United Firefighters' Union of AustraliavCountry Fire Authority

[2012] FWA 7155

Note: An appeal pursuant to s.604 (C2012/5096) was lodged against this decision.

[2012] FWA 7155

The attached document replaces the document previously issued with the above code on 21 August 2012.

The Decision has been refiled to correct the paragraph numbering from paragraph [120].

Melissa Nassios

Associate to Commissioner Roe

Dated 29 August 2012

[2012] FWA 7155

FAIR WORK AUSTRALIA

DECISION

Fair Work Act 2009
s.739 - Application to deal with a dispute

United Firefighters' Union of Australia
v
Country Fire Authority
(C2012/237, C2011/5253 & C2011/5835)

COMMISSIONER ROE MELBOURNE, 21 AUGUST 2012

Alleged dispute concerning the application of Clause 27.4 of the Country Fire Authority (CFA), United Firefighters’ Union of Australia Operational Staff Agreement 2010 pursuant to Clause 15, Dispute Resolution, regarding safe staffing levels and additional staffing.

[1] Since March 2011 the Tribunal has been dealing with disputes concerning the application and implementation of Clause 27.4 Additional Staffing of the Country Fire Authority (CFA), United Firefighters’ Union of Australia Operational Staff Agreement 2010 (the Agreement). The relevant extant applications currently before the Tribunal are:

(a) C2011/5253 dated 26 July 2011 (the First Application);

(b) C2011/5835 filed 14 September 2011 (the Second Application); and

(c) C2012/237 dated 13 March 2012 (the Third Application).

[2] The parties to the dispute are the United Firefighters’ Union of Australia (UFU) and the Country Fire Authority (CFA).

[3] A number of consent Recommendations and Statements have been made by the Tribunal during the course of the dispute. In particular Recommendations of 19 March 2012, 16 November 2011, 6 September 2011, 10 August 2011, 29 July 2011, and 16 June 2011. A Statement was also issued on 20 June 2011.

[4] I am satisfied and the parties agree that conciliation has been unsuccessful and is exhausted and the UFU have requested that the matter be arbitrated. I am satisfied and the parties agree that the requisites steps of Clause 15, Dispute Resolution, have been completed.

[5] The dispute is about the application of Clause 27.4 and the implementation of additional staffing. I am satisfied that this is within the scope of matters with which Clause 15, Dispute Resolution, of the Agreement is able to deal. FWA is empowered to resolve the dispute by private arbitration.

[6] The resolution of the dispute sought by the UFU is that the CFA is directed to comply with clause 27.4.7 namely that: “the CFA will request that its employees approve a proposed variation to Schedule 1 of the agreement to record all deployments in the preceding year”. The UFU has proposed a determination which sets out a number of steps required to give effect to this in a timely manner. The determination proposed by the UFU is Attachment 2 to this decision. The UFU also provided a revised version of the proposed Schedule 1 as varied. 1 That proposal refers to deployments the UFU says have occurred between 21 October 2010, the date the Agreement commenced, and the present.

[7] I raised with the parties the possibility that I might determine the dispute in a different manner to that sought by the UFU. In response the CFA argued that I should not determine a dispute that has not yet arisen. In characterising the dispute the focus in not on the particular remedy sought. The extensive history of this matter before me means that I am in a good position to be satisfied that there is in fact a dispute about the application and implementation of Clause 27.4 and 27.4.7 in particular and that it goes beyond the particular outcome sought by the UFU. I am satisfied that I am not confined to the particular remedy or resolution sought by the UFU. My role is to determine a resolution to the dispute about the application or implementation of Clause 27.4 Additional Staffing and Clause 27.4.7 in particular.

[8] The CFA have participated in processes over the period since March 2011 whereby they have consulted with the UFU about the training of recruits, the initial allocation of those recruits once they have completed their initial training to fire stations, and the location, rank and number of additional positions at various fire stations and the timing of the creation of those positions.

[9] The UFU allege that the CFA have refused to take those steps necessary to facilitate the variation to Schedule 1 of the agreement to reflect the deployments made by it between 21 October 2010 and 1 September 2011, the first year of operation of the Agreement.

[10] When considering the construction of clause 27.4.7 of the Agreement, regard should be had to the other provisions of clause 27, the text and operation of the Agreement as a whole, and the legislative context in which the Agreement was made and in which it was to operate.

[11] The relevant provisions of the Agreement are at Attachment 1 to this decision.

[12] The approach to interpretation of registered industrial agreements is well settled:

(a) The primary focus in interpreting an agreement is on the words of the instrument itself.

(b) A narrow or pedantic approach is misplaced.

(c) The search is for the meaning intended by the framer of the document bearing in mind that that person was likely of a practical bent.

(d) It is justifiable to read the document to give effect to its evident purpose having regard to the context despite inconsistencies which might tend to some other reading.

(e) Meanings which avoid inconvenience or injustice may be reasonably strained for.

(f) The Tribunal is not free to give effect to some anteriorly derived notion of what would be fair or just.

Background and Evidence

[13] The evidence of Mr McGuinness for the UFU and Mr Ferguson for the CFA concerning the practices in respect to staffing and deployment is relevant to an understanding of the meaning of Clause 27 in so far as it reveals the mutual intention of the parties at the time the Agreement was made and in so far as it enables me to establish the relevant background facts and context.

[14] Evidence was given by Mr Michael McGuinness for the UFU. 2 Mr McGuinness has been employed by the CFA since 1987 and now holds a senior position as an Operations Officer who is the Officer in Charge of the Geelong City Fire Station. Mr McGuinness also holds senior roles for the UFU.

[15] Mr McGuinness gave evidence that Schedule 1 includes the minimum crewing at each rank level required for each appliance at each station together with the number of relievers to be deployed to each station.

[16] Mr McGuinness gave evidence that the established practice for many hears have been that there are a number of recruits trained each year. The training course lasts 16 weeks and at the conclusion of the course recruits who are assessed as suitable are deployed to fire stations which are crewed by a combination of career firefighters and volunteers. Prior to the completion of the course the recruits are notified of the stations available for deployment and are then requested to indicate their preferences. At the successful completion of the course they are deployed to a station. They are then classified as Firefighter Level 1.

[17] Mr McGuinness prepared a table showing where the recruits from the courses 2/2010, 1/2011, 2/2011 and 3/2011 were deployed. After completing 34 weeks of employment (that is 18 weeks following the end of the recruit course) and completing required assessment, the firefighter is able to form part of the minimum crewing requirements and may be rostered to fill the position of those on various forms of leave or on higher duties. These firefighters can also then apply to fill substantive vacant firefighter positions. Vacant firefighter positions are subject to a process of internal advertisement and a merit based selection process prior to appointment to the position. Recruits are not subject to such a process when being initially assigned to stations. At Dandenong the new firefighters can form part of minimum crewing at an earlier stage.

[18] Evidence was given for the CFA by Mr Euan Ferguson who is the Chief Officer. 3 Prior to his appointment as Chief Officer in 2010 Mr Ferguson had been the Chief Officer for the South Australian Country Fire Service and before that had held very senior roles over a long period of time with the CFA. The Chief Officer is responsible for the order and control of firefighters and for the allocation, distribution and deployment of operational resources. He is also responsible for ensuring that operational personnel are trained, organised and equipped to meet the CFAs objectives and statutory responsibilities.

[19] In the main the evidence of Mr Ferguson and Mr McGuinness is consistent concerning the traditional process of training and deployment of recruit firefighters. Where there are minor differences it is not necessary to resolve them in order to determine the issues in this case.

[20] Mr McGuiness and Mr Ferguson agree that recruit firefighters are “deployed above strength that is in addition to the minimum establishment of career firefighters set out in Schedule 1 at the station to which they are deployed.” 4 At first there appeared to be a difference concerning whether or not the above strength firefighters who had recently completed their training at Fiskville were classified as “relief” firefighters. I am satisfied that the evidence supports a conclusion that in the main they are classified as above strength relief firefighters or relievers.5

[21] I am satisfied that a policy on employment and recruitment including transfers applies to firefighters regardless of whether they are above strength or not. 6 I am also satisfied that a firefighter, including an above strength firefighter, can only be redeployed against their will for a period of up to six months.7

[22] The UFU produced the “Recruit Firefighter Placement and Development Strategy” in evidence. 8 That document notes:

“it is important to reinforce that Level 1 Firefighters are a State resource and at all times during their developmental period they are considered “above strength personnel”. Level 1 Firefighters will not be considered as part of minimum staffing levels until they have completed the agreed 34 week process including assessments. .....Normal station relief must be provided using allocated relievers and at no stage should these Level 1 Firefighters be utilised in a relief capacity to the detriment of their development.”

The document uses the term “deployment” to refer to the stations to which the Level 1 Firefighters are allocated following the completion of their training at Fiskville. Level 1 Firefighters are immediately engaged in the work of a career firefighter and as such are “deployed” from the moment that they commence “on station” after the successful conclusion of the recruit course. 9

[23] I am satisfied that the evidence supports a conclusion that the CFA uses the term “deployment” to cover both the initial allocation of recruits to above strength positions and the creation and filling of new positions.

[24] I am also satisfied that the effect of Clause 27.1 and Schedule 1 is that the positions in that Schedule must be filled at all times. If there is no appointed occupant of the position or if the occupant is not available then someone must be called upon to act in the position.

[25] Mr Ferguson and Mr McGuinness agree that the Chief Officer and the CFA have determined that an additional 342 firefighters should be deployed over the next six years to meet the objectives of the CFA. The parties reached agreement under the auspices of FWA about the three phase process and a timetable for deployment of the additional 342 firefighters over the next six years in order to give effect to the CFA’s obligations under clauses 27.4.1 and 27.4.2 of the Agreement. 10 The parties reached agreement in November 2011 with the assistance of FWA on the deployments in Phase 1. Mr Ferguson gave evidence that:

“in line with the Phase 1 agreement, 65 new positions have been established, 63 of which have been established by rank are stations and 2 of which are Operational Officer positions. Of those 65 new positions, 37 have been filled through the normal process of internal advertisement and appointment, including Operational Manger positions. In each case the appointment of employees to those new positions has occurred this year. No new positions were established or filled in the first 12 months of operation of the Operational Staff Agreement.” 11

[26] Mr Ferguson and Mr McGuinness agree that some minor changes to the Schedule 1 which appears in the Agreement were agreed and have been reflected in a document on the CFA Intranet.

[27] The UFU and the CFA also agreed on a process for varying Schedule 1 of the Agreement to reflect deployments in Phase 1. However, the parties did not reach agreement in respect to Phase 2 and on the details of the varied Schedule 1.

[28] Mr Ferguson gave evidence that:

“the CFA notified the UFU that it was no longer prepared to take steps to effect a variation to Schedule 1 because it did not consider that the Clause 27.4.6 is legally valid, although it was prepared to publish a document (not forming part of the Operational Staff Agreement) in the form of Schedule 1 which would be updated annually to reflect the creation of newly established positions and actual deployment of firefighters to those positions and also to continue the process of consultation about the establishment and filling of additional firefighter positions.” 12

[29] Mr Ferguson made clear in answer to my question, that minimum staffing would be maintained in accordance with the document published. 13 The document published by Mr Ferguson differs from the existing Schedule 114 because of the inclusion of the new positions created to date as a result of the implementation of Phase 1 of the additional staffing.

[30] It is apparent that the changes to Schedule 1 proposed by the UFU reflect the 75 recruits who have been deployed “above strength” to fire stations since 21 October 2010 15 together with 45 new positions which UFU say have been created as part of Phase 1 to the present date. The Phase 1 deployments have all occurred in the period since 1 September 2011.

[31] The major difference between the document published by Mr Ferguson and the Schedule proposed by the UFU 16 is the inclusion of the above strength recruit firefighters following their initial deployment to stations. There is also some uncertainty about the status of 10 new positions at Traralgon. There is no dispute that the Chief Officer has determined to create these positions as part of Phase 1 however I am unsure as to whether or not the positions have been advertised and filled.

[32] Mr Ferguson gave evidence that if the above strength firefighters were included in Schedule 1 it would “constitute a significant impediment to the performance by me of my obligation to decide the way in which the operational personnel of the CFA should be best organised to achieve the CFA’s statutory functions”. 17 Mr Ferguson says that this would be because if any above strength firefighter was absent from their station due to illness they would have to be relieved. This would be a major change to the present situation and would have major cost and operational implications. Mr McGuinness gave evidence that it was not the intention of the UFU that above strength relievers should have to be replaced.

[33] Mr Ferguson gave evidence that there were at least 35 above strength firefighters located across the fire stations listed in Schedule 1 who were not included in Schedule 1 at the time the Agreement came into operation. 18 Mr Ferguson gave evidence that the 35 was a net figure when the number of vacant positions was subtracted from the number of above strength firefighters. He suggested that the gross number of above strength firefighters was approximately 70.

[34] It is not in contention that the CFA operates consistent with the requirements of Schedule 1 of the Agreement and maintains minimum manning levels in accordance with that Schedule. Mr Ferguson gave evidence that the CFA developed a process by which it proposed to go about creating and filling the 342 new career firefighter positions.

[35] Mr Ferguson gave evidence that:

“if the CFA does not have the discretion itself to determine from time to time the number and composition of career firefighters in its employ according to the various considerations that are relevant in terms of the performance of its statutory functions, the exercise of those statutory functions will be significantly impeded.” 19

The construction of Clause 27.4.6 and 27.4.7

[36] The UFU submit that the term deploy in Clause 27.4.7 is a reference to both the deployment of recruits to stations and to the deployment of firefighters to newly created positions. Further when Clause 27 is read as a whole it is submitted by the UFU that the obvious purpose of Clause 27.4.7 is to record the increase in staffing levels that are required under the Agreement and this includes the initial deployment of recruits as Level 1 Firefighters and the deployments to newly created positions in Phase 1 which give effect to Clause 27.4.2 of the Agreement. The UFU argue that the Board of Reference Decisions referred to in Clause 27 support this conclusion as does the agreed position of the parties reflected in the Recommendations and Statements concerning the implementation of Phase 1.

[37] The CFA argue that the variation which the UFU requests FWA to endorse is not in conformity with Clause 27.4.7 because the amendments to Schedule 1 that the UFU put forward in its proposed Determination alter the character of Schedule 1 of the Agreement, by including “above strength” employees who are not currently included in Schedule 1.

[38] The heading of the Schedule is “Schedule 1 - current staffing: 2010 Current Authorised Manning (not including above strength)”.

[39] It is reasonably apparent that the heading applies to the whole of the schedule which has five parts - the minimum numbers on each fire fighting appliance by rank and station; the minimum staffing numbers per shift by rank and station (which generally is the aggregate of the first table); the core numbers of non-relievers which is generally four times the minimum numbers per shift except for day work stations and certain ranks; the relief staff numbers; the ratio of non-relievers plus relievers divided by minimum “manning” (at stations which operate 10/14 roster this is generally between 5 and 6). In other words I am satisfied that “above strength” firefighters are not included in Schedule 1.

[40] Clause 27.1 provides that “the current staffing ratios, locations and levels as set out in Schedule 1 will be maintained as a minimum for the life of this agreement.” In my view this reinforces the conclusion that Schedule 1 reflects the minimum staffing levels which need to be maintained and is not intended to include above strength firefighters. It is not in contention that traditionally above strength firefighter numbers do not need to be maintained as they will eventually apply for and be appointed to positions which form part of the minimum staffing in Schedule 1 or to other positions which are not included in Schedule 1. Furthermore, if above strength firefighters were included in Schedule 1 then this process would be impeded as their numbers could not be reduced without further variation to the Agreement.

[41] Clause 27.4.1 provides that “during the life of this agreement, the current staffing ratios, locations and levels will be increased.” Read in context this is a reference to changes to the matters set out in Clause 27.1 and in Schedule 1. It is not a reference to the “above strength” firefighters.

[42] I am also satisfied that traditionally career firefighters who complete their training at the training college and who are allocated to a station are allocated “above strength” until they apply for and are appointed to a vacant career firefighter position. Those positions, other than non-operational day work positions such as in training, are set out in Schedule 1. Mr Ferguson gave evidence that there are 526 positions in Schedule 1 but a total of approximately 830 professional firefighters employed by the CFA. There are a substantial number of professional firefighters who are above strength or who are allocated to positions which are not in Schedule 1 such as those in managerial roles.

[43] I understand that Clause 27 reflects a decision by the Chief Officer to employ 342 additional firefighters over the next six years. This is a net figure - that is those firefighters who leave during this period will also be replaced. It is also clear from Clause 27 and the evidence of Mr Ferguson that the Chief Officer has decided that there will be additional integrated fire stations, new equipment and additional firefighters allocated to stations. That is, the 342 will be required to increase the number of fire fighting positions and in particular to increase the minimum manning and consequent numbers on shift and numbers on relief to maintain appropriate ratios. This is made clear in Clause 27.4.1. It is the intention of Clause 27 that over six years positions, including relief positions, will be added to Schedule 1. However, Clause 27.4.8 allows for the possibility that the process might take more than six years.

[44] Unfortunately, the word “deployment” is used to describe two quite different processes:

• The deployment of recruits to various stations, above strength, immediately following the completion of their training at Fiskville.



• The creation of new positions which form part of minimum manning following a decision of the Chief Officer and the deployment of firefighters to these positions generally following a process of advertisement of the vacant position.

[45] Both types of deployment are referred to in Clauses 27.4.6 and 27.4.7.

“27.4.6. At the conclusion of each recruit training course or as otherwise agreed between the CFA and the UFU, the CFA will deploy all qualified recruit firefighters following consultation in accordance with the recommendations of the Board of Reference.

27.4.7. On or before September 1 of each year, the CFA will request that its employees approve a proposed variation to Schedule 1 of the agreement to record all deployments in the preceding year. For the avoidance of doubt, each variation will insert into Schedule 1 the deployments undertaken in the preceding year. Following each approval by the CFA’s employees, the CFA and the UFU will take all necessary steps to cause Fair Work Australia to approve the variation to the agreement.” (emphasis added)

[46] I do not read the Clause 27.4.6 as requiring immediate deployment to a position. There is nothing in the Agreement or the evidence that suggests a mutual intention to change the traditional situation that those employed by the CFA as operational firefighters are either:

• Appointed to a position in Schedule 1 including as a reliever; OR



• Acting in a position in Schedule 1 but holding another substantive position in Schedule 1; OR



• In a position or acting in a position not included in Schedule 1, such as in a managerial role; OR



• Not appointed to a position but employed “above strength”

[47] In my view the expression in 27.4.7 “the deployments undertaken in the preceding year” is a reference to the new positions which have been created by the Chief Officer in the year up to September 1. Read in context it is clear that this does not include “above strength” firefighters. There is nothing in Clause 27 which suggests that the character of Schedule 1 which explicitly excludes above strength firefighters is being changed to include above strength firefighters.

[48] In my view Clause 27.4.6 is poorly drafted. The confusion arises because Clause 27.4.6 is about the placement of individual firefighters whilst Clause 27.4.7 is about the creation of firefighting positions. Clause 27.4.6 uses the term deployment in the sense of the placement of individuals at stations. Clause 27.4.7 uses the term deployment in the sense of new positions which have been created. 20 Because Clause 27.4.6 refers only to all qualified recruit firefighters it is possible that it is referring only to the initial deployment of those who complete training at Fiskville to above strength roles at stations. However, the clause suggests that this should be done consistent with the recommendations of the Board of Reference. The Board of Reference recommendations are about the location for new firefighting positions. It is therefore possible that the clause is also concerning the subsequent or related process of creating new positions or is referring to the need to take into account future priority for new positions in determining the location for initial recruit deployment.

[49] I consider it is likely that Clause 27.4.6 means that at the end of each recruit course, or at another time or using another process agreed by the parties, the UFU and the CFA will discuss where all the new recruit firefighters will be placed at stations, above strength, and also given that there are now additional above strength firefighters what this enables the CFA to do, as part of the process of creating 342 additional positions over six years. In respect to the location of new positions this will be, following consultation in accordance with the Board of Reference. I consider it likely that the reference to the Board of Reference is designed to reinforce the concept which is contained in Clause 27.4.1 that the training of a large number of additional recruits will, over a six year period, make possible the creation of additional positions which are reflected in minimum staffing levels. Clause 27.4.6 is about the requirement to consult about the initial deployment of individuals who complete Fiskville training to above strength roles and subsequently to consult about the creation of new positions. It is not necessary to determine this matter for the purpose of these proceedings as I am satisfied that the meaning of deployment in Clause 27.4.7 is clear when considered in the context of Clause 27 as a whole.

[50] Clause 27 clearly implies that at the end of the six year period it is expected that 342 more positions will be created but it is not possible to be exact about the number or the timing at any point during the process. The link in Clause 27 between the concept of recruits completing training, deployment and change to Schedule 1 strongly suggests a close relationship between the number of new positions and the number of additional firefighters. However, read in context it cannot mean each new recruit allocated to a station but who has not yet been appointed to a position (that is who is “above strength”) is reflected in Schedule 1. Schedule 1 reflects the positions and rosters required to be filled not the total number of employees. The Chief Officer has discretion about when and where new positions are created subject only to the commitment to create 342 new positions over six years and the requirements in respect to consultation and the Board of Reference in respect to location.

[51] Clause 27.4.7 requires the CFA to act in concert with the UFU to vary Schedule 1 to reflect the additional positions created.

[52] As at September 1 2011 no new positions had been created. The uncontested evidence of Mr McGuinness suggests that 10 positions have been created by the Chief Officer at Traralgon which would make the total created to date 45. This is expected to increase to 65 shortly. Whatever the number, the CFA under the Agreement is required to take steps to vary the Agreement to reflect that number from 1 September 2012. Subject to resolution of any jurisdictional objections, I would determine the dispute in this matter by requiring the CFA to carry out its obligations under the Agreement to take all necessary steps without delay to implement Clause 27.4.7 by seeking to vary Schedule 1 of the Agreement to reflect the new positions created as at 1 September 2012.

The jurisdictional objections.

[53] The resolution which the UFU seeks is based on the contention that Clause 27.4.7, by reason of it being a term of an enterprise agreement made under the Act, imposes a legal obligation on the CFA to annually take the steps necessary to effect a variation of the Agreement in accordance with the terms stated in that clause. The UFU contentions then rest on the basis that, on its proper construction, Clause 27.4.7 in the circumstances that exist requires the variation to provide for the incorporation in the Agreement of a new Schedule 1 as attached to its proposed determination. 21

[54] The CFA's primary contention is that the foundation of the UFU's claim is critically flawed because:

(a) the obligation that Clause 27.4.7 purports to impose is directed at supporting and maintaining the obligations purportedly imposed by Clause 27.1 of the Agreement; and

(b) the legislative powers of the Commonwealth do not extend to the imposition on the CFA of obligations of the kind that Clause 27.1 purports to impose, or for that matter, any of the obligations which Clause 27 purports to impose.

[55] The CFA argues that this is the case because:

(a) Clause 27 of the Agreement (including Clauses 27.1 and 27.4.7), is of no legal effect and is unenforceable, by reason of s.5 of the Fair Work (Commonwealth Powers) Act 2009 (Vic) (“the Referral Act”);

(b) Alternatively, Clause 27 of the Agreement is of no legal effect and is unenforceable, by reason of the principles stated in Re Australian Education Union & Anor; Ex parte Victoria (1995) 184 CLR 188 (“Re AEU”).

[56] The CFA also contends that:

(a) by reason of s. 253(1)(a) of the Act, Clause 27 of the Agreement is invalid and unenforceable;

(b) alternatively, by reason of s.255 of the Act and also the overall scheme of the Act, FWA is precluded from making the determination sought.

[57] The CFA submit that the operation of Clause 27 of the Agreement as a matter of both form and substance restricts and controls the number and identity of employees to be employed within the CFA and the number of CFA employees who may be dismissed on grounds of redundancy. The CFA argues that this is in contravention of the Referral Act and of the principles in Re AEU. For this reason the provisions are unenforceable.

[58] The issue concerning the restriction in Clause 27.2 on redundancies is not a matter before me in these proceedings. The meaning of Clause 27.4.7 and Clause 27.1 and Schedule 1 is not affected by this clause. I make no comment or determination in respect to this aspect of Clause 27.

[59] It is not in contention that the employees of the CFA are employees in the public sector and are therefore covered by the Referral Act unless the CFA is a constitutional corporation. The employees of CFA are employees in the public sector because the CFA is a public entity in that it is a body corporate which was created under the Country Fire Authority Act 1958 (Vic) (“CFA Act”) and it performs public functions and its directors are appointed by the Governor in Council. It is not in contention that the Referral Act does not apply if the CFA is a constitutional corporation.

[60] The UFU submit that it is not necessary for me to determine whether or not the CFA is a constitutional corporation because the same principles arise with respect to the Referral Act as arise in respect to Re AEU. The excluded matters in section 5 of the Referral Act are crafted so as to reflect the language of the High Court in Re AEU. I accept that the principles and language are similar. This view is reinforced by the Referral Act Explanatory Memorandum which states that the matters excluded from the referral of powers “are based on the High Court’s consideration in Re AEU of matters which would involve the making of Commonwealth laws of general application that would operate to destroy or curtail or interfere with the continued existence of the State or in its capacity to function as a government.” 22 However, I agree with the CFA that the matter of whether or not Clause 27.4.7 is prohibited from being an effective term of the Agreement by virtue of the Referral Act legislation must be considered with direct reference to the legislation.

[61] The UFU argue that the Referral Act is not relevant for two reasons. Firstly, they argue that the CFA is a trading or constitutional corporation and therefore is not covered by the Referral Act. The CFA argue that it is not a constitutional corporation. Secondly, the UFU argue that a clause in an agreement freely entered into by a public entity is not excluded from the operation of the Fair Work Act by the Referral Act notwithstanding the fact that the clause might include matters which pertain to the number, identity, or appointment (other than terms and conditions of appointment) of employees in the public sector.

[62] I accept the argument of the CFA that Clause 27.4.7 must be read in conjunction with Clause 27.1 and Schedule 1. I am satisfied that the effect of Clause 27.4.7 if implemented is to bring about a variation to Schedule 1 which in turn changes the number of career firefighters the CFA is required to maintain on shift at each station and at each rank as set out in Clause 27.1.

[63] I accept that the decisions to maintain minimum staffing at the level specified in Schedule 1, as it was at the date of the Agreement and to employ a net additional 342 firefighters over the next 6 years are decisions which have been made by the Chief Officer. The Agreement in these respects does not take that authority or power away from the Chief Officer and give it to anyone else. I also accept that these decisions have been made for reasons including employee health, safety and welfare and taking into account the need to increase fire fighting resources and the Victorian Bushfires Royal Commission recommendations. The Chief Officer took into account the number and frequency of firefighter attendance at emergency calls throughout several locations in Victoria, population growth, risk factors, and the need for flexibility in adapting to changed demands. The Chief Officer confirmed aspects of this in his evidence. 23 There is no basis to doubt the validity of the reasons for the staffing levels stated in the Agreement.

[64] Although the Chief Officer has authority and discretion in respect to the timing and numbers of additional positions created, once Clause 27.4.7 is implemented the Chief Officer cannot reduce the minimum staffing at a particular station without further variation to the Agreement. In practice this means without agreement of a majority of firefighters. In this sense the Clause is not simply a machinery clause but is also a clause which makes effective an obligation on the CFA to maintain staffing ratios, locations and levels as set out in a varied Schedule 1. Without Clause 27.4.7 the Chief Officer is not prevented from reducing the number of employees at the nominated fire stations below the new numbers. In other words without Clause 27.4.7 the additional positions are not locked in. I am satisfied that Clause 27.4.7 is a matter pertaining to the regulation of the number and identity of employees.

[65] Sometime after the conclusion of the proceedings and whilst I was writing this decision, the CFA requested permission to provide supplementary submissions about the relationship between the Referral Act exclusion and the implied limitation in Re AEU and also about the application of the implied limitation to agencies of the State Government. I granted permission and also provided an opportunity to the UFU to provide a submission in reply. I have considered the matters raised in these supplementary submissions.

Is the CFA a trading corporation?

[66] The UFU argues that the CFA is a trading or constitutional corporation.

[67] Mr Ferguson gave evidence concerning the revenue derived by the CFA from sales of goods and services. In total the CFA say this amounts to $14.5 million out of a total of $466.5 million in 2010/11 and $14.6 million in 2011/12. The CFA notes that this is about 3.15% of revenue attributable to trading activities. 24

[68] The CFA provides services in respect to Fire Equipment Maintenance (FEM); that is the sale, servicing and inspection of portable fire equipment. This activity constitutes the majority of CFA trading activity. Mr Ferguson noted that in some regional areas the CFA is the only readily available service provider for FEM whereas in other areas, including metropolitan areas, there are a number of private for profit contractors who offer and provide the service. Mr Ferguson accepted that in this sense the CFA provides the service in competition with the private companies in some areas. 25 The activity is regarded by the CFA as contributing to the maintenance of community fire safety in line with its statutory functions. In this sense the trading activity is part of the core functions of the CFA. 26

[69] Mr Ferguson gave evidence that the sale of equipment by CFA is not for the purpose of generating a profit. 27

[70] The CFA derives income from invoices sent to people following false alarms. The CFA derives income from charging fees for hazmat services in some cases. The CFA derives income from invoicing those who are not insured but who use fire services. 28

[71] The UFU argues that other aspects of CFA revenue should be considered as trading revenue. In particular they point to the revenue from Owners and Insurance Intermediaries paid under s80A of the Country Fire Authority Act. In 2010-11 this amounted to $14.726 million or a further 3% of revenue. This payment is made directly by each owner or insurance intermediary to the CFA. It is in effect a payment to provide a property owner with the service of fire protection from the CFA. Insurance premiums have relationship to the value of a property and the risks to that property including risk from fire. A proportion of the amount of that premium is required to be paid to the CFA.

[72] The UFU also argues that the major source of revenue for the CFA which is the levy on insurance premiums pursuant to s77 of the Country Fire Authority Act should be regarded as trading revenue. This revenue amounted to $309 million in 2010-11. It is not necessary to determine whether this income is trading revenue. However, I accept that it is significant that the income is not directly from consolidated State revenue.

[73] The UFU referred to the Full Federal Court in Bankstown Handicapped Children’s Centre Association Inc and Another v Hillman and Others 29 which summarised the relevant principles as follows:

“48 The notion of what is a trading corporation for the purposes of paragraph 51(xx) of the Constitution has evolved and expanded in the last three decades. The applicable principles were conveniently and helpfully summarised by Steytler P in Aboriginal Legal Service of Western Australia (Inc) v Lawrence (No 2) [2008] WASCA 254; (2008) 37 WAR 450, 252 ALR 136 in the following passage at [68]:

(1) A corporation may be a trading corporation even though trading is not its predominant activity.

(2) However, trading must be a substantial and not merely a peripheral activity.

(3) In this context, "trading" is not given a narrow construction. It extends beyond buying and selling to business activities carried on with a view to earning revenue and includes trade in services.

(4) The making of a profit is not an essential prerequisite to trade, but it is a usual concomitant.

(5) The ends which a corporation seeks to serve by trading are irrelevant to its description. Consequently, the fact that the trading activities are conducted in the public interest or for a public purpose will not necessarily exclude the categorisation of those activities as "trade".

(6) Whether the trading activities of an incorporated body are sufficient to justify its categorisations as a "trading corporation" is a question of fact and degree.

(7) The current activities of the corporation, while an important criterion for determining its characterisation, are not the only criterion. Regard must also be had to the intended purpose of the corporation, although a corporation that carries on trading activities can be found to be a trading corporation even if it was not originally established to trade.

(8) The commercial nature of an activity is an element in deciding whether the activity is in trade or trading.

49 The only suggestion by the parties in these proceedings that this summary does not represent the law as it presently stands, was a submission by the Association that the observation in (4) that making a profit is a usual concomitant to trade was not correct. Plainly actually making a profit could not be a usual concomitant other than perhaps over the longer term. A person or organisation engaged in trade may, for a period, do so with limited commercial success and trade at a loss. The statement that profit-making is a usual concomitant of trading appears to be founded on observations of Barwick CJ to that effect in R v Trade Practices Tribunal; Ex parte St George County Council [1974] HCA 7; (1974) 130 CLR 533 which is the first authority noted by Steytler P. The Chief Justice was dealing with an argument that the statute under which the county council was established contained a direction that county councils supply electricity as cheaply as possible to residents of the county district. In effect, Barwick CJ was noting that making as large a profit as possible was effectively precluded by the legislation, but the direction did not prevent a Council making a profit and the county council in question had, in fact, been highly profitable. The Chief Justice observed that profit-making was perhaps not of the essence of trading, but it was a usual concomitant.

50 In the second authority mentioned, Re Ku-ring-gai Co-operative Building Society (No 12) Ltd [1978] FCA 50; (1978) 36 FLR 134, the first passage referred to was from the judgment of Bowen CJ though appears to be a passage in which the Chief Justice was summarising the argument of counsel and the second passage is a reference to the judgment of Deane J who did no more than indicate that he was inclined to think that the two building societies (which were mutual societies not trading for a profit) were not trading corporations. The reference to the third authority, Adamson, is to a passage in the dissenting judgment of Stephen J and, with respect, can be disregarded. The fourth authority was Red Cross, but the passage referred to involved a discussion by Wilcox J of the commercial activities of the Red Cross which generated considerable income though his Honour noted that those trading activities were not motivated by the hope of the private gain but purely to earn revenue which the relevant Division of Red Cross needed for its charitable activities. However, in one sense, this question of whether making a profit is a usual concomitant to trade is a barren one because the authorities, as noted in (8)of Steylter P's list of applicable principles, establish that the commercial nature of the corporation's activities are indicative of trading.

51 Many activities and services which have historically been provided mainly or exclusively by government are now carried on by companies which undertake those activities or provide those services with the objective of making a profit. Examples are legion and included prison services, electricity generation and distribution, potable water collection or production and distribution and the construction and maintenance of roadways. There can be little doubt that, at least in the ordinary course, companies which undertake those activities or provide those services can be characterised as trading corporations. Does the fact that a corporation likewise provides such services but on effectively a cost recovery basis only, render it inappropriate to characterise that corporation as a trading corporation?

52 There is no bright line delineating what is or is not a trading corporation. That is exemplified by the division of opinion in Aboriginal Legal Service of Western Australia (Inc) where a minority of the Court characterised the Service's activities as that of a trading corporation but the majority did not. As Black CJ and French J observed in Quickenden at [52] "....the characterisation of a body corporate as a trading corporation is a matter of fact and degree" repeating similar observations of Mason J in St George at 234.” (some references removed)

[74] The UFU also point to the decision of Justice Marshall which found that the Metropolitan Fire and Emergency Services Board (MFB) is a trading corporation. 30 The CFA argue that Marshall J rested his conclusion on the circumstance that the MFB's trading activities (predominately those carried on through its Fire Equipment Services department) generated 5.11% of the MFB's total revenue, attracting about $8,000,000 in income as a result of what were conceded by the MFB to be trading activities. By way of contrast, in this case for the financial year ending 30 June 2011, about $14.5m of the CFA’s total income was generated from activities that the CFA describes as sales of services and goods (the majority of which was attributable to fire protection equipment services). The CFA's total income, however, was $466.5m, the substantial proportion of which was derived from insurance company levies (about $309m). The CFA say that 3.15% of total income was derived from trading activities in the 2010/2011 year. The UFU say that the proportion is more than 6% if the Owners and Insurance Intermediaries revenue is included. I accept the UFU approach.

[75] Further, the CFA submits that the activities test must be contextualised; that is, the test involves more than an analysis of the proportion of income derived from trading activities as compared to the total revenue received by the CFA. 31 Accordingly the CFA argue that other quantitative measures of gauging the nature and extent of trading and non-trading activities ought to be examined, such as the number of employees engaged in the trading activities as compared to non-trading, the number of working hours dedicated to each and the amount of capital allocated to each.

[76] The CFA in this respect urged me to consider that volunteers form a major part of the CFA’s organisation and activities. They argue that this changes the character of the organisation away from what might be generally considered a trading corporation. Further it means that a large part of its activity is not reflected in its revenue, making the % of trading income a less reliable measure of its significance in overall activity. The UFU point to the fact that the major income source for the CFA is not State Government grants but insurance company levies. This alters the character of the organisation when compared to State Government agencies and makes it more akin to a Government Business Enterprise. The 2010/11 CFA Annual Report refers to one of the eight key strategic areas for the CFA as “sustainable business”. 32

[77] The CFA also urged me to consider the relative importance of the trading activities as compared to the non-trading activities in terms of discharge of critical statutory functions. The UFU point, in my view correctly, to the evidence of Chief Officer Ferguson that the sale and servicing of fire protection equipment is in fact consistent with the CFA’s key statutory duties. This is the largest trading activity of the CFA.

[78] There have been a number of cases which have considered whether or not organisations which primarily have a public not for profit purpose and which have a substantial volunteer component are trading corporations. This includes the Red Cross, hospitals and sporting organisations. Wilcox J in E v Australian Red Cross Society 33 dealt with whether a hospital was a trading corporation. He held that it did not matter that the hospital was incorporated by statute and publicly owned. In that context he relied upon certain statements contained in various judgments of members of the High Court in Tasmanian Dam.34His Honour said as follows:

"If the question be asked whether the scale of the corporation's trading activities was "substantial", "a sufficiently significant proportion of its overall activities" or "not insubstantial" - to apply the tests adopted in Adamson - it is relevant to note that, in the financial year ended 30 June 1985 it received $14,584,456 in patients' fees in return for services rendered by it. It also received $3,736,662 from "business activities". It is true that these amounts were dwarfed by its State government subsidy of $112,127,706. But that does not matter. Trading activities yielding some $18 million per year can only be described as substantial. It seems to me that the scale of the hospital's trading activities in 1984-1985 was such that it should be regarded as then being a trading corporation."

[79] In the Adamson case the High Court examined whether a football club and a football league were trading corporations. 35 Justice Murphy found:36

“Even though trading is not the major part of its activities, the description, "trading corporation" does not mean a corporation which trades and does nothing else or in which trading is the dominant activity. A trading corporation may also be a sporting, religious, or governmental body. As long as the trading is not insubstantial, the fact that trading is incidental toother activities does not prevent it being a trading corporation. For example, a very large corporation may engage in trading which though incidental to its non-trading activities, and small in relation to those, is nevertheless substantial and perhaps exceeds or is of the same order in amount as the trading of a person who clearly is a trader. Such a corporation is a trading corporation and is the subject of the legislative power in s 51(xx.). That power is subject to the Constitution and may be limited byother provisions, for example, s 116 would protect a religious body which was a trading corporation from laws which would prohibit the free exercise of religion. The corporations power may be used not only to protect persons who trade with trading corporations, but also to protect trading corporations in regard to those who deal with them."

[80] In the circumstances of this case:

• An income of at least $14.5 million from trading activities is substantial. The actual income from trading activities is probably at least twice this amount.



• The trading activity cannot be described as insubstantial even though it is a small proportion of overall income and activity. It is not merely a peripheral activity and it is not prohibited by the organic rules of the organisation.



• The substantial trading activities in respect to Fire Equipment Maintenance contribute in the view of the Chief Officer to the maintenance of community fire safety in line with its statutory functions.



• Even though the primary purpose of the activity is not to make a profit, in some regions the trading activity is conducted in competition with other providers.



• The scale and character of the operations of the CFA make it more like a major sporting league or utility or Government Business Enterprise than an individual sporting club or charity or a Government Department. The CFA provides services to the State of Victoria as a whole (with the exception of the Metropolitan Fire District).

[81] In these circumstances I reach the same conclusion as reached by Justice Marshall in respect to similar activities undertaken by the Metropolitan Fire and Emergency Services Board (MFB) notwithstanding the differences in the circumstances between the MFB and the CFA which I have taken into account.

[82] The CFA is a trading or constitutional corporation.

Referral Act

[83] As the CFA is a trading or constitutional corporation the Referral Act does not apply to the CFA. Therefore, despite the fact that substantial submissions were made on this point, it is not necessary for me to determine whether or not Clause 27.4.7 is invalid or unenforceable due to the operation of the Referral Act.

[84] The UFU argues that I must distinguish between an obligation which is imposed as opposed to an obligation which is entered into voluntarily. The Referral Act is a referral of legislative power and the excluded matters must be read in that context. The UFU agrees that FWA could not make a Modern Award which regulated the number of employees in the public sector binding on the State of Victoria. The UFU agrees that the legislation could not allow FWA to mandate the inclusion in an agreement of a provision that regulates the number of employees in the public sector binding on the State of Victoria. FWA under the Fair Work Act 2009 mandates certain provisions in agreements such as those relating to disputes settlement and consultation but it did not mandate the inclusion of Clause 27 in the Agreement. FWA did not pursuant to the legislation create the obligation in Clause 27.4.7 of the Agreement. That obligation was created by the CFA and its employees. All that FWA does is to give effect to that agreement.

[85] The CFA argue that the Referral Act excludes the capacity to make agreements which regulate the matters covered by the implied limitation. The CFA draw attention to the judgment of Lehane J in the Full Federal Court decision in Dempster v Comrie. 37 The CFA argue that the judgment provides that, in respect to earlier referral legislation, the power to make legislation for agreements including matters covered by the implied limitation in Re AEU is not referred to the Commonwealth.

[86] It is not necessary for me to determine these matters given that I have found that the CFA is a trading corporation.

[87] The supplementary submissions of the CFA argued that the implied limitation in Re AEU applied irrespective of whether the CFA is a trading corporation and irrespective of whether clause 27 of the Agreement falls within the scope of the matters excluded by the Referral Act. They also argued that the implied limitation may be broader than the limitations in the Referral Act. The UFU argue that the Referral Act exemption has the same scope as the implied limitation in Re AEU. The UFU argue that the State has specifically referred its powers in respect to the matters in the Fair Work Act and this is effectively the granting of an additional head of power to the Commonwealth. The granting of that power is subject to the specific exemption in the Referral ct and it is therefore not subject to any additional implied limitation. I find the argument of the UFU to be more persuasive on this point however it is also not necessary for me to determine this matter given that I must consider whether or not Clause 27.4.7 is invalid or unenforceable due to the implied limitation in Re AEU.

Is Clause 27 and Clause 27.4.7 in particular excluded by Re AEU?

[88] The limitations in Re AEU only apply to employees of the State or an agency of the State. The CFA in supplementary submissions argue that the implied limitation extends to agencies or other instrumentalities of the Government. The CFA argue that in determining whether or not the CFA forms part of the State I should consider whether the agency was brought into existence for a public purpose, whether the functions and duties of the agency are government/public functions and the rights and powers that the State has over the agency. The UFU did not challenge the CFA submission that the limitations in Re AEU apply to the CFA.

[89] In Re AEU the High Court explained and applied in the context of the creation of an industrial award the implied limitation to Commonwealth legislative power. 38 The High Court enunciated the implied limitation in the following terms:39

“The limitation consists of two elements: (1) the prohibition against discrimination which involves the placing on the States of special burdens or disabilities (“the limitation against discrimination”) and (2) the prohibition against laws of general application which operate to destroy or curtail the continued existence of the States or their capacity to function as governments.” (emphasis added)

[90] The issues in this proceeding are confined to the second limb of the limitation. The High Court further explained this aspect of the limitation in its application in the context of laws dealing with state government employment as follows: 40

“At this point it is convenient to consider South Australia’s argument based on impairment of a State's ‘integrity’ or ‘autonomy’. Although these concepts as applied to a State are by no means precise, they direct attention to aspects of a State’s functions which are critical to its capacity to function as a government. It seems to us that critical to that capacity of a State is the government's right to determine the number and identity of the persons whom it wishes to employ, the term of appointment of such persons and, as well, the number and identity of the persons whom it wishes to dismiss with or without notice from its employment on redundancy grounds. An impairment of a State's rights in these respects would, in our view, constitute an infringement of the implied limitation. On this view, the prescription by a federal award of minimum wages and working conditions would not infringe the implied limitation, at least if it takes appropriate account of any special functions or responsibilities which attach to the employees in question. There may be a question, in some areas of employment, whether an award regulating promotion and transfer would amount to an infringement. That is a question which need not be considered. As with other provisions in a comprehensive award, the answer would turn on matters of degree, including the character and responsibilities of the employee.” (emphasis added)

[91] Re AEU related to the application of this principle to the power to create an industrial award for teachers in Victoria following the service of a log of claims. The conclusion was as follows: 41

“[T]he operation of the implied limitation would preclude the Commission from making an award binding the States in relation to qualifications and eligibility for employment, term of appointment and termination of employment, at least on the ground of redundancy.”

[92] The parties took me to a number of subsequent decisions which they argue illustrate how Re AEU should be applied in the circumstances of this case.

[93] The CFA referred to the High Court in Austin v Commonwealth of Australia 42 which considered the Re AEU principle in the context of the treatment of State judicial officers with respect to taxation liability. The Court noted that the application of the principle in Re AEU requires an appreciation of the substance and actual operation of the federal law. It was noted that:43

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

[94] The CFA also referred to Konrad v Victoria Police 44 where a Full Federal Court considered whether the federal unfair dismissal laws, in their application to State police officers, violated the implied limitation. Ryan J said:45

“I do not consider that the need to have a valid reason of that kind before terminating the employment of a member of its police force is destructive or restrictive of the continued existence or governmental autonomy of a State. It is true that a corollary of the availability to a State police officer of relief under Division 3 of Part VIA of the Act is that the State cannot capriciously or maliciously terminate, with impunity, the employment of such an officer. However, I find it difficult to accept, as a necessary incident of the existence or functioning of a State as a polity, the reservation to it of an unfettered power to terminate the employment of a police officer on a whim or out of spite or otherwise without a valid reason.”

[95] Similarly, Justice North said: 46

“The provision is invalid if it operates to destroy or curtail the capacity of a State to function as a government: Re Australian Education Union: Ex Parte State of Victoria [1995] HCA 71; (1995) 184 CLR 188 at 231 (Re AEU); Victoria v The Commonwealth (1996) 187 CLR 416 at 498. Whether this is so will often be a question of broad impression. In Re AEU the High Court held that the Act was invalid insofar as it prevented a State from dismissing employees on grounds of redundancy. Several factors may explain this view. Redundancy arises when an employer has no further need for a job to be done. Large scale redundancies in the public service have occurred in recent years. They have followed fundamental restructuring of the work of the public service. The result has been that State governments no longer require many jobs to be done which had previously been done. To impede a State in a fundamental reorganisation of its workforce may be seen as intruding into its ability to implement a structure for government administration, and to compel it to retain employees which it does not need. In that sense it is quite distinguishable from, for example, the termination of an employee for disciplinary reasons. Such a termination does not relate to the structuring of the State workforce but rather relates to the composition of the workforce by persons conforming to appropriate behavioural standards. Thus, the reasoning that may have led the High Court to determine that the Act could not apply to terminations by the States on grounds of redundancy does not apply to terminations for other reasons.”

[96] In Greater Dandenong City Council v ASU, 47 the Full Federal Court considered the operation of the Re AEU principle in the context of provisions of the Workplace Relations Act 1996 (Cth) which protected employees from adverse treatment on the grounds that they were entitled to the benefit of an industrial instrument. Wilcox J, approved the comments of North J in Konrad,48and observed:

“It …. is a matter of critical importance, in the application of a statutory provision against a State, to determine whether the true effect of that provision is to inhibit terminations of employment on account of redundancy (in which case the statutory provision is inapplicable to the State) or whether it is truly concerned with the general regulation of employment practices; for example, the prohibition of unacceptable discrimination.”

[97] The UFU argues in its submission in reply 49 that:

“7. The only relief given by the High Court on the basis of the implied limitation was in relation to awards that had been imposed on the State of Victoria or its agencies as a result of the compulsory arbitration process in place under the Federal Act at that time.

8. Further the High Court considered the implied limitation only had effect to the extent of the state government or its agency's right to "determine" the matters identified and identified 50 that the operation of the implied limitation "would preclude the Commission from making an award binding the States in relation to qualifications and eligibility for employment, term of employment and termination of employment at least on the ground of redundancy"51

9. In the Industrial Relations Act Case 52 the High Court, in considering the effect of those provisions of the Industrial Relations Reform Act 1993 and the Industrial Relations Reform Act (No. 2) 1994 which bound the Crown "in the right of each of the States", held that such provisions "could be read as binding the States to the extent that the provisions of the Act do not prevent them from determining the number and identity of those they wish to dismiss on redundancy grounds and the terms and conditions of those employed at the higher levels of government."53

10. During the course of the Industrial Relations Act Case the High Court considered those provisions of the legislation pertaining to agreement making. The Court found that agreements entered into voluntarily by the states and their employees did not require reading down nor did they offend the implied limitation. 54

11. In short an agreement entered voluntarily between a state or an agency of a state and its employees is not subject to the implied limitation.

12. The issue of the implied limitation was also considered in the Work Choices Case 55No challenge was made with respect to the provisions regulatingvoluntary agreements entered into by the States with respect to their employees.

13. When considering the implied limitation in Clarke v Commissioner for Taxation 56French J adopted a view that a "multi-factorial assessment" shouldbe applied including:

"1. Whether the law in question singles out one or more of the States and imposes a special burden or disability on them which is not imposed on person's generally.

2. Whether the operation of a law of general application imposes a particular burden or disability on the States.

3. The effect of the law upon the capacity of the States to exercise their constitutional powers.

4. The effect of the law upon the exercise of their functions by the States.

5. The nature of the capacity or the functions affected.

6. The subject matter of the law affecting the State or States and in particular the extent to which the law is made authorises its discriminatory application.'' 57'

.......

15. The UFU submits that the jurisdictional argument must fail for several discrete reasons.

(a) While the Agreement operates under a Commonwealth law it was entered into voluntarily by the CFA having obviously decided that it was in its best interests to do so. and as such submitted itself to the Federal legislation. The Federal legislation has general application with respect to the regulation of agreements but this does not involve any impairment which would offend the principle in Re AEU or those matters set out as exemptions in the Referral Act.

.........

(c) Further this matter is being dealt with pursuant to an agreed dispute resolution clause under which the UFU and the CFA have submitted to private arbitration by the Tribunal In this regard the parties have agreed between themselves as to how they will conduct their affairs including how disputes over the application of the Agreement will be dealt with." 58

[98] The UFU argue that the Industrial Relations Act case considered whether or not the provisions relating to agreement making in Commonwealth legislation were valid. The High Court identified the question to be decided and the answers to that question as follows: 59

“(ii) Questions in the case stated

The questions in the case stated bearing on certified and enterprise flexibility agreements may be summarised as follows:

...

• Are the provisions of Divs 2 and 3 of Pt VIs of the Act, or any part of such provisions, beyond the legislative power of the Commonwealth and invalid in their application to the State of Western Australia in relation to persons employed to enable the State to continue to exist and function as such? (Qs l2(e), (f)) (emphasis added)

...

(vii) Conclusion with respect to certified and enterprise flexibility agreements

The provisions of Divs 2 and 3 of Pt VIB of the Act are valid in their entirety, as is s 152 in its application to enterprise flexibility agreements.

...

(6) Are the provisions of Div 2 of Pt VIB of the Act, or any part of them, beyond the legislative powers of the Commonwealth and invalid in so far as they purport to apply to the States?

Answer: No.”

[99] In reaching its conclusions the CFA argues that the focus of the High Court was on whether or not the legislative provisions in respect to agreement making made it more difficult for the States to enter into certified agreements than for other employers or, in any other way, impose special burdens or disabilities upon the States. They submit that the main findings in this respect were:

“Or to put the matter another way, the Commission can certify an agreement if and only if it could have made an award in the same terms. And that is so notwithstanding that its powers of certification are otherwise circumscribed so that, for example, they must be exercised if certain other conditions are fulfilled and must not be exercised if certain other conditions are not.” 60

“In so doing, it marks out a feature of the system of conciliation and arbitration adopted by the Parliament for the prevention and settlement of industrial disputes. And it marks out what well may be thought to be a necessary or indispensable feature of any system that might properly have been adopted pursuant to s 51(xxxv).” 61

“When regard is had to the terms of s 170MC( 1 )(g), it appears that, in defining single business to include activities carried on by the Commonwealth and the States and Territories, the Act simply ensures that government employers, as well as non-government employers, may take advantage of the provisions of Div 2 of Pt VIB. There is nothing in the definition or in the terms of s 170Mc( 1 )(g) which enables it to be concluded that the provisions of Div 2 of Pt VIB make it more difficult for the States to enter into certified agreements than for other employers or, in any other way, impose special burdens or disabilities upon the States.” 62

[100] The CFA argues that both an award and an agreement have force by operation of the underlying relevant industrial legislation and that the implied limitation therefore applies to both. The CFA accepts that the Industrial Relations Act case involved consideration of whether various legislative amendments, and the procedures for approving agreements in particular, were within the Commonwealth’s power. 63 The CFA argues that the Industrial Relations Act case did not specifically consider the issue of the content of agreements only whether or not there was a power to approve agreements and whether or not the granting of that power discriminated against the States. It did not consider whether or not the implied limitation extends from the content of Awards to the content of Agreements voluntarily entered into. In this respect they say the case does not change the general application of the principles in Re AEU.

[101] In the Industrial Relations Act case a finding was made that the provisions of the legislation:

“can be read as binding the States to the extent that the provisions of the Act do not prevent them from determining the number of persons they wish to employ, the term of their appointment and the number and identity of those they wish to dismiss on redundancy grounds and the terms and conditions of those employed at the higher levels of government.” 64

[102] The High Court found that based on this it was necessary and possible to read down the legislative provisions in respect to the setting of minimum wages in respect to those employed at higher levels of government. The case then specifically considered those provisions of the legislation pertaining to agreement making and whether or not they offended the implied limitation and enabled the State to continue to exist and function as such. I accept that the consideration of this matter in the Industrial Relations Act case was not detailed when compared to the treatment of some other matters. However, I am satisfied that the UFU is correct that the Re AEU limitation was raised in respect to the provisions in the legislation providing for the making of agreements in respect of State public sector employees and the provisions were approved. Although the legislation in question in the Industrial Relations Act case was different from the current legislation in respect to the approval of agreements, I see no reason why the principles and conclusion do not apply to the present legislation.

[103] I accept the argument of the UFU that during the course of the Industrial Relations Act Case the High Court considered those provisions of the legislation pertaining to agreement making. The Court found that agreements entered into voluntarily by the states and their employees did not require reading down nor did they offend the implied limitation

[104] I accept that the UFU is correct that just because a clause in an agreement applying to public sector employeesregulatesthe number and identity of the persons employed does not mean that that clause is unenforceable due to the implied limitation in Re AEU.

[105] Although I have found that Clause 27.4.7 in conjunction with Clause 27.1 and Schedule 1 do not take away from the Chief Officer the power to determine whether and when additional positions are to be created, I accept the argument of the CFA that the Agreement Clause 27.4.7 has the effect of restricting and controlling the number of employees to be employed by the CFA at particular fire stations by requiring that new positions created must be maintained. However, it does not “operates to destroy or curtail the capacity of a State to function as a government” because it is an agreement voluntarily entered into by the CFA. It is “not a necessary incident of the existence or functioning of a State as a polity for it to reserve an unfettered power” to fail to observe industrial agreements which it has freely entered into on the grounds that a provision in that agreement has the effect of restricting or controlling the number of employees to be employed. In assessing these matters I am not considering the effect of the law on the functions of the State as a whole but rather the effect of the law on the CFA as an agency of the State.

[106] The legislation which provides for collective agreements to be made and approved and for disputes over the application of those agreements to be determined by private arbitration does not compel the CFA to restrict its power to determine the number of employees to be employed. Any such limitation is something which the CFA has voluntarily agreed to impose on itself. If one examines the true effect or the substance and actual operation of the Fair Work Act 2009 in respect to the approval of Agreements it is concerned with the general regulation of employment and agreement making in particular and it is not destructive or restrictive of the continued existence of governmental autonomy of a State. The State can prevent any limitation of this sort by deciding not to agree to a particular clause in a proposed agreement. It is common knowledge that for many years all proposed agreements affecting public sector employees in Victoria must be approved through a high level and detailed State Government process prior to being entered into.

[107] In different circumstances Justice Murphy made observations which illustrate how there may be a difference between what is permissible when considering agreements from what is permissible when considering compulsion or an award.

“The view has been taken that the process of arbitration requires a determination which is within the ambit of the dispute. But this doctrine is not to be applied rigidly; an award is authorized if it relates to the matters in dispute or is reasonably incidental to them or calculated to settle the dispute. But in conciliation parties may settle the dispute by an agreement which goes beyond the ambit of the dispute. It may well be that such an agreement can be given force by s. 28 of the Act (see also s. 55 of the Act).” 65 (references removed)

[108] The UFU in my view correctly point to the fact that the underlying issue in Re AEU is whether the legislation curtails or interferes in a substantial manner with the exercise of constitutional power by the State. The UFU referred to Chief Justice Gleeson’s statement that the disabling effect on State authority was the essence of the invalidity. 66

[109] The provision in Clause 27.4.7, which has been voluntarily entered into, is not an instance where the legislation has the effect of curtailing or interfering in a substantial manner with the exercise of constitutional power by the State. Nothing in the Act has the effect of determining the number and identity of persons to be employed. The CFA made the decision to agree to the provision; the legislation has simply given effect to that decision.

[110] I am satisfied that Clause 27.4.7 is not unenforceable or invalid because of the implied limitation on the power of the Commonwealth in Re AEU.

[111] I also consider that the argument that the parties have agreed between themselves as to how they will conduct their affairs including how disputes over the application of the Agreement will be dealt with to have some force. S 739 of the Act provides that FWA may arbitrate in these circumstances provided that the matter in the Agreement is a permitted matter under the Act and provided the other provisions of s. 739 and s. 255 are complied with. Obviously this would not apply if the provision was not permitted by the Referral Act in circumstances where the Referral Act exclusions applied.

Is Clause 27 unenforceable due to s. 253(1)(a) of the Act? Is it a permitted matter?

[112] The CFA argues that by reason of s. 253(1)(a) of the Act, Clause 27 of the Agreement is invalid and unenforceable.

“253 Terms of an enterprise agreement that are of no effect

(1) A term of an enterprise agreement has no effect to the extent that:

(a) it is not a term about a permitted matter; or

(b) it is an unlawful term; or

(c) it is a designated outworker term.

Note 1: A term of an enterprise agreement has no effect to the extent that it contravenes section 55 (see section 56).

Note 2: A term of an enterprise agreement permitting or requiring deductions or payments to be made has no effect if it benefits the employer and is unreasonable in the circumstances (see section 326).

(2) However, if an enterprise agreement includes a term that has no effect because of subsection (1), or section 56 or 326, the inclusion of the term does not prevent the agreement from being an enterprise agreement.

172 Making an enterprise agreement

Enterprise agreements may be made about permitted matters

(1) An agreement (an enterprise agreement) that is about one or more of the following matters (the permitted matters) may be made in accordance with this Part:

(a) matters pertaining to the relationship between an employer that will be covered by the agreement and that employer’s employees who will be covered by the agreement;

(b) matters pertaining to the relationship between the employer or employers, and the employee organisation or employee organisations, that will be covered by the agreement;

(c) deductions from wages for any purpose authorised by an employee who will be covered by the agreement;

(d) how the agreement will operate.”

[113] The CFA argues that it is well established that an agreement provision does not pertain to the employer/employee relationship if it is concerned with managerial matters. The effect of Clause 27 they argue is to entirely remove the CFA’s prerogative to consider, let alone determine, staffing levels for itself. They argue that the extreme nature of Clause 27 means that it goes well beyond any reasonable regulation of a matter pertaining to the employment relationship. The real substance and effect of Clause 27 they argue is to directly regulate and control the CFA workforce planning processes and the exercise of responsibilities which are vested by the CFA Act in the CFA and the Chief Officer in relation to the number and composition of the CFA’s firefighting personnel.

[114] The position of the CFA in this respect is overstated. I have concluded earlier that a proper reading of Clause 27 is that the Chief Officer has determined that 342 additional professional firefighter positions will be created over the next six years. Regular recruit training courses will be held to ensure that this number is able to be achieved. The recruits will be deployed as above strength firefighters following consultation with the UFU. The Chief Officer will determine when and where new positions are created after consultation with the UFU. That decision will then be reflected in Schedule 1. This is not an absolute removal of the power and authority of the Chief Officer or the CFA in respect to who it employs as suggested by the CFA. The establishment of staffing ratios, locations and levels in Schedule 1 is based on decisions of the Chief Officer and is included and regulated in the Agreement for reasons including employee health, safety and welfare.

[115] The Explanatory Memorandum to the Fair Work Bill 2009 provides some guidance as to what is within the scope of permitted matters. The Explanatory Memorandum provides:

“672. It is intended that the following terms would be within the scope of permitted matters for the purpose of paragraph 172(1)(a):

• terms relating to particular staffing levels (subject to any other applicable legislative requirements or limitations) particularly if those terms are aimed at ensuring the health, safety and well-being of employees;”

[116] The terms of Clause 27 identify the rationale and objective for the clause as follows:

“Consistent with the Chief Officer’s direction and for reasons including employee health, safety and welfare, the current staffing ratios, locations and levels as set out in Schedule 1 will be maintained as a minimum for the life of this agreement.”

...

“Having reviewed the number and frequency of firefighter attendance at emergency calls throughout several locations in Victoria, and having regard to other relevant factors including population growth and increased risk factors, and to ensure the appropriate level of fire cover for the community, the Chief Officer has determined that additional employees are required as specified in Clause 27.4.2.”

[117] These provisions make it clear that the clause relates to staffing levels which are particularly aimed at the health, safety and well being of employees. Furthermore the levels have been set by the CFA. The provisions are analogous to the nurse/patient or teacher/student ratios found in agreements.

[118] I am satisfied that the provisions are permitted matters. It is hard to imagine anything of greater relevance and concern to employees, as employees, in respect to their relationship with their employer, as employer, than the issues of job security, workload and safety. For those involved in emergency services these matters have an enhanced significance. The matters addressed in Clause 27 and in Schedule 1 pertain to these matters. I am satisfied that the matters pertain pursuant to s. 172(1)(a) of the Act and therefore the clause is not unenforceable due to s. 253(1)(a) of the Act.

[119] I also accept the UFU submission that Clauses 27.4.6 and 27.4.7 are to some extent machinery or ancillary provisions which relate to how the Agreement will operate with respect to safe staffing. Such matters are matters which also pertain pursuant to s.172(1)(d) of the Act.

Is FWA prohibited from making a determination due to the operation of s. 255 and the objects and scheme of the Act?

[120] The CFA argue that by reason of s.255 of the Act and also the overall scheme of the Act, FWA is precluded from making the determination sought.

[121] Section 739 of the Act relevantly provides that FWA may arbitrate:

“(4) If, in accordance with the term, the parties have agreed that FWA may arbitrate (however described) the dispute, FWA may do so.

(5) Despite subsection (4), FWA must not make a decision that is inconsistent with this Act, or a fair work instrument that applies to the parties.

255 Part does not empower FWA to make certain orders

(1) This Part does not empower FWA to make an order that requires, or has the effect of requiring:

(a) particular content to be included or not included in a proposed enterprise agreement; or

(b) an employer to request under subsection 181(1) that employees approve a proposed enterprise agreement; or

(c) an employee to approve, or not approve, a proposed enterprise agreement.

(2) Despite paragraph (1)(a), FWA may make an order that particular content be included or not included in a proposed enterprise agreement if the order is made in the course of arbitration undertaken when dealing with a dispute under section 240.

Note: FWA may only arbitrate a dispute under section 240 if arbitration has been agreed to by the bargaining representatives for the agreement (see subsection 240(4)).”

[122] The Explanatory Memorandum provides this guidance.

“1069. This clause provides that FWA is not empowered under this Part to make an order that requires, or has the effect of requiring:

• particular content to be included or not included in a proposed enterprise agreement; or



• an employer to request employees to approve a proposed enterprise agreement (see clause 181(1)); or



• an employee to approve or not approve a proposed enterprise agreement.




1070. For example, FWA could not make an order that has the effect of requiring:

• a bargaining representative to make concessions in relation to a proposed enterprise agreement;



• an employer to request employees to vote on a proposed agreement on or by a particular day; or



• an employee to vote in favour of a proposed agreement (see also Part 3-1 - General Protections).”

[123] The CFA argues that the determination sought by the UFU would require the CFA to request employees to approve a variation by voting for it. This would also be designed to ensure that the CFA agree to include particular content in an Agreement which is impermissible.

[124] The UFU argue that the decision in this matter does not have to be made by Order. The terms of the determination sought give effect to the voluntary agreement entered into by the parties at Clause 27.4.7 to request that employees approve a proposed variation. Furthermore the UFU argue that Section 255 only applies to proposed agreements and it does not make any reference to variations to agreements.

[125] The UFU argue that the determination sought is one which implements the Agreement. It does not seek to require a party to make a new Agreement or to vary the Agreement in a way extending beyond what was committed to in the Agreement. Section 255 has no application where all that is sought is the implementation of an agreement which has already been made. In this respect the determination of this dispute is simply a machinery provision designed to give effect to the agreed term in 27.4.7.

[126] I generally agree with the submission of the UFU. However, I accept that it is possible that s. 255 may apply to variations to agreements where they have not already been substantially agreed to as part of an agreement. However, in this case the variation has been substantially agreed to as part of the Agreement and the process in which I am engaged is consent private arbitration analogous to a similar process under s240 of the Act.

[127] The CFA argues that to require the CFA to facilitate the variation to the Agreement sought by the UFU would be contrary to the objects of part 2-4 of the Act. It would be fundamentally inconsistent with the objects and scheme of the Act for the Tribunal to require an employer to approve a variation of an agreement sought by a union but resisted by the employer. It is not the role of the Tribunal to require parties to make agreements. For these reasons the CFA argue it would be beyond power to make the determination sought by the UFU. The CFA argue that it would be contrary to bargaining in good faith to require the parties to make agreements.

[128] I agree with the UFU that a determination requiring a party to implement an agreement is precisely what a disputes resolution clause in an agreement which provides for private arbitration of disputes over the application or implementation of the Agreement is designed to achieve. In this respect the determination sought is one which implements the Agreement. It does not seek to require a party to make a new agreement or to vary the Agreement in a way extending beyond what was committed to in the Agreement. Furthermore it would in my view be contrary to the scheme and objects of the legislation to allow a party, in these circumstances, to withdraw from the provisions of an enterprise agreement freely entered into. The CFA is only being required to do what it freely committed to do in the Agreement. For FWA to facilitate this occurring could not be described as contrary to the scheme and objects of the Act.

Conclusion

[129] This decision is in resolution of a dispute pursuant to the disputes settlement procedure of the Agreement. No Order is made. I have decided that:

• the CFA is required to implement Clause 27.4.7; and



• the CFA was under no obligation to seek to vary Schedule 1 of the Agreement prior to 1 September 2012 because there were no deployments to newly created positions during the period up to 1 September 2011;



• the CFA is under obligation to seek to vary Schedule 1 of the Agreement from 1 September 2012 to insert into Schedule 1 all of the deployments which have occurred prior to 1 September 2012. The deployments referred to correspond with the new positions which have been created by decision of the Chief Officer following consultation including with the UFU consistent with the other provisions of Clause 27.

[130] Consistent with this decision and to resolve the dispute:

(a) The CFA should provide a draft variation to the UFU within seven days of this decision. The draft variation can include the other agreed minor variations to Schedule 1 implemented by the Chief Officer.

(b) The UFU should respond to the CFA within three days of receipt of the draft variation and either indicate its agreement to the proposal or the specific amendments it believes are required to reflect this decision.

(c) In the event that any differences cannot be resolved within three days of receipt of the UFU correspondence a conference will be held at FWA and the matter will be resolved pursuant to the disputes settlement procedure and as part of the settlement of the disputes currently before FWA.

(d) Once the draft variation is finalised the CFA should within seven days request that its employees whose employment is covered by the Agreement vote to approve the proposed variation to Schedule 1 and hold a vote by way of ballot conducted by the Australian Electoral Commission.

(e) In the event that the variation is made by the vote of affected employees the CFA should, in conjunction with the UFU, implement, within 14 days of notification by the AEC of a positive vote, all necessary processes pursuant to the Act to have the variation approved by FWA.

COMMISSIONER

Appearances:

Mr W Friend SC for the UFU.

Mr J Bourke SC for the CFA.

Hearing details:

2012
Melbourne
August 6

 1   Exhibit UFU 4.

 2   Exhibit UFU 3.

 3   Exhibits CFA 3 and CFA 4.

 4   Exhibit UFU 3, at paragraph 19.

 5   Exhibit UFU 3, Attachment McG11.

 6   Exhibit UFU 6.

 7   PN238.

 8   Exhibit UFU 3, at paragraph 30, and Attachment MMcG10.

 9   Exhibit UFU 3, at paragraphs 20, 21, 22, 23, 27 and 28.

 10   Exhibit UFU 3, at paragraph 30, and Attachment MMcG17.

 11   Exhibit CFA 3, at paragraph 43.

 12   Exhibit CFA 3, at paragraph 41(c).

 13   PN287 to PN291.

 14   Exhibit CFA 1.

 15   Exhibit UFU 3, at paragraphs 17 and 18, and Attachments MMcG13 – MMcG15 inclusive.

 16   Exhibit UFU 4.

 17   Exhibit CFA 3, at paragraph 54.

 18   Exhibit CFA 3, at paragraph 45(g).

 19   Exhibit CFA 3, at paragraph 42.

 20   I gave the parties an opportunity to respond to this view in PN461 to PN462 for example.

 21   Exhibit UFU 4.

 22   Fair Work (Commonwealth Powers) Bill 2009 Explanatory Memorandum in respect to Clause 5

 23   PN264 to PN268 for example.

 24   Exhibit CFA 4, at paragraph 5.

 25   PN339

 26   Exhibit CFA 4, at paragraph 6 and PN334.

 27   Exhibit CFA 4, at paragraph 6.

 28   PN321 to PN327.

 29 (2010) 182 FCR 483.

 30   United Firefighters' Union of Australia v Metropolitan Fire & Emergency Services Board (1998) 83 FCR 346.

 31  Hughes v WA Cricket Association Inc (1986) 19 FCR 10 at 22, 23 and 25.6 per Toohey J.

 32   Exhibit CFA 3, Attachment EF1 at page 5.

 33 (1991) 27 FCR 310, at 344-5.

 34   Commonwealth v Tasmania (Dam Case) (1983) 158 CLR 1, 155-157, 179-180, 240 and 269-270.

 35   R v The Judges of the Federal Court of Australia; ex parte The Western Australian National Football League ("Adamson") (1979) 143 CLR 190.

 36 (1979) 143 CLR 190 at 239.

 37 (2000) 96 FCR 570 at 28, 29 and 32. The views of Lehane J in this passage were also specifically endorsed by Moore J.

 38   Derived from City of Melbourne v Commonwealth (State Banking case) (1947) 74 CLR 31.

 39   Re Australian Education Union: Ex Parte State of Victoria (Re AEU) (1995) 184 CLR 188 at 54.

 40   Re AEU at 57.

 41   Re AEU at 60.

 42 (2003) 215 CLR 185.

 43 (2003) 215 CLR 185 at 123–124.

 44 (1999) 91 FCR 95.

 45 (1999) 91 FCR 95 at 17.

 46 (1999) 91 FCR 95 at 23–24.

 47 (2001) 112 FCR 232.

 48 (2001) 112 FCR 232 at 103.

 49   Exhibit UFU 2.

 50   Re AEU p232 point 8.

 51   Re AEU p234 point 1.

 52   State of Victoria v Commonwealth of Australia (Industrial Relations Act case)(1996) 187 CLR 416

 53   The Industrial Relations Act Casepage 501.

 54   The Industrial Relations Act Case page 535 point 10 - page 542 point 6 and page 563 point 4.

 55   State of New South Wales v Commonwealth of Australia (2006) 229 CLR 1 at 374 and 392.

 56 (2009) 240 CLR 272.

 57 (2009) 240 CLR 272 34.

 58   CFMEU v AIRC (the Private Arbitration Case) (2001) 203 CLR 645 at 30-34.

 59   The Industrial Relations Act Casepage 535 point 10 - page 542 point 6 and page 563 point 4.

 60   The Industrial Relations Act Case at page 537.

 61   The Industrial Relations Act Case at page 538.

 62   The Industrial Relations Act Case at page 542.

 63   PN738.

 64   The Industrial Relations Act Case at page 503.

 65   R v Bain; Ex parte Cadbury Schweppes Australia Ltd (1984) 159 CLR 163 at 168.

 66   Austin v Commonwealth of Australia (2003) 215 CLR 185 at 26 and City of Melbourne v Commonwealth (State Banking case) (1947) 74 CLR 31 at 75.

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