, rightly or wrongly, by a member. In Mr Newall's submission s.45(1)(g) only applies to 'preliminary jurisdictional questions'. All it enables the Commission to review would be whether or not jurisdiction lay below."
Under the heading "Jurisdictional error", the Full Bench set out its conclusions. The members commenced this section of their reasons by saying:
"In order to succeed the appellant must show that the Commissioner erred in deciding he had jurisdiction or in refusing or failing to exercise jurisdiction.
It is not enough for the appellant to show that the Commissioner fell into legal error. The error must be of a jurisdictional nature.
The question whether a particular error constitutes an excess of jurisdiction or a failure to exercise jurisdiction is often difficult to determine."
They then referred to several legal authorities -Anisminic v Foreign Compensation Commission [1969] 2 AC 147, Public Service Association (SA) v Federated Clerks' Union (SA Branch)(1991) 173 CLR 132; Re Keely; Ex parte Kingham (1991) 129 ALR 225 and Australian Industrial Relations Commission; Ex parte Metal Trades Industry Association of Australia (1995) 130 ALR 63 - and previous Full Bench decisions. They then said:
"In the matter before us the appellant and interveners submit that the Commissioner made a jurisdictional error in that he misconstrued the no disadvantage test. Other jurisdictional errors were advanced but this was the primary point.
The Commission must approve the implementation of an EFA if, among other things, it is satisfied that the agreement does not, in relation to their terms and conditions of employment, disadvantage the employees who are covered by the agreement (s.170NC(1)(d))."
After setting out s.170NC and stating that the "no disadvantage" test in s.170NC(1)(d) "is a statutory condition precedent to a decision to approve the implementation of an EFA", the members of the Full Bench explained their view:
"The means of determining whether or not the no disadvantage test is met is dealt with in s.170NC(2). The Commission is required to decide whether its approval of the implementation of an agreement would result in the reduction of any entitlements or protections which the employees covered by the agreement enjoy under:
.an award (defined in s.170NC(3) to exclude an order under Part VIA, certified agreements and enterprise flexibility agreements); or
.any other law of the Commonwealth or of a State or Territory that the Commission thinks relevant.
If such a reduction would occur then the Commission must determine whether, in the context of the terms and conditions of the employees concerned when considered as a whole, the reduction would be contrary to the public interest.
In the course of his second reading speech on the Industrial Relations Reform Bill 1993 the Minister made the following observations in relation to the operation of the no disadvantage test:
'Two forms of agreements are provided for - certified agreements and enterprise flexibility agreements. Both types of agreements must not disadvantage employees in relation to their terms and conditions of employment considered as a whole. To gain access to these agreements, employees' terms and conditions of employment must be covered by an award, providing the benchmark for the no disadvantage test.
The no disadvantage test has been an important innovation. Applying as it does to the overall package of employee entitlements, it allows for agreed reductions if these are judged not to be against the public interest, for example, as part of a strategy for dealing with a short-term business crisis and revival. However, as the government has consistently stressed, the provision is intended to protect well established and accepted standards which apply across the community, standards such as maternity leave, hours of work, parental leave, minimum rates of pay, termination change and redundancy provisions and superannuation.' [House of Representatives Hansard, 28 October 1993 at p.2781]
It is clear from the terms of subsection 170NC(2) and the extract from the Minister's second reading speech referred to above that an agreement may satisfy the no disadvantage test notwithstanding that its implementation would result in a reduction in award entitlements and protections. It does not operate to proscribe a reduction in award entitlements and protections. The key consideration is whether such a reduction is contrary to the public interest having regard to the overall package of terms and conditions of employment to apply to the employees covered by the agreement.
However the no disadvantage test was intended to protect well established and accepted community standards. Such standards, including tests case decisions, should be accorded substantial weight by the Commission in the exercise of its discretion in relation to the no disadvantage test ...
The question whether an entitlement to paid sick leave constitutes a community standard was raised in the proceedings before us. It was argued that if paid sick leave was a community standard then the Commissioner erred in not according the removal of this entitlement substantial weight in the determination of the no disadvantage test.
In our view an entitlement to paid sick leave is a community standard. Such an entitlement was first introduced into an award in Amalgamated Society of Engineers v. Adelaide Steamship Co. Ltd (1922) 16 CAR 231 at 285.
Industrial tribunals have traditionally taken the view that sick leave exists to meet the fact that sickness may strike anyone; it is not a right that an employee gains by virtue of the performance of his duties.
...
An entitlement to paid sick leave is a common feature of existing Federal awards. It is a community standard.
Where the implementation of an agreement would result in a reduction in employee entitlements or protections the Commission must determine whether, in the context of the terms and conditions of the employees concerned when considered as a whole, the reduction would be contrary to the public interest. In practice this involves a consideration of the overall package of terms and conditions of employment to apply to the employees covered by the agreement. The reductions in employee entitlements and protections need to be balanced against the benefits provided in the agreement. Such benefits may include a wage increase or an improvement in conditions.
While a reduction in an entitlement or protection that has the status of a community standard is not prohibited by the Act it must be accorded substantial weight by the Commission in the exercise of its discretion in relation to the no disadvantage test."
The members of the Full Bench then quoted Commissioner Redmond's brief statement about s.170NC(1)(d). They noted that "(n)o other relevant reasons were provided". They went on:
"It is clear that the Commissioner was in error in concluding that the implementation of the Agreement would not result in a reduction in any entitlements or protections which the employees covered by the Agreement had under an award. Table 1 ... demonstrates the effect on award entitlements and protections of implementing the Agreement.
In our opinion this is not simply a wrong finding of fact. The question whether there is any evidence of a particular fact is a question of law, as is the question whether a particular inference can be drawn from facts found or agreed: ...
On this basis whether the inference that the implementation of the Agreement would not result in the reduction of any entitlement or protections of the employees covered by the Agreement under an award can be drawn from the evidence is a question of law.
In the proceedings before the Commissioner Mr Burke, an agent representing the employer applicant, conceded that the implementation of the Agreement would increase ordinary hours of work from 38 hours per week in the Award to 40 hours per week. ... Such an increase in standard hours is a reduction in an award entitlement. Further, Exhibit B1, tendered by Mr Burke, sets out a number of other reductions in entitlements, namely in relation to:
.annual leave loading;
. smokos;
. public holidays;
. meal breaks; and
. sick leave.
The inference that there was no reduction in award entitlements or protections is not available on the basis of the agreed facts. There was no evidence at all to support such a finding - indeed all of the evidence leads to the opposite conclusion.
The view reached by the Commissioner in relation to this critical issue amounted to more than a wrong finding of fact, it constituted an error of law. Moreover it seems to us that the relevant error was not merely an error of law in the exercise of the Commissioner's jurisdiction; the error concerned the nature and extent of the jurisdiction itself.
Clearly not every legal error in the application of the statutory tests associated with decisions to approve the implementation of an EFA will be a jurisdictional error. However given the central importance of the no disadvantage test in the statutory scheme, the error in this case is of such a profound and obvious character that it amounts to a constructive failure to exercise jurisdiction."
The Full Bench contrasted the case with Walker v Industrial Court of New South Wales (1994) 53 IR 121 and referred again to the PSA case before saying:
"The Commissioner misapprehended the nature of his jurisdiction.
In our opinion the conclusion we have reached is open to us on two bases.
First, the error of law made by the Commissioner led him to misconceive the nature of the test in s.170NC(1)(d). The proper identification of reductions in award entitlements or protections would have led the Commissioner to proceed to consider the second part of the no disadvantage test. However because of the legal error made the Commissioner never proceeded to apply the second element of the no disadvantage test - that is to consider whether the reductions in award entitlements were, in the context of the employees' terms and conditions of employment considered as a whole, contrary to the public interest.
Second, the Commissioner's decision was based solely on the fact that, in his view, the relevant statutory requirements had been met. Compliance with these requirements meant that the Commission must approve the implementation of the Agreement (s.170NC(1)). Wrongly thinking that there were no reductions in award entitlements or protections and, therefore, that s.170NC(1)(d) was satisfied led the Commissioner to give effect to what he wrongly thought was the duty imposed by s.170NC(1) to approve the implementation of the Agreement.
Once it is accepted that there were manifest reductions in award entitlements or protections it follows from the Commissioner's statement that his decision to approve the implementation of the Agreement proceeded on a fundamental misapprehension of the nature of his jurisdiction. The situation in the present case falls within that described by Dawson and Gaudron JJ in the PSA Case [at 160], where 'necessary issues have not been decided, and when it is asserted that, had they been decided, the result might have been different'.
We also note that the approach we have taken is consistent with that recently applied by the Industrial Relations Court in Re: Australian Industrial Relations Commission; Ex parte Comalco Aluminium (Bell Bay) Limited (1995) 131 ALR 657. In that case the Court was dealing with an application for prerogative relief in relation to a decision of the Commission to make an interim paid rates award. The Commission had acted under s.170UC of the Act to maintain an 'existing paid rates award'. The Court held that the award said to be an 'existing paid rates award' (referred to in the judgment as the 1991 Award) was not a paid rates award at all. The 1991 Award did not comply with the definition of a paid rates award in s.4(1) of the Act. The Court decided that once it was accepted that the 1991 Award was not a paid rates award the Commission's decision to make the interim award proceeded on a fundamental misapprehension of the nature of its jurisdiction. Wrongly thinking that the 1991 Award was a paid rates award and, therefore, that s.170UB(1)(b) was satisfied, the Commission gave effect to what it wrongly thought was the duty imposed on it by s.170UB(2) to make a particular type of award.
Similarly in the matter before us the Commissioner erred in thinking that the implementation of the Agreement would not result in a reduction in award entitlements or protections and therefore that s.170NC(1)(d) was satisfied. The Commissioner then gave effect to what he wrongly thought was the duty imposed on him by s.170NC to approve the implementation of the Agreement.
In our view on either of the bases set out above there was a constructive failure to exercise jurisdiction. In view of the conclusion we have reached in relation to the Commissioner's error in dealing with the no disadvantage test we have not found it necessary to consider the other jurisdictional errors alleged by the appellant."
The formal order of the Full Bench was to uphold the appeal, quash the order approving the implementation of the agreement and "refer the matter back to Commissioner Redmond to be dealt with in accordance with this decision".
The existence of a right of appeal: counsels' submissions
The first proposition put to us in support of the application for the grant of prerogative relief against the Full Bench of the Commission was that the Full Bench erred in entertaining an appeal where no right of appeal existed. If the Full Bench did make this error, there is no doubt that it was jurisdictional in nature and that it would entitle Tweed Valley to the relief sought.
Counsel for Tweed Valley stated that s.45 of the Industrial Relations Act was enacted in 1988 in exercise of the Commonwealth Parliament's powers under s.51(i), (xxxv) and (xxxix) of the Constitution and not pursuant to its powers under s.51(xx). Accordingly, they said, jurisdictional error in respect of which an appeal is permitted by s.45(1)(g) is similarly limited; s.45(1)(g) has no application to a jurisdictional error made in a case arising out of a provision enacted pursuant to another head of power, such as s.51(xx). They pointed out that s.45 was amended in 1993 to insert s.45(1)(eaa), giving a right of appeal against a decision of a member of the Commission refusing to approve implementation of an EFA, and there was a consequential insertion of para. (baa) into s.45(3), but no amendment was made to s.45(1)(g) or s.45(3)(d). This indicates a legislative intention, according to counsel, to leave the constitutional reach of these provisions unchanged -
"and limited to jurisdictional questions of the kind that could arise under the original heads of constitutional power relied upon by the Commonwealth when the provision was first enacted. The jurisdictional questions that may be raised on appeal under s.45(1)(g) do not extend to those concerning an in-state corporation of the specified kind and its employees."
Counsel submitted that s.170NN supports this understanding of the position. Section 170NN(1) provides that, at any time while an enterprise flexibility agreement is in force, a Full Bench may review its operation, after giving the persons bound by it an opportunity to be heard. Subsection (2) provides that the Full Bench may act under subs.(1) only of its own initiative or on application by a person bound by the agreement. By subs.(3), in any event each three years, a Full Bench must review the operation of the agreement. Subsection (4) empowers the Full Bench to order termination of the agreement, to accept an undertaking in relation to its operation or to permit a variation.
Finally, counsel argued that the Commission's approval of an agreement under s.170NC is not properly to be characterised as a decision that the Commission had jurisdiction, within the meaning of s.45(1)(g); the approval was simply an exercise of power that arose from the existence of the circumstances referred to in s.170NC. "The decision of the kind referred to in s.45(1)(g)", said counsel, "is that which s.101 requires the Commission to make before it resolves an industrial dispute".
Counsel for the Attorney General put submissions that overlapped those of counsel for Tweed Valley. They repeated the argument about s.45(1)(g) being limited to cases arising under provisions that were dependent on the constitutional powers used in the 1988 Act as originally enacted. They expanded the s.45(1)(eaa) reference; saying that, if the legislature had intended that the second limb of s.45(1)(g) (refusal or failure to exercise jurisdiction) would apply to applications to approve enterprise flexibility agreements:
"it would have expressed paragraph 45(1)(eaa) differently than it did. Expressed as it was, the right of appeal conferred by paragraph 45(1)(eaa) included within the second limb of paragraph 45(1)(g), had that paragraph begun to operate in respect of refusal or failure by a member to exercise jurisdiction in a matter arising under Part VIB, Division 3, of the Act. It should not be assumed that the legislature in 1993 intended largely to duplicate in paragraph 45(1)(eaa) that which it had already enacted in the second limb of paragraph 45(1)(g); rather, it should be concluded that the legislature intended that paragraph 45(1)(eaa) was to represent the sole conferral of appeal rights in respect of decisions in respect of enterprise flexibility agreements."
Counsel for the Attorney General also contended that, even if it applied to applications under Division 3 of Part VIA, s.45(1)(g) had a restricted operation. In putting this contention, they separately addressed both "limbs" of the paragraph. The first limb, they said, required a decision by a Commission member that the member had jurisdiction. It was not enough that the Commission member acted on the basis that he or she had jurisdiction.
In support of this submission counsel referred to cases concerning the meaning of "decision" in the Administrative Appeals Tribunal Act 1975(Director-General of Social Services v Chaney (1980) 47 FLR 80) and Administrative Decisions (Judicial Review) Act 1977(Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321). There is no reason, they claimed:
"to think that the word is used in paragraph 45(1)(g) in a sense other than its ordinary sense when used in the context of administrative or judicial proceedings, so that an appeal under the first limb of that paragraph is one against an announced or published ruling or adjudication of a member of the Commission that the member has jurisdiction in a matter arising under the Act."
It follows, according to counsel:
"that the right of appeal conferred by that limb is only a right of appeal against an actual decision by a member of the Commission that the member has jurisdiction in a matter arising under the Act. It is not a right of appeal against a merely constructive decision to that effect implicit in the purported exercise by the member of jurisdiction in a matter arising under the Act. To paraphrase some language quoted with approval by Northrop J in Chaney's Case, the right of appeal is not one merely against what 'passes in the mind of' a member."
Counsel further submitted that, if a Commission member announces a decision that the Commission has jurisdiction and later makes a substantive decision, the scope of any appeal under s.45(1)(g) is limited to the first decision, concerning jurisdiction; the Full Bench has no power to review the substantive decision. They said their approach to s.45(1)(g) is supported by the Explanatory Memorandum that accompanied the Bill for the 1988 Act. The relevant part of that memorandum read:
"Clause 45: Appeals to Full Bench
Sub-clause (1) provides that a Full Bench may grant leave to appeal against certain specified decisions of members of the Commission.
It should be noted that a Full Bench is expressly empowered to hear an appeal against a decision by a member of the Commission that the member has jurisdiction to deal with a matter under this Act or a refusal or failure of a member of the Commission to exercise jurisdiction.
This provision, which complements the right of appeal against a finding in relation to an industrial dispute under clause 101, is intended to enable a party to a matter who considers that the Commission is mistaken about the existence or non-existence of jurisdiction to be able to have the matter re-examined within the Commission without having to resort to judicial review of the decision concerned.
Under sub-clause (2) leave is to be granted if a Full Bench considers it is in the public interest to do so. The persons or organisations that may institute appeals are set out in sub-clause (3)"
Counsel emphasised the reference to clause 101 of the Bill
(now s.101 of the Act) which related to findings about industrial disputes. They said that the "right of appeal against a finding in relation to an industrial dispute", referred to in the memorandum, is that now contained in s.45(1)(a). But, they said this:
"is a right of appeal against a decision of a member of the Commission only on a matter which is an essential preliminary to the subsequent exercise of jurisdiction by the member and is not a right of appeal against a subsequent decision made in the exercise of that jurisdiction. Paragraph 45(1)(g) 'complements' paragraph 45(1)(a) in the sense that it likewise provides a right of appeal only against a preliminary decision by a member that the member has jurisdiction to entertain a claim before that member exercises that asserted jurisdiction and does not provide a right of appeal against a subsequent decision purporting to exercise that asserted jurisdiction."
Counsel recognised that AFME/PKIU had not appealed on the basis that Commissioner Redmond wrongly decided that he had jurisdiction, nor had the Full Bench upheld the appeal on that basis. Nevertheless, they said, the first limb is relevant because it provides guidance as to the proper interpretation of the second limb; indeed, they made their second limb argument dependant upon acceptance of their contentions about the first limb. They said:
"... when that limb confers a right of appeal against a refusal or failure of a member of the Commission to exercise jurisdiction in a matter arising under the Act, that right should be construed in light of the nature of the right of appeal conferred by the first limb of the paragraph. No reason appears why the second limb of the paragraph should be construed as conferring a right of appeal against a member's ultimate decision in the purported exercise of an asserted jurisdiction when the first limb of the paragraph does not do so. In other words, the second limb of the paragraph confers no right of appeal against a member's ultimate decision in the purported exercise of a jurisdiction on the ground that that ultimate decision amounted to a constructive refusal or failure to exercise that jurisdiction; it confers a right of appeal only against an express refusal (for instance, where the member expressly decides that he/she lacks jurisdiction to entertain a matter), or an actual refusal or failure in fact. The two limbs of paragraph 45(1)(g) are two sides of the same coin. The paragraph provides an appeal relating to the question whether or not the member had or had not jurisdiction to enter into an inquiry. Appeals under that paragraph do not extend to questions relating to things done in the course of an inquiry."
The existence of a right of appeal: conclusions
We disagree with almost every step in the arguments put to us concerning the existence of a right of appeal. First, we see no reason to read down s.45(1)(g) so as to confine it to proceedings arising under provisions that were contained in the original Act and founded on constitutional powers other than the corporations power. We are not aware of any authority for the proposition that a validly-enacted ancillary provision that, as a matter of construction, is capable of applying to a variety of substantive provisions must be confined in its operation to those provisions that depend upon the particular constitutional power used when it was first enacted. Counsel was unable to cite any decision to that effect. That does not surprise us. As it seems to us, the proposition is a legal heresy.
In considering the possible application of a particular Commonwealth statutory provision to particular facts, two matters are relevant: the constitutional validity of the provision and its proper construction. In relation to validity, no doubt it is correct to say that, when it was first enacted, s.45(1)(g) depended upon the existence of the constitutional powers used by Parliament to enact the substantive provisions of the original Act. Section 45(1)(g) is an ancillary provision. If the Act's substantive provisions were invalid, s.45(1)(g) would also have been invalid. However, nobody suggests invalidity. The arguments of both counsel for Tweed Valley and counsel for the Commonwealth concede that the substantive provisions enacted in 1988 were, and are, constitutionally well-founded. It follows, as they accept, that s.45(1)(g) was, and is, also a valid law of the Commonwealth. If that is right, it is the end of the reading down argument.
A validly enacted law of the Commonwealth is a valid law for all purposes and capable of being applied, according to its tenor, to subjects that extend beyond the limits of the constitutional power on which it was based. We think this is what Gibbs CJ had in mind when, in Actors and Announcers Equity Association of Australia v Fontana Films Proprietary Limited (1982) 150 CLR 169 at 182-183, he said:
"The words of par. (xx) suggested that the nature of the corporation to which the laws relate must be significant as an element in the nature or character of the laws ... In other words, in the case of trading and financial corporations, laws which relate to their trading and financial activities will be within the power. This does not mean that a law under s.51(xx) may apply only to the foreign activities of a foreign corporation, for ex hypothesis the law will be one for the peace, order and good government of the Commonwealth." (Emphasis added)
As it seems to us, when Parliament amended the Act in 1993, adding new provisions based on other heads of constitutional power, it was free to take advantage of ancillary provisions that were already validly contained in the Act. It was not required to re-enact those provisions under the corporations power, as it obviously could have done.
The proper construction of a validly-enacted provision has to be determined from the words used and their context. The court's task is to determine the apparent intention of the Parliament. There is nothing in s.45(1)(g), reading it in its post-1993 context, to indicate that Parliament intended to exclude from its ambit applications arising out of provisions whose constitutional validity depended on the corporations power. There is nothing in s.45(1)(g) to that effect. And there is nothing in the context that suggests that Parliament did not intend s.45(1)(g) to apply to such cases. Although the Explanatory Memorandum for the original Bill had spoken of it complementing the right of appeal against a finding in relation to an industrial dispute - which, we accept, was a reference to s.45(1)(a) - the purpose of the provision was stated more broadly:
"to enable a party to a matter who considers that the Commission is mistaken about the existence or non-existence of jurisdiction to be able to have the matter re-examined within the Commission without having to resort to judicial review of the decision concerned."
This purpose is readily understandable, especially when it is remembered that, at that time, the only venue for judicial review was the High Court. We are aware of seven reported cases, during the seven years before enactment of the 1988 Act, in which a party moved the High Court for prerogative relief in order to challenge a decision of a single member of the Commission. There may have been other cases as well, not included in the law reports. The last of the reported cases, Re Griffin; Ex parte Professional Radio and Electronics Institute of Australia (1988) 167 CLR 37, was heard shortly before Parliament considered the Bill for the 1988 Act. In that case, at 40, Brennan J expressed regret at the absence of an alternative forum for the litigation of a complaint against a Commissioner's handling of an application for variation of an award. Although it had been submitted that the applicant union had a right of appeal to the Full Bench of the Conciliation and Arbitration Commission, under s.35(2)(a) of the Conciliation and Arbitration Act 1904, his Honour thought this doubtful and reluctantly ordered that the matter be listed before the Full High Court. In this situation, and especially in the light of Brennan J's observations, it is understandable that Parliament decided that the Full Bench of the Commission should become the first resort of parties who thought that a single member of the Commission had fallen into jurisdictional error, rather than the High Court. If that view was understandable in 1988, it was equally applicable in 1993 to the substantive provisions then being added. In considering Parliament's intention concerning review of decisions under those provisions, it is noteworthy that, although Parliament made amendments to s.45 to take account of them, it did not amend s.45(1)(g).
The insertion of s.45(1)(eaa) and s.45(3)(baa) does not indicate that Parliament intended to exclude the application of s.45(1)(g) in cases arising under Division 3 of Part VIB of the Act. The argument of counsel to that effect overlooks the difference between merits review and jurisdictional review. In relation to merit review, Parliament distinguished between decisions approving implementation of an enterprise flexibility agreement and decisions refusing approval. The reason, presumably, was that Parliament wished to encourage the use of enterprise flexibility agreements: see s.170LA(1)(b) of the Act. In relation to a decision refusing approval, s.45(1)(eaa) provided a full right of appeal (with leave) irrespective of jurisdictional error. In other words, the Full Bench was empowered to review the merits of a single member's refusal of approval, even though the single member acted within jurisdiction in refusing approval of implementation. However, in the case of a decision approving implementation of an agreement, there was to be no merits review. Provided that the single member acted within jurisdiction, that would be the end of the matter.
Notwithstanding its policy to encourage enterprise flexibility agreements, Parliament would have been aware that it could not prevent challenges to approvals on jurisdictional grounds. If the Act made no provision for appeals in Part VIB Division 3 matters on jurisdictional grounds, parties would nevertheless be entitled to move the High Court under s.75(v) of the Constitution; indeed they would have no alternative. So the same considerations as motivated the introduction of s.45(1)(g) into the Act in 1988 made it sensible not to exclude Part VIB Division 3 cases from its application.
We do not think that the existence of s.170NN militates against the conclusions just expressed. It is not clear how a Full Bench may become seised of a matter under s.170NN, but this is not of present importance. The important point is that s.170NN assumes an agreement that is "in force"; that is, an agreement that is validly in operation. A person who wished to contend that an order approving implementation was beyond jurisdiction would be unwilling to accept that assumption. Such a person would wish to use s.45(1)(g) of the Act, if it was available, or s.75(v) of the Constitution if it was not.
The argument for Tweed Valley that the Commissioner's approval of the agreement is not properly to be characterised as a decision that the Commission had jurisdiction to grant approval overlaps the Attorney General's argument that a "decision", for s.45(1)(g) purposes, must be an express announcement that the Commission has jurisdiction. We do not think either proposition is correct. Neither Chaney nor Bond justifies them. In Chaney there was a question of the competence of the Director General's appeal to the Federal Court. Section 44 of the Administrative Appeals Tribunal Act conferred a right of appeal against a "decision" of the Tribunal. The alleged "decision" was a ruling by the Tribunal President that the Tribunal had jurisdiction to review a certain decision of the Director General and an order staying the suspension of Mrs Chaney's pension pending determination of the review. By majority (Deane and Fisher JJ, Northrop J dissenting) the Full Federal Court held that the President's ruling and order did not amount to a "decision" for the purposes of s.44. At 100, Deane J spoke of the indeterminate meaning of the word "decision"; it can refer to "the mental process of making up one's mind" but, in the context of judicial or administrative proceedings, "the words will ordinarily refer to an announced or published ruling or adjudication". He went on:
"In such a context, the word 'decision' may be apt to include the determination of any question of substance or procedure, including, for example, rulings on procedural questions such as whether particular evidence should be received or the meaning of the word may be limited to a determination effectively resolving an actual substantive issue. When the word 'decision' has the last-mentioned limited meaning, it can refer to any such determination whether final or intermediate ... or be limited to referring only to a determination which effectively disposes of the matter in hand."
His Honour went on to resolve the question before the Court by reference to the terms of the appeal provisions in the Administrative Appeals Tribunal Act.
It is not necessary to refer extensively to Bond. The issue in that case was similar to that in Chaney: whether the word "decision" referred only to the final announced ruling.
The present question is quite different. It is common ground that Commissioner Redmond made a formal and final ruling in which he approved implementation of the agreement. On any view, this amounted to a "decision" of the Commission. And, on any view, by it Commissioner Redmond purported to exercise the jurisdiction conferred on the Commission by s.170NC. But it is said that Commissioner Redmond's decision did not amount to "a decision ... that the member has jurisdiction" because he did not say anything about jurisdiction. If Commissioner Redmond had expressly stated that he had jurisdiction to approve the implementation of the agreement, his decision would have amounted to a "decision ... that the member has jurisdiction" and been appellable under s.45(1)(g); but as he simply assumed his jurisdiction, and proceeded to exercise it, it was not.
There is no warrant for this distinction. An announcement of a decision to exercise jurisdiction necessarily implies a view that one has jurisdiction. Anybody reading Commissioner Redmond's decision would realise that he was of the opinion that he had jurisdiction, rightly or wrongly and whether or not as the result of prolonged consideration. His decision to exercise jurisdiction amounted also to an announcement that he possessed it.
As we have said, counsel for the Attorney General used their interpretation of the first limb of s.45(1)(g) as the foundation of their argument that a "refusal or failure ... to exercise jurisdiction" must be an expressed refusal or failure. As we reject that interpretation, we necessarily reject the dependent argument. However, we comment that, even if the first limb required an announcement as to jurisdiction by the Commission member, it would not follow that the second limb did so. A refusal to do an act must be expressed; a failure need not.
"person aggrieved"
Counsel for the Attorney General argued that, if s.45(1)(g) conferred a right of appeal in this case, AFME/PKIU was not qualified to take advantage of it; the reason being that it was not a "person aggrieved" within the meaning of s.45(2)(d) of the Act. Counsel submitted that consideration of whether a person is "aggrieved", within the meaning of a particular statute, involves consideration of the relevant statutory context. In the present case, they said, the statutory context includes the standing requirement in respect of appeals under s.45(1)(eaa): "any person who would have been bound by the agreement if implementation of it had been approved": see s.45(3)(baa). AFME/PKIU would not have been bound by the agreement because it had not given a written notice under s.170ND of the Act agreeing to be bound. Therefore it could not have appealed under s.45(1(eaa) if Commissioner Redmond had refused to approve its implementation. It would be anomalous, according to counsel, if a person who could not appeal against a decision to refuse to approve the implementation of a flexibility agreement could appeal against a decision concerning jurisdiction to approve or refuse approval.
There is no doubt that, in determining whether a person is a "person aggrieved" for the purposes of exercising a statutory right of appeal, it is necessary to consider the relevant statutory context. Gibbs CJ said as much in Koowarta v Bjelke-Petersen (1982) 153 CLR 168 at 184-185. His Honour there referred to cases in which it had been held "that a person is 'aggrieved' by an act which operates in restraint of what would otherwise have been his legal rights." But he also mentioned Attorney General (Gambia) v N'Jie [1961] AC 617 at 634 in which the Judicial Committee of the Privy Council said that the words "person aggrieved" should not be subjected to a restricted interpretation; "they ... include a person who has a genuine grievance because an order has been made which prejudicially affects his interest".
In Tooheys Limited v Minister for Business and Consumer Affairs (1981) 54 FLR 421, Ellicott J at 437 interpreted the description "a person who is aggrieved" in s.5 of the Administrative Decisions (Judicial Review) Act as extending, at least, to "a person who can show a grievance which will be suffered as a result of the decision complained of beyond that which he or she has as an ordinary member of the public". He went on to say at 437-438 that, in many cases, that grievance will be shown because the decision affects his or her existing or future rights but in other cases it may be less direct; it "may affect him or her in the conduct of a business or ... affect his or her rights against third parties."
Gummow J followed Tooheys in Australian Institute of Marine and Power Engineers v Secretary, Department of Transport (1986) 13 FCR 124 in holding that the applicant, a registered industrial organisation with members serving in ships of the relevant class, had standing to seek reasons for a manning notice given by the respondent. At 133 his Honour pointed out, first, that the applicant had among its interests or objects the obtaining and maintenance of reasonable conditions of employment of its members, second, that it had been invited to participate in the relevant Manning Committee and had made submissions in regard to the manning notice and, thirdly, that the issue was one of safety and was "fertile ground for an industrial dispute".
The decision of Commissioner Redmond did not affect AFME/PKIU's legal interests. But the union had an interest in the decision beyond that of an ordinary member of the public. Its position was much like that of AIMPE in the case heard by Gummow J: it was concerned with the maintenance of members' conditions of employment, it had participated in the decision complained of by making submissions (pursuant to a statutory right: see s.170NB(2) of the Industrial Relations Act) and the decision was one containing potential for industrial disputation.
Having regard to these decisions, and the other authorities discussed by the judges who made them, it seems to us that the formula "person aggrieved" covers the position of AFME/PKIU in this case; unless there is something about this particular statute that indicates otherwise. The only thing mentioned by counsel is the restriction in s.45(3)(baa). But we do not see the existence of that restriction as an indication that Parliament wished the courts to interpret s.45(3)(d) more narrowly than they might otherwise have done. Section 45(3)(baa) deals with the right to pursue a merits appeal against a refusal decision. Section 45(3)(d) relates to the entitlement to raise a question as to whether a Commission member has acted within jurisdiction. These are different questions. There is room for the view that a wider category of people has a legitimate interest in ensuring that the Commission acts within its jurisdiction than those who are directly affected by a particular decision, and so allowed to agitate its merits.
Whether the members of the Full Bench misconceived their jurisdiction
Counsel for Tweed Valley argued that, if, contrary to their submissions, AFME/PKIU had a right of appeal to the Full Bench, their client is nonetheless entitled to prerogative relief. This is because the members of the Full Bench misconceived their jurisdiction:
"(t)he members of the Full Bench failed to consider, in relation to each of the matters that they identified as disadvantaging the employees covered by the agreement whether -
(a)Approval of the agreement by the Commissioner to whom application has been made would result in the reduction of any of the entitlements and protections of the employees covered by the agreement under the Food Preservers Award 1956;
(b)(AFME/PKIU) had discharged the onus of establishing any, and if so which, of the matters referred to in (a);
(c)The employees viewed as a group were disadvantaged."
As a separate argument, counsel contended that the "members of the Full Bench erroneously treated s.45(1)(g) as requiring or permitting them to consider for themselves whether the agreement should be approved pursuant to s.170NC. The provision only permits jurisdictional review".
We can dispose briefly of this second submission and will do so immediately. Our understanding is that counsel meant that the Full Bench was confined to determining whether or not Commissioner Redmond fell into jurisdictional error. We doubt that this was so. Section 45(7) gives several options to a Full Bench hearing on appeal. They include, by para.(b), the power to "make an award, order or decision dealing with the subject matter of the decision or act concerned". As it seems to us, this power would have enabled the Full Bench to make a decision dealing with the question whether or not to approve implementation of the agreement. In other words, although gaining jurisdiction only because of a jurisdictional error by the Commissioner, the Full Bench could have resolved the whole dispute between the parties by determining whether or not to approve implementation of the agreement. However, it is not necessary for us to reach a firm conclusion about that matter. The Full Bench chose not take this course. As already recounted, the Full Bench merely quashed Commissioner Redmond's decision and referred the matter back to him to be dealt with in accordance with its decision. Even if counsel were correct in asserting that the Full Bench's powers in dealing with an appeal under s.45(1)(g) of the Act are limited to determining whether or not the single member fell into jurisdictional error and making consequential orders, that limitation was not exceeded in this case.
The first argument raises the primary issue between the parties regarding the question whether or not the Full Bench fell into jurisdictional error. It is an issue that turns on the construction of s.170NC(2) of the Act. Tweed Valley's argument is that the test of disadvantage specified in s.170NC(2)(a) is met only if it can be said that the entitlements and protections under the EFA, considered as a whole, are less advantageous to employees than the entitlements and protections under the award, considered as a whole. The task of the Commissioner, counsel said, was to look at the whole of the benefits under each document and make a judgment as to their comparative value to the employees; and this is what Commissioner Redmond did. Although the Full Bench disagreed with his judgment as to the comparative value of the benefits taken by the employees under each document, that did not entitle the Full Bench to conclude that he had failed to exercise his jurisdiction; if Commissioner Redmond asked himself the right question, he acted within jurisdiction even if he erred in its exercise.
We do not accept this analysis of s.170NC(2). We have already quoted s.170NC(1) and (2). It will be recalled that s.170NC(1) sets out a series of matters about which the Commission must be satisfied before approving implementation of an EFA. If it is satisfied about those matters, it must approve implementation. One of these matters is described, by para.(d), in this way:
"the agreement does not, in relation to their terms and conditions of employment, disadvantage the employees who are covered by the agreement."
Subsection (2) explains the concept of disadvantage. An agreement is taken to disadvantage employees in relation to their terms and conditions of employment only if two conditions are fulfilled: first, approval of implementation of the agreement would result in the reduction of any entitlements or protections of the employees under an award or other relevant law (para.(a)); and, second, in the context of their terms and conditions, the Commission considers that the reduction is contrary to the public interest (para.(b)). It will be apparent that, if there is no "reduction of any entitlements or protections" of employees, the first condition will not be satisfied, with the result that the agreement is not to be taken to disadvantage employees. In that situation, the Commission would be entitled to find compliance with para.(d) of s.170NC(1). On the other hand, if there is "reduction of any entitlements or protections", the Commission must go on to consider the issue raised by para.(b): whether in the context of the terms and conditions of employment considered as a whole, the reduction is contrary to the public interest.
The significance of para.(b) was spelled out by a Full Bench of the Commission (Ross VP, Maher DP and Cox C) in Enterprise Flexibility Agreements Test Case May 1995 (1995) 59 IR 430. At 456 the Full Bench referred to the Minister's Second Reading Speech on the Industrial Relations Reform Bill 1993 and commented:
"It is clear from the terms of s.170NC(2) and the extract from the Minister's Second Reading Speech referred to above that an agreement may satisfy the no disadvantage test notwithstanding that its implementation would result in a reduction in award entitlements and protections. It does not operate to proscribe a reduction in award entitlements and protections. The key consideration is whether such a reduction is contrary to the public interest having regard to the overall package of terms and conditions of employment to apply to the employees covered by the agreement."
At 457 the Full Bench said:
"Where the implementation of an agreement would result in a reduction in employee entitlements or protections the Commission must determine whether, in the context of the terms and conditions of the employees concerned when considered as a whole, the reduction would be contrary to the public interest. We agree with the submission put by ACCI in this regard, that is the Commission should adopt a global approach rather than a line by line approach in making a public interest determination under s.170NC(2)(b). In practice this involves a consideration of the overall package of terms and conditions of employment to apply to the employees covered by the agreement. The reductions in employee entitlements and protections need to be balanced against the benefits provided in the agreement. Such benefits may include a wage increase or an improvement in conditions. The approach of balancing the reductions and benefits in an agreement is consistent with the following extract from the Minister's Second Reading Speech on the Industrial Relations Reform Bill 1993 (House of Representatives, Hansard, 28 October 1993 at p.2778):
'In the bargaining process employees want and deserve the security of knowing they cannot be worse off - worse off in totality. The security of knowing that the conditions they currently enjoy are not to be traded off without something being offered in return. It may not always be a pay rise, it may be extra training, more flexible rosters or just greater job security; it will be something nevertheless.'
Given the need to balance a range of factors the determination of whether or not the no disadvantage test has been met in a particular case will largely be a matter for the impression and judgment of the Commission member at first instance.
Even if the overall package of terms and conditions of employment would result in a net reduction of protections or entitlements, the Commission may nevertheless determine that such a reduction was not contrary to the public interest. For example, such a conclusion may be reached where the reductions are necessary as part of strategy for dealing with a short-term business crisis and revival."
We agree with these observations.
In the present case, Commissioner Redmond did not reach para.(b) of s.170NC(2). In relation to "no disadvantage", he determined that "(c)ertification of the Agreement will not result in the reduction of any entitlement or protections of the employees covered by the Agreement under an award or any other law of the Commonwealth or of a State or Territory". He was saying, in other words, that the condition contained in para.(a) of s.170NC(2) was not satisfied.
The evidence submitted to Commissioner Redmond clearly indicated that some of the benefits available to employees under the award would become unavailable to them, if the EFA was implemented. It is not necessary to go into great detail about this. Even on Tweed Valley's analysis of the position, under the agreement employees would lose the right to an annual leave loading, severance pay on redundancy, paid sick leave, paid bereavement leave, make-up jury service pay, and various higher classification and special rate allowances. Other benefits would be reduced: paid public holidays and shift, call out, overtime and Sunday work allowances. Junior and casual pay rates would be reduced and standard working hours increased. Although there is scope for argument as to which of these benefits fall into the category of "entitlements" and which are "protections", there is no doubt that one effect of implementation of the EFA would be the loss or reduction of particular entitlements or protections.
Counsel for Tweed Valley acknowledged that the agreement involved a loss of some of the benefits granted by the Award. But they said it was an erroneous approach to consider whether there was a reduction in particular entitlements or protections; the question that had to be determined was whether, overall, the employees suffered a reduction of their entitlements and protections. They said that Commissioner Redmond had understood this and looked at the matter globally. His finding that implementation of the agreement "will not result in the reduction of any entitlement or protections of the employees" under the award must be understood as a finding that, looking at the totality of benefits available under the agreement (including, notably, higher wages rates) and comparing the results with the totality of benefits available under the award, the employees will not be worse off under the agreement. Counsel said that the jurisdictional error committed by the Full Bench was to say that Commissioner Redmond was wrong in looking at the matter globally; he was entitled to do this.
We do not accept this submission. It seems to us that the approach taken by Commissioner Redmond was clearly incorrect. Paragraph (a) refers to "the reduction of any entitlements or protections" under an award. The word "any" makes plain that para.(a) is concerned with individual entitlements and protections, not the value of a total package of entitlements and protections. If any individual entitlement or protection would be reduced, as a result of implementation of an agreement, the condition contained in para.(a) is fulfilled. This does not mean that the Commission cannot be satisfied that the agreement does not disadvantage the employees, but it does mean that it cannot be so satisfied unless and until it addresses the public interest issue posed by para.(b). In the present case, it being apparent that the agreement would effect a reduction in many individual entitlements and protections, Commissioner Redmond was required to consider whether those reductions were contrary to the public interest. As the Full Bench pointed out in the Enterprise Flexibility Agreements Test Case, in a particular case the Commission might hold that a reduction in individual entitlements and protections was not contrary to the public interest because the reductions were offset by new benefits; in other words, the overall package of terms and conditions under the EFA was not less advantageous to employees than the overall package under the award. In other cases, even if the EFA overall package was less advantageous, there might be special reasons for holding that reduction was not contrary to the public interest, such as assisting survival of the employer's business.
The finding that Commissioner Redmond fell into error does not necessarily lead to the conclusion that the Full Bench had jurisdiction to quash his decision. The Full Bench had jurisdiction to take that course only if his error amounted to a failure to exercise jurisdiction. If he had asked himself the right question, the Full Bench would not have been entitled to interfere with his decision, even though its members thought he had come up with the wrong answer; for example, if he had appreciated that, having regard to the terms of the EFA, para.(a) of s.170NC(2) was satisfied and he needed to consider para.(b), but he had reached a conclusion about public interest with which the Full Bench disagreed. This would be an error within jurisdiction, if it was an error at all, and not susceptible to attack under s.45(1)(g) of the Act.
However, that is not what happened in this case. Apparently as a result of misconstruction of s.170NC(2), Commissioner Redmond failed to appreciate his need to consider the issue posed by para.(b). The situation is not unlike that which occurred in Re Keely; Ex parte Kingham (1995) 129 ALR 255 where, through an oversight, an essential legal issue was left unconsidered. In that case, at 273-278, Wilcox CJ analysed the leading recent cases on jurisdictional error. It is not necessary to repeat that analysis. It is sufficient to refer to Public Service Association of South Australia v Federated Clerks' Union of Australia, South Australian Branch (1991) 173 CLR 132 and especially to passages from the judgments of Brennan J and Dawson and Gaudron JJ that are set out in Re Keely at 276-277. It will be noted that Brennan J described the situation then before the Court as one where "(t)he Full Commission misconceived its jurisdiction and failed to consider the true question which they had to decide". Dawson and Gaudron JJ said that the "Commission considered only whether leave to appeal should be granted to raise the latter question and, thus, failed to deal with the question whether leave should be granted to raise the different issues presented by the applications. To that extent, the Commission failed to exercise the jurisdiction conferred upon it by s.104 of the Act".
The error made by Commissioner Redmond in this case was of the same kind. Because of his mistake of law, he failed to exercise the jurisdiction conferred on him under s.170NC of the Industrial Relations Act. The Full Bench acted within its own jurisdiction in concluding that the case fell within s.45(1)(g) and in making an order quashing the primary decision and remitting the matter to Commissioner Redmond for further determination.
Orders
The arguments put to the Court on behalf of Tweed Valley and the Attorney-General must all be rejected. The motion for the issue of writs of prohibition and certiorari should be dismissed.
I certify that this and the preceding fifty-seven (57) pages are a true copy of the Reasons for Judgment of the Chief Justice Wilcox and Justice Marshall.
Associate:
Dated: 24 April 1996
APPEARANCES
Counsel for the Applicant: J L Trew QC and P Newall
Solicitors for the Applicant: Halliday & Stainley
Counsel for the Second Respondent: W L Haylen QC and J Wallace
Solicitors for the Second Respondent: Taylor & Scott
Counsel for the Commonwealth
intervening: L Katz SC and C Staker
Solicitors for the Commonwealth
intervening: Australian Government Solicitor
Counsel for R Moir & P Stokes
(employees) intervening: S B Benson
Solicitors for R Moir & P Stokes
(employees) intervening: Peter Sochacki & Co
Date of hearing: 15 March 1996
IN THE INDUSTRIAL RELATIONS )
)
COURT OF AUSTRALIA ) No. NI 1169 of 1996
)
NEW SOUTH WALES DISTRICT REGISTRY )
BETWEEN: TWEED VALLEY FRUIT
PROCESSORS PTY LTD
Applicant
AND: THE HONOURABLE IAIN JAMES KERR ROSS,
A VICE PRESIDENT OF THE AUSTRALIAN
INDUSTRIAL RELATIONS COMMISSION,
THE HONOURABLE DAVID ANTHONY DUNCAN,
A DEPUTY PRESIDENT OF THE AUSTRALIAN
INDUSTRIAL RELATIONS COMMISSION AND
KEITH WILLIAM MAHON ESQUIRE,
A MEMBER OF THE AUSTRALIAN
INDUSTRIAL RELATIONS COMMISSION
First Respondents
AND
AUTOMOTIVE, FOOD, METALS AND
ENGINEERING/PRINTING AND KINDRED
INDUSTRIES UNION
Second Respondent
CORAM: Wilcox CJ, Moore and Marshall JJ
PLACE: Sydney
DATE: 24 April 1996
REASONS FOR JUDGMENT
MOORE J: I have read the reasons for judgment of Wilcox CJ and Marshall J in a draft form. It is unnecessary to repeat much of the detail set out in them.
I agree that an appeal lay under s45(1)(g) of the Industrial Relations Act 1988 ("the Act") against the approval of the implementation of the Tweed Valley Processors Enterprise Flexibility Agreement ("the Agreement") by Commissioner Redmond. I agree, with one qualification, with the analysis of Wilcox CJ and Marshall J as to the proper construction of s45(1)(g). In my opinion the approval by the Commissioner, in the circumstances, raised a question as to whether there had been a failure to exercise the jurisdiction conferred by Division 3 of Part VIB of the Act.
The language of the latter part of s45(1)(g) when it speaks of "a refusal or failure of a member of the Commission to exercise jurisdiction", is in wide terms. It is consistent with the language and structure of the paragraph to treat the word "refusal" as a reference to an overt act of the member of the Commission expressly declining to exercise jurisdiction. The expression "failure to exercise jurisdiction" would, consistent with its ordinary meaning, comprehend situations where the Commission fails to exercise jurisdiction inadvertently either by not exercising jurisdiction at all or purporting to do so but in a way that was erroneous in a fundamental respect.
The width of the language of the latter part of s45(1)(g) is to be contrasted with the use of the word "decision" in the first part of the paragraph. The expression "a decision .. that the member has jurisdiction", in my opinion, is intended to comprehend conduct other than conduct arising from inadvertence. The difference is, in part, illustrated, in a passage from the judgment of Barwick CJ in R v Aird; Ex parte The Australian Workers' Union (1973) 129 CLR 654. A Deputy President of the Commonwealth Conciliation and Arbitration Commission had considered whether a dispute existed as the result of the service of a log of claims by the Australian Workers' Union on employers producing ready mixed concrete. An issue arose as to whether the Union's eligibility rules included employees in that activity. The Chief Justice said at 658:
"In the present case, the notification under s. 25 by the applicant came before a Deputy President who, after hearing argument, declined jurisdiction because in his opinion no industrial dispute existed as claimed by the applicant in its notification. His reason for that opinion was that the applicant was not competent to represent the employees in the ready-mixed concrete batching plants and thus not able to create a dispute as to their wages and conditions. This opinion, in turn, depended on his view of the proper meaning of the eligibility clause of the applicant. But the only "decision" given was that the Commission had no jurisdiction. I do not pause to consider whether such a "decision" is a judgment at all in any proper sense of the word or whether it is an award or decision within the meaning of the Act. But certainly, in my opinion, it is not an award within s35 (2) in respect of which an appeal lies to the Commission constituted as provided in s. 35 (1) nor was it in my opinion a decision by way of a finding as to the existence of an industrial dispute or by way of a finding as to the parties to any industrial dispute within the scope of that section."
There was, at the time, no provision in the relevant legislation equivalent to s45(1)(g). Plainly the Deputy President had refused to exercise jurisdiction and had his conclusion been that the eligibility rules did cover the relevant employees, he would have made a decision that he had jurisdiction.
The authorities relied on by the Minister as to what the word "decision" means in an administrative law context have to be approached, in my opinion, with some caution when construing the word "decision" in s45 of the Act. The Administrative Decisions (Judicial Review) Act 1977 and related legislation is remedial legislation and should not be construed narrowly: see Australian Broadcasting Tribunal v Bond & Ors (1990) 170 CLR 321 at 335 per Mason CJ. Thus "decision" is to be construed generously. The Act presently under consideration cannot be so characterised. Given that what Commissioner Redmond did plainly raised an issue about a failure to exercise jurisdiction, it is unnecessary to determine what precisely is comprehended by the word "decision" in the first part of s45(1)(g). However my present view is that it is unlikely that Parliament intended that every exercise of jurisdiction was to be treated as involving a decision that the member has jurisdiction as that expression appears in s45(1)(g) where no issue concerning jurisdiction was raised before the member of the Commission.
I also agree, for the reasons given by Wilcox CJ and Marshall J, that the Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union was an organisation aggrieved by the act of the Commissioner failing to exercise the jurisdiction conferred by Division 3: see s45(3)(d) and that it was thus able to appeal under s45 of the Act.
A condition precedent to the approval of the implementation of an enterprise flexibility agreement under s170NC is that the Commission is satisfied the agreement does not, in relation to their terms and conditions of employment, disadvantage the employees who are covered by the agreement: see s170NC(1)(d). What is comprehended by that condition is dealt with by s170NC(2) which provides:
"170NC(2) For the purposes of paragraph (1)(d), an agreement is taken to disadvantage employees in relation to their terms and conditions of employment only if:
(a)approval of implementation of the agreement would result in the reduction of any entitlements or protections of those employees under:
(i)an award (as defined in subsection (3)); or
(ii)any other law of the Commonwealth or of a State or Territory that the Commission thinks relevant; and
(b)in the context of their terms and conditions of employment considered as a whole, the Commission considers that the reduction is contrary to the public interest."
The Full Bench approached the application of s170NC(2) in the following way. They first made a comparison of the Agreement and the Food Preservers Interim Award 1986 ("the Award"). The comparison was reflected in a table the first column of which was headed "ENTITLEMENT/PROTECTION" which is a repetition of the language of s170NC(2) though no distinction was sought to be drawn between an entitlement or protection and how it might be reflected in any comparison. In the first column were listed seventeen subjects which might be described as conditions of employment. However an eighteenth, right of entry, might not be so readily characterised in that way and some of the other subjects deal with a number of discrete matters. There then appeared in relation to each subject entries in two further columns. The first summarised the effect of clauses in the Award dealing with the condition of employment and identified the relevant clause or clauses and the second did the same in relation to the Agreement. The table was preceded by the observation that:
"A comparison of the Agreement and the Award makes it clear that the implementation of the Agreement has resulted in a reduction in a number of entitlements and protections which the employees covered by the Agreement were previously entitled to under the Award."
The Full Bench then dealt with what might be benefits under the Agreement which might balance "the reductions in award entitlements and protections".
Later in their decision the Full Bench considered the operation of s170NC(2) both in the abstract and in relation to the Agreement having regard to the findings they earlier made and recorded in the table. In considering the operation of s170NC(2) the Full Bench set out the following extract from the second reading speech of the Minister for Industrial Relations when introducing the Bill containing s170NC(2):
""Two forms of agreements are provided for - certified agreements and enterprise flexibility agreements. Both types of agreements must not disadvantage employees in relation to their terms and conditions of employment considered as a whole. To gain access to these agreements, employees' terms and conditions of employment must be covered by an award, providing the benchmark for the no disadvantage test.
The no disadvantage test has been an important innovation. Applying as it does to the overall package of employee entitlements, it allows for a wide range of variations to award conditions. It also allows for agreed reductions if these are judged not to be against the public interest, for example, as part of a strategy for dealing with a short-term business crisis and revival. However, as the government has consistently stressed, the provision is intended to protect well established and accepted standards which apply across the community, standards such as maternity leave, hours of work, parental leave, minimum rates of pay, termination change and redundancy provisions and superannuation." [House of Representatives Hansard, 28 October 1993 at p.2781]" [my emphasis]
The Full Bench then said:
"It is clear from the terms of subsection 170NC(2) and the extract from the Minister's second reading speech referred to above that an agreement must satisfy the no disadvantage test notwithstanding that its implementation would result in a reduction in award entitlements and protections. It does not operate to proscribe a reduction in award entitlements and protections. The key consideration is whether such a reduction is contrary to the public interest having regard to the overall package of terms and conditions of employment to apply to the employees covered by the Agreement.
However the no disadvantage test was intended to protect well established and accepted community standards. Such standards, including test case decisions, should be accorded substantial weight by the Commission in the exercise of its discretion in relation to the no disadvantage test [see October 1995 Third Safety Net Adjustment and Section 150A Review decision, print M6500 at p.52]." [my emphasis]
The Full Bench went on to consider whether an "entitlement to paid sick leave" constitutes a community standard and concluded it was. They then returned to this concept of "community standard" in more general terms and said:
"While a reduction in an entitlement or protection that has the status of a community standard is not prohibited by the Act it must be accorded substantial weight by the Commission in the exercise of its discretion in relation to the no disadvantage test." [my emphasis]
No express reference is made in s170NC(1)(d) or (2) to community standards nor does any expression appear in s170NC that might reasonably be viewed as a reference to community standards unless it is somehow comprehended in the reference to "is contrary to the public interest". But that is an expression of wide application. As Wilcox CJ and Keely J said in Comalco Aluminium (Bell Bay) Ltd v O'Connor & Ors (1995) 131 ALR 657 at 681:
"The expression "in the public interest", as it appeared in s 41(1)(d) of the Conciliation and Arbitration Act, was considered by the High Court in Re Queensland Electricity Commission; Ex parte Electrical Trades Union of Australia (1987) 72 ALR 1; 61 ALR 393. Mason CJ, Wilson and Dawson JJ said at ALR 5; ALJR 395:
Ascertainment in any particular case of where the public interest lies will often depend on a balancing of interests, including competing public interests, and be very much a question of fact and degree.
There is nothing in either of these cases, or in s 170UB or s170UC, to commend a narrow interpretation of the expression "public interest" or to suggest that, as submitted by Comalco, consideration of the public interest may not include consideration of the interests of the parties to the relevant industrial dispute. On the contrary, the resolution of industrial disputes being a primary purpose of the Act, the disposal of a dispute in a manner that takes account of the interests of the disputants is plainly within the scope and purpose of the legislation. The purpose of the reference to "public interest" is to ensure that private interests are not the only matters taken into account; to make clear that the interests of the whole community are matters for the Commission's consideration. The effect of the reference is to amplify the "scope and purpose" of the legislation. But the statute does not direct the Commission as to the weight to be given to the various factors or as to the decision it should make."
While s170NC is not itself a provision directed to dispute resolution in the constitutional sense, the preceding observations are nonetheless apt in the present case.
The approach of the Full Bench in the passages I earlier set out is, in my opinion, a gloss placed on the language of the Act based, at least in part, on what was said by the Minister.
To the extent that the view of the Full Bench was based on the statement of the Minister, it is necessary to bear in mind what was said by Mason CJ, Wilson and Dawson JJ in Re Bolton & Anor; Ex parte Beane (1987) 162 CLR 514 at 518 when considering the proper construction of a provision in the Defence (Visiting Forces) Act 1963 having regard to the second reading speech of the Minister. Their Honours said:
"That speech quite unambiguously asserts that Pt III relates to deserters and absentees whether or not they are from a visiting force. But this of itself, while deserving serious consideration, cannot be determinative; it is available as an aid to interpretation. The words of a Minister must not be substituted for the text of the law. Particularly is this so when the intention stated by the Minister but unexpressed in the law is restrictive of the liberty of the individual. It is always possible that through oversight or inadvertence the clear intention of the Parliament fails to be translated into the text of the law. However unfortunate it may be when that happens, the task of the Court remains clear. The function of the Court is to give effect to the will of Parliament as expressed in the law."
See also the observations of Deane J at 532.
In relation to s170NC, Parliament could have readily chosen language which directed attention to community standards in the text of s170NC(2) but it did not. Rather it used a formulation referable to "the public interest".
Section 170NC(2) requires the Commission to identify whether there would be a reduction of any entitlement or protection, a matter I consider shortly, and then consider whether the reduction (or reductions) is contrary to the public interest having regard to the terms and conditions of employment considered as a whole. The reference to "their terms and conditions as a whole" in s170NC(2) is, in my opinion, a reference to the terms and conditions that would result from the implementation of the agreement under consideration. It is not a question of ascertaining whether there has been a "net reduction". On one view of the concluding paragraph of a passage from the decision of the Full Bench in Enterprise Flexibility Test Case, May 1995 (1995) 59 IR 430 at 457 quoted with approval by Wilcox CJ and Marshall J, the Full Bench was suggesting that s170NC(2)(b) results in the Commission ascertaining whether there has been a "net reduction" in entitlements or protections overall. However the reduction referred to in s170NC(2)(b) is any reduction identified as a result of the application of s170NC(2)(a). It is not "a reduction" arising from the comparison and reconciliation, in some quasi mathematical sense, of any reductions identified in the first step taken under s170NC(2)(a) with the terms and conditions as a whole.
It is conceivable that a reduction in an entitlement may be of an entitlement that itself is, or may be characterised as, a community standard. If so, the Commission's task is to consider whether that reduction is contrary to the public interest having regard to the terms and conditions of employment, under the agreement, considered as a whole. It appears to me that the critical factor identified in the legislation is not the character of the entitlement or protection that is to be reduced but the effect of its reduction as a term or condition of employment having regard to all other terms and conditions of employment considered as a whole. The Commission's charter is then to consider whether that reduction is, in those circumstances, contrary to the public interest. The application of that statutory test, however, is entirely a matter for the member of the Commission who is called upon to consider whether to approve the implementation of the agreement.
The Full Bench went on to consider whether, having regard to their analysis of the Agreement, Commissioner Redmond had properly applied the provisions of s170NC(1)(d) and (2). The Full Bench proceeds, correctly, on the basis that s170NC(2) is structured in a way that requires individual entitlements and protections to be addressed and reductions, if any, identified. Any reductions must then be considered, in the way I earlier discussed, having regard to the terms and conditions in the agreement as a whole. The table appearing in the Full Bench's decision is, this Court was informed by senior counsel for the applicant, one that was prepared by the Full Bench after it reserved its decision. The only present relevance of that fact is that the applicant seeks to establish by its own tabular comparison in these proceedings that there were no reductions in entitlements or protections. A significant feature underpinning the applicant's comparison is that the rates of pay payable under the Agreement are said to exceed those payable under the Award. Thus the Agreement compensates for any payment that might otherwise have been made under the Award because the provisions in the Award requiring payment either do not appear in the Agreement or appear but, in terms, require the payment of a lesser sum. Arguably this may be so in relation to some matters, but plainly the Agreement does result in a reduction of an entitlement in at least one respect, namely sick leave.
Paid sick leave may often involve several elements. The first is that it entitles an employee to be absent from work while sick without exposing the employee to dismissal by virtue of their absence. To that extent it is also a protection. The second is that it entitles an employee to be paid for the day or days absent: see Graham v Baker (1961) 106 CLR 340 at 346. Ordinarily that payment would be made at the conclusion of the pay period in which the leave was taken. In the present case clause 24 of the Award is in clear terms and confers an entitlement to leave of absence while sick for which period the employee is to be paid at the ordinary time rate of pay of the appropriate classification. These entitlements are subject to certain conditions and limitations which are set out in detail.
The Agreement deals with sick leave in clause 32 and while it is far from clear whether it confers an entitlement to be absent while sick, that, in my opinion, is what is intended by the clause. That lack of clarity in the clause, with the attendant uncertainty as to the affected employees' rights, is itself a loss of a protection otherwise arising from the Award. The Award is clear and thus the entitlement is certain. Clause 32 makes no provision for payment for the period the employee is on sick leave and the clause notes that sick leave entitlements have been "taken into the hourly rate".
Thus an employee who has taken sick leave derives no immediate payment for the period they were absent. They may take such leave within weeks of the commencement of the operation of the Agreement. If so, it might be expected the employee would not even have, in monetary terms, derived by then whatever benefit flowed from what is said to be the embodiment of sick leave entitlements in the hourly rate. However, more fundamentally, the Agreement does not provide for payment while absent on sick leave and this, in my opinion, constitutes the reduction of an entitlement.
This was one of the matters relied on by the Full Bench when it concluded that Commissioner Redmond had failed to apply, sequentially, the provisions of s170NC(2)(a) and then (b). Commissioner Redmond had said:
(iv)section 170NC(1)(d): the means of determining whether or not the 'no disadvantage' test is met is dealt with in ss. 170NC(2). Certification of the Agreement will not result in the reduction of any entitlement or protections of the employees covered by the Agreement under an award or any other law of the Commonwealth or of a State of [sic] Territory. The Agreement does not , in relation to their terms and conditions of employment, disadvantage the employees who are covered by the Agreement." [my emphasis]
This, as the Full Bench correctly concluded, manifests a failure of Commissioner Redmond to appreciate the task of the Commission in a fundamental respect and constituted a jurisdictional error in the way discussed by Wilcox CJ and Marshall J. It follows, in my opinion, that the applicant has not demonstrated that the Full Bench had no jurisdiction derived from the combined operation of s45(1)(g) and (7) to do what it did, namely quash the order approving the implementation of the Agreement and referring the matter back to Commissioner Redmond. They plainly did. However they did so in terms that the matter then be dealt with "in accordance with this decision". As is already apparent, I do not accept that the decision of the Full Bench discloses an approach that is correct in all respects. However the direction of the Full Bench that the matter be dealt "with in accordance with this decision" does not dictate a particular result and Commissioner Redmond is obliged to consider the matter having regard to the plain terms of s170NC.
I agree with the order proposed by Wilcox CJ and
Marshall J.
I certify that this and the preceding thirteen (13) pages are a true copy of the Reasons for Judgment herein of his Honour Justice Moore.
Associate: ........ ........ ......
Dated: ..../..../....
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