RAIL CORPORATION NEW SOUTH WALES, RAIL INFRASTRUCTURE CORPORATION AND STATE RAIL AUTHORITY OF NEW SOUTH WALES ENTERPRISE AGREEMENT 2005

[1] This decision concerns clause 8.6, the status quo clause, contained within the Dispute Settlement Procedure (DSP) in the Rail Corporation New South Wales, Rail Infrastructure Corporation and State Rail Authority of New South Wales Enterprise Agreement 2005 (the Agreement).

[2] The matter was originally notified to the Commission by the Australian Rail, Tram and Bus Industry Union (RTBU) by way of an application to have a dispute resolution process conducted in accordance with the Agreement. The dispute relates specifically to persons applying for positions of Station Manager (SM) and Duty Manager (DM) within RailCorp. The RTBU asserts that RailCorp has introduced and applied a new merit selection process in respect of these positions and has done so ignoring, or contrary to, the provisions of clause 8.6 of the Agreement. The matter has been the subject of conferences before me when attempts were made to resolve what I will refer to as the underlying dispute. The underlying dispute concerns matters generally related to the selection process which should apply to these classifications. Whilst that dispute was being processed through the various steps of the DSP the RTBU sought to invoke the status quo clause. RailCorp did not accept that it was introducing a new merit selection process or that the status quo clause was applicable to the dispute. It is this difference of opinion that is the subject of this decision.

[3] Both the RTBU and RailCorp were represented by solicitors. Mr Carrick appeared for the RTBU and Mr Woods appeared for RailCorp. The Australian Municipal, Administrative, Clerical and Services Union (ASU) also appeared and was represented by Mr Ellery. The ASU supported and adopted the submissions of the RTBU. Because of the need for this decision to issue urgently it is not possible for me to refer to all of the evidence. I have considered the evidence contained within the statements of Mr Panigiris, called on behalf of the RTBU and Mr Greenhalgh, called on behalf of RailCorp. Additionally both men gave oral evidence and were cross-examined.

[4] The contentious matters in the evidence were relatively few. The parties took issue with the application of certain provisions of the Agreement to that evidence. I will now record my findings of fact based on the evidence. The evidence covered matters that went further than that necessary for me to refer to in this decision. In resolving the underlying (and continuing) dispute it may well be necessary to return to that broader evidence.

[5] The State Rail Authority of New South Wales (SRA) which, for the purposes of this decision, I will refer to as a predecessor to RailCorp, had policies dealing with a number of aspects of the engagement of persons for employment and the contractual entitlements of employees. Since around the year 2000 policies relevant to the matter before me were contained in a document titled "Human Resources Policy Manual" (the Policy Manual). RailCorp has adopted and applied those policies. I return later to discuss, in some detail, specific policies in that manual which are relevant to the matters here in issue.

[6] The Policy Manual and the Agreement both refer to, and describe, a merit selection process as the basis upon which persons will be selected to fill vacant positions.

[7] In around May 2006 the RTBU informed RailCorp that it had become aware of a new selection process that had been introduced by RailCorp relating to appointments to SM and DM positions. In reply, RailCorp informed the union that it intended to adopt a new merit selection process for these two classifications. It indicated that prior to doing so it would consult with the relevant unions in accordance with the Agreement. Correspondence was exchanged between the two parties and meetings were held. By August 2006 the union had informed RailCorp that it did not accept the proposed new selection process for SMs and DMs. It sought further consultation and clarification of a number of issues. The union requested that the positions then being advertised be processed in accordance with the previously existing merit selection arrangements.

[8] It is clear from the correspondence that RailCorp intended that certain steps previously undertaken in the selection of persons for these positions were to change. It maintained that its proposals complied with the existing recruitment and selection policies contained in the Policy Manual.

[9] RailCorp accepted that it had not previously "adopted an assessment based method of selection" for these classifications and that previously an "interview based method" had been used. The selection process for DM and SM positions was now to differ in at least the following respects:

• Applicants would be invited to attend an Assessment Centre and assessed by that centre;

• Applicants would have no interview with the Selection Panel; and

• The Assessment Centre would provide a report containing its assessment of the candidates to the Selection Panel for its consideration.

[10] The RTBU thereafter notified RailCorp, and then subsequently the Commission, of a dispute. No other union party to the Agreement had, prior to this time, raised any dispute about the use of Assessment Centres in the selection process nor, I assume, the consequential change of there no longer being an interview with the Selection Panel.

[11] The option of using Assessment Centres as part of the process of selecting suitable candidates has been in place for several years. RailCorp relies on the fact that since at least the September 2001 amendments to the Policy Manual, Assessment Centres have been referred to.

[12] Assessment Centres have been widely used in relation to the selection of positions within both salary and wage classification streams. This has included the use of such centres for classifications which RailCorp asserts are of comparable or higher level than SM and DM positions.

[13] RailCorp believes the use of Assessment Centres ensures a better matching of people to positions and streamlines and expedites the selection process.

[14] I should now refer to the relevant provisions of the Agreement and Policy Manual. Before I leave the summary of facts however I should indicate that it is not clear to me what detail is contained in the reports the Assessment Centre sends to the Selection Panel. It seems however that they use some system to identify the relative merits of the candidates assessed by them. Although not conceded by RailCorp, its seems clear enough, that the rankings by the Assessment Centre are relied upon by the Selection Panel. This occurs in circumstances where the panel does not itself interview or have any face-to-face contact with the applicants.

[15] The Agreement, being a multi-business agreement, was certified by a Full Bench in July 2005. Reasons for decision were published as it was necessary for the Full Bench to be satisfied that it was in the public interest to certify the Agreement. The Dispute Settlement Procedure (DSP) was the subject of comment in paragraph 25 and 26 of that decision. No party brought to my attention any other evidence or submissions before the Full Bench that may be appropriate to take into account in the interpretation of clause 8, and in particular clause 8.6.

[16] I will refer only to those clauses of the Agreement that are relevant to the discrete issue here under consideration.

[17] Clause 7 is titled "Consultative Process". It recognises "two tiers of consultation in the Rail organisations". The clause identifies a number of examples which are matters that would be considered at the "Peak Consultative Committee" level. One such matter is "Human Resource Policies" (clause 7.1(viii)(j)).

[18] Clause 7.3 provides that where matters cannot be resolved through the consultative process the dispute will be dealt with in accordance with the DSP in clause 8.

[19] Clause 8 is the "Dispute Settlement Procedure". Clause 8.2 provides that any "dispute, grievance, claim or problem between the parties" shall be processed in accordance with the steps set out in that clause. Thereafter a number of steps identify how a dispute might be progressed and who should participate in an attempt to resolve the dispute. Step 5 allows the Commission to conciliate in a dispute. Step 6, the final step, provides that the Commission is empowered to "…arbitrate over the matter, provided that arbitration is limited to disputes that involve the interpretation, application or process of implementation" of a term or terms of the Agreement.

"The status quo before the emergence of the grievance or disputes shall continue whilst the above procedures are being followed. For this purpose, "status quo" means the work procedures and practices in place immediately prior to the change that gave rise to the dispute or grievance".

[21] Part C of the Agreement is titled "Core Principles". Clause 22 deals with the filling of authorised positions. Employer obligations in relation to vacant positions are referred to in the clause. Preference is first given to employees on the displaced list who may be suitable for redeployment. If not filled in that way the employer is to advertise and fill the position by merit selection within four weeks of the completion of the redeployment review process (clause 22.3). The employer is to fill vacant positions within six months from the time the position becomes vacant (clause 22.4). Clause 22.6 provides that the employer will select, appoint and promote people on the basis of merit as determined by the skills, competence, qualifications and experience required for the position.

[22] RailCorp has policies relating to a number of its employment practices and in particular guidelines or procedures relating to the selection and appointment of employees. I have earlier indicated that similar policies which applied within SRA have been adopted by RailCorp.

[23] The current policies are contained in the Policy Manual. Of particular relevance to this matter are the policies titled "Recruitment Policy" and "Selection Policy". From time to time these policies have been reviewed and the date upon which previous policies were amended or replaced and new policies operative is identified in a schedule contained within the manual. In the case of the Recruitment Policy its most recent amendment was in September 2001 at which time it "repealed" certain documents that had been applicable since June 1994. In the case of the Selection Policy, on the same date, three earlier documents (described as various checklists and guidelines) were "repealed" and the current policy commenced.

[24] It was not suggested that it was necessary for me to consider the terms of previous policies contained in earlier versions of the manual or other written policies and guidelines specifically relating to the matters here in issue.

[25] I turn first to the Recruitment Policy. Section 1 sets out the policy and in clause 1.1 provides that "All positions filled through merit selection must comply with State Rails Recruitment Policy and Selection Policy". The remainder of this policy incorporates guidelines that are to be observed in relation to the filling of vacant positions, including advertising requirements, identifying persons who are eligible to apply for positions advertised in the internal weekly publication and those eligible for positions advertised externally. There are also details about what must be provided to potential applicants concerning the completion and filing of applications.

[26] The Selection Policy is in Section 2 of the Policy Manual. Clause 2.1 sets out the policy. It provides that "The principle of merit must form the basis of all selection. Merit is decided by taking into account the relevant position and assessing the abilities, qualifications, experience, standards of work performance and personal qualities of each applicant".

[27] The policy goes on to provide that in order to ensure the selection processes are transparent, fair and equitable, a number of principles are to be observed. These include applicants having a "knowledge of the procedures used by State Rail for staff recruitment and selection" and that "selection panels are structured so as to ensure expertise, independence and diversity of backgrounds, opinions and judgements". The Selection Policy applies to all job applicants. The composition of a Selection Panel is referred to in clause 2.6.1. It is to include a Convenor, an external independent person, and a third panel member with a good working knowledge of the position in question. The time within which a panel is to be formed (one week after the closing date of an advertisement) and certain attributes or qualities of the persons on the panel (eg sex, selection training, diverse backgrounds) and ethical matters are listed.

[28] Clause 2.6 .2 is titled "Selection Process". I should reproduce part of that clause:

There are a number of options that can be used to assess the applicants against the position requirements. These are:

• task assessments (eg a role play dealing with a difficult customer)

• a combination of more than one of these options

The panel must carefully consider the essential selection criteria before making a decision regarding the most suitable selection method. For example, when selecting a trainer, the applicants may be required to make a presentation to the panel. This selection method however, would not be suitable when selecting a cleaner.

The Selection Panel must agree on the most appropriate selection method to be used prior to the cull."

[29] Clause 2.6.4 is titled "Interview/Assessment". The opening words of the clause provide that applicants must be given three working days notice "…of the interview or other selection methods". It then goes on to provide what applicants must be advised of. This includes the identification of the time and location of "the interview" and the selection method that is to be used. Examples are given of methods the applicant must be advised of. The applicant is to be advised of the names and position titles of the Selection Panel members. And finally "Every attempt is to be made to notify applicants of the details of the interview by telephone" and the details are to be confirmed by mail or email.

[30] The next six topics in this part of the policy all relate to the interview. In particular they serve to caution Selection Panels about, for example, relying too heavily on interview performance which might be better evaluated by other means, the panel not working coherently during the interview, or allowing applicants to control the interview. The panel must agree on all questions which are to be asked and which must be directly related to the selection criteria. The same core questions must be asked of all applicants. The last matter addressed in clause 2.6.4 is titled "At the end of the Interview". Several mandatory requirements are placed on the Selection Panel. For example they are obliged to advise each applicant that the applicant with most merit will be recommended and if they have any concerns regarding the overall selection process, including the interview, they can raise their concerns with the panel.

[31] Clause 2.6.5 obliges the Selection Panel to rate applicants and in doing so to use all available information gathered at each stage of the selection process. It is the panel that must document the rating of applicants. Clause 2.6.7 places additional responsibilities on the Selection Panel to assess the relative merit of the applicants. It provides that the selection decision must not be based solely on the applicant's performance at the interview. Clause 2.6.8 provides that if the selection panel is having difficulty making a final decision then it may have applicants undertake a second interview.

[32] Clause 2.6.11 details matters that must be addressed in the Selection Panel report. I note in particular the information that is required includes a list of all applicants that were interviewed but not found to be suitable for appointment. Reasons for recommending or rejecting applicants, including a copy of the interview summary, are to be in the report.

[33] There is a dispute between the RTBU and RailCorp. It concerns the selection process RailCorp requires applicants to undertake for the position of SM and DM. That selection process is, in several respects, inconsistent with the terms of the Selection Policy. The Selection Policy as contained in the Policy Manual is encompassed by the term "Human Resources Policies" in clause 7 of the Agreement. Any dispute concerning clause 7 is be processed in accordance with the DSP.

[34] The dispute is currently before the Commission and it has proceeded to Step 5 of the DSP - the conciliation stage. Whilst a dispute is being processed the status quo clause applies. It may well be that the clause is not applicable to or able to be invoked in respect of all disputes or grievances. In this matter I have decided it does apply.

[35] The dispute arose when RailCorp decided that each applicant for the positions would be assessed by an Assessment Centre. I am aware of the description that they are "invited" to attend a centre but it seems that if they decline the invitation there is no likelihood of their being selected for the position. The dispute is not confined to that issue only. The role of the Assessment Centre in the process is to be accompanied by the cessation of an interview of applicants by the Selection Panel. The panel would now receive a report from the Assessment Centre containing rankings of the applicants. It would no longer make its own assessment by reference to its own observations of applicants in an interview. These changes to the selection process are inconsistent with several provisions of the Selection Policy. At the very least they are arguably inconsistent with clauses 2.6.2, 2.6.4, 2.6.5, 2.6.7 and 2.6.11 of that policy.

[36] I think it is also open to me to draw the inference that a Selection Panel, convened for the purposes of selecting applicants for the SM and DM positions, is informed (although I do not have any specific evidence as to how this is undertaken) that the option referred to in clause 2.6.2 of the policy about the use of an Assessment Centre will, on each occasion, be chosen. In these circumstances it cannot be said that the Selection Panel gives any real independent consideration to the most suitable selection method.

[37] RailCorp submits that only a subset of matters that might otherwise be processed in accordance with the DSP may be amenable to clause 8.6 and this is not one of them. It argues that the term "work procedures and practices" in that clause should be interpreted as procedures and practices by which work is undertaken. The issue of deciding who will be appointed to a position of SM or DM is an aspect of managerial prerogative and not a procedure or practice by which work is undertaken.

[38] The above categorisation of the dispute is not one I adopt. RailCorp has detailed policies which regulate and prescribe what applicants may expect to occur at each stage of applying for, and being appointed to, a position. Similarly the obligations of Selection Panels are also prescribed in detail. To the extent selection of employees is a management prerogative it is here constrained by the policies. And, the Agreement envisages there may be a challenge to the manner in which those policies are applied.

[39] Although the construction RailCorp places on the second sentence in clause 8.6 has some attraction, I am more persuaded by the submission that its purpose is not to limit the matters in dispute that may be subjected to the clause but to identify the time at which the status quo will be assessed. That time is immediately prior to the change which gave rise to the dispute. The first sentence of clause 8.6 should not be read down as submitted by RailCorp.

[40] Furthermore the word "work" has an extensive list of definitions in, for example, The New Shorter Oxford English Dictionary. It is not just confined to work in the sense of using one's own labour or the identification of something that is to be done or completed. It can also be the place or premises where an activity is carried on. In this context, it is equally open that the reference to work procedures and practices means the procedures and practices of RailCorp or another employer party to the Agreement.

[41] The Selection Policy is, in my opinion, in terms that regulate and prescribe rights and obligations of applicants, in this case existing employees, and the Selection Panel, two of whom are employees. In this respect it appears that the advertisements for these positions were placed in the internal RailCorp "Your Career" booklet. There was no suggestion that they were advertised externally. The applicants are entitled to and can assert that the Agreement and the recruitment and selection policies applicable to them are work procedures and arguably work practices also.

[42] It is appropriate that, subject to what I refer to below as the immediate consequences of this decision, and whilst this dispute is being processed in accordance with the DSP, RailCorp ensure that the selection process undertaken in respect of SM and DM positions is consistent with the process which applied prior to August 2006 when this dispute arose.

[43] I raised with the parties during the hearing certain practical problems that would arise in the event I was to make a finding about the applicability of clause 8.6 consistent with the RTBU submissions. The reason for this was that Mr Greenhalgh's evidence was that 22 SM positions had been selected and confirmed and some 230 applicants for the DM positions had been offered the opportunity to progress to the Assessment Centre. Those assessments had commenced and it was likely they would have been completed by the time of the hearing. Accordingly I thought it appropriate to give the RTBU an opportunity to consider the implications for those SMs and DMs who had undergone the Assessment Centre process and/or been appointed since the dispute had arisen. In subsequent written advice the RTBU indicated that it would not challenge the appointment of SMs which had been made since the dispute arose. Those appointments should "continue unaffected". In the case of DM positions it understood a selection process had been undertaken but appointments had not been made. As far as possible the status quo should apply to these positions with applicants who had been referred to the Assessment Centre being referred back to the Selection Panel for an interview and a determination about the merit of those applicants and who should be nominated for appointment. It accepted however that RailCorp could restrict the applicants who would be referred back to the Selection Panel to those who had passed the Assessment Centre process. Subsequently RTBU expressed concern that RailCorp might have proceeded to appoint DM's and, if that was the case, it withdrew its concessions about DM positions.

[44] The ASU indicated it would not intervene in the recently completed process for the SMs. In relation to selection processes commenced, but not completed, it submitted that those candidates should be interviewed by the Selection Panel who should determine the merit of the candidates.

[45] RailCorp submitted that the matter before me did not relate to classifications outside of the SM and DM positions and, the extent the ASU referred to other positions in its correspondence, I should make no ruling about them. I accept that submission. In relation to the DM positions RailCorp indicated it had not issued appointment letters to such persons. I note the balance of RailCorp's submission .Those considerations have been taken into account by me in arriving at the decision I have earlier referred to.

[46] Each of the above submissions can be further addressed if necessary when the matter is next before me.

[47] I am conscious of the potential of this decision to give rise to a reconsideration of selection processes that have been undertaken for hundreds, if not thousands, of employees of RailCorp. These processes, according to the evidence, have applied to a wide cross-section of classifications. There is no evidence that any issue was taken with those processes by any of the Unions party to the Agreement or by any individual employee. If there is now some attempt to do so that is a matter, if notified to the Commission, will be dealt with as expeditiously as possible. Numerous considerations would rise including why the appointments arising out of those selection processes should not be the subject of similar concessions as here made by the RTBU.

[48] This decision relates to the facts in this matter. I have not intended that the comments I have made set any general principles about the applicability or breadth of clause 8.6.

[49] It was not submitted by the RTBU, nor in my opinion could it be, that human resources policies cannot be introduced and/or amended from time to time. As a general rule the employment policies an employer adopts will be a matter for that employer. This of course must be subject to the terms of any relevant legislation, award or agreement. It was not suggested that unions party to the Agreement must first give their approval before a new or amended policy may be applied. The reason this matter has proceeded before me is because the Agreement identifies Human Resources policies as being a matter about which a dispute may arise and be processed through the DSP.

[50] I have not overlooked the time constraints referred to in clause 22 of Part C of the Agreement in relation to the filling of vacant positions. In this context I am also aware of RailCorp's opinion that the use of Assessment Centres expedites the selection process. These considerations were not, in my opinion, relevant to the discrete matter the subject of this decision. They will no doubt be discussed when this matter is next listed before me.

[51] This matter will be relisted for conciliation on Tuesday, 1 May 2007 at 10.00am.

Mr M. Carrick, Solicitor, for the Australian Rail, Tram and Bus Industry Union

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