Victoria University v National Tertiary Education Industry Union
[2015] FWCFB 2892
•8 MAY 2015
The attached document replaces the document previously issued with the above code on 8 May 2015.
This version corrects paragraph numbering and a typographical error at [27].
Shomaice Zowghi
Associate to Vice President Catanzariti
Dated 12 May 2015.
| [2015] FWCFB 2892 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.604 - Appeal of decisions
v
National Tertiary Education Industry Union
(C2014/8035)
VICE PRESIDENT CATANZARITI | SYDNEY, 8 MAY 2015 |
Appeal against decision [2014] FWC 7711 of Commissioner Bissett at Melbourne on 11 November 2014 in matter number C2014/1067.
[1] This is an appeal by Victoria University (the University) against a decision 1 (Decision) and order2 (Order) made by the Commissioner in dealing with a dispute arising under the Victoria University Enterprise Agreement 2013 (the Agreement) pursuant to s.739 of the Fair Work Act 2009 (the Act).
[2] Prior to the hearing of the appeal on 12 March 2015, Mr O’Grady of Counsel sought permission to appear for the University and Ms Keating of Counsel sought permission to appear for the National Tertiary Education Industry Union (the NTEU). Given the complexity of the matter, and having regard to s.596 of the Act, permission was granted to both parties to be represented.
Background
[3] The background of this dispute is succinctly set out in the Decision as follows:
“[2] In February 2014 the University commenced consultation with the NTEU with respect to major change in the Engagement, International & Governance area of the University. The University commenced implementation of changes, including staff reductions in about June 2014. For a group of three employees known as ‘Pool B’ the University indicated that it would require the three staff to apply for the two positions that would remain after the restructure in that Pool.
[3] The NTEU raised a dispute and say that the University has not met the requirements of clause 65 of the current Agreement in the process it has applied. It submits that the effect of the process implemented by the University is that the unsuccessful candidate was made forcibly redundant.
[4] The NTEU says that the Agreement is clear that, prior to proceeding with forced redundancies, all other options must be exhausted. To this end it says that the University failed to comply with its obligations under clause 65 of the Agreement by:
● Not considering forced redundancy as a last resort;
● Failing to pursue all other options before considering forced redundancies;
● Failing to pursue the options of retraining, natural attrition, voluntary separations, fixed term retirement contracts, leave without pay, voluntary conversion to part time employment, long service leave, or internal transfer before proceeding with forced redundancies.
[5] The University says that the suggestion in the clause that all other options must be exhausted prior to forced redundancies is aspirational and cannot be construed to set an absolute requirement on the University.
[6] Over the last few years the University has undergone ‘organisational reform’ in the face of financial challenges. This has resulted in a substantial number of employees being made redundant. This change has been implemented through the Organisational Reform Program (ORP). The first phase of the ORP took effect in January 2013. In the second phase, to which this dispute relates, the University seeks to ‘consolidate savings made during the first phase.’ (footnote omitted).
[7] Until the current dispute there have been no forced redundancies with voluntary separations being the primary means by which staffing numbers have been reduced. Whilst this was satisfactory through the first phase of ORP the University says that it now needs to retain staff that have the ‘qualifications, skills and competencies required in the new structure.’ (footnote omitted).
The dispute
[8] The dispute has arisen through a decision by the University to not pursue all of the options in clause 65.2 of the current Agreement prior to proceeding with forced redundancies.
[9] The matter in dispute is the proper construction of clause 65 of the Agreement such that it can be implemented in line with its intent.
[10] The determination of this requires consideration of whether clause 65 places a mandatory obligation on the University to exhaust a range of specified options prior to implementing compulsory redundancies.”
[4] Clause 65 of the Agreement sets out as follows:
INTRODUCTION OF CHANGE, WORKPLACE CONSULTATION,
RELOCATION AND REDUNDANCY
65 Job Security
65.1 The University recognises that security of employment is an important issue for its staff members. The goal of the University is to endeavour that there be no net reduction in jobs.
65.2 The University will pursue the options of retraining, natural attrition, voluntary separations, fixed term retirement contracts, leave without pay, voluntary conversion to part-time employment, long service leave, or internal transfer before proceeding with forced redundancies.
65.3 The University will seek wherever possible to avoid forced redundancies, but reserves the right to adopt this approach. Forced redundancies will be considered only as a last resort when all other options have been exhausted.
[5] It is relevant to note that clause 65 of the Agreement is followed by clauses on organisational change (clause 66), relocation of staff (clause 67), redundancy - general (clause 68), redundancy and redeployment for professional staff (clauses 69 and 70) and redundancy for academic staff (clause 71).
[6] To the extent that they provide relevant context to the grounds of appeal raised, we also note the following historical background of the Agreement as set out in the Decision:
[15] The predecessor to the current Agreement is the Victoria University (Academic & General Staff) Enterprise Agreement 2011 (the 2011 Agreement). The Job Security clause and following clauses in that Agreement are identical to the provisions of the current Agreement.
[16] The predecessor to the 2011 Agreement is the Victoria University (Academic & General Staff) Enterprise Agreement 2009 (the 2009 Agreement). The Job Security clause was at clause 69 of that Agreement. It is identical to clause 65 in the current Agreement.
[17] Prior to the 2009 Agreement was the Victoria University Academic & General Staff Enterprise Bargaining Agreement 2005 (the 2005 Agreement). It provided, at clause 11:
11 Intent of Agreement
...
11.3 The University recognises that in the climate of change, security of employment is an important issues (sic) for its staff members. The goal of the University is to endeavour that there be no net reduction in jobs. The University is committed to exploring all measures, to avoid forced redundancies. Where possible, it will pursue the options of retraining, natural attrition, voluntary separations, fixed term retirement contracts, leave without pay, voluntary conversion to part-time employment, long service leave, or internal transfer before proceeding with forced redundancies.”
Decision at first instance
[7] The starting point for the Commissioner’s reasoning was to consider the well-established principles of construction applicable to the interpretation of an industrial instrument. 3 It is unnecessary to traverse the authorities again in detail and it suffices to say they are set out at paragraphs [18] to [26] of the Decision. The Commissioner then went on to state:
“[41] Clause 65 of the current Agreement must be considered in context of the Agreement as a whole. Given that there has been no change in the provisions since the 2009 Agreement it is reasonable to consider the context of the negotiations for the 2009 Agreement and the facts and circumstances that were known to the parties at the time those negotiations took place.”
[8] Having regard to the surrounding circumstances in the negotiation of what eventually became clause 65 in the Agreement, the Commissioner turned her mind to the admissible extrinsic evidence before her which included:
- correspondence received by the NTEU in the lead up to the finalisation of the 2009 Agreement from the then Vice-Chancellor; and
- a policy document on Redundancy promulgated by the University in January 2014.
[9] The Commissioner ultimately found that, on a proper construction of clause 65 and having regard to the extrinsic material before her, there was a shared understanding between the parties that forced redundancies were only to occur when all other options had been exhausted. The Commissioner went on to make the following findings:
“[70] I am not convinced that the University has met its obligations in respect of clause 65.2. It is, in my view, disingenuous to suggest that, because one of the three employees received a separation package the University met its obligations under clause 65.2. There is no evidence that the University explored all options under clause 65.2. It may well have been that, had the University explored the options in clause 65.2 with the affected staff, it would have resulted in the same outcome. But this is not something that can be known.
[71] Ultimately the result of the process implemented by the University is that a person was made redundant. This has occurred through a process which, at its very commencement (the requirement to lodge an expression of interest for the positions and a selection process occurring) left the person without a position. In the situation of the University where it is going through a substantial reduction in staffing numbers the University effectively determined who would be made redundant prior to determining if it could have achieved the reduction in numbers through some other mechanism in clause 65.2.
[72] I accept that clause 65.1 of the current Agreement is aspirational in nature (the University is to endeavour that there be no net reduction in jobs).
[73] Clause 65.2 however places a positive obligation on the University (the University will pursue options...before forced redundancies) and clause 65.3 gives the University the right to consider forced redundancies if all other options have been exhausted.
[74] I am satisfied that the approach adopted by the University in the Engagement, International & Governance area, where, in the first instance in ‘Pool B’ it required three employees to apply for two positions, was a mechanism by which it implemented a forced redundancy program prior to exhausting the options required in clause 65.2.”
[10] Having made these findings, the Commissioner stated the following conclusions:
“[75] I will issue an order that requires the University to pursue the options in clause 65.2 prior to proceeding with forced redundancies. Whilst this will have little practical effect in respect of ‘Pool B’ employees referenced above (I understand the third person has left the University) this does not alter what the University should have done in that case. It may also provide some guidance for the University in future.
[76] I decline to issue an order that requires the University in all circumstances to pursue the options in clause 65.2 on a University wide basis as sought by the NTEU. I have not had submissions or evidence led on this issue such that an order of this breadth could be considered....”
[11] The following Order accompanied the Commissioner’s Decision:
“The Respondent must, in accordance with clause 65 of the Victoria University Enterprise Agreement 2013, pursue all of the options set out in subclause 65.2 to exhaustion prior to proceeding with forced redundancies in Pool B of the Engagement, International and Governance area of the University.”
The Appeal
[12] The University advanced six grounds of appeal in their written submissions. The first four grounds relate to the correct construction of clause 65 of the Agreement. In summary, the University submitted that the Commissioner erred in determining that clauses 65.2 and 65.3 of the Agreement imposed the substantive obligations reflected in the Order which accompanied the Decision.
[13] The University outlined in their written submissions, what they contend is the proper approach to the construction of clause 65 when read in context, relying on numerous authorities. 4 The University submitted that on this construction, the Commissioner should have found that clauses 65.2 and 65.3 do not operate to impose substantive obligations, but rather provided aspirational particulars of the aspirational commitment made in clause 65.1.5 The University further noted that the terms of clauses 65.2 and 65.3 and the terms of the Commissioner’s order were ill-adapted to the imposition of substantive obligations in a statutory regime that imposes civil penalties for non-compliance.
[14] In the alternative, the University submitted that even if clauses 65.2 and 65.3 of the Agreement imposed substantive obligations, the nature and extent of those obligations were misdescribed in the Order and so described, were unclear and uncertain. To the extent that clause 65.2 imposed substantive obligations, the University submitted that what was required was that the University explore and genuinely consider the options set out in clause 65.2 as part of the change management process, prior to terminating an employee’s employment by reason of forced redundancy. It did not however, they submitted, impose a requirement on the University to pursue alternatives to termination by forced redundancy where the University had explored and genuinely considered those alternatives and had formed the view that their implementation would impact upon its ongoing viability. In this regard, the University submitted that the Commissioner should have held that the University could rely upon the steps taken in compliance with clauses 68-71 of the Agreement as satisfying the obligations imposed by clauses 65.2 and 65.3.
[15] Further to their submissions on construction and as a separate ground, the University submitted that the Commissioner failed to pay any or proper regard to the submissions put by the University as to the proper constructions of clauses 65.2 ad 65.3 and misconstrued and/or misapplied the evidence before the Commission.
[16] In its fifth ground of appeal, the University relied on the principles set out in Moshirian v University of New South Wales 6 and submitted that the Commissioner erred in failing to construe the Agreement objectively and without regard to the substantive understanding and intention of the parties where:
- on a proper view of the evidence it could not be said that there was any meeting of the minds as to what the effect of the redraft of clause 65 was; and
- the parties mutual understanding of the meaning of the clause could not operate to override the clause’s objective construction.
[17] The sixth ground of appeal concerns the reliance by the Commissioner on parts of the aforementioned correspondence between the Vice Chancellor and the NTEU in the lead up to the making of the 2009 Agreement and the University policy document governing redundancy. The University submitted that the Commissioner failed to have regard to the totality of these documents and this resulted in an erroneous approach underlying the Commissioner’s reasoning.
[18] The NTEU submitted in response that permission to appeal should be refused because:
a. no appealable error was demonstrated and the public interest was not attracted because the Commissioner’s decision as to the construction of the Agreement was correct and was not attended by any doubt such as to warrant it being reconsidered;
b. the subject matter of the decision was confined to a total of 3 employees and the relief granted through the Order was only confined to this pool of 3 employees. There was no public interest in an appeal against a decision and order issued to resolve such a confined dispute; and
c. the subject matter of the dispute no longer exists as two of the employees were redeployed and one left the employ of the University. As such, no injustice would arise if permission to appeal were refused.
[19] In respect of the University’s first four grounds regarding the proper construction of clause 65, the NTEU submitted that when regard is given to the text of clause 65, reading the clause as a whole and with the rest of the Agreement, it clearly imposes an obligation on the University and ought not to be read as an aspirational statement. The NTEU submitted that the conclusion reached by the Commissioner reflects the proper construction as it:
a. is consistent with the plain and ordinary meaning of the Agreement, read as a whole and in context;
b. gives a harmonious operation to each of the competing clauses;
c. gives each clause work to do; and
d. is consistent with the admissible extrinsic materials.
[20] In relation to the submission that the Commissioner failed to pay regard to the University’s submissions as to the proper construction of clause 65, the NTEU submitted that the Decision makes plain that the Commissioner understood the proposition that was being put by the University. In the NTEU’s submission, the University’s true complaint is that the Commissioner did not agree with the University’s contentions.
[21] As to ground five, the NTEU submitted that this ground does not survive a fair reading of the Decision. The NTEU submitted that at paragraphs [44]-[46] the Commissioner draws certain inferences open to her and then proceeds to refer to an exchange of correspondence between the parties about the redundancy arrangements before concluding at paragraph [49] that the correspondence ‘provides a framework within which the final words in the 2009 Agreement were settled’. The NTEU submitted that this framework forms part of the context within which industrial instruments must be interpreted and it was wholly proper for the Commissioner to make use of it the way that she did.
[22] The NTEU submitted with respect to ground six, that it was wholly proper for the Commissioner to place significant weight on correspondence from the Vice Chancellor to the NTEU to the extent that it was contemporaneous evidence of a shared understanding between the parties, namely, that the University would consider forced redundancies ‘as a last resort when all other options have been exhausted’. The NTEU submitted that in circumstances where the University was rejecting the NTEU proposal for a ‘no forced redundancy’ scheme, the letter is powerful evidence of mutual intention. As to the assertion, that the totality of the evidence was not considered, in the NTEU’s submission the balance of the matters raised in the letter do not support the proposition the University advances.
[23] Similarly, the NTEU submitted that the University’s policy document on redundancy was a contemporaneous document recording the understanding of the University that the Agreement placed a significant onus on the University to avoid forced redundancies. It was to that extent only that the Commissioner relied on the document as forming part of the framework within which the Agreement was to be construed and in the NTEU’s submission there was no error in that approach.
Consideration
[24] The Fair Work Commission must grant permission to appeal if it is satisfied it is in the public interest to do so. 7 In GlaxoSmithKline Australia Pty Ltd v Colin Makin,8 a Full Bench summarised the concept of public interest in the following terms:
“Although the public interest might be attracted where a matter raises issues of importance and general application, or where there is a diversity of decisions at first instance so that guidance from an appellate court is required, or where the decision at first instance manifests an injustice, or the result is counter intuitive, or that the legal principles applied appear disharmonious when compared with other recent decisions dealing with similar matters...” 9
[25] We do not consider that the University has demonstrated that it is in the public interest to grant it permission to appeal the Decision.
[26] We accept the NTEU’s submissions and find that the Commissioner took the proper approach to the construction of clause 65 of the Agreement. The Commissioner’s findings were reasonable and open to her on the evidence.
[27] As the Commissioner was not in error, the Decision does not manifest any injustice, nor does the Decision warrant revisiting. However, we have some hesitation in relation to the Order issued by the Commissioner. Broadly speaking, the Commission does not issue Orders which might be construed as seeking to enforce, by separate Order, the terms of an Agreement. There may be circumstances where Orders can assist with the proper application of the Agreement but in this case the Commissioner did no more than Order the terms of the Agreement. We think in the circumstances before the Commissioner, an Order was not necessary as the finding of the Commission makes clear the obligation of the University under the Agreement.
[28] Out of an abundance of caution, we will grant permission to appeal and set aside the Order of the Commissioner. In all other respects we confirm the decision of the Commissioner and dismiss the appeal.
Conclusion
[29] Having determined that the Decision was not vitiated by appealable error and that the Commissioner was correct in determining that the University did not comply with its obligations pursuant to clause 65 of the Agreement, we do not believe it is necessary to make an Order. The Order of Commissioner Bissett is set aside. The University should take the necessary steps to comply with the resolution of the dispute as determined under clause 59 of the Agreement.
VICE PRESIDENT
Appearances:
C O’Grady of Counsel for the University.
S Keating of Counsel for the NTEU.
Hearing details:
2015
Melbourne
12 March.
1 National Tertiary Education Industry Union v Victoria University[2014] FWC 7711.
2 PR557619.
3 Amcor v Construction, Forestry, Mining and Energy Union (2005) 222 CLR 241 (Amcor) and Kucks v CSR Limited (1994) 66 IR 182; Codelfa Constructions Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337; Toll (FGCT) Pty Ltd v Alphapharm (2004) 219 CLR 165; K & S Lake City Freighters Pty Ltd v Gordon and Gotch Limited (1985) 157 CLR 309.
4 City of Wanneroo v Australian Municipal, Administrative, Clerical And Services Union (2006) 153 IR 426 at [53] per French J; Amcor Limited v CFMEU (2005) 222 CLR 241; Kucks v CSR Limited (1996) 66 IR 182 at 184 per Madgwick J; Ambulance Service Victoria (South Western Region) & Ors v Australian Liquor, Hospitality & Miscellaneous Workers Union [1998] FCA 196 per Northrop J; Moshirian v University of New South Wales [2002] FCA 179 at [24], [27] per Moore J; National Union of Workers v Qantas Airways Ltd [2003] FCA 976 at [18] citing Amcor; Transport Workers Union of Australia v Linfox Australia Pty Ltd [2014] FCA 829; Biotechnology Australia v Pace (1988) 15 NSWLR 130 at 132, 235 per Kirby J.
5 NTEU v Latrobe University [2014] FCA 1330 at [45] per Tracey J.
6 [2002] FCA 179 at [24] per Moore J
7 Fair Work Act 2009, s.604(2).
8 [2010] FWAFB 5343.
9 GlaxoSmithKline Australia Pty Ltd v Colin Makin [2010] FWAFB 5343, [27].
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