United Voice v Academy Services
[2019] FCCA 1620
•14 June 2019
FEDERAL CIRCUIT COURT OF AUSTRALIA
| UNITED VOICE v ACADEMY SERVICES | [2019] FCCA 1620 |
| Catchwords: INDUSTRIAL LAW – Workplace agreement – whether respondent in breach of workplace agreement in failing to offer employment to existing employees of an outgoing contractor – whether relevant clause in collective agreement void by virtue of prohibited content – approbation and reprobation – whether relevant content of collective agreement pertained to relations between employer and employee – content not prohibited – breach of collective agreement found – declaration made. |
| Legislation: Academy Services and LHMU Cleanstart Union Collection Agreement 2008, cls. 48.3, 48.5 and 48.5.1.2 |
| Cases cited: Fried v National Australia Bank Ltd [2000] FCA 910 Commonwealth v Verwayen (1990) 170 CLR 394 |
| Applicant: | UNITED VOICE |
| Respondent: | ACADEMY SERVICES PTY LTD |
| File Number: | ADG 299 of 2016 |
| Judgment of: | Judge Heffernan |
| Hearing date: | 7 November 2017 |
| Date of Last Submission: | 9 November 2017 |
| Delivered at: | Adelaide |
| Delivered on: | 14 June 2019 |
REPRESENTATION
| Counsel for the Applicant: | Mr S Blewett |
| Solicitors for the Applicant: | United Voice |
| Counsel for the Respondent: | Mr K Luke |
| Solicitors for the Respondent: | Thomsons Lawyers |
IT IS DECLARED THAT:
Academy Services Pty Ltd has contravened Section 50 of the Fair Work Act 2009 (Cth) by failing to offer employment to existing staff of an outgoing contractor namely, to Ms Pooja Khadka, Mr Federico Salazar Arevalo and Ms Lady Salazar Perez, as required by the Academy Services and LHMU Cleanstart Union Collective Agreement 2008.
ORDERS:
This matter is adjourned to a date and time to be advised for submissions as to compensation and pecuniary penalty.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT ADELAIDE |
ADG 299 of 2016
| UNITED VOICE |
Applicant
And
| ACADEMY SERVICES PTY LTD |
Respondent
REASONS FOR JUDGMENT
Introduction
During the course of 2006, 2007 and 2008, the Liquor, Hospitality and Miscellaneous Union (‘LHMU’) now called United Voice conducted its Cleanstart campaign. Broadly speaking, the purpose of the campaign was to develop a model collective agreement that could be used as the basis for individual collective agreements entered into by the LHMU and particular employers. This matter involves a dispute arising from one such collective agreement and whether it contained prohibited content.
The respondent in this matter is Academy Services Proprietary Limited, a company incorporated pursuant to the Corporations Act 2001 (Cth), a constitutional corporation for the purposes of the Fair Work Act 2009 (Cth) (‘the FW Act’), and, at all relevant times, carried on the business of providing cleaning services in South Australia and elsewhere.
The applicant is an employee organisation registered under the Fair Work (Registered Organisations) Act 2009 (Cth), is entitled to represent the interests of employees in the cleaning services industry and, as the respondent concedes, is entitled to bring this application on behalf of its members pursuant to s.540(2) of the FW Act.
This dispute arises from the circumstances of a number of employees who, prior to 22 August 2016, were employed by ISS Facility Services (‘ISS’). Prior to 22 August 2016, ISS provided cleaning services to Red Cross Blood Services (‘the Red Cross’) and, in particular, at commercial premises situated at 301 Pirie Street and Regent Arcade in the Central Business District of Adelaide (‘the Red Cross CBD sites’). The relevant employed persons were Mr Federico Salazar Arevalo, Ms Pooja Khadka and Ms Lady Salazar Perez (‘the employees’).
In about June 2016, the Red Cross decided not to renew the contract for ISS to provide cleaning services to the Red Cross CBD sites. The contract was awarded to the respondent, which was to commence providing cleaning services on 22 August 2016. In July of 2016, ISS provided a list of employees to the respondent, including those engaged at the Red Cross CBD sites, and, in particular, the employees mentioned above. The respondent says that this lease also included the names of ISS employees who had not worked at the Red Cross CBD sites. At all relevant times, the Academy Services and LHMU Cleanstart Union Collective Agreement 2008 (‘the Agreement’) applied to the respondent in respect of its business by virtue of Schedule 3 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (‘the TPCA Act’). Specifically, it applied to the performance of work pursuant to contracts for the cleaning of commercial buildings in the central business district of Adelaide. At all material times, a similar collective agreement applied to ISS with respect to the provision of cleaning services in the Adelaide central business district. Division 6 of the Agreement is headed ‘Fair Job Security’, and it covers a range of matters, including ‘introduction of change and change of contract’, ‘notice of termination’, and, ‘redundancy’. Relevantly to this matter, clause 48.3 deals with ‘change of contract’. It purports to provide as follows:
“48.3.1The employer is required to notify employees 28 days or as soon as practicable before the existing cleaning contract is due to expire or when the employer is notified the contract has been terminated.
48.3.2Such a notification is to be in writing and will contain options (if any) for suitable alternative employment in other buildings with the employer in the event that it loses the particular contract for which the employee is employed.
48.3.3The employer will then provide a current list of employees who wish to remain working at the site to the successful tenderer.
48.3.4The employer will then hold a site meeting during paid time of all employees as soon as practicable after the employer receives notice of contract termination but at least 14 days before contract termination. At that meeting, those employees who are to be offered suitable alternative work with the employer will receive notification in writing. This offer of employment shall remain open for at least 14 days, and an employee may only accept an offer in writing.
48.3.5At this meeting, all employees will receive a letter from the employer which contains:
⸋ Details of their entitlements, including accrued annual leave; and
⸋ A statement of service (including length of service, hours of work done, classification and shift configuration).
48.3.6The employer will also facilitate a paid meeting of not more than 30 minutes with all employees as soon as practicable (but at least 14 days) prior to the termination of the contract and after the meeting mentioned in 48.3.4. The employer will invite the successful tenderer (the incoming contractor) to attend and address staff.”
Clause 48.5 of the Agreement purports to provide for circumstances where the employer is an incoming contractor. It states as follows:
“48.5.1Where the employer has successfully tendered for a contract in a building, the employer will adopt the following process:
48.5.1.1The employer will attend a meeting as stipulated in clause 48.2.6 of employees engaged on the expiring contract to discuss the opportunities for employment of these employees to that of the employer.
48.5.1.2The employer will then offer employment to existing staff of the outgoing contractor for all available positions at the site. In filling these positions, the existing staff of the outgoing contractor shall be given preference over any existing employees of the incoming contractor.
48.5.1.3This offer will be open for a minimum period of fourteen (14) days (or such lesser time as agreed between the prospective employer and employees) and employees may only accept an offer in writing to the employer.
48.5.2Subject to 48.5.2.1, those employees employed with the incoming contractor will not be required to serve a probationary or qualifying period (for the purposes of section 643(7) of the Act) and will be advised as such in writing.
48.5.2.1Those employees currently serving a probationary and/or qualifying period (for the purposes of section 643(7) of the Act) at the time of contract change with the outgoing contractor will be required to serve the balance of that period with the incoming contractor.”
On or about 26 July 2016, representatives for the respondent met with each of the four employees individually. What was said at those meetings is a matter of dispute between the parties. On or about 29 July 2016, the respondent informed each of the four employees in writing that they had been unsuccessful in obtaining a position as a cleaner working for them at the Red Cross CBD sites.
The respondent commenced providing cleaning services at the Red Cross CBD sites on 22 August 2016 and, at the time of trial, continued to do so. The respondent did not offer employment to any of the employees of ISS who had worked at the Red Cross CBD sites immediately prior to the change of contract (including the employees identified above). The respondent does not deny that but says that it did engage the services of an ISS Port Adelaide employee to continue to clean the Red Cross Port Adelaide site.
Issues at trial
The applicant contends that subclauses 48.3 to 48.5 of the Agreement imposed obligations on the respondent that were not met. As the outgoing contractor, the applicant contends that ISS was obliged to comply with clause 48.3 of the Agreement. Further, the respondent is alleged to have been obliged, as the incoming contractor, replacing another contracted cleaning service, in this case ISS, to comply with clause 48.5 and, in particular:
a)To attend a meeting of the type referred to in clause 48.5.1.1 of the agreement;
b)To offer employment to existing staff of the outgoing contractor for all available positions at the site; and
c)In filling the available positions to give preference to the existing employees of the outgoing contractor over its own staff.
The applicant says that when representatives of the respondent met with the employees, they told them:
a)That it could not guarantee a job to them at the Red Cross CBD sites; and
b)That it would have to give preference to its existing staff in respect of any positions at the Red Cross CBD sites.
In failing to offer employment to any of the ISS employees who had worked at the Red Cross CBD sites immediately prior to the change of contract, the applicant alleges that the respondent was in breach of clause 48.5 of the Agreement to offer available positions to the relevant ISS employees, and to give preference to them over the respondent’s own existing staff. As a result, the respondent is alleged to have contravened item 2(2) of Schedule 16 of the TPCA Act with respect to each of the employees. The applicant seeks a declaration pursuant to s.545 of the Act that the TPCA Act has been contravened in the manner alleged. The applicant also seeks:
a)An order pursuant to s.546 of the Act that the respondent pay pecuniary penalties to the applicant for alleged contraventions.
b)An order pursuant to s.545 of the Act that the respondent pay compensation to each of the employees for the loss sustained by each of them by virtue of the respondent’s alleged breaches.
The respondent seeks orders for:
a)A declaration that clause 48.5 of the Agreement contains prohibited content and is void and unenforceable by virtue of s.358 of the Workplace Relations Act 1996 (Cth) (‘the WR Act’), which was preserved by Schedule 3 of the TPCA Act.
b)In the alternative, a declaration that clause 48.5 of the Agreement is not about a permitted matter and has no effect by virtue of s.253(1) of the Act.
With respect to the orders it seeks, the respondent submits that as the Agreement was made under the now repealed Workplace Relations Act, it became a collective agreement-based transitional instrument by virtue of Schedule 3 of the TPCA Act, and certain provisions of that Act still apply by virtue of the transitional provisions. Section 358 of the WR Act provided that a term of a workplace agreement was void to the extent that it contains prohibited content. Pursuant to s.356 of the WR Act (operating in conjunction with reg.8.7(1) of the Workplace Relations Regulations 2006 (Cth) ‘the WR Regulations’), a term of a workplace agreement was prohibited content if it dealt with a matter that did not pertain to an employment relationship.
By virtue of reg.8.7(3), a matter pertained to the employment relationship if it related to the relationship between the employer bound by the agreement and all persons who were employed by the employer and who were bound by the agreement (‘the content rules’).
Relevantly, for the purpose of this matter, the effect of the transitional provisions is to define the content rules as including provisions in the WR Act that stipulate what matters should not be included in an instrument/agreement, and provisions that stipulate that a particular term of an instrument/agreement is of no effect. Further, the transitional provisions operate to mean that those instrument content rules applicable at the time the WR Act was repealed continued to apply to instrument/agreements entered into under the WR Act. In other words, the old content rules continued to apply to transitional instruments. Sections 356, 358 and reg.8.7 are content rules under the TPC Act and, therefore, continue to apply to the agreement. The respondent contends that the net effect of the above has relevance to cl.48.5 of the Agreement, because the Agreement purports to impose obligations on the respondent with respect to ISS employees who were not employed by the respondent and, hence on the respondent’s case, not covered by the Agreement. Accordingly, cl.48.5 contains prohibited content and is void by virtue of s.358 of the WR Act. If that argument is rejected, the respondent contends further that cl.48.5 is still unenforceable under the FW Act, because it is not about a ‘permitted matter’ as defined in s.172(1) of the FW Act, and, as such, can have no effect and is unenforceable by virtue of s.253(1) of the FW Act. This is so, the respondent argues, because, firstly, the ISS employees were not in an employment relationship with the respondent and not covered by the agreement (s.172(1)(a)) and, secondly, because employment of ISS employees, being from another organisation, does not relate to the respondent’s relationship to the applicant (s.172(1)(b)). In summary, the respondent argues that the Agreement is only enforceable to the extent that it does not contain prohibited content or non-permitted matters.
Materials relied on
The parties tendered a Statement of Agreed facts.[1]
[1] Exhibit A2.
The applicant relies on the following affidavits:
·Pooja Khadka, dated 25 May 2017;
·Federico Salazar Arevalo, dated 26 May 2017;
·Lady Salazar Perez, dated 7 June 2017;
·John Joseph Kennedy, dated 29 May and 12 July 2017; and
·Chris Field, dated 29 May 2017.
The respondent relies on the following affidavits:
·Kate Dunn, dated 28 June 2017;
·Mark Hoffman, dated 28 June 2017; and
·Craig Thomas, dated 1 September 2017.
The evidence
Case for the applicant
Ms Lady Salazar Perez
Ms Lady Salazar Perez is a student of urban planning. She was enrolled at the University of South Australia and supporting herself by working as a cleaner. She was born in Colombia and arrived in Australia in 2012. She commenced working with ISS in March 2012 as a casual cleaner.
From about mid-2013, ISS deployed her at the Red Cross CBD site in Regent Arcade, where she continued to work as a casual. Ms Salazar Perez worked regular hours on Monday to Friday from 8.00pm to 11.00pm, and on Saturday afternoons from 2.30pm to 5.00pm. She also worked two and a half hours on most public holidays. She was made permanent by ISS in mid-2014.
Ms Salazar Perez worked at the Regent Arcade site until August 2016. She worked alongside two other ISS employees, Mr Federico Salazar Arevalo and someone called John. Ms Salazar Perez became aware in early 2016 that ISS may lose the Red Cross CBD contract. She was advised by ISS on 12 July 2016 that they had, in fact, lost the contract and that, pursuant to clause 48 of the ISS Cleanstart Agreement, she would be considered for employment by the incoming contractor if she gave permission for her details to be released. Ms Salazar Perez did want to be considered for ongoing employment with the incoming contractor. She says that she telephoned the respondent and was told to complete an expression of interest form and to email it to them, which she did.[2]
[2] Exhibit A3.
Along with Mr Salazar Arevalo, she attended a meeting with managers from the respondent in late July 2016. She says that she took time to prepare for the interview with them by thinking about the job and its requirements. In oral evidence, she told the Court that she was pretty sure she had dressed for the interview in a tidy and professional manner. On arrival, she says that they were required to fill out a job application form prior to the meeting.[3] She told the Court that she had no trouble in understanding the application form or in completing it. She and Mr Salazar Arevalo met with a man and a woman whose names she cannot recall. During the meeting, she and Mr Salazar Arevalo were asked about how the cleaning work was performed at their Red Cross site and whether it could possibly be done within two hours. They were also asked about problems they had encountered performing at the site. They were not asked about their desire to work, their work history, or their job performance. She was asked where she was from.
[3] See Job Application Form, Exhibit A1 at p 198.
Ms Salazar Perez told the court that she had no difficulty understanding the questions in the interview and did not have to ask either of the interviewers to repeat any of their questions. She had no problem answering the questions and was not asked at any stage to repeat any of her answers. At no stage did either of the interviewers say anything to her that indicated they might not be able to understand her answers.
At the conclusion of the meeting, Ms Salazar Perez says that the interviewers told her she would be contacted but that work at the Red Cross CBD site could not be guaranteed because the respondent had other existing staff they needed to place. She was advised in writing on 29 July 2016 that she had been unsuccessful in her application for employment. Mr Salazar Arevalo was also unsuccessful in his application for employment. It was her understanding that the employee named John did not apply for ongoing employment with the respondent.
Ms Salazar Perez was out of work from 20 August 2016 when the ISS Red Cross CBD contract ended. She remained out of work for a few days until her former employer ISS found work for her at a site at the University of Adelaide. This was for 20 hours per week, working between 3.00am and 7.00am Monday to Friday, which was difficult for her. She felt vulnerable having to attend work at that time of the morning, and she sought alternate shifts from ISS. Her hours were later reduced by ISS when the university reduced the amount of services they required.
Ms Salazar Perez’s evidence was the subject of minimal cross-examination and none that was damaging to her credit as a witness. She gave her evidence in a straightforward manner, did not attempt to reconstruct with respect to matters that she had difficulty recalling, and I regard her as having been an honest and reliable witness.
Mr Federico Salazar Arevalo
Mr Federico Salazar Arevalo gave evidence and was cross examined. At the time of the trial he was working for Wolf Blass as a cellar hand. He is a Graduate Accountant, having undertaken his studies in Australia, and at the time of swearing his affidavit, a cleaner. He was born in Columbia, moving to Adelaide in 2011.
Mr Salazar Arevalo started working with ISS in May 2011 shortly after he arrived in Australia. Initially he worked at the University of South Australia City East Campus. He was transferred to the Red Cross CBD site in Regent Arcade in mid-2013 where he remained working until August 2016. He worked there with Ms Salazar Perez. He was employed as a permanent employee working regular hours on Monday, Wednesday and Friday between 8.00pm and 10.00pm, in addition to two and half hours on Saturday. During the last six months of his work at that site, he also filled in from time-to-time for another employee, John, working an additional two hours per night on Monday to Friday. This meant that he worked a total of 18 and half hours per week during most weeks.
The circumstances in which he came to learn that ISS was at risk of losing the Red Cross CBD contract and then had in fact lost the contract, were in effect the same as those detailed by Ms Salazar Perez.
He attended at the interview with Academy Services in company with Ms Salazar Perez. He described that interview in similar terms to Ms Salazar Perez. He was not asked many questions about himself personally or about his work history. As with Ms Salazar Perez, he says that he was told that the respondent could not guarantee that there would be work for him because they had a number of their own staff, who they “needed to look after”. He too was sent a letter on 29 July 2016 advising him that he had been unsuccessful in his application to work with the respondent. On learning that he had not been successful, he contacted his former employer ISS, advised them and asked if they could find him work elsewhere. They were able to provide him 6 hours work every Monday, Wednesday and Friday cleaning the ISS main office.
In oral evidence, he said that he prepared for the meeting with the respondent as though it was a job interview and that he dressed for a job interview. He denied that he was untidily dressed. He filled in the job application[4] and did not have any difficulty in understanding it. He had no difficulty in completing the form. He was called in for the interview before he had finished filling out the application. He did not have any difficulty understanding the questions that were asked of him in the interview, and did not have to ask any of them to be repeated. He said that he and Ms Salazar Perez answered questions and that he did not have any difficulty in responding to the questions that were asked of him. He told the Court that it was a “really casual” and easy interview. He said that he was not asked at any stage to repeat any of the answers that he gave and neither of the interviewers said anything to him that suggested to him that they could not understand his answers.
[4] Exhibit A1, p 197.
He maintained in cross-examination that he was told by his interviewers that the respondent had a number of staff of their own that they needed to look after. He said that the reason he had a bad feeling at the end of the interview was that a person conducting the interview told them that there was no guarantee that they would have a job and that they said that they had staff they were trying to place. The interview had taken about 20 minutes.
I am satisfied that Mr Salazar Perez gave his evidence in a forthright manner, did his best to assist the Court, and that it was truthful and reliable.
Ms Pooja Khadka
Ms Pooja Khadka was born in Nepal, moving to Australia in 2008. She commenced working with ISS in 2015, initially cleaning the BHP building until she was transferred to the Red Cross CBD site at Pirie Street. She remained working there until August 2016. Ms Khadka was a permanent employee and worked regular hours from Monday to Friday between 5.00pm and 9.00pm. This amounted to 20 hours per week. The only other person employed to clean that site was Mr Salim Zurman.
As with Ms Salazar Perez and Mr Salazar Arevalo, Ms Khadka came to learn, firstly, that ISS was at risk of losing the Red Cross CBD contract, and then ultimately that it had lost the contract. She received a letter in July 2016 from ISS advising her that it had lost the contract and asking if it was happy for them to provide her information to Academy Services, the incoming contractor. She indicated that she was. She contacted the respondent indicating that she wanted to retain employment at the Red Cross CBD site at Pirie Street. She was advised to fill in a form and did so. Towards the end of July 2016, she was interviewed by two or three people employed by the respondents. She was asked some questions about the Pirie Street site and what work was involved in cleaning the building. She was also asked about security at the building and how long she had worked for ISS. The interview ended with her being told that they would contact her. She received a letter from the respondent which informed her that she had not been successful in getting work with them at the Pirie Street CBD site. She did not retain a copy of that letter.
On being informed that she had not been successful, Ms Khadka contacted ISS with the request that they try to place her somewhere else. They provided her with work at Families SA at St Mary’s. That job provided 2 hours work per evening on Monday to Friday between 5.30pm and 7.30pm. In effect, she received about half as much in wages per fortnight as she had at the Red Cross CBD site at Pirie Street. Whilst she asked ISS for more hours of work, they were unable to provide it to her.
In oral evidence, Ms Khadka identified the form that she was required to fill out prior to her interview.[5] She told the Court that she did not have a difficulty in filling out the form, or understanding the questions that it had asked. Whilst she could not remember what she was wearing at the job interview, she thought it might have been a “pant and suit”. She understood that the interview with the employees of the respondent was in effect a job interview. She told the Court that she was not untidily dressed. She told the Court that she did not have any difficulty understanding the questions that she was asked and that the Academy Services people did not ask her to repeat the answer to any question that they asked. She said that she answered all of the questions that were put to her with no difficulty. She did not ask the respondent’s employees who interviewed her to repeat any of the questions that they put to her. At not stage did any of the persons who interviewed her indicate that they were having difficulty understanding her.
[5] Exhibit A1, p 200.
Ms Khadka was not cross-examined. As with the other two employees, I regard Ms Khadka as an honest and reliable witness. I accept her evidence.
Mr Joseph Kennedy
Mr Joseph Kennedy is a solicitor, admitted in February 2007, who since admission has practiced either as a legal officer in a union or as a solicitor in private practice predominantly in the area of employment and industrial law. Between July 2006 and January 2009, he was a National Legal Officer employed by the LHMU, now called United Voice.
He gave evidence of the background to the Clean Start campaign which ultimately led to the drafting of the ‘Model Clean Start Agreement’ (‘the Model Agreement’) which formed the basis for the collective agreements which were later made between the union and contract cleaning employers under the WR Act in 2008 and 2009. In considering his evidence, it is important to note that all relevant times, it was unlawful by virtue of s.357 of the WR Act for an employer to lodge a collective agreement which contained prohibited content. Further, at all relevant times it was unlawful by virtue of s.365 of the WR Act for a union to seek to include prohibitive content in a collective agreement.
One of Mr Kennedy’s main responsibilities whilst employed with the Union was to assist with the Clean Start campaign. The impetus behind the campaign was to improve conditions for cleaners working in offices in the central business district of capital cities. The Union developed a set of principles upon which the campaign was based. Ultimately many contracting cleaning companies agreed to those principles. During the course of 2007, the Union worked on developing a series of solutions to what were perceived to be a number of specific problems facing workers employed in the cleaning industry in office buildings. From the Union’s perspective, those solutions were directed to securing fairness in the following areas:
a)Hours of work;
b)Work load and staffing levels;
c)Pay and allowances;
d)Job security;
e)Treatment of workers in the course of employment; and
f)Leave entitlements and worker’s rights including dispute resolution procedures.
The Model Agreement dealt with job security through ‘change of contract’ provisions.[6]
[6] Change of Contract provisions are sometimes referred to in abbreviated form as ‘COC’ in the Exhibits.
Once the Model Agreement had been prepared, the Union engaged in a consultation process with employers and employer bodies. Mr Kennedy was involved to that end in a number of meetings with employers from late 2007 and throughout the course of 2008. On his evidence, by late 2008, the Union had reached substantial agreement with many of the employers and employer bodies on the terms of the Model Agreement. By the time he ceased employment with the Union in January 2009, the Model Agreement had been agreed with employer bodies. At that time, he did not understand that there were any issues still being discussed between the Union and employers, or employer bodies, with respect to change of contract provisions in the Model Agreement.
Mr Kennedy’s evidence summarised the rationale behind the change of contract provision. It is necessary to understand that rationale in order to appreciate the context in which he engaged in certain discussions, produced certain documents, and in particular, to consider his evidence with respect to the disputed contents of a telephone conversation he has said to have had with Mark Hoffman, who at the relevant time was employed by the respondent as National Operations Manager.
Mr Kennedy’s evidence was that during the course of the Clean Start campaign, a significant issue for the Union and its members concerned job security in the context of a contract cleaning employer losing a particular cleaning contract. At the time, this was apparently a regular occurrence. The difficulty for employees was that the incoming contractor was not obliged to employ existing cleaners in the relevant building. This caused stress and uncertainty for employees, exposing them to a risk of loss of employment. In turn, this led to disputes as to whether an affected employee had an entitlement to severance pay, or if the circumstances were simply part of the “customary and ordinary turnover of labour”. The solution proposed by the Union was that where a contract was changed and a new contractor was coming into a building, an orderly process would pertain that would enable, to the extent possible, employees who were already working at a particular building to continue doing so but in the employ of the incoming contractor. The proposed solution involved developing a series of interlocking obligations binding upon both the outgoing contractor and the incoming contractor. Such a solution would only be viable where both the incoming and outgoing contractors were parties to a collective agreement in similar or identical terms. This would require the majority of employers in the industry to be party to similar or identical agreements.
Discussions with employers ensued between the end of 2007 and during the course of 2008. Mr Kennedy said that some employer and employer bodies were concerned about the obligatory nature of the change of contract provisions on incoming employers. One of their concerns related to employers not wanting to be obliged to employ persons who could be regarded as poorly performing employees. To address this concern, the Union agreed to impose obligations on an outgoing contractor not to transfer employees to the site at which the contract was lost after it had been notified of the loss of contract. The Union agreed that the obligation on the incoming contractor to employ existing employees would be confined to circumstances where there were ‘available positions’, however the Model Agreement provided that existing employees were to be guaranteed preference of employment over the existing employees of the incoming contractor.
Mr Kennedy’s evidence was that in all of the industry consultation in which he was involved, including at a national level, he could not recall any discussion as to whether or not the obligations imposed upon the incoming contractor to employ existing cleaners in a building constituted prohibited content, or were otherwise unlawful or unenforceable. He said that by June 2008, all of the issues were largely resolved with employers, and in particular with the major employer association during national negotiations on 11 June 2008. The change of contract provisions were resolved during the course of those negotiations. Mr Kennedy assisted in drafting the Union’s summary of that meeting which recorded that no issue was raised in relation to the enforceability of the change of contract clause.[7]
[7] Exhibit A1, Annexure ‘JK-1’, pp 47 – 54.
During the course of 2008, Mr Kennedy consulted with Mr Hoffman as to the respondent’s queries and concerns about the Model Agreement.
On 6 December 2007, Mr Kennedy attended a briefing on behalf of the Union with a number of Adelaide contractors. He made notes of that meeting.[8] Those notes indicated that some of the contractors expressed concerns about the obligation to offer jobs to existing cleaners. The notes do not record there being any concern raised about the enforceability of those requirements. Mr Kennedy’s evidence was that had such a concern been raised, he would have made a note of it.
[8] Exhibit A1, pp 57 – 60.
As a result of that meeting, and other meetings held nationally in December 2007, Mr Kennedy prepared a summary of feedback the Union had received during meetings with contractors.[9] In that portion of the notes dealing with change of contract provisions, the following appears:
“What happens if the incoming contractor simply refuses to take the staff on? We can’t regulate them through an agreement (prohibited).”
[9] Exhibit A1, pp 73 – 78.
Mr Kennedy acknowledged in his evidence that the note appeared to suggest that that question was raised during consultations with contractors during the December 2007 meetings. He had no recollection of the question being raised, or any similar discussion occurring. Further, he had no recollection of it occurring later in any ongoing negotiations.
At about the same time, Mr Kennedy produced a document for his own reference headed, ‘Follow ups for Clean Start MCA’.[10] The document was prepared in order to set out considerations arising from the December consultations. It includes the following:
“CoC – we cannot force an incoming contractor to take staff on. It is prohibited content (per Electrolux). Only put it in the MOU which is unenforceable anyway.”
[10] Exhibit A1, p 80.
Mr Kennedy’s evidence was that the note appeared to indicate that at that stage of the process, he had formed a view that further consideration had to be given to the question of the enforceability of the change of contract provisions and whether they amounted to prohibited content. He had no recollection of specifically considering that issue at about that time.
Mr Kennedy was cross-examined on both the feedback memorandum and the follow ups memorandum. Mr Kennedy confirmed that the feedback report was prepared for internal Union purposes. He acknowledged that the concept of fair job security was an important issue for the Union. With respect to the extract referred to above from the feedback report, Mr Kennedy said that the question was either the query raised by him for the benefit of the Union expressing his concern that it might not be possible to regulate the contractor to take on staff that are not its own staff, or a notation of a point made by one of the contractor representatives. He regarded the former as the more likely possibility. He agreed that the word “prohibited” was a reference to prohibited content.
Mr Kennedy denied that at about that time in mid-2008, he had formed a concluded view that the change of contract clause contained prohibited content. He acknowledged that at the early stages of the process there appeared to have been a question in his mind as to whether or not the relevant clause was prohibited content but that he appeared to have considered the issue and resolved in his mind that it was not.
With respect to the reference to prohibited content in the follow ups memorandum, he denied that it showed that he had formed a concluded view on that matter. He explained that memorandum as being a note that he had prepared for his own purposes which involved putting his thoughts on paper with respect to matters that he needed to consider and follow up himself. He acknowledged that the note showed that he was clearly considering the issue and that he did so. The reference to putting the change of contract clause in the memorandum of understanding was simply an idea that had occurred to him in the event that he and the Union formed a concluded view as prohibited content.
He told the Court that he was aware at that time that it was unlawful to place prohibited content in an agreement. The note about the memorandum of understanding was simply a note made to his own attention that anything that was prohibited content should go in a memorandum of understanding which would sit alongside the agreement that the Union reached with contractors. He denied that he had formed the view that the clause was prohibited and that the Union nonetheless sought to put the clause in the Agreement. Given that it was unlawful, it was not something that he would have done, and he did not believe the Union would have done so. Had he reached such a view, he said that he would have recalled it because it would have involved the Union in effect doing something unlawful to which he would have been a party.
Mr Kennedy was aware that Mr Hoffman had sent a letter to the Union on 5 March 2008 on behalf of the respondent setting out its concerns and indicating that it did not agree the clause imposing an obligation on the incoming contractor to employ the employees of an outgoing contractor.[11] It should be noted that that letter does not suggest that the relevant clause was unenforceable or that it amounted to prohibited content.
[11] Exhibit A1, pp 67 – 71.
Mr Kennedy attended another meeting with contractors on 23 April 2008. His notes of that meeting were summarised in a document prepared the following day.[12] The notes record that Mr Hoffman attended the meeting. A central issue at that meeting was the change of contract provisions. It does not appear from the notes that the question of the enforceability or prohibited content was raised by any of the contractors at that meeting. Mr Kennedy’s evidence was that if it had been raised, he would have noted it.
[12] Exhibit A1, pp 62 – 65.
Against that background, Mr Kennedy sent an email to Mr Hoffman on 30 October 2018 indicating that he had attempted to call him to address the concerns that Mr Hoffman had about the change of contract provisions.[13] Mr Hoffman says that as a result of that email, a telephone conversation took place between himself and Mr Kennedy. Mr Kennedy has no specific recollection of that conversation but concedes the possibility that it occurred on or shortly after that date. Mr Hoffman’s version of the conversation will be referred to later in these reasons.
[13] Exhibit A1, p 56.
Mr Kennedy’s evidence is that it is extremely unlikely that he would have said anything to Mr Hoffman along the lines that the change of contract obligations on incoming contractors were unenforceable. That is so, he says, because he did not believe that the provisions that they had agreed with the industry were prohibited content or were otherwise unenforceable. His evidence was that that remains his belief. His evidence was that during the course of negotiations, there was discussion about the enforceability of the clause with respect to an incoming contractor that was not bound by a Clean Start collective agreement. His view was that the situation was clear, that the collective agreement could not bind or impose obligations on employers who are not a party to it. Further, his understanding behind the drafting of the Agreement was that it was designed to create an enforceable industry standard for all employees cleaning offices in the relevant CBDs. He observed that his role in the Clean Start campaign was to ensure that the Agreement contained legally enforceable obligations.
With respect to Mr Hoffman’s account of the telephone conversation, Mr Kennedy does not dispute that, if as asserted by Mr Hoffman, the respondent had indicated that the change of contract provisions should be removed from the Clean Start Agreement, he would have said words to the effect that the Union’s position was that it would not remove the change of contract positions. He concedes that he possibly told Mr Hoffman that an enterprise agreement could only apply to an employer and its employees. He denies that he would have told Mr Hoffman that the Clean Start Agreement could only apply to employees once they had actually been hired by an incoming contractor. He denied other statements that Mr Hoffman attributed to him, or that he would have said anything to the effect that the change of contract provisions could not be enforced by employees of the outgoing employer.
Mr Chris Field
The applicant also relied on the evidence of Mr Chris Field who was a Union official employed by United Voice and its predecessors at all relevant times. Mr Field was involved in consultation about the Agreement in South Australia. His evidence was that before the Collective Agreement had been finalised, the respondent was one of a number of cleaning contract companies that agreed to the Responsible Contracting Principles that had been developed by the applicant. The respondent entered into a responsible cleaning contract agreement with the Union on 29 June 2007.[14]
[14] Exhibit A1, pp 90- 93.
He states that by mid-2009, most of the major cleaning companies in South Australia had entered into Clean Start Collective Agreements. The respondent agreed to enter into the Academy Services and LHMU Clean Start Union Collective Agreement 2008 in late-2008 and it was formalised once employees had voted to approve it on about 19 April 2009.[15]
[15] Exhibit A1, pp 95 – 149.
The Agreement was lodged with the Workplace Authority by the respondent in May 2009.[16] The Workplace Authority advised the Union of the approval given to the Agreement on 1 June 2009.[17]
[16] Exhibit A1, p 151.
[17] Exhibit A1, pp 154 - 156.
Mr Field said that one consequence of the Clean Start Campaign had been that many major property owners required that entities tendering for contracts for the provision of cleaning services for their buildings be signatories to the Clean Start Agreement, or that they be able to demonstrate employment provisions which were equivalent to the provisions set out in the Clean Start Agreement.
The Clean Start Campaign was supported by both the Federal and South Australian State Governments. In July 2009, the Federal Government published a series of Fair Work Principles which stipulated that cleaning contractors tendering for government funded cleaning services contracts had to either be a signatory to a Clean Start Agreement or meet a series of requirements set out in the Agreements.[18] The South Australian Government adopted its own Clean Start policy which required contractors to comply with standards no less favourable than those provided by the Clean Start Agreements.[19] Mr Field stated that he was aware that the respondent had won contracts to provide cleaning services at the South Australian Court buildings in the CBD, as well as the Adelaide Railway Station, after the time at which the State Government policy commenced. He was also aware that the respondent has provided cleaning services to the Australian Taxation Office building in South Australia and had won that contract at a time when the Australian Government Fair Work Principles were enforced.
[18] Exhibit A1, pp 158 – 165.
[19] Exhibit A1, pp 167 – 170.
On behalf of the Union, Mr Field was involved with the change of contract issues relating to the Red Cross CBD sites at the request of Mr Salazar Arevalo. When it came to his attention that ISS employees believed that they would not be offered employment with the respondent, Mr Field caused an email to be sent to the respondent reminding it of its obligations under the Agreement. Mr Hoffman responded to that email on 4 August 2016 indicating that the respondent would comply with its lawful obligation.[20]
[20] Exhibit A1, pp 175 – 176.
When he learned that Mr Salazar Arevalo had been told that he had been unsuccessful in seeking employment with the respondent, he instructed a Union official to email the respondent again putting them on notice that they regarded the respondent as being in breach of the Agreement. Mr Hoffman responded to that email indicating that the respondent had always regarded clause 48.5 of the Agreement as being unenforceable. He also indicated that during discussions between the respondent and the Union in 2009, and prior to signing the Agreement, Mr Field and Mr Kennedy had assured the respondent that clause 48.5 could not be legally enforced.[21]
[21] Exhibit A1, pp 178 – 179.
A meeting was arranged between the applicant and the respondent on 19 August 2016. Mr Field advised Mr Hoffman that he believed the respondent was in breach of the Agreement. Mr Hoffman reiterated that he had always understood that clause 48.5 of the Agreement was legally unenforceable. Mr Hoffman said he held that view because there was no employer/employee relationship between an incoming contractor and employees of the outgoing contractor. Mr Hoffman claimed that he had made that view clear to the applicant at the time the respondent signed the Agreement in 2009. Mr Field says that Mr Hoffman did not assert during the course of that meeting that the applicant had advised or reassured him that clause 48.5 was unenforceable. The explanation proffered by Mr Hoffman for the respondent’s actions was that the respondent had to look after its own staff first and that several of them needed a “top up” in their hours.
Mr Field’s evidence was that he could not recall the respondent ever saying that it did not believe that clause 48.5 was unenforceable. Nor could he recall the Union ever “repeatedly” telling the respondent that that was the case. He had no recollection of any discussion of that nature and believes that it did not occur. He did not believe that he had ever given such an assurance about clause 48.5 to the respondent, or to any cleaning company, or that any assurance was given in his presence.
An email exchange occurred between Mr Field and Mr Hoffman between 2 and 5 December 2008. Mr Hoffman requested a written assurance that the Union regarded the change of contract provisions as unenforceable and seeking a letter from the Union stating that the clause was a statement of intent only. Mr Hoffman’s email of 4 December 2008 at 10.05am reiterated that the respondent would not sign an agreement that stated they “will” have to hire certain individuals because that would take the decision process out of their hands. Mr Field’s response to that email the following day reaffirmed the Union’s commitment to the wording of clause 48.5.1.2 as it then was, and expressed some concern if the respondent chose not to sign up to the Agreement because of the word “will” being used instead of the word “may”. He asked the respondent to agree to sign to the Agreement in its present form.
As can be seen from the Collective Agreement signed by the parties, it was entered into on the basis of the wording of clause 48.5.1.2 promoted by the Union.[22]
Case for the respondent
[22] Exhibit A1, pp 95, 129 & 149.
Mr Mark Hoffman
Mr Mark Hoffman is the General Manager for the respondent. At the time of the Clean Start Campaign and the signing of the Collective Agreement, he was the respondent’s National Operations Manager.
Mr Hoffman’s evidence was that when he first reviewed the applicant’s model Clean Start Agreement, he had reservations about a number of terms, and in particular those relating to the change of contract provisions. He did not agree with those provisions because he considered that the employment of new staff was a matter for the employer to determine and he was also concerned about the cost of recognising prior service with respect to the employees of the outgoing employer. He says that he raised his concern about the change of contract provision and other aspects of the Model Agreement at the meeting on 6 December 2007. He acknowledges that not all contractors were opposed to the change of contract provisions. He surmised that this was because larger employers with long standing employees would be able to minimise their risk of having to pay redundancy entitlements to employees in the event of a change of contract. The respondent was at that time still relatively small and was not faced with the same risk in that regard as larger employers.
Mr Hoffman says that he repeated his concerns at the national meeting on 23 April 2008. He believed that he raised concerns similar to those set out in his letter to the Union of 5 March 2008. After the April 2008 meeting, his evidence is in effect that he went cool on the idea of a Clean Start Agreement because of the reservations he held. His attitude in that regard changed later in 2008 as the Clean Start Campaign gained momentum and a number of employers in the industry committed to the agreement. He says that he was also influenced by the fact that governments at both Federal and State level were starting to require compliance with the terms of the Clean Start Agreements by companies tendering for work in government buildings. Whilst there was some inconsistency between the level of compliance required by government, some required a tender to have entered into an agreement and others required a tender to offer terms and conditions to employees no less favourable than the agreement.
By October 2008, Mr Hoffman had become concerned that the respondent would be overlooked when tendering for government cleaning contracts because they had not signed up to an agreement. He renewed discussions with Mr Field.
His evidence is that when he spoke to Mr Field in October 2008, he reiterated his concerns about the change of contract provisions and told him that the respondent would not enter into an enterprise agreement that dictated who it could and could not hire. Mr Field referred him to Mr Kennedy and the telephone conversation, to which I have already referred, took place on or about 30 October 2008. He says that he told Mr Kennedy that if the change of contract provisions were removed from the Agreement, then the respondent would sign. Mr Kennedy’s response was that the respondent would not remove the change of contract provision because of its desire for a uniform agreement across the industry and that he emphasised that a number of employers had already signed on to the Agreement. Mr Hoffman says that he was told by Mr Kennedy, in effect, that an enterprise agreement could only apply to an employer and its employees and that until the respondent hired employees of an outgoing cleaning contractor, the Agreement could not apply to those employees. He says that Mr Kennedy told him, in effect, that the Union would not remove the provisions from the Agreement because it would not be supported by its member base and because it expected that most employers would comply with the provisions in any event. Mr Hoffman took that to mean that Mr Kennedy’s position was that the change of contract provisions could not be enforced by employees of the outgoing employer because the Agreement could only be enforced by employees of the Academy.
At all relevant times during the negotiation period, Mr Hoffman was not aware of provisions of the WR Act relating to prohibitive content in work place agreements. I accept his evidence in that regard.
With respect to government contracts obtained by the respondent, Mr Hoffman notes that the South Australian Government’s Clean Start Policy came into effect shortly after the respondent signed the Clean Start Agreement. The Government policy did not require tenderers to have a Clean Start Agreement in place, but that terms and conditions be no less favourable than such an agreement. Notwithstanding the fact that the respondent held a contract with TransAdelaide for the cleaning of the Adelaide Railway Station from 2005, it lost that contract in 2010 to Multiclean Pty Ltd, which at the time it was granted the contract did not have a Clean Start Agreement in place.[23] Multiclean Pty Ltd entered into a Clean Start Agreement on 27 April 2011.
[23] Exhibit A1, p 213.
As far as the respondent’s contract with the Courts Administration Authority for the cleaning of the State Court buildings is concerned, the respondent commenced that contract on about 12 August 2013. That contract adopted the State Government Clean Start Policy but it stipulated that the relevant clause ceased to apply on 1 July 2013 when the Clean Start Collective Agreement was stated to expire.[24]
[24] Exhibit A1, p 215, clause 3.7.
Mr Hoffman said that the respondent also serviced a local government contract for the Adelaide City Council between September 2010 and 31 January 2013, when it lost the contract. Whilst the expression of interest specifications for that contract stipulated that the Council had a preference for engaging in an organisation which had signed up to comply with the requirements of the Collective Agreement, and that it required subcontractors to ensure that employees had terms and conditions no less favourable than those contained in the Agreement, the respondent lost the contract to International Cleaning Services, which did not have a Clean Start Agreement in place.
Mr Hoffman’s evidence was that with respect to the Federal Government contract for the Australian Tax Office building in the Adelaide CBD, that by the time the respondent commenced that contract on 19 November 2012, the Commonwealths Cleaning Guidelines of 2012 were in place and that it was not a requirement of that contract that the respondent had a Clean Start Agreement in place.
The purpose of the above evidence was to demonstrate that contrary to the contention of the applicant, the respondent could have won the government contracts without a Clean Start Agreement and further that it lost the flexibility to offer a competitive contract price when submitting non-government tenders because it lost the ability to offer employees lower than Clean Start rates in line with the relevant award. Mr Hoffman said that the respondent lost a number of tenders for non-government contracts as a result. He gave the example of a tender it submitted with respect to Angaet Management Pty Ltd.[25]
[25] Exhibit A1, p 256 (entry highlighted in blue).
When the respondent successfully tendered for the Red Cross contract nationwide, Kate Dunn was appointed as the overall National Contract Manager and Craig Thomas was the relevant Contract Service Manager for South Australia. Mr Hoffman assumed responsibility for the ‘roll out’ of the contract during a period in 2016 when Ms Dunn was on leave and assisted her with it on her return.
With respect to the Red Cross CBD sites, Mr Hoffman said it was the respondent’s intention to interview any existing cleaners of the outgoing contractor at the site to determine whether the respondent should employ any of them to do the work. His evidence is that he did not consider the respondent was obliged to employ any of those cleaners because of his understanding as to the change of contract provisions not being applicable to outgoing employees. He said that the respondent had operated on that basis with respect to other contracts as well.
Mr Hoffman was cross-examined at some length. He confirmed that by October 2008 the respondent was concerned that it might be excluded from both government tender opportunities and potentially non-government tenders because it did not have a Clean Start Agreement and that this was the impetus for re-instigating discussions with the Union. Mr Hoffman was not able to explain exactly why it was that he continued to be dissatisfied with the existence of clause 48.5, notwithstanding that he believed earlier advice from Mr Kennedy that it was unenforceable. He said that he was unsure why the clause needed to be in there at all if it was not enforceable. He told the Court that the respondent did not get legal advice as to whether or not clause 48.5 was enforceable. Notwithstanding that he believed Mr Kennedy had told him the clause was unenforceable in either late October or early November 2008, he conceded that he continued throughout December of 2008 to seek to change the wording of that clause so that it provided the respondent ‘may’ offer employment to employees of the outgoing contractor, rather than a requirement that it ‘will’ offer such employment. He stated that the email exchange with Mr Field in the first week of December 2008 was the last communication that he could recall having with either Mr Field or Mr Kennedy on the enforceability of that clause. He agreed that the respondent entered into the agreement because on balance they believed it was in their interests to do so it having both some benefits and some burdens for them. The main burden, from Mr Hoffman’s perspective, was the cost impact because he was of the view that they were not obliged to hire the cleaners of the outgoing contractor.
Mr Hoffman said that he only had one conversation with Mr Kennedy and was told that the agreement would only apply between an employer and its employees once they entered into an employee/employer relationship. When questioned about an email sent by Mr John Hoffman to the Union after this dispute arose in August 2016,[26] Mr Hoffman was not able to recall if he told Mr John Hoffman if he had been given repeated assurances by Mr Kennedy - that he could not recall what he had told Mr John Hoffman about those assurances, except that it was clear that the agreement could only apply between an employer and employee once an employment relationship was established.
[26] Exhibit A1, p 178.
It was put to Mr Hoffman that this was a conclusion that he had formed having been told by Mr Kennedy that the Agreement could only apply to the employee/employer relationship, but he maintained that his recollection of the conversation with Mr Kennedy was as per his evidence. When asked whether Mr Kennedy had specifically told him that the clause could never be legally enforced, Mr Hoffman said:
“I think my recollection of the conversation was that it was very clear that the agreement could only apply between an employee and an employer, and that until that relationship was formed, that it would – the agreement wouldn’t apply. So, therefore, it was deduced that the – that all of the clauses with the entire agreement didn’t apply until the agreement itself did.”[27]
[27] See transcript p 59, lines 11 – 16.
He then repeated that that was what Mr Kennedy had informed him[28] but then said that he could not remember the exact words used by Mr Kennedy in relation to the question of enforcement “but that was the assurance that I received from the entire conversation”.[29]
[28] See transcript, p 59, line 21.
[29] See transcript, p 59, lines 34 and 35.
Mr Hoffman was questioned about the following sentence in the email from Mr John Hoffman to the applicant on 11 August 2016:
“The wording of the subclauses of 48.5 do not amount to a legal obligation of the incoming contractor.”[30]
[30] Exhibit A1, p 178.
The witness conceded that Mr Kennedy did not use the specific words that the subclauses of 48.5 did not amount to a legal obligation of the incoming contract. He conceded the above phrase was an interpretation of what he understood his conversation with Mr Kennedy to have meant[31] and that he could not recall exactly what was said by Mr Kennedy in relation to the subclause itself.
[31] See transcript, p 60, line 20.
Returning again to the question of whether Mr Kennedy said that the agreement could not be legally enforced. Mr Hoffman repeated that he could not recall the exact words Mr Kennedy had used but that it was certainly the “impression” it had imparted upon him.
Mr Hoffman conceded that his email to Mr Field in December 2008 did not assert that Mr Kennedy had given him a verbal assurance that the clause could not be enforced. He said that he could not recall saying to Mr Field that Mr Kennedy had told him that the clause was unenforceable, that he did not ever put that to Mr Field, or communicate to the Workplace Authority that he had been given that assurance. He conceded that it was not until the present issues arose, that he asserted to Mr Field that he had been given verbal assurance that clause 48.1.5 was unenforceable. He could not recall what he had said to Mr Field in his meeting of August 2016 but believed it was to the effect that the Agreement could not apply until there was an employee/employer relationship.
Mr Hoffman conceded that he did not make any notes of his conversation with Mr Kennedy, or at any stage put into writing the things he alleges Mr Kennedy said to him.
With respect to putting in tenders after the Clean Start Agreement had been signed, Mr Hoffman acknowledged that the respondents tender documents stated that they were signatories to a Clean Start Agreement, believing for some tenders it would assist them, although that for other tenders that they knew that it would hinder them. He was not able to say for certain if the fact of being a Clean Start Agreement signatory was ever a deciding factor in a successful tender but acknowledged that they had always stated that they were a Clean Start signatory and in that context had used the fact of being a Clean Start signatory in tenders where they had been successful.
Mr Craig Thomas
Mr Craig Thomas is employed as a Service Manager for the respondent. One of the contracts he manages is for the Red Cross of South Australian sites.
He was asked either by Mr Hoffman or Ms Dunn to conduct interviews of people employed by ISS during the change of contract period. He was told to report back to them on whether any of those cleaners would be suitable to be employed by the respondent to continue cleaning at the Red Cross CBD sites once the respondent commenced servicing the contract. He was assisted by a colleague by the name of Ms Carmel Cotis. He was not able to recall specific details of the people he had interviewed.
His evidence was that each candidate was asked to fill out an employment application prior to the interview and his colleague took notes during the interviews. After each interview, they discussed the candidate and in some cases made additional notes. He said that his overall impression of the people that he interviewed was that they did not present well or communicate well in the interviews. By that he meant that they were untidily dressed, in some cases demonstrated poor personal hygiene and either said very little in the interview, or had difficulty communicating due to limited English skills.
He said that there was one candidate who was unlike the others, and who was employed at the Red Cross Port Adelaide site. That person appeared to be well dressed and demonstrated a considerable amount of knowledge about cleaning at the Red Cross sites. After the interviews had been conducted, he provided the application forms and interview notes to Ms Dunn. He was asked for feedback from Ms Dunn at one stage but cannot recall specifically what he said to her. In general terms, he told her that with the exception of the person from the Port Adelaide site, the candidates had not presented or communicated well.
In cross-examination Mr Thomas told the Court he could not recall exactly the number of people he interviewed with respect to the Red Cross CBD sites and when asked whether all of the interviewees were untidily dressed, he said that he could not remember every single person he interviewed over 12 months ago.
His evidence was that he interviews 50 or 60 people per annum. He said that the majority of interviewees were “not dressed too well to come to an interview”.[32] With respect to the three people the subject of these proceedings, Mr Thomas said that one of them came in with hair that looked like it was not clean or that their face was not clean, like they had just woken up “first thing in the morning”. He then said, “one of them at the same time sort of was, like, scared to even give information or maybe didn’t understand me, or there was a communication problem”.[33] He was not able to say which of the interviewees looked like they had just got up and could not say with any certainty that it was one of the three workers the subject of these proceedings.
[32] See transcript, 8 September 2017, p 5, line 27.
[33] See transcript, op cit, p 6, line 4.
He also said that one or some of the interviewees were wearing denim jeans and tracksuit pants and one of them had an odour of some sort. He could not say who was wearing the denim jeans or who was wearing the tracksuit pants and could not say whether Ms Khadka, Ms Salazar Perez or Mr Salazar Arevalo were untidily dressed. With respect to the poor personal hygiene, he could not now say whether it was a man or a women who had an odour. He accepted that the notes of the interviews with the three workers did not indicate that any of them had an odour. He was not able to recall whether any of the three witnesses in this matter were those that had the communication problems. He agreed that there was nothing in the application forms of the three workers that indicated that they had a difficulty in communicating. He could not recall whether Ms Salazar Perez told him whether she was studying a Masters in Urban Planning.
Mr Thomas had a vague recollection of interviewing two people together. He said that the lady did not talk too much and appeared very shy and quite nervous. The effect of his evidence was that Mr Salazar Arevalo did the talking for both of them. He thought that Ms Salazar Perez might have been getting a bit of help from the gentleman in filling out the employment forms. He could not recall whether either of them asked him to repeat any questions but said he did not ask either of them to repeat any answer that they gave him. He told the Court that he had no difficulty understanding Mr Salazar Arevalo’s answer but he was less sure about the lady. He would not have described Mr Salazar Arevalo as a person with poor communication skills and he could not recall that he either had an odour or was untidily dressed.
Mr Thomas confirmed that he made notes on Mr Salazar Arevalo’s form indicating that he thought he had a lot of knowledge, could do a lot of different things, and that he liked him. He agreed that he thought that he would make a good employee and that he recommended him for employment.
Mr Thomas said that he told Ms Salazar Perez and Mr Salazar Arevalo at both the start and the end of the interview that there was no guarantee of employment with the respondent:
“I said it both times. At interviews, I can’t guarantee anything. We have – we have our own staff who have no work as well, and we are just putting it all together and trying to get – work out who was available to work, who wasn’t. Yes.”[34]
[34] See transcript, op cit, p 14, lines 37 – 39.
Mr Thomas agreed that both Ms Salazar Perez and Mr Salazar Arevalo indicated that they would be prepared to work at other Red Cross sites. From his perspective there was no reason why Mr Salazar Arevalo would not have been suitable to continue the work he had been doing at the Red Cross CBD site, adding that he thought he was very good. He said that he gave his reasoning to Mr Dunn in relation to Mr Salazar Arevalo and he would have told Ms Dunn that Ms Salazar Perez was a bit quieter and that he was unsure about her. He said that he would not have recommended against Ms Salazar Perez and that he just gave everything he had done in the interviews and his facts to his manager and explained them to her. He agreed that it did not seem likely that he would have said with respect to either of them, that they did not present well.
With respect to Ms Khadka, he could not remember if she asked him to repeat any questions that he asked her, or whether he asked her to repeat any of the answers she provided. He agreed that the dot point written on her application form reflected answers that she would have given to questions that he asked about the site. He agreed that there was nothing in his notes to suggest that she had difficulty communicating. With respect to the word “No” in a circle at the top of the application form, he agreed that that indicated it was unlikely that he would have recommended employing Ms Khadka but that he could not remember why. It may have been that she had communication problems or that she had an odour, he simply could not recall. In any event, the decision as to Ms Khadka was made by Ms Dunn and not him.
Mr Thomas was cross-examined about the status of franchisees with the respondent. He agreed that he knew that there were no workers compensation levies, superannuation, annual leave, sick leave or long service leave payments with respect to franchisees. With respect to the Red Cross CBD sites, all of the persons who were placed in those sites at the changeover of the contract by the respondent were, as far as he was aware, franchisees.[35] It was not his decision to determine who was to be employed at the site. It was not his understanding that a determination had been made by management to place franchisees in the two CBD sites.
[35] See transcript, op cit, p 17, line 6.
Mr Thomas said that all employees and franchisees are, and were at the relevant time, required to wear a uniform comprised of black pants and a shirt that are provided by the respondent.
In re-examination, Mr Thomas repeated that he could not recall what any of the interviewees were wearing 12 months ago, he thought one of the interviewees might have attended wearing thongs but that he could not say who it was.
It was clear that Mr Thomas had limited recollection of the interviews and his discussions with Ms Dunn. To the extent that his evidence about the interviews is inconsistent with the evidence of Mr Salazar Arevalo, Ms Salazar Perez and Ms Pooja Khadkha, I accept their evidence over his.
I accept as he conceded, that he would have recommended Mr Salazar Arevalo for employment and that he thought he would make a good employee. I accept that it was unlikely that he would have reported to Ms Dunn that either Mr Salazar Arevalo and/or Ms Salazar Perez did not present well. I accept that he would not have recommended against employing Ms Salazar Perez.
It is difficult to give any weight to his surmise as to why he wrote the word “No” on Ms Khadka’s form given his limited recollection of events. I accept, given that notation that it is unlikely he would have recommended her for employment. I accept his evidence that he told Ms Salazar Perez and Mr Salazar Arevalo that he could not guarantee employment because the respondent had its own employees who needed to be placed.
Ms Kate Dunn
Ms Kate Dunn is the National Operations Manager for the respondent. As part of that role, she oversaw the management of the respondent’s cleaning contract with the Australian Red Cross Blood Service Nationally. One of her responsibilities is the requirement of cleaners to carry out the work under the contract.
In around July 2016, before the respondent had commenced to provide services in South Australia, she had made arrangements to interview the cleaners of the previous cleaning contractor ISS to determine whether the respondent should employ any of them to continue to service the Red Cross contract. At about the time that she was meant to carry out the interviews, she was summoned to Melbourne to meet with representatives of the Red Cross. As a result, she arranged for Mr Thomas to conduct the interviews in her absence. Ms Carmel Cotis assisted Mr Thomas.
On her return from Melbourne, she met with Mr Thomas and Ms Cotis to get feedback from the interviews. She was not able to recall the feedback given to her specifically about each of the interviewees. Her recollection is that overall feedback she received from them was that the cleaners had not presented or communicated well in the interview and were not well prepared or professional. The exception to that feedback was one cleaner at the Port Adelaide site whom she recalls being advised had interviewed well and had a lot of knowledge and experience. It is difficult to reconcile that evidence with the evidence of Mr Thomas as to Mr Salazar Arevalo and Ms Salazar Perez. At the time that she spoke to Mr Thomas and Ms Cotis, they provided her with notes made during the interviews together with employment application forms.[36]
[36] Exhibit A1, pp 197 to 201.
Based on the feedback she was given, Ms Dunn determined that none of the cleaners were suitable candidates with the exception of the person from the Port Adelaide site. Her evidence is that she formed that view because presentation and good communication skills are two of the core attributes that the respondent looks for in its cleaners. Communication skills are particularly important with respect to the Red Cross contract because of specific procedures that need to be followed to ensure that the Red Cross is able to maintain its licence. Some direct communication is required between cleaners and employees of the Red Cross at each site.
Ms Dunn does not recall specifically what she discussed with Mr Thomas with respect to Mr Salazar Arevalo.
Ms Dunn said that once she had formed the view that only the Port Adelaide employee would be taken on, she would have considered what existing Academy cleaners were available to carry out the relevant work. She does not recall which Academy cleaners she placed at the Red Cross CBD sites. Her evidence was that if an existing cleaner of an outgoing contractor at a site interviews and presents well, and the respondent is satisfied that other relevant criteria relating to the site are met, it is preferable for the respondent to leave that cleaner in place rather than replace them with one of its own employees. Doing so makes the respondent’s transition into a new contract much smoother. Nationally, the respondent hired 34 existing cleaners from outgoing contractors at Red Cross sites. Given that evidence and on the basis of the feedback given by Mr Thomas, one would have thought that employment of at least Mr Salazar Arevalo would have been consistent with company policy.
In cross-examination, Ms Dunn repeated that she could not recall the feedback she got from Mr Thomas or Ms Cotis about the individual cleaners. She had only an overall memory or general impression of what had happened, which is that the cleaners had not presented well, were not good communicators, and were not professional. She could not recall which of those attributes applied to each cleaner or whether all of them applied to each cleaner. She could not recall Mr Thomas telling her that Mr Salazar Arevalo had a lot of knowledge or that he would be a good employee. She did recall that something had been said on one of the forms about liking him. She could not reconcile Mr Thomas’ apparent views about Mr Salazar Arevalo with her own recollection of events, in particular that he would not have recommended against hiring Mr Salazar Arevalo and accepted that her recollection with respect to him might have been wrong. She could not recall Mr Thomas saying that he would not have recommended against hiring Ms Salazar Perez. She accepted that if Mr Thomas had formed a view that those employees did have good communication skills, that it might have made them good employees. Ms Dunn agreed that if Mr Thomas had told her that Mr Salazar Arevalo would make a good employee and would be suitable to continue working at the Red Cross CBD site, she probably would have employed him. The effect of her evidence is that she does not know why he was not employed. Ms Dunn agreed that since the contract commenced, the cleaners working at the Red Cross CBD sites have been franchisees. She did not think that she had pre-determined that the cleaners at the CBD sites should be franchisees. That evidence was far from compelling. As she did not take part in the tender process, she did not know if the tender was based on the price of having franchisees perform the work.
Submissions
The applicant submits that the respondent is not entitled to assert that clause 48.5.1.2 is not enforceable by virtue of the principle of approbation and reprobation. The respondent, having elected to make the agreement and lodge it with the Workplace Authority for approval, relied on the agreement for many years. It did so in order to remain competitive and secure further contracts. Having won contracts it would not otherwise have won, it is not open to the respondent to assert that the clause is void or unenforceable. That remains the case notwithstanding the respondent’s claim to have believed at the time of entering the agreement that clause 48.5.1.2 was unenforceable.
In the alternative, the applicant submits that clause 48.5.1.2 does not contain prohibited content. This is because matters relating to the security of employees are matters pertaining to the employment relationship even where they affect the rights of third parties. It is necessary, it was submitted, to look at the term ‘prohibited content’ and the wording of clause 48.5.1.2 In the context of the agreement, the existence of numerous similar agreements based on the Model Agreement and the ubiquity within the cleaning industry of frequent changes of contracts having a regular adverse effect on employment security for cleaners, clause 48.5.1.2 can be seen to be part of an interlocking set of obligations addressing the security of employment of employees employed by employers with enterprise agreements based on the Model Agreement. The clause pertains as much to the security of employment of the existing employees of the respondent as it does those of an outgoing contractor and, for that reason, pertains to the employment relationship and is, thus, not prohibited content. If either of those first two submissions is accepted, it is submitted that the actions of the respondent amount to a clear contravention of clause 48.5.1.2 because it employed existing franchisees rather than employees of the outgoing contractor.
The respondent submits that the applicant cannot rely on the principle of approbation and reprobation to overcome a relevant legislative provision that clearly deems clause 48.5.1.2 to be void. If that submission is not accepted, the respondent says that in any event the applicant cannot prove on the balance of probabilities that the respondent benefited from having the agreement in place and in particular that it won contracts it would otherwise not have won.
The respondent contends that the terms of clause 48.5.1.2 clearly do not relate to the employment relationship. This is because the employees of the outgoing contractor are not employees of the incoming contractor and the clause purports to place obligations on the respondent with respect to persons it does not employ. As a consequence, the content of clause 48.5.1.2 is void to the extent that it contains prohibited content. Given the wording of the clause, that renders it unenforceable in its entirety. If that submission is not accepted, the respondent further submits that the requirement to give preference to employees of the outgoing contractor implies a level of managerial discretion as to the suitability of the employees of the outgoing contractor and that it is only required to do so if it determines those persons are suitable to fill the available positions. In this matter, the respondent gave preference to Ms Khadka, Ms Salazar Perez and Mr Salazar Arevalo by interviewing them and considering them for the available positions. Having determined that they were not suitable, it proceeded to consider its own employees. There was, accordingly, no breach.
Consideration
A preliminary matter
I accept the evidence of Mr Kennedy that he did not knowingly cause an agreement which contained prohibited content to be entered into by the parties.
He gave his evidence in a forthright manner and was an impressive witness. I accept his explanation that the question of whether clause 48.5.1.2 contained prohibited content was a matter that he must have turned his mind to but that at the time the agreement was entered into he was of the view that it did not contain prohibited content. I accept that it has remained his view since that time that it does not contain prohibited content. I do not accept that he told Mr Mark Hoffman that the clause could not be enforced. I accept Mr Kennedy’s evidence that he would not knowingly have allowed the applicant to enter into an agreement that contained prohibited content and that his efforts were all directed towards establishing agreements that could be legally enforced. As Mr Hoffman himself readily conceded, that view may well have been his interpretation of the clause based on discussions he had with Mr Kennedy about the effect of the change of contract provisions of the agreement. I am satisfied that that is a view that must have crystallised in Mr Hoffman’s mind in the years following the signing of the agreement. I am fortified in that view by the fact that he cannot recall the exact words about the clause that he says Mr Kennedy said to him or the specific words to the effect that clause 48.5.1.2 did not amount to a legal obligation on the incoming contractors. Secondly, he made no note of that conversation at the time. Further, he did not at any time make a note to the effect that he had been given that reassurance by Mr Kennedy. He did not mention it in his email to Mr Field in December of 2008, he continued to seek to have clause 48.5.1.2 removed even after the phone call during which he asserts Mr Kennedy is purported to have given him the assurance that it was not legally enforceable, and I am satisfied that he did not mention it to Mr Chris Field when he met with him in August 2016. In any event, as Mr Blewett submitted, that issue is something of a red herring. The respondent has not pleaded that it was induced by the applicant into entering an agreement that contained prohibited content. It clearly made a conscious decision to enter the agreement based on its assessment of market imperatives. Further, the opinions of Mr Kennedy and Mr Hoffman on that matter are not relevant to the question of whether it was prohibited content under the WR Act. It is also questionable as to whether Mr Hoffman’s belief as to the non-enforceability of the clause at the time of entering into the agreement is relevant to the applicant’s contentions as to the principles of approbation and reprobation given that the respondent lodged the agreement with the Workplace Authority thereby holding it out as legally enforceable and as a result obtained approval from the authority.
I turn to consider the first contention of the applicant as to approbation and reprobation.
The principle of approbation and reprobation can be succinctly summarised by reference to the following extract from the judgment of Weinberg J in Fried v National Australia Bank Ltd:[37]
[37] [2000] FCA 910 at paras [30]-[31].
“[30]The doctrine of approbation and reprobation is conveniently summarised in Halsbury’s Laws of Australia at para[190-35] as follows:
“a person may not “approbate and reprobate” meaning that a person, having a choice between two inconsistent courses of conduct and having chosen one, is treated as having made an election from which he or she cannot resile once he or she has taken some benefit from the chosen course.” (Footnote omitted)
[31]In Halsbury’s Laws of England, 4th ed Vol 16, at para[957] a similar statement of principle appears. The authors of the English text add:
“Thus a plaintiff, having two inconsistent claims, who elects to abandon one and pursue the other may not, in general, afterwards choose to return to the former claim and sue on it; but this rule of election does not apply where the two claims are not inconsistent and the circumstances do not show an intention to abandon one of them.” (Footnotes omitted)
[32]In Commonwealth v Verwayen (1990) 170 CLR 394 at 421-2 Brennan J said:
“Election consists in a choice between rights which the person making the election knows he possesses and are alternative and inconsistent rights. A doctrine closely related to election, and sometimes treated as a species of election, is the doctrine of approbation and reprobation. This doctrine precludes a person who has exercised a right from exercising another right which is alternative to and inconsistent with the right he exercised as, eg, where a person "having accepted a benefit given him by a judgment, cannot allege the invalidity of the judgment which conferred the benefit". An election is binding on the party who makes it once it is made overtly - or, at all events, not later than on the communication of an election to the party or parties affected thereby. It is binding whether or not others who are affected by the election have acted in reliance on it. In this respect, election is to be distinguished from estoppel.” (Footnotes omitted)
[33]There can be no doubt that the doctrines of election and of approbation and reprobation are alive and well in this country. As to the application of the principles set out above see Verschures Creameries v Hull and Netherlands Steamship Co Ltd [1921] 2 KB 608 at 611; Randwick Municipal Council v Broten [1964-5] NSWR 1445; Bienvenu v Royal Society for Protection of Animals [1967] VR 656 at 664; Sea Culture International Pty Ltd v Scoles (1991) 32 FCR 275; Express Newspapers Pty Ltd v News (UK) Ltd [1990] 3 All ER 376; and VACC Insurance Ltd v BP Australia Ltd (1999) 47 NSWLR 716 at 724-725.”
Mr Blewett referred me to a discussion of the doctrine in Mandurah Enterprises Pty Ltd v Western Australian Planning Commission.[38] That case in turn discussed examples of the application of the doctrine. In Bienvenu v Royal Society for Protection of Animals,[39] the plaintiff, a contributory of the defendant, had previously obtained interlocutory orders including costs in an action against the defendant. That order was obtained on the basis that the association’s by-laws were valid. The plaintiff, at a later stage, caused a writ to be issued seeking a declaration that the same by-laws on which it had previously relied were invalid as being beyond power. The Court took the view that the by-laws were invalid but that the plaintiff could not succeed because he had relied on them and in doing so had approbated them in the earlier action and received the benefit of his costs.
[38] [2008] WASCA 211.
[39] [1967] VR 656.
Similarly, in the Australian Workers’ Union, New South Wales Branch v Minister for Natural Resources and Others,[40] the Union was precluded from arguing that a particular proclamation was invalid because it had earlier relied on it to its benefit on the basis of asserting the validity of the proclamation in the conduct of proceedings.
[40] (1991) 26 ALD 461.
On the basis of the above, Mr Blewett submits that the doctrine can be invoked notwithstanding the legal invalidity of something relied on by the parties. In this matter, even if I were to find that clause 48.5.1.2 contained prohibited material, that would not preclude the applicant from relying on it if the necessary elements for the application of the doctrine pertained. In order for the doctrine to apply, it must be established that the respondent had choice between two inconsistent courses of conduct, that the respondent chose between or elected on one of those inconsistent courses of conduct, and that the respondent has benefited from the course of conduct chosen.
I am satisfied that in entering the agreement the respondent made a choice as to inconsistent courses of conduct. It could have chosen to sign up to such an agreement or it could have chosen to continue its business without a workplace agreement in this form. On its own assessment, the choice involved opting into the Agreement and thereby accruing the benefit of a potential advantage in applying for contracts, in particular for Government work, or opting out and leaving itself to the vicissitudes of a market in which it may have operated at a perceived disadvantage. It elected to sign the agreement, lodged it with the Workplace Authority and, in doing so, represented to the Authority that it was lawful.
The more difficult question is whether it benefited from the Agreement over the several years between entering into it and the events of the subject of these proceedings. Mr Hoffman agreed that the respondent had used the fact that it was a signatory to a Clean Start Agreement in some tenders in which they were successful.[41] His evidence was that he was not certain whether the fact of being a Clean Start signatory was ever a deciding factor in the respondent successfully tendering for work but that they had always stated they were a Clean Start signatory.[42] He acknowledged that the respondent stated they were a Clean Start signatory because in some tenders he thought that it would assist in winning those tenders.[43] The question of potential benefit to the respondent in being a signatory comes into focus primarily with government contracts. Mr Hoffman’s evidence was that at the time of entering the agreement the respondent was concerned that if it did not it might be excluded from certain tenders, particularly with respect to South Australian government contracts, and to a lesser extent with respect to Commonwealth government contracts. He was asked whether the South Australian government spent a lot of money on contracts of the sort for which the respondent tendered, and his evidence was:
“Yes, they did, and we would also be excluded from existing contracts. We haven’t been retendering for those contracts.”[44]
[41] Transcript of 7 September 2017, p 68, lines 35 to 41.
[42] Ibid.
[43] Op cit, line 27.
[44] Op cit, p 64, lines 29 to 30.
This was because at the time he was referring to, the respondent had not signed a Clean Start Agreement.
The South Australian Courts Administration Authority contract had been won after entering the Clean Start Agreement and at the time when the Clean Start principles were in place for South Australian government contracts.[45] Although those principles had ceased to apply by the time they actually commenced work on that contract. Whilst Mr Hoffman denied that the respondent relied on being a Clean Start signatory in tendering for that work, he acknowledged that they quoted “Clean Start rates” and said that it was probable that they had put the fact that they were a Clean Start signatory in the tender documents for that contract.[46]
[45] Op cit, p 65, line 46.
[46] Op cit, p 66, lines 1 to 16.
None of the relevant contracts by which the respondent might be said to have benefited by way of having chosen to enter the Agreement was in evidence before me. None of the key players in the organisations who entered into the cleaning contracts with the respondent for it to provide cleaning services since it entered the Agreement was called to give evidence. There was no witness to answer the question, effectively posed by Mr Hoffman in his evidence, about whether the respondent’s status as a signatory to the Agreement was the, or one of the, determining factors in any successful tender.
On the evidence before me, can it be demonstrated that the respondent benefited from having entered the Agreement? In my view, the term benefit in this context should not be narrowly construed. It is defined in Black’s Law Dictionary as follows:
“(1) advantage; privilege;
(2) profit or gain.”[47]
[47] Black’s Law Dictionary 8th Edition, Thomson West 2004.
In the Oxford English Dictionary it is defined in these terms:
“Noun. (1) an advantage or profit gained from something.”[48]
[48] Oxford English Dictionary, 3rd Edition, 2010. It is defined in almost identical terms in LexisNexis Concise Australian Legal Dictionary, 5th Edition, LexisNexis, Butterworths 2015.
I am satisfied that he respondent did obtain a benefit from having entered the Agreement. On its own estimation, given the number of other contractors who had signed Clean Start Agreements, it benefited by closing a competitive gap between it and such contractors. It gained a competitive advantage against any contractors who had not signed an agreement when it came to tendering for South Australian government contracts and Commonwealth contracts. It held out the fact of its being a signatory to an agreement when tendering for work.
An ordinary application of the principle of approbation and reprobation would operate to prevent the respondent from seeking to resile from its election to enter the Agreement and avoid the burden imposed in clause 48.5.1.2. In this matter it is the respondent’s contention that irrespective of any benefit it might have obtained, the clause is void and unenforceable because it contains prohibited content, the clause not pertaining to an employment relationship. It submits that the principle of approbation and reprobation cannot operate to override the clear intention of the legislature. In support of that submission, the respondent referred the Court to Ross v Smith, Timms & Co[49] where Way CJ observed:
“… the general rule is that you cannot have an estoppel against an Act of Parliament in matters mandatory …”[50]
[49] [1909] SALR 128.
[50] Ibid at p132.
That proposition was referred to as well-established and not open to doubt in Gerloff v Edwards.[51] The principle was applied in Walsh v Commercial Travellers’ Association of Victoria,[52] where the Court held that to depart from it would, “destroy in large measure the operation of the statue”.[53]
[51] [1917] SALR 93 at p 105.
[52] [1940] VLR 259 at p 263.
[53] Ibid.
It was in response to that contention that the applicant referred the Court to the authorities of Kok Hoong v Leong Cheong Kweng Mines Ltd[54] and Equuscorp Pty Ltd v Wilmoth Field Warne.[55] In dealing with the question of whether a statutory provision precluded the reliance on estoppel, their Lordships said in Kok Hoong:
“It has been said that the question whether an estoppel is to be allowed or not depends on whether the enactment or rule of law relied on is imposed in the public interest or “on grounds of general public policy” (see Re a Bankruptcy Notice, per Atkin LJ ([1924] 2 Ch at p 97)). However a principle as widely stated as this might prove to be rather an elusive guide, since there is no statute, at least public general statute, for which this claim might not be made. In their lordships’ opinion a more direct test to apply in any case such as the present, where the laws of money lending or monetary security are involved, is to ask whether the law that confronts the estoppel can be seen to represent a social policy to which the court must give effect in the interests of the public generally or some section of the public, despite any rules of evidence as between themselves that the parties may have created by their conduct or otherwise. Thus the laws of gaming or usury (Carter v James) override an estoppel: so do the provisions of the Rent Restriction Acts with regard to orders for possession of controlled tenancies (Welch v Nagy).”[56]
[54] (1964) 1 All ER 300 at 308.
[55] (2007) 18 VR 250.
[56] (1964) 1 All ER 300 at 308.
In Equuscorp the Court had this to say:
“[84]The question in this case is therefore whether the Act reflects a purpose and a social policy which necessarily excludes the operation of the doctrine of estoppel. In our view the answer to this question may depend on the level of generality with which it is posed. In Kok Hoong this question was approached by considering whether the protective purpose of the particular legislation is inconsistent with the ability of the parties to enter into arrangements which may give rise to an estoppel.
[85]If the relevant question is whether the doctrine of estoppel is inconsistent with the prohibition of certain types of costs agreements between solicitors and their clients, it must be answered in the affirmative. The report which preceded the introduction of the Act indicates that the purpose of provisions regulating certain types of the agreements was to increase access to justice by giving lawyers an incentive to pursue meritorious claims, while at the same time protecting their clients against excessive costs by limiting the amount which the lawyer can charge if the litigation is successful. Section 102 of the Act is consistent with that goal because agreements between solicitors and clients which do not comply with the legislation are void. Under this broad approach to the question it would clearly be inconsistent with the policy of the Act to allow estoppel to operate so as to permit enforcement of a costs agreement in breach of the Act.
[86]If, on the other hand, the question is whether permitting WFW to assert estoppel against Equus would undermine the policy of the Act, in our view it would not do so, because of the particular facts of this case. There was no inequality of bargaining power between Equus, “a very experienced professional litigant”, and WFW. As the learned judge below observed, although Equus had no independent legal advice when drafting the agreement, it had been carefully negotiated over a 15-month period by Mr Russo — Equus’s then managing director, key shareholder and “intelligent and experienced litigant who demonstrated himself to be well able to look after his own interests” — to reflect the financial interests which Equus sought to achieve in its capacity as a financier of litigation. Far from exposing the client to excessive costs, the learned judge below actually observed that “in many respects … [the agreement] operates surprisingly harshly against the interests of WFW”.[57]
[57] Equuscorp, op cit, para [84]-[86].
In Equuscorp the Court held that it was not necessary to determine whether the applicability of estoppel was determined by considering the social policy objectives of the relevant legislation or by considering the effect on the parties of permitting estoppel to be raised in the circumstances on the facts of a specific case.[58] This was because, it concluded, that the agreement before it was not void under the particular legislation.
[58] Ibid at para [88].
By reference to Equuscorp, the applicant submitted that I must first consider whether the social policy objectives of the WR Act prevent the applicant from relying on the doctrine of approbation and reprobation. If it does, then it is submitted that I should then consider whether an application of the doctrine would fall foul of the specific facts of this case, which would require me to consider the relative bargaining power of the parties, whether there was coercion, the fact that the agreement was reached after months of discussion, and that it had been relied upon by the parties for almost a decade.
I do not accept the applicant’s submission that Equuscorp stands for the proposition that there is a two-tier test to be applied in answering the question. In my view, the Court identified the principle in Kok Hoong as to inconsistency with the purpose of the social policy underpinning the statute and asked itself whether that was the correct question to ask. It then postulated that a more appropriate question might be whether permitting the respondent to assert an estoppel would undermine the policy of the relevant statute on the specific facts of that case. As I have noted, it did not resolve the issue. The remarks were obiter.
In any event, I have concluded that it is not necessary for me to resolve the question because, as will be seen below, I have concluded that cl.48.5.1.2 of the agreement did not contain prohibited content and properly understood pertains to the employment relationship.
As I have noted, the content rules are established by ss.356 and 358 of WR Act in conjunction with regs.8.7(1), (2) and (3). Those Regulations provide as follows:
“8.7Matters that do not pertain to the employment relationship are prohibited content
(1)Subject to subregulation (2), a term of a workplace agreement is prohibited content to the extent that it deals with a matter that does not pertain to the employment relationship.
Exception to rule in subregulation (])
(2)If:
(a) a term deals with a matter that does not pertain to the employment relationship; and
(b) the matter is:
(i)incidental or ancillary to a matter contained in the agreement which does pertain to the employment relationship; or
(ii)a machinery matter; or
(iii)so trivial that it should be disregarded as insignificant; then, to the extent that the term deals with the matter, it is not prohibited content.
Meaning of pertains to the employment relationship
(3)In this regulation, a matter pertains to the employment relationship:
(a) in the case of a collective agreement-if it pertains to the relationship between the employer bound by the agreement and all persons who, at any time when the agreement is in operation, are employed by the employer and who are bound by the agreement; or
(b) in the case of an ITEA-if it pertains to the relationship between the employer bound by the agreement and the employee bound by the agreement.”
Any content which does not pertain to the employment relationship or which is not incidental to or ancillary to something pertaining to the employment relationship is prohibited content and an agreement or part of an agreement is void to the extent that it contains such content. The question of what pertains to an employment relationship was considered in Electrolux Home Products Pty Ltd v Australian Workers’ Union[59] where Gleeson CJ observed:
“In one sense, anything that is capable of being made the subject of an agreement between an employer and employees could be said to be a matter pertaining to their relationship. An employer could agree, for example, to make regular donations to a particular political party. The established principle, however, is that, in the context with which this legislation is concerned, it is matters which affect employers and employees in their capacity as such that “pertain to the relations of employers and employees”...”[60]
[59] (2004) 209 ALR 116.
[60] Ibid at para [9].
The other members of the Court expressed the same view.
I accept the submission of the applicant that provisions relating to the recruitment by an employer of persons who are not yet employees may pertain to the employment relationship and that they will do so where they affect the interests of the existing employees.[61]
[61] Re Cram and Others; Ex parte New South Wales Colliery Proprietors’ Association Ltd and Others (1987) 72 ALR 161 at pp 168 to 170.
This is particularly the case where such provisions directly concern the security of employment of existing employees of the employer.[62]
[62] Re Shefenacker Vision Systems Australia Pty Ltd, AWU, AMWU Certified Agreement 2004 [2005] AIRC 233 at para [78] & [83]; United Firefighters Union of Australia v Metropolitan Fire and Emergency Services Board [2016] FWCFB 2894 at [29] & [31].
It is notable that in Shefenacker’s case that the obligations created by the agreement imposed obligations with respect to third parties, namely labour hire employees, yet still related to the employment relationship because of its implications for the job security of existing employees.
Applying those principles to clause 48.5.1.2, it must be borne in mind that the subject agreement was part of an interlocking series of agreements negotiated by the applicant with numerous cleaning contractors across the industry. It is an industry in which there is a high turnover of contracts and, as a result, security of employment for persons employed for cleaners has historically been problematic. The model Clean Start Agreement was designed to address this by providing greater security of employment for all cleaners employed by a contractor which was a signatory to an agreement. The respondent and other signatories to agreements were aware of this object by virtue of the campaign. In this instance, clause 48.5.1.2 purports to provide security for the employees of the incoming contractor. That does not mean that it had no effect on the job security of existing employees. Existing employees of the respondent had the security of the change of contract provisions in the event that the contract under which they were employed was terminated and awarded to a contractor that was also a signatory to a Clean Start Agreement. Further, and as submitted by the applicant, clause 48.5.1.2 also has an effect on the employment of the existing employees of the respondent because it restricts the potential availability of work to them in circumstances where there is a change of contract to the benefit of their employer. They only become eligible for a job under the new contract if a position is open after preference is given to the workers of the outgoing contractor. That is clearly a matter that goes to the employment relationship because it relates to the employer’s capacity to provide further and different opportunities for employment in a very fluid market. That implication was, in effect, acknowledged by Mr Thomas when he told the interviewees that there were no guarantees and that the respondent had its own employees that it needed to find places for.
I am satisfied that on a plain reading of the effect of clause 48.5.1.2, it provides for an absolute preference to be given to the employees of the outgoing contractor. I reject the submission of the respondent that the preference was given to the ISS employees simply by inviting them to apply for employment and then interviewing them. The agreement was intended to provide job security for the relevant employees. Whilst clause 48.5.1.1 stipulates that the employer will attend a meeting with the employees of the outgoing contractor “to discuss opportunities for employment of these employees to that of the employer”, (emphasis added), the use of the word ‘opportunities’ cannot, in the context of the clause, read as a whole, be taken to mean opportunities to compete against existing employees of the employer, or any other persons for the relevant positions. It must mean opportunities for employment at a relevant site insofar as there are jobs available at a site under the terms of the contract entered into by the incoming contractor/employer. It is not difficult to envisage circumstances where there might not be sufficient work available to offer positions to all employees of an outgoing contractor. For example, the number of weekly hours of cleaning work required under the new contract may be less than those under the old contract. The days on which, or hours during which, the work is to be performed may be substantially changed, making it unsuitable for one or more of the employees of the outgoing contractor. Other examples could readily be identified. In that context it is easy to see why the subclause refers to the requirement to advise of ‘opportunities’ for future employment with the incoming contractor. However, where the jobs exist, clause 48.5.1.2 provides an absolute obligation to provide an offer of employment to the employees who had worked on the site under the outgoing contract. What other meaning could be given to the words: “the employer will then offer employment to existing staff of the outgoing contractor for all available positions at the site”? (emphasis added)
The use of the phrase “all available positions” is clearly in recognition of the type of contingency I have identified above, but it could also refer to a situation where greater opportunities for work were provided under the new contract. For example, if the outgoing contract provided for three cleaners working three hours per day and the new contract provided for those positions plus an additional position with a greater number of hours, and hence greater remuneration, that additional position would have to be offered to one of the outgoing contract employees. To that extent, the contractor would have some managerial discretion in terms of to which of the old employees to offer the position. However, it is only once all available positions have been offered to the old employees that the contractor can offer a position to an existing employee of the contractor. The preference is given to the existing staff of the outgoing contractor to accept a position of employment with the incoming contractor. The term preference is used in the sense of giving the employees of the outgoing contractor an advantage. The advantage is the ability to maintain job security. That being the case, the respondent has breached the agreement as alleged because it failed to offer employment to any of the three workers.
If I am wrong about the above, namely, the absolute nature of the requirement to offer employment to the employees of the outgoing contractor, and if the clause provides for some lesser preference to the employees of the outgoing contractor then, in my view, the agreement has still been breached as alleged because the applicant has established on the balance of probabilities that the respondent provided no preference at all to Ms Khadka, Ms Salazar Perez or Mr Salazar Arevalo. In the context of the agreement, I am not satisfied that inviting the workers to apply for employment and interviewing them is sufficient to have given them preference. None of them was offered employment even though Mr Salazar Arevalo had been recommended for employment. The jobs at the relevant sites were given to franchisees of the respondent with respect to whom the respondent did not bear the costs associated with employees. There is reason to suspect that, notwithstanding the respondent offered employment to the ISS Port Adelaide employee at the Port Adelaide site, the respondent declined to offer Ms Salazar Perez and Mr Salazar Arevalo employment and placed franchisees in the Red Cross CBD sites because it was a more cost effective course for it to take. Such a finding would not be inconsistent with Mr Hoffman’s belief that the relevant clause was unenforceable.
However, I decline to draw that inference because it seems equally likely that the actions of the respondent were motivated, as Mr Thomas has said, by a desire to provide work for people who were already on their books.
I make the declaration and orders to be found at the beginning of these reasons.
It was agreed between the parties that in the event I found the respondent in breach, the matter should be adjourned for submissions as to compensation and penalty.
I certify that the preceding one hundred and sixty-one (161) paragraphs are a true copy of the reasons for judgment of Judge Heffernan
Date: 14 June 2019
9
8