United Firefighters' Union of Australia v Metropolitan Fire & Emergency Services Board
[2010] FWA 2731
•20 AUGUST 2010
[2010] FWA 2731 |
|
DECISION |
Fair Work Act 2009
United Firefighters' Union of Australiav
Metropolitan Fire & Emergency Services Board
(C2009/10396)
VICE PRESIDENT LAWLER | SYDNEY, 20 AUGUST 2010 |
Alleged dispute regarding new relativities for employees.
[1] The UFU has referred a dispute to Fair Work Australia pursuant to the dispute resolution procedure in the Metropolitan Fire and Emergency Services Board, United Firefighters’ Union of Australia, Operational Staff Agreement 2005 (2005 Agreement). This decision deals with a jurisdictional objection raised by the MFESB to FWA dealing with the dispute.
[2] The 2005 Agreement is a pre-reform certified agreement in which the dispute resolution procedure was approved by the AIRC pursuant to section 170 LW of the pre-WorkChoices version of the Workplace Relations Act 1996 (WR Act).
[3] Pursuant to transitional provisions in the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009, the matter, including the jurisdictional objection, is to be dealt with by FWA on the basis of the WR Act provisions that applied immediately prior to the commencement of the Fair Work Act 2009. 1
[4] The UFU and the MFESB have been in dispute since before the 2005 Agreement was made over the proper wages for officers in certain classifications (including in particular leading firefighter, station officer and senior station officer) and whether, on a work value basis, the wages for those classifications should be increased relative to the wages paid to a base grade firefighter. In short, they have been in dispute over relativities with the union contending that the pay for particular classifications should be increased to restore the relativities that once existed and that, on the union’s submission, also properly reflect the increasing skill and responsibilities involved in those classifications.
[5] Clause 21 of the Agreement is entitled "Career Paths and Opportunities". Clause 21.4 provides:
"During the life of the agreement the right of the UFU is reserved to pursue a work value/anomaly type exercise to develop and introduce new relativities. If not agreed between the parties, the determination of the AIRC of any UFU application as to relativity shall, notwithstanding the other provisions of this agreement, be binding on the parties.”
[6] It may readily be inferred that the parties, unable to reach a negotiated settlement of the dispute so as to settle the dispute through the incorporation of new relativities in the Agreement, agreed to settled the dispute by submitting it to arbitration by the AIRC if they could not settle its themselves by further negotiation after the certification of the Agreement.
[7] It is well established that the AIRC, now FWA, has no jurisdiction in relation to a dispute referred to the tribunal under a dispute resolution procedure in a certified agreement to which s.170LW applied unless the dispute is a dispute over the application of the agreement within the meaning of s.170LW.
[8] The MFESB submits that FWA has no jurisdiction to deal with the dispute as referred by the UFU because:
(1) the dispute is not a dispute over the application of the 2005 Agreement; and
(2) even if the dispute is a dispute over the application of the 2005 Agreement the AIRC (now FWA) is prevented from dealing with it because the 2005 Agreement could not validly confer power on the AIRC (now FWA) of the sort that clause 21.4 purports to confer.
[9] The MFESB’s written outline of submissions further explain these objections:
“24 In subclause 21.4 of the Agreement, the union reserved a right to bring a claim for the development and implementation of "new relativities". The clause contains a process where there is no agreement reached between the parties as to the new relativities. The process is that the AIRC will determine the matter and the parties agree to be bound by this.
25 There is no dispute here about the application of subclause 21.4, or any other clause on the Agreement.
26 This application does not bring a dispute over the application of the Agreement. In effect, the application brings a matter before FWA to be dealt with as a consent private arbitration. It seeks a work value assessment with a view to varying and increasing the wage rates and relativities. Such matters do not meet the description of disputes in s.170LW: (cf: Ansett Pilots Association and Ansett Australia per Ross VP, Print R8525 at [34] (upheld on appeal in Print S1467); Australian Licensed Aircraft Engineers Association v Qantas Airways Limited per Rafaelli C PR938353 [2003] AIRC 1180; Australian Nursing Federation WA Branch v Minister for Health WA per McCarthy DP, PR918916 at [28]).
27 Such an application has no statutory basis. It arms FWA with no statutory power.
28 Further, the respondent could not consent to any private arbitration outcome derived from such a process as in sub-clause 21.4 where this might effectively vary the terms of the Agreement other than in accordance with s.170MD: (cf: Finance Sector Union v Commonwealth Bank of Australia (2005) 147 FCR 158 at [76] to [84] per Merkel J; and the appeal decision (2007) 157 FCR 329 at [172] to [176] per Branson J and [228] per Marshall J). The possibility of such an outcome would indicate that the Agreement could not have been validly certified by the AIRC.”
[10] In Ansett Pilots Association v Ansett Australia 2 Ross VP was dealing with a dispute referred to the AIRC under a dispute resolution process in a certified agreement, which dispute resolution process had been approved under s.170LW of the WR Act. The dispute was over the proper rate of pay for pilots of a new aircraft being introduced into Ansett’s fleet, the B747-400. Ross VP held that the dispute was not a dispute “over the application of the agreement” but his Honour’s reasons contemplated that the outcome would have been otherwise if the agreement prescribed a process providing for arbitration of a rate of pay for a new classification:
“[25] Clause 10 of the Agreement sets down a procedure for resolving disputes between the parties. Clause 10 does not apply to any dispute which arises during the life of the Agreement but rather the scope of clause 10 is limited by the clause itself. The introductory words to clause 10 are in the following terms:
"Any dispute arising from this Agreement shall be determined pursuant to the following procedure ..." (emphasis added)
[26] In my view the dispute currently before the Commission is not a dispute "arising from [the] Agreement".
[27] The Agreement neither sets a rate of pay for B747-400 pilots nor prescribes a process providing for the arbitration of a rate of pay for a new classification. Indeed clause 24, Reclassification, of the Agreement can be said to reflect an intention to proscribe labour cost increases associated with the reclassification of employees covered by the Agreement. Clause 24 is in the following terms:
"During the life of the Agreement the parties may negotiate and implement changed classification structures by agreement.
The parties to this Agreement acknowledge that reclassification must:
(a) only be achieved by agreement;
(b) recognise that increased remuneration will only result from the use of increased skill or responsibility; and
(c) be achieved at no additional cost."
[28] Mr Borenstein, on behalf of the APA, submitted that the matter before me does not fall within the scope of clause 24. The essence of this submission was put in the following terms:
"... we would reject the proposition that what we are arguing about is truly a reclassification. Reclassification connotes the redistribution or re-division in existing work. What we are saying here is that there is a new stream of work that is being brought into the workplace and the difficulty that has arisen is not one of reclassification at all."4
[29] Despite Mr Borenstein's able advocacy I do not agree with the construction of clause 24 which he advances. While titled "Reclassification", clause 26 is not limited to the reclassification of employees within the existing classification structure in the Agreement. Nor is it limited to the redistribution or redivision of existing work.
[30] The first sentence of clause 24 makes it clear that the clause is directed to the negotiation and implementation of "changed classification structures", by agreement. The title of the clause must give way to the clear words of the text5.
[31] In my view clause 24 clearly evinces an intention that changes to existing classification structures would only be implemented by agreement.
[32] Clause 10 needs to be construed in the context of the Agreement as a whole6. As a specific provision clause 24 would operate to impliedly limit the scope of the more general clause 107.
[33] In my view the claim before me seeks to change the existing classification structure by adding a new rate for pilots operating B747-400 aircraft. Hence the claim falls within the ambit of clause 24 and may only be implemented by agreement.
[34] Even in the absence of clause 24 I do not think that the dispute can properly be said to be a dispute "arising from [the] Agreement". No term of the Agreement is in dispute between the parties. The dispute is not about the application of a particular term. Rather it seeks to establish a new term. In my view the APA's claim is different in character to that contemplated by clause 10 of the Agreement.
[35] I have decided that clause 10 of the Agreement does not provide the Commission with jurisdiction to set an actual rate of pay for pilots operating B747-400 aircraft. This conclusion is based on the construction of clause 10 of the Agreement and the characterisation of the dispute before me as set out above.”
(underline emphasis added to paragraphs [27] and [34])
[11] The Full Bench of the AIRC upheld Ross VP’s decision, observing: 3
“[5] Before us Mr Borenstein attacked Ross VP's decision on the following grounds. Firstly, Mr Borenstein argued that Ross VP had "taken a much too literal and narrow approach to the construction" [transcript p.5] of the phrase "arising from the agreement" in his decision. In this respect Mr Borenstein submitted that clause 10 of the agreement should be construed as giving the Commission appropriate power to fix a pay rate for a B747-400 pilot. He submitted that such a construction of clause 10 was justified pursuant to either the necessary implication which arose from s.170LT(8) or from s.170LW. He submitted that under s.170LT "since the commencement of the agreement the pilots employed under the agreement have been required to perform other work, more demanding work on a more sophisticated aircraft, and yet are being paid at the rate which has been nominated for the lesser work". [transcript p.7] He submitted that such a dispute was a matter arising under the agreement. He submitted that the dispute was also a dispute over the application of the agreement since the agreement struck a rate of pay for flying a B747-300 series aircraft and the dispute was about an appropriate rate of pay to apply "when you ask these people to do something else".
[6] Secondly, Mr Borenstein submitted that Ross VP had erred in forming the view that a fixation of a rate of pay for B747-400 series aircraft was a reclassification within the meaning of clause 24 of the agreement. As we understand the submission it was that the issue before Ross VP did not concern reclassification but was simply about Ansett seeking to apply a rate in the agreement to an aircraft type not covered by the agreement. This was, according to Mr Borenstein, both a matter arising under the agreement within the meaning of s.170LT(8) and a dispute over the application of the agreement within the meaning of s.170LW. Accordingly Mr Borenstein submitted that Ross VP's reference to clause 24 had led him into an error in construing clause 10.
...
[8] We do not find it necessary to set out here the arguments advanced by Ansett in response to the appellant's submissions.
[9] The issue turns on the question of whether clause 10 of the agreement empowers the Commission to arbitrate rates for an aircraft type which was not included in the agreement. We do not see, on a proper construction of the agreement, how the fixation of rates for a new aircraft type can be said to arise out of the agreement. The agreement makes provision with respect to pay rates for specified aircraft types and there is no reservation of the position in relation to other aircraft types. In those circumstances we consider Ross VP was correct in concluding that a dispute about pay for such an aircraft type was not within the scope of clause 10 of the agreement. We think the approach adopted by Ross VP was not unnecessarily literal. In our view his Honour correctly construed the agreement.
[10] In relation to the submission about s.170LW we would point out that that section is a source of power underpinning provisions in an agreement. It does not confer any original jurisdiction upon the Commission in relation to dealing with an agreement other than in accordance with power conferred by the terms of the agreement itself.
[11] We turn to the issue of Ross VP's reference to clause 24 of the agreement. We do not consider that Ross VP made any error in this regard. We agree that in ordinary industrial parlance a claim for the insertion of a new aircraft type and pay rate in an appendix to an agreement headed "Classification structure" which appendix sets out aircraft types and pay rates would be regarded as a reclassification. In this respect Ross VP made no error. We are fortified in that conclusion by clause 11 of the agreement which provides:
"11. EMPLOYER AND EMPLOYEE DUTIES
The Company may direct an employee to carry out such duties as are within the limits of the employee's skills, competence and training consistent with the relevant classification structure and any relevant legislation provided that such duties are not designed to promote de-skilling.
The Company may direct an employee to carry out such duties and use such tools and equipment as may be required provided that the employee has been properly trained in the use of such tools and equipment.
Any direction issued by the Company under this clause is to be consistent with the Company's responsibilities to provide a safe and healthy working environment."
Clearly this clause contemplates that the agreement contains a classification structure and imposes obligations in respect of duties relevant to each classification in the structure. But even if Ross VP were wrong about this and the issue was not one of reclassification then recourse can only be had to clause 10 of the agreement. For the reasons we have given, clause 10 is not applicable in the present circumstances.
[12] For these reasons were are not satisfied that Ross VP was wrong and we decline to grant leave to appeal.”
(underline emphasis added)
[12] The decision of both Ross VP and the Full Bench proceeded on the basis that the AIRC would have had jurisdiction to deal with the dispute if the agreement in question had prescribed a process for arbitrating a rate of pay for the new classification of pilot of a B747-400. The agreement in the Ansett cases did not have a provision analogous to clause 21.4 in the 2005 Agreement in this case.
[13] The MFESB relied on my decision in CEPU v Telstra Corporation 4 in which I held:
“[13] Whatever else the expression “disputes over the application of the agreement” in s.170LW of the Act and its predecessors may denote, in my opinion it must certainly include:
(i) disputes over whether the agreement applies in particular circumstances; and
(ii) disputes over how the agreement applies in particular circumstances.”
[14] That decision was overturned on appeal 5 although the Full Bench did not comment on the correctness or otherwise of that approach to determining whether a dispute is properly characterised as a “dispute over the application of the agreement.” On any view, I was not, in that passage, attempting to exhaustively state what constituted a “dispute over the application of [an] agreement”. Moreover, my decision did not take account of the decisions at first instance an on appeal in the Ansett cases. I regard myself as bound to give effect to the apparent view of the Full Bench in Ansett that the AIRC has jurisdiction, consistent with s.170LW of the WR Act, to deal with a dispute that involves performing an arbitral function expressly conferred on the AIRC by a clause in a certified agreement. I note that this outcome is consistent with a purposive construction of s.170LW, viewed in the context of the WR Act as a whole. In short, clause 21.4 itself empowered the AIRC to resolve by arbitration a dispute over the proper relativities for particular classifications in the event that the parties could not reach agreement on that matter themselves and a dispute referred to FWA pursuant to clause 21.4 ought be characterised as a dispute over the application of the 2005 Agreement within the meaning of s.170LW of the WR Act.
[15] I note that this approach was taken by Harrison SDP in ARTBIU v Pacific National 6 and where her Honour observed of the Ansett decisions:
“[11] In my opinion these decisions do not stand for any general proposition that if a dispute is about what should be in an agreement rather than what is in the agreement it can never be a dispute over the application of the agreement. In the matter before me, and unlike the facts in the Ansett decisions, there is provision for an existing rate of pay for relay drivers and also a process for revisiting that rate of pay during the life of the Agreement. The Ansett cases were no more than an exercise in categorising the matter there in dispute and then applying the terms of the relevant agreement to ascertain if they reflected an agreement by the parties to empower the Commission to undertake a role in the settlement of the dispute.”
[16] This approach is also consistent with the approach taken by the Full Bench of the AIRC in Sydney Ferries Corporation v AMOU 7 albeit that that case was concerned with a different statutory regime.
Did clause 21.4 validly confer power on the AIRC?
[17] The MFESB relies on the decision of Merkel J in Finance Sector Union v Commonwealth Bank of Australia 8 and, on appeal, the decision of the Full Court of the Federal Court in Commonwealth Bank of Australia v Finance Sector Union9 as authority supporting the conclusion that clause 21.4 could not validly confer on the AIRC the power of arbitration that it purports to confer.
[18] The case before Merkel J concerned the lawfulness of a subsidiary of the bank entering a collective agreement, subsequently certified by the AIRC, when the subsidiary only had a small number of (compliant) employees. The agreement contained a clause that purported to authorise the employer to enter into individual agreements that prevailed over the certified agreement. There was no relevant constraint on the terms of those individual agreements in the sense that they did not have to be superior to the certified agreement and at all relevant times, the bank and its subsidiary intended that the employment of employees was to be under individual contracts. Merkel J held that the collective agreement was incapable of being validly certified. It is desirable to set out a portion of his Honour’s reasons being in mind that s.170MD of the WR Act provided a process for varying a certified agreement:
“74 It is clear from the statutory provisions set out above that, prior to a valid certification of an agreement, the AIRC must be satisfied that:
(a) the terms of the agreement have been approved and genuinely made by a valid majority of employees bound by the agreement and who have had its terms explained to them: see ss 170LE, 170LK and 170LT(6);
(b) the terms of the agreement only relate to matters pertaining to the employee-employer relationship: see s 170LI(1) and Electrolux at 122 [17], 145 [111], 156-159 [157]-[166] and 180 [251]-[253];
(c) the terms of the agreement do not include inconsistent, objectionable or discriminatory terms: see ss 170LU(2), 170LU(2A) and 170LU(5);
(d) the agreement passes the no-disadvantage test: see ss 170LT(2) and 170XA; and
(e) the agreement contains dispute prevention and settlement procedures: see s 170LT(8).
75 Further, any variation of the agreement must, by order, be approved by the AIRC, which must refuse to approve it in certain circumstances: see s 170MD(3). In Kilpatrick Green Pty Ltd v The Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia & Anor [1998] FCA 559, Ryan J observed that a suggestion that the AIRC had countenanced the variation, perhaps very substantially, of a certified agreement without such a variation being certified, would ‘implicate the Commission in an improper delegation or abdication of its duty of certification.’
76 Subject to a possible exception in respect of ‘facilitative provisions’ (to which I later refer), the cumulative effect of the above provisions is such that it is an implicit, if not explicit, requirement of the statutory scheme for certification that the agreement being certified contain all of the terms that are to have effect as a certified agreement as a result of the certification. If the position were otherwise, the AIRC could not satisfy itself of the requirements in respect of the matters set out in ss 170LE, 170LI, 170LK, 170LT, 170LU, 170MD and 170XA. Thus, those terms must both be in existence and be considered by the AIRC prior to it certifying the agreement. It would be antithetical to that scheme for the AIRC to be empowered to validly certify an agreement when it had no knowledge of the terms of the cl 12 agreement that will ultimately be binding on the employer and the employees as if it were an agreement certified under the WR Act. More specifically, it is self-evident that a consequence of the certification of the CommSec Agreement, including cl 12, is that a cl 12 agreement may be given effect to as if it were a certified agreement notwithstanding that:
(a) a valid majority of employees may never have considered, let alone approved, its terms;
(b) the agreement may contain terms that do not pertain to the employee-employer relationship;
(c) the agreement may contain inconsistent, discriminatory and objectionable provisions;
(d) the AIRC, as opposed to the contracting parties, has not considered whether the agreement passes the ‘no-disadvantage’ test;
(e) the agreement may exclude the operation of the dispute prevention or settlement procedures in the CommSec Agreement; and
(f) the agreement varies the certified agreement without the variation being considered, let alone approved, by the AIRC.
77 I referred above to a possible exception in respect of ‘facilitative provisions’ which the AIRC has permitted to enable ‘agreement at enterprise level to determine the manner in which [a] clause is applied at the enterprise’: see Safety Net Adjustments and Review – September 1994 (1994) 56 IR 114 (‘Safety Net’) at 136. The AIRC (at 137) contrasted such provisions with ‘a built-in contracting-out provision in an award, which should not occur’ because, if the parties wish to divest themselves of their obligations, ‘they should do so in accordance with the processes provided by the Act.’
78 A facilitative provision, which provides for the parties to agree upon the details of the manner in which a particular clause is to operate at the enterprise level, is unlikely to affect the AIRC’s ability to be satisfied that the pre-conditions to certification have been met. Also, such a provision is unlikely to result in a variation of the agreement (for the purposes of s 170MD) in the event that agreement is subsequently reached upon the details of the operation of the clause at an enterprise level. In that regard, a facilitative provision may therefore fall within the marginal note to s 170MD(7), which states that the sub-section ‘would not apply to an agreement in so far as the obligations under the agreement can change because of the terms of the agreement itself.’ Although s 13(3) of the Acts Interpretation Act 1901 (Cth) provides that such notes are not to be taken to be part of the Act, the note indicates an intention that provisions such as facilitative provisions may not be regarded as variations for the purposes of s 170MD. Whether a facilitative provision is permissible may depend upon the width of the provision and, also, whether it purports to merely provide for the agreement made pursuant to it to operate between the parties, but not to become a provision of the award or certified agreement (as the case may be).
79 It is obvious that the purpose of the provisions to which I have referred is that the AIRC is to determine whether all of the terms of the agreement, which might be relevant to the statutory duties of the AIRC to which I have referred and which are to have effect as terms of a certified agreement during the period of its operation, satisfy the relevant statutory requirements. The cl 12 agreements, made pursuant to cl 12 of the CommSec Agreement, exclude all of the terms of the CommSec Agreement and substitute their terms as the terms and conditions of employment that are to have effect as if they were terms of the CommSec Agreement. It is clear that the cl 12 agreements and, it must follow, cl 12 of the CommSec Agreement which authorises those agreements, not only undermine the certification role of the AIRC under the WR Act, but also defeat the purpose of the statutory provisions to which I have referred. The Court should not construe the relevant provisions to produce those consequences if a construction that gives effect to the legislative purpose is reasonably open...
80 In my view, subject to a probable exception in respect of facilitative provisions, it is an implicit requirement of the statutory provisions to which I have referred that the agreement being certified contain all of the terms that are to have effect as a certified agreement as a result of the certification. That construction gives effect to the purpose of the relevant provisions, is reasonably open and should be adopted.”
(underline emphasis added)
[19] Merkel J then considered, consistent with the approach laid down in Project Blue Sky Inc v Australian Broadcasting Authority 10, whether the failure by the AIRC to follow the requirements of the WR Act in relation to certification of the agreement resulted in invalidity and held that it did.
“83 When regard is had to the significance of the requirement that the agreement being certified contain all of the terms that are to have effect as a certified agreement as a result of the certification; to the mandatory requirements that must be satisfied for certification; and to the consequences of certification; the conclusion is inevitable that the requirement is one that is an ‘essential preliminary’ to certification or, as was suggested in SAAP, an imperative requirement of non-compliance with which will result in invalidity.
84 The same result can also be reached by a simpler route. Section 170MD(2) provides that a variation to a certified agreement has no effect unless the AIRC approves it. Section s 170MD(7) provides that a certified agreement is not able to be varied except in accordance with s 170MD and certain other specified provisions of the WR Act. A cl 12 agreement, by excluding all of the terms of the CommSec Agreement, is plainly a variation of that agreement. In so far as cl 12 of the CommSec Agreement purports to give effect to a cl 12 agreement as if it were a certified agreement, it cannot have that effect by reason of ss 170MD(2) and 170MD(7) CBA and CommSec contended that cl 12 permits the CommSec Agreement to be varied and for the varied agreement to have effect as a certified agreement. However, the WR Act does not empower the AIRC to override the imperative statutory requirements of s 170MD. Therefore, any exercise of power by the AIRC purporting to do so is ultra vires and of no effect.”
[20] Merkel J’s ultimate conclusion that the CommSec Agreement could not have been validly certified by the AIRC was upheld on appeal. 11 Branson J, with whom Marshall and Spender JJ relevantly agreed12, held:
“171 The appellants placed reliance on the fact that s 170XA requires a positive conclusion by the Commission that certification would (not may) result in a reduction in terms and conditions of employment. They submitted that it was not possible for the Commission to say at the point of certification that terms and conditions of employment would be reduced because, in effect, at that time the terms of any individual agreement that might be entered into under clause 12 were unknown.
172 In my view, the plain intent of s 170XA is that the Commission must give consideration to, and form a view on, whether the agreement, if certified, would result, on balance, in a reduction in the overall terms and conditions of employment of the employees under the industrial instruments and law to which s 170XA(2) refers. The statutory requirement for the Commission to compare the overall terms and conditions of employment of the employees in relevant respects if the agreement were certified and if the agreement were not certified reveals that the Commission must be placed in a position where it can make the necessary comparison. It cannot make that comparison if the overall terms and conditions of employment of the employees, if the agreement is certified, cannot be known because they may be fixed by later agreements between the employer and individual employees. The Commission is not authorised to delegate to the parties to an agreement its responsibility under s 170LT to determine whether the agreement satisfies the no-disadvantage test (see the second paragraph of clause 12).
173 The above considerations assist a proper understanding of the requirements of s 170LI of the Act that before an application may be made to the Commission for certification ‘there must be an agreement, in writing, about matters pertaining to the relationship’ between the employer and persons whose employment is subject to the agreement.
174 An agreement about a matter pertaining to that relationship which may at any time cease to bind some or all of those whose employment is subject to the agreement because they have entered into inconsistent individual agreements which prevail over that agreement is not, in my view, an agreement in writing about that matter within the meaning of s 170LI. It is, at best, a provisional agreement about that matter linked to an agreement that the parties, or some of them, may agree something else. The manner in which a certified agreement may be varied is controlled by s 170MD of the Act. Section 170MD does not contemplate a variation that binds individual employees only. It does not contemplate a variation which does not require the Commission’s approval.
175 The appellants’ reliance on s 170NHA of the Act was misplaced. Section 170NHA was concerned to preserve the validity of certain agreements certified by the Commission prior to the judgment of the High Court in Electrolux Home Products Pty Ltd v Australian Workers’ Union [2004] HCA 40; (2004) 209 ALR 116. In that case the High Court held that an agreement purportedly certified which dealt with a matter which was not a permitted matter was not validly certified. As the primary judge rightly concluded, the reason that the CommSec agreement could not be certified extended well beyond the inclusion in it of a matter that was not a permitted matter (see [171]-[173] above). Additionally, it was no part of the Commission’s function to remake the CommSec Agreement of which clause 12 was an important aspect.
176 For the above reasons the primary judge rightly concluded that the Commission was not authorised to certify the CommSec Agreement; it was not an agreement of the kind required by s 170LI of the Act before an application for certification could be made to the Commission. Submissions founded on the assumption that each agreement entered into under clause 12 of the CommSec Agreement constitutes a purported variation of a certified agreement need not, for this reason, be further considered.”
[21] In the present case, clause 21.4 of the 2005 Agreement is to be distinguished from clause 12 of the CommSec Agreement with which Merkel J and the Full Court were concerned. Clause 12 of the CommSec Agreement purported to authorise the employer to make individual agreements with employees that overrode the other terms of the CommSec Agreement. Clause 21.4 of the 2005 Agreement does not leave it to the parties to subsequently agree on the terms and conditions that will apply to an employee creating the problem in relation to the no disadvantage test highlighted by the Cull Court. Rather, clause 21.4 authorises the AIRC (now FWA) to arbitrate new relativities. It can be assumed with certainty that the ARIC (now FWA) would not arbitrate an outcome that would reduce the wages for a relevant classification such that the agreement, with those new relativities included, would fail the no disadvantage test. In my view, clause 21.4 of the 2005 agreement is properly characterised as being within that class of clauses identified by Merkel J as “facilitative provisions” as to which, the better view is that such provisions were permitted by the scheme of the WR Act (as contemplated by the marginal note to s.170MD(7)).
[22] For these reasons I am not persuaded by the arguments of the MFESB and I find that FWA does have jurisdiction to deal with the dispute and to perform the function contemplated by clause 21.4 of the 2005 Agreement. However, that said, I think it appropriate to note that I have grave reservations over whether, in the particular circumstances of this matter, it is appropriate for FWA to arbitrate new relativities for the classifications in question pursuant to the power conferred by clause 21.4. There is a real issue as to whether FWA should decline to deal further with the dispute pursuant to s.111(1)(e)(ii) of the WR Act as it existed immediately before the commencement of the FW Act. The 2005 Agreement came into force on 19 April 2006 and had a nominal expiry date of 19 April 2009. A provision substantially similar to clause 21.4 appeared in the predecessor agreement. In this context I note that the UFU’s application includes as a ground upon which the UFU relies:
“3. Wage movements and other changes since the initial setting of rank relativities - such as the lifting of the leading firefighter cap - have also resulted in anomalies. These anomalies include compression of wage rates.”
[23] Wage relativities have a clear relevance in the context of arbitrated wage rates that form part of a safety net. In that context the compression of relativities is a matter that attracted comment by the Full Bench of FWA in the Annual Wage Review 2009–10: 13
“[335] ...The history of adjustment of minimum wages in federal awards since the legislated introduction of enterprise bargaining in 1993 has been one of dollar increases rather than percentage increases. This has compressed relativities in the award classification structures. While the compression of relativities is an important issue in itself, a number of parties also submitted that it is desirable that the real value of minimum wages should be maintained throughout award structures, not just at the lower levels or at the level of the minimum wage. The fall in the real value of minimum wages at various award levels is demonstrated by Chart 5.2 set out in Chapter 5. Furthermore, there may be adverse implications for the incentive for employers to bargain if the gap between award wages and earnings is too big.
[336]We consider there is a strong case for a percentage adjustment to all modern award minimum wages. While not all award-reliant employees are low paid, uniform dollar increases reduce the relevance of the safety net at the higher award levels and erode the real value of award wages at most levels. These are particularly important considerations at the commencement of the modern awards system. ...”
[24] However, it is arguable that different considerations apply in the context of bargaining. Once employees are remunerated at a rate that leaves them substantially better off overall when compared to the relevant reference instrument, wage outcomes are a matter for bargaining and there is no intrinsic imperative to maintain relativities between particular classifications. The remuneration provided for the 2005 Agreement is substantially in excess of the relevant award. For whatever reason the UFU decided not to pursue the dispute in relation to relativities with any vigour during the nominal life of the 2005 Agreement (or its predecessor agreement) and only attempted to refer the matter to the FWA in September 2009 14, many months after the 2005 Agreement passed its nominal expiry date. The parties have been bargaining for a new agreement and, as far as I am aware, no replacement agreement has yet been concluded. I cannot immediately think of any good reason why the wage rates for the relevant classifications should not now be a matter for bargaining rather than arbitration. However, these matters have not been the subject of any submissions.
[25] I direct the UFU to lodge with FWA and serve on the MFESB by 24 September 2010 written submissions as to why I should refrain from exercising the power in s.111(1)(e)(ii) of the WR Act and decline to deal further with the dispute.
VICE PRESIDENT
Appearances:
Mr A. Bandt, of counsel, on behalf of the applicant.
Mr F. Parry SC and Mr R. Dalton, of counsel, on behalf of the respondent.
Hearing details:
2009.
Melbourne:
21 October.
1 Schedule 19 and item 11 of Schedule 18 to the Fair Work (Transitional Provisions and Consequential Amendments) 2009
2 Print R8626
3 Ansett Australia v Ansett Pilots Association Print S1467
4 (2003) 125 IR 88 at [13]
5 CEPU v Telstra Corporation (2003) 128 IR 385
6 [2007] AIRC 547
7 [2007] AIRCFB 909 esp at [19]
8 (2005) 147 FCR 158
9 (2007) 157 FCR 329
10 (1998) 194 CLR 355 at [92]
11 (2007) 157 FCR 329
12 Marshall J at [228] and Spender J at [23]-[24]
13 [2010] FWAFB 4000
14 It appears that there was an unsuccessful attempt to file a dispute notification in late August 2009.
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