Contravention
22 I am satisfied that HNZ's conduct falls within cl 22, and in particular within cll 22.8 and 22.9, read with cl 22.6.
23 At the hearing of this matter, I raised with counsel some issues of construction about cl 22. It is apparent from the evidence that HNZ complied with cl 22.6(a), which both parties accepted was the "trigger" for the operation of cll 22.7 to 22.11. Where employees nominate a representative pursuant to cl 22.7, cl 22.8 imposes a specific obligation on the employer to "recognise" that representative. The use of the word "recognise" indicates the intent of the 2013 Agreement is that the employer will then deal with the representative for the purposes of consultation. The context of the consultation obligation in cl 22.9 is such that it might be undertaken directly with employees (if there has been no nomination under cl 22.7) or with the employees' nominated representative. It is likely that the obligation will be discharged, where an employer has recognised a representative, through consultation with the representative. Otherwise, the intent of cl 22.7 would be frustrated. Clauses 22.8 and 22.9 must be read together, in a way that gives them practical operation. The consultation envisaged by cl 22.9 is then intended to provide information and material for the employer actively to consider: see cl 22.11.
24 I am satisfied on the evidence before me that HNZ has contravened s 50 of the Fair Work Act, in that HNZ failed to comply with its obligations in cll 22.8 and 22.9 of the 2013 Agreement, read with cl 22.6. HNZ failed:
(1) to recognise the applicant as the representative of the pilots;
(2) to consult with the applicant (as the pilots' appointed representative) about the proposed roster change, and therefore failed to seek the pilots' views (through the applicant) about the proposed changes; and
(3) to discuss with the applicant the introduction of the changes to the pilots' rosters or provide any information to the pilots (through the applicant) about the proposed changes.
25 The parties put this forward as a single contravention. While HNZ's conduct may have been capable of being characterised as multiple contraventions, I am satisfied it is appropriate to proceed on the basis it is a single contravention, because the failure is put as a failure to recognise and consult with the applicant as the pilots' representative.
26 HNZ seeks to explain (but not excuse) its contravening conduct in large part by referring to its reliance on advice it sought and obtained from the Chamber of Commerce and Industry of Western Australia. The evidence is thin about the circumstances in which the advice was sought. There is no evidence of the content of the advice, other than the very general evidence of Ms Dillon-Phillips that it was "to the effect that consultation with the Applicant was not either necessary or required by the 2013 Agreement". On the other hand, cl 22.9 is clear on what must be done, even if who must be consulted is less clear. HNZ contends, and I accept, that in declining to consult the applicant it acted on the advice of the Chamber of Commerce as described by Ms Dillon-Phillips. It accepts this advice was incorrect. The evidence shows that it was given correct advice when it consulted its legal representatives in this proceeding. I infer that is what has led HNZ to decide not to contest the contravention allegation.
27 Accordingly, there should be declarations giving effect to this finding of contravention.
28 As to penalty, the parties submitted and I accept that while the process of "instinctive synthesis" (see Markarian v The Queen [2005] HCA 25; 228 CLR 357 at [37]), which has been regularly applied to civil penalty decision-making and adopted by the Full Court in Director, Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union [2015] FCAFC 59; 105 ACSR 403 at [221] and [239], is such that no mandatory considerations can or should be specified, and the Court must look at all the circumstances, taking into account the totality principle, nevertheless guidance has now been given on many occasions about the kinds of factors the Court might consider. The appropriate approach is set out in Australian Ophthalmic Supplies v McAlary-Smith [2008] FCAFC 8; 165 FCR 560 at [89] (per Buchanan J, referring to a list of factors previously set out by Tracey J in Kelly v Fitzpatrick [2007] FCA 1080; 166 IR 14).
29 Taking into account the parties' respective submissions, and from my own consideration of the evidence, I accept the following factors are relevant in the circumstances of this particular contravention.
30 Consultation is an important and valuable right in the employment relationship, and is no mere formality: it is purposive, not just procedural: Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v QR Limited [2010] FCA 591; 268 ALR 514 at [43]-[44] citing with approval Port Louis Corporation v Attorney-General of Mauritius [1965] AC 1111 at 1124 and TVW Enterprises Ltd v Duffy (No 2) [1985] FCA 251; 7 FCR 172 at 178. See also Construction, Forestry, Mining and Energy Union v Laing O'Rourke Australia [2013] FCA 246 at [21]. It is important because it is through consultation that employers may be assisted in seeing proposals from different perspectives, including being alerted to negative aspects or adverse consequences of proposals: see generally QR Limited v Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia [2010] FCAFC 150; 204 IR 142 at [81] per Gray J.
31 HNZ's conduct as I have set out above meant the pilots could provide no such input nor could the applicant on their behalf. It was a conscious course of conduct, occurring at different times in relation to different pilots, and there was a deliberate refusal by HNZ to engage with the applicant when it was asked to do so.
32 HNZ says that it did express "a willingness to consult" with two of the pilots, Mr Duncombe and Mr Saunders. It is true there is an agreed fact referring to written communications on or about 30 June 2014 to Mr Duncombe and Mr Saunders, to the effect that HNZ was available to meet for consultation on 1 or 2 July 2014. However that occurred in the context of the proposed changes being pursued by HNZ, having deliberately decided not to engage actively with the applicant. I do not consider this isolated correspondence, which was not in evidence before me, reduces the seriousness of the contravention to any meaningful extent.
33 The chronology as set out in the agreed statement of facts at [12] to [16] and [20] to [22] is also important. The initial offer of "willingness" to meet is all but neutered by what then occurs, in terms of the nomination of the applicant by Mr Duncombe and Mr Saunders, and HNZ's failure to engage with the applicant as required. Further as the applicant submitted, the once-off "invitation" is far removed from the consultation obligation in the 2013 Agreement.
34 The evidence of the pilots' concerns about the proposals indicates they may have had useful perspectives which could have influenced HNZ's decision-making. Besides that, they were entitled to be heard about proposals that significantly affected their working arrangements, and therefore (because of the nature of their employment and the fact they worked in remote locations on long rosters) their family lives.
35 There was some debate in the submissions about the characterisation of the fact that the roster change was not implemented. I accept, as I set out below when dealing with previous decisions, that the non-implementation means as a matter of fact that any loss to the employees was mitigated. However I accept the applicant's submissions that the non-implementation was driven by the action taken by the applicant on behalf of the pilots.
36 HNZ gave undertakings about non-implementation only after the applicant initiated proceedings, pursuant to s 739 of the Fair Work Act, in the Fair Work Commission. These undertakings initially applied to only some of the pilots. The applicant sought, and was granted, interim orders maintaining the pre-dispute roster cycles for all the remaining pilots. Prior to the hearing of an appeal before the Full Bench of the Fair Work Commission, the applicant sought orders to maintain the pre-dispute roster cycles of the pilots. No orders were necessary in the end because HNZ agreed not to implement its proposed changes and to consult the pilots as the 2013 Agreement contemplated in cll 22.7 to 22.11. That sequence of events places the fact of non-implementation of the roster changes in a different light and one less favourable to HNZ.
37 I accept the applicant's submissions that the capacity of HNZ to pay a penalty should be taken into account, in the sense of HNZ having a capacity to pay a penalty without undue hardship. HNZ accepts this. The fact it is a profitable organisation of significant size may also be relevant to the assessment of its explanation for the contravention. There was, in terms of its financial and organisational capacity, nothing to prevent it seeking its own legal advice before engaging in the roster changes, rather than simply relying on communications with the WA Chamber of Commerce.
38 HNZ's cooperation should be taken into account in its favour. By making an admission and agreeing to the facts underlying the admitted contravention, the parties' and the Court's resources and time have been used as effectively and efficiently as possible. The parties have indicated they had also reached agreement on an appropriate penalty, but in the light of the Full Court's decision in Director, Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union [2015] FCAFC 59; 105 ACSR 403, that agreement is not before the Court.
39 I have accepted the applicant's submissions that the pilots' entitlement to consultation, including through their union, is an important one. It is appropriate that the penalty imposed emphasises that these kinds of obligations cannot be ignored, or sidestepped, by employers. In Ponzio v B & P Caelli Constructions Pty Ltd [2007] FCAFC 65; 158 FCR 543, Lander J said (at [93]):
There are three purposes at least for imposing a penalty: punishment; deterrence; and rehabilitation. The punishment must be proportionate to the offence and in accordance with the prevailing standards of punishment: R v Hunter (1984) 36 SASR 101 at 103. Therefore the circumstances of the offence or contravention are especially important. The penalty must recognise the need for deterrence, both personal and general. In regard to personal deterrence, an assessment must be made of the risk of re-offending. In regard to general deterrence, it is assumed that an appropriate penalty will act as a deterrent to others who might be likely to offend: Yardley v Betts (1979) 22 SASR 108. The penalty therefore should be of a kind that it would be likely to act as a deterrent in preventing similar contraventions by like minded persons or organisations. If the penalty does not demonstrate an appropriate assessment of the seriousness of the offending, the penalty will not operate to deter others from contravening the section. However, the penalty should not be such as to crush the person upon whom the penalty is imposed or used to make that person a scapegoat. In some cases, general deterrence will be the paramount factor in fixing the penalty: R v Thompson (1975) 11 SASR 217. In some cases, although hardly in this type of contravention, rehabilitation is an important factor.
40 The agreed facts in this case, although somewhat sparse, nevertheless demonstrate a real error of judgment by HNZ, in terms of who should be sought out by an employer seeking to understand its consultation obligations under an enterprise agreement. Other employers should learn from this that it is far preferable to engage experienced lawyers to give advice in full context. Counsel for HNZ frankly and properly recognised this aspect.
41 I do not consider that specific deterrence has a large role to play in the current circumstances. I accept that HNZ acted in quite a "short cut" kind of way in simply seeking out the advice of the WA Chamber of Commerce and then acting on it. It can be inferred those within HNZ who were responsible for the proposal knew the roster change proposal would be unpopular with the pilots. However I am satisfied that HNZ has, through this proceeding, learned that it cannot take such short cuts, and now appreciates the consequences of doing so. The likelihood of a further contravention of this nature is remote, in my opinion. Further, I do not see this as a case where any kind of "corrective action" by HNZ, beyond its undertaking to adhere to the terms of the 2013 Agreement, should be expected.
42 I do not accept the applicant's submission that weight should be placed on the role of senior management. Although the roster change proposal necessarily came from a person within senior management (as one would expect), this is not a case of some premeditated plan to avoid obligations in which all senior management were closely involved.
43 I do not accept the applicant's invitation to place weight on the absence of contrition, or an apology from HNZ. I prefer the submission of HNZ that these aspects are not particularly appropriate to the circumstances of this contravention. No doubt there will be cases where the refusal, or absence, of an apology, would be significant. That might be the case especially where there has been unlawful conduct targeted at a particular employee, or there are circumstances of embarrassment, humiliation, or worse. Further, there is an aspect of contrition in the response of HNZ by admitting the contravention and submitting to a penalty. Agreement was reached between the parties relatively early in the course of the proceedings: some six months before trial and some four months after the proceeding was issued.