Burgess and Ors v Mount Thorley Operations Pty Ltd

Prior to being retrenched the applicant had not been disciplined, counselled or warned about his work performance.

In or about 1996 officers on behalf of the respondent made representations to the applicant giving him assurances that his employment was secure. The applicant acted upon these assurances to his detriment.

In or about June 1997 the respondent decided to restructure its operations and to reduce the numbers of its employees including employees in the class of work performed by the applicant.

In or about August 1997 the respondent invited the applicant and other staff members to apply for new positions of employment.

The applicant declined to apply for a new position of employment. 11. The respondent decided to retrench the applicant because the applicant had declined to apply for a new position of employment and/or for reasons related to that reason. 12. In or about October 1997 the respondent unilaterally altered the applicant's work and work location and otherwise treated the applicant unfavourably.

13. On or about 21 November 1997 the applicant was summoned to a meeting with an officer of the respondent and was told his employment was terminated.

14. In all the circumstances the respondent adopted an unfair inconsistent and humiliating procedure for retrenching the applicant. The procedure was inconsistent with the applicant's contract of employment and the procedures which had hitherto been adopted by the applicant's employer.

15. The contract, arrangement or collateral arrangement whereby the applicant performed work in an industry was and is unfair, harsh and unconscionable and contrary to the public interest in that: (a) it permitted the respondent to terminate the contract of employment without any or any sufficient or valid reason; (b) it invested the respondent with significant discretionary powers which may and have been used to the substantial disadvantage of the applicant particularly in the circumstances relating to termination of the contract and/or the failure to continue the applicant's employment; (c) the applicant was at all material times in a position of unequal and inferior bargaining power in respect of his dealings with the respondent and was specifically in such a position at the time of termination; (d) it permitted the respondent to breach a fundamental term of the applicant's contract of employment without consideration or compensation; (e) it permitted the respondent to deprive the applicant of the significant benefit of long term secure career employment and/or employment at all; (f) it failed to provide for the giving of a fair, reasonable and period of notice of termination of employment in all the circumstances; (g) it failed to provide for any or any reasonable payment to the applicant by the respondent upon termination of employment for any reason; (h) it failed to provide for the payment of compensation to the applicant by the respondent in circumstances where the respondent wrongfully terminated the contract in such a manner and for such reasons as would cause the applicant distress, anxiety and damage to his good name and character; (i) it failed to protect the applicant against harsh, unjust and unreasonable dismissal and failed to contain any protective or security provisions to guard against harsh, unjust and unreasonable termination and in particular it failed to provide for: (i) fair, reasonable, appropriate and transparent terms and conditions relating to the manner in which the applicant would be dealt with in the event that the respondent considered his conduct or performance was unsatisfactory; (ii) an opportunity for the applicant to rectify any aspect of his conduct or performance which might be considered by the respondent to be unsatisfactory; and (iii) any mechanism or procedure that would accord the applicant both procedural and substantive fairness in the event that the respondent was considering or proposing to terminate the contract of employment; (j) it was unfair on its face in that the term of the contract, arrangement or collateral agreement which provided for notice of termination provided for a period of notice which, having regard to all of the circumstances of the applicant's employment and in particular the amount of his salary and his seniority within the respondent's work force and the circumstances of the termination of his employment, was inadequate and unreasonable; (k) it permitted the respondent to pay to the applicant an amount in respect of notice which was for an employee with over 23 years of service, having regard to reasonable principles and standards of employment practice inadequate and unfair; (l) it permitted the respondent to impose without notice, warning, consultation or negotiation a standard of termination payments which were to be paid to the applicant; (m) it was otherwise unfair, harsh and unconscionable or contrary to the public interest upon such grounds and for such reasons as this Honourable Court may find.

15 Schmidt J reached a number of conclusions. Firstly, there was the issue of new claims. Her Honour found that certain claims made by the applicants below were first articulated in closing submissions. Her Honour found that these claims had not constituted any part of the pleadings and no application had been made by the applicants to amend the pleadings. The claims were that, if it were held that the relevant 1990 Award and EA provisions were not in fact incorporated into the relevant contracts of employment, the Court should either: (a) vary the contracts to insert the provisions as terms of the contracts; or (b) vary the contracts to insert a similar type of provision.

16 In the judgment at [119] to [122] her Honour stated: 119 Section 106 permits an unfair contract, as defined, to be declared void or varied by order of the Court and for money orders in connection with such orders also to flow. Both as a matter of natural justice and in accordance with the Court's Rules, a respondent must be put on notice as to the orders sought, including the terms of any variation to the contract claimed. The grounds must detail the basis upon which those orders are sought, including how any money order is connected to the orders of avoidance and variation sought, that is the unfairness alleged must be identified. How the money sums sought are calculated must also be explained. Applicants cannot depart from the claims so made, without the Court's leave, in the absence of consent. An applicant advancing relief in final submissions on a basis which has not been claimed in the summons, is no more permissible than for relief to be granted on a basis raised by a trial judge at hearing, if that claim was not advanced in the summons upon which the hearing proceeded. 120 The formulation of a claim in the summons is a different matter to how any money orders might ultimately be framed by the trial judge, who is at that point not confined to the precise terms of the orders sought in the summons. Depending upon the approach which the parties adopt to the litigation, formulation of such final relief can be a difficult process. It was held, for example, by the Full Court in Barclays Australia Investment Services Limited & Ors v Nordby (1995) 99 IR 258 at p279 that: 'The task of assessing a "just" monetary amount is one which, not infrequently, involves the exercise of a broad judgment without the assistance of defined and identifiable parameters or heads of loss or damage.' 121 Nevertheless, the exercise of framing final orders, including money orders 'just in the circumstances' (s106(5)), is concerned with an assessment of the claims advanced in the summons and having in mind the evidence as to the circumstances in question. In calculating money orders this can give rise to the need for approximations to be made and countervailing circumstances to be balanced, as a matter of justice between the parties. That is an entirely different matter however, to the Court proceeding to deal with a claim for variation of a contract on a basis simply not advanced by an applicant in the summons, but only articulated in submissions. 122 In this case, it must be concluded that the new claims for variation of the contracts first articulated in closing submissions were not available to the applicants. The result of this conclusion is that the applicants' claims must be determined on the basis of the case strongly pressed from the outset, that each of the contracts here in question contained as terms the Award and EA provisions. It is not now open as a matter of justice between the parties, for the Court to depart from the claims pressed, so as to vary the contracts the subject of these applications, by inserting the Award and EA as terms, or to vary the contracts in the other ways articulated in closing submissions.

17 Secondly, Schmidt J found that it was common ground the applicants had been made redundant as a result of the restructuring earlier described and not as a consequence of performance related issues.

18 Thirdly, her Honour found that neither the 1990 Award nor the EA formed a part of the applicants' employment contracts and this finding was sufficient to dispose of the applicants' claims as advanced. There was no evidence that the parties had expressly agreed to incorporate the EA or the 1990 Award as terms of the employment contracts, or that they even turned their minds to this issue. Nor could the 1990 Award or the EA be implied into the employment contracts as, following BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1984) 180 CLR 266, the contracts were effective without such an implication. Finally, such an implication could not be made on the basis of custom, practice or course of dealing.

19 Fourthly, it was held that to the extent that the applicants' claims depended upon a determination that the respondent breached its obligations under the EA and 1990 Award, the claims must fail. Her Honour found that she did not have the jurisdiction to make such a determination, as the federal industrial laws prescribed a code for the Federal Court to deal with such complaints.

20 Fifthly, Schmidt J found the applicants' claims as advanced suffered an insurmountable difficulty: the final relief sought directly concerned subjects dealt with comprehensively by both the 1990 Award and the EA - termination of employment and the amount of money to be paid upon such termination. The 1990 Award and the EA together dealt in the most comprehensive way imaginable with termination of employment. If the Award and EA were to be incorporated into the employment contracts and the Court acceded to the applicants' contentions, any resultant order would be inconsistent with the requirements of the 1990 Award and EA. The 1990 Award and EA, stemming as they do from federal legislation, must prevail in the case of any inconsistency. An application brought under the Act could not properly be used to circumvent the enforcement provisions for award breaches contained in federal legislation.

21 Sixthly, Schmidt J addressed the alternative claims advanced by the applicants. As we have already observed, in Mr Burgess' case these claims were:

· In the alternative the Applicant claims the sum of $250,000 by way of compensation and/or the payment of money consequent upon the making of claimed orders 1 and 2 in paragraph A hereof.

· In the further alternative the Applicant claims the sum of $250,000 by way of compensation and/or the payment of money pursuant to claimed orders 3 and/or 6 and/or 7 in paragraph A hereof.

22 In relation to the alternative claims her Honour said at [184]: 184 In my view, those alternative claims, advanced on the basis explained, could not overcome the problems of inconsistency here arising. The first alternative effectively entirely removed the Award and EA rights to terminate employment, prior to age 65. That has an obvious discriminatory impact, as well as being startlingly inconsistent with the Award and EA provisions as to termination of employment. The second alternative, even though more difficult to understand, led to no different result. Obscurity cannot provide a basis for the view being reached that inconsistency is thereby avoided. Nor can it be ignored that this order too seeks payment of a considerable sum in addition to the money already paid in order to satisfy the Award and EA obligations. As a matter of discretion an award could not be made on such a basis. 23 In concluding her findings on inconsistency Schmidt J stated at [198] and [199]: 198 In my view the resulting inconsistency between the orders here sought and the EA and Award is direct and unavoidable. The type of conclusion reached by the High Court in Wardley , is not available in this case. Here, it is not simply the powers conferred by s106 of the Act upon the Court which arises for consideration, but the way in which the Court is asked to exercise those powers, in the applicants' summonses. Those claims are not alien from the purpose and subject matters of the Award and the EA, but expressly deal with the same matters, such as the notice to be given of termination, the considerations which then arise, the consultation which is required and the payments which must be made thereupon. 199 This is not a case where s106 may simply be regarded as a readily discernable background part of the general law of the land, such as the rights and obligations generally imposed upon employers and employees by long service leave or anti-discrimination legislation. Indeed, the claim here advanced itself raises problems of conflict with such anti-discrimination legislation. Rather, s106 empowers the Court to interfere with particular kinds of contracts and arrangements, including employment contracts, if relevant unfairness be found. While awards have general application to the classes of employees with which they are concerned, cases brought under s106 typically involve only the parties to the individual contract of employment brought before the Court for consideration. That the Court, in such an application, might be asked to exercise its powers in respect of the contractual process governing termination of employment, is not surprising, but immediately points to the potential intersection between the results of the two statutory schemes in question, if the Federal award already deals with that matter. This potential increases when the applicants' case involves an assertion that the award in question has been breached by the respondent's conduct and that the Court's order is required to redress the resulting unfairness flowing from such breach. In this case, the conclusion that inconsistency resulted, was unavoidable.

24 The orders made by her Honour were in the following terms: 200 [I] have concluded that the basis upon which the applicants advanced their claims was not made out, as to ground a basis for the relief sought, and that the Court has no jurisdiction to entertain the orders sought in any event. Accordingly, the applications are dismissed. The usual order as to costs would be that the applicants should bear the respondent's costs, as agreed or assessed. If no agreement is reached within 21 days of this judgment as to the appropriate costs order, the parties have liberty to approach. LEAVE TO APPEAL

25 Section 188(1) of the IR Act (NSW) provides that an appeal from a member of the Commission may only be made with leave of the Full Bench. Section 188(2) provides that leave will be granted if the Full Bench is of the opinion that the matter is of such importance that, in the public interest, leave should be granted. Section 188(3) provides that the Full Bench may deal with an application for leave to appeal separately and without conducting a hearing into the merits of the appeal.

26 The appellants contended that the appeal raised fundamental questions regarding: (a) the relationship between Awards or Agreements made pursuant to the Workplace Relations Act 1996 and the scope of the jurisdiction of the Commission to set aside or vary contracts of employment or arrangements relating to the performance of work in an industry in New South Wales. (b) the impact of the decision of the High Court in Byrne v Australian Airlines Limited (1995) 185 CLR 410 on the jurisdiction of the Commission under s.106 of the Industrial Relations Act 1996 . (c) the interpretation of s 152 and/or s 170LZ of the Workplace Relations Act 1996, and in particular the question of whether s 106 is a State law providing protection for an employee against harsh, unjust and unreasonable termination within the contemplation of those provisions.

27 The respondent opposed leave essentially on the grounds that the judgment of Schmidt J disclosed no error and that the principles to be adopted in considering inconsistency between federal law and potential orders under s 106 (and its predecessors) of the IR Act (NSW) were well settled.

28 We adopt the approach laid down in Knowles v Anglican Property Church Trust (No 2) (1999) 95 IR 380 both as to leave to appeal and as to the nature of an appeal under the statute. Leave to appeal will not, as a general rule, be granted unless the appellant demonstrates that the appeal proceedings "raises substantial issues of principle or law or has wider implications for the jurisprudence of this Commission, including whether the decision has widespread practical application" (see Knowles at 382). We consider this matter raises substantial issues of law so as to justify granting leave to appeal. In particular, as the appellants submitted, the appeals raise the important question of the relationship between awards or agreements made pursuant to the Federal Statute and the scope of the jurisdiction of the Commission in Court Session to set aside or vary contracts of employment or arrangements relating to the performance of work in an industry in New South Wales. We grant leave to appeal.

29 Mr R Kenzie QC with Mr S Howells of counsel appeared for the appellants. Whilst Mr Kenzie made extensive submissions regarding the alleged errors at first instance, his main contentions may be encapsulated in the following nine propositions: 1. There was no inconsistency under s 109 of the Commonwealth Constitution. That is, there was no inconsistency between the 1990 Award and EA on the one hand and the orders sought by the appellants under s 106 of the IR Act (NSW) on the other. An examination of the IR Act (Cth) demonstrated that it did not evince an intention to cover the field in an overarching way in relation to claims by employees that the termination of their employment was harsh, unjust or unreasonable. Section 106 of the IR Act (NSW), it was contended, transcended notions of unfair dismissal: see Beahan v Bush Boake Allen Australia Ltd (1999) 47 NSWLR 648; (1999) 93 IR 1. 2. There was no direct or indirect inconsistency. A Federal award or certified agreement is separate in concept and legal effect from the contract of employment of an individual, or an arrangement affecting an individual, when considered as the subject of s 106 proceedings: see Byrne v Australian Airlines (1995-1996) 185 CLR 410 where it was made clear that terms of an award or certified agreement do not automatically become part of the contract of employment of a relevant employee. One consequence of this is that the contract of employment must operate separately from the award and the certified agreement and the legislative scheme pursuant to which those instruments have force and effect and pursuant to which they may be enforced. This must leave the contract of employment and remedies in relation to it unaffected by the award, the certified agreement and the legislative scheme governing those instruments. See Newton v Goodman Fielder Mills Ltd (1998) 81 IR 227 as to the relationship between State awards and s 106. 3. The nature and the range of relief obtainable under s 106 in relation to unfair contracts is completely discrete from the regime of awards or agreements concerned under the Federal Act and the way in which relief could be granted in relation to it. There was no intersection between an order under s 106, which is concerned with individual rights under a contract or arrangement, and the content of a federal award or certified agreement which are directed at collective solutions to industrial matters, not individual in nature: See Adams v Westfield (2000) 99 IR 382; Barry v Incitec (1992) 45 IR 143; Renard Constructions (ME) Pty Ltd v Minister for Public Works (1992) 26 NSWLR 234; Metrocall Inc v Electronic Tracking Systems Pty Ltd (2000) 101 IR 66 and Julia Thornthwaite v Australian National Credit Union (2002) 116 IR 438. 4. Contrary to the findings of Schmidt J, there was abundant evidence at first instance to the effect that the relevant terms and conditions contained in the 1990 Award and EA became part of the appellants' contracts of employment or arrangements or collateral arrangements. This evidence was constituted by express agreement based upon letters of appointment and conversations between officers of the respondent and the appellants and by implication arising from the practice in the industry and the circumstances of the appellants' employment. The sources of the contracts of employment and other arrangements which were said to have existed between the appellants and the respondent were as follows: (a) The letters of appointment and other constituent documents incorporating as they do, the terms of the relevant Award for each of the Applicants. (b) The Work/Wages Bargain, pursuant to which work was performed and wages paid. (c) Terms of the Award in respect of which specific discussion and agreement took place between Managers on behalf of the Respondent and the Applicants. (d) Each applicable term contained in the 1996 Agreement being an agreement specifically agreed upon by an express process between individual employees and the Respondent at the meeting in Singleton. (e) All implied duties and obligations cast upon employers and employees by the common law. 5. Even if it were accepted that none of the terms contained in the 1990 Award or EA necessarily formed part of the contracts of employment of the appellants, nevertheless, those contracts of employment incorporated the essential elements of the "work/wages bargain". The unconscionable and humiliating treatment meted out to the appellants from 1996 onwards by the respondent could and should, therefore, form the basis for relief under s 106 of the Act. In other words, regardless of any inclusion of the Federal Award and EA terms in the contracts of employment, the conduct of the employer was in any event unfair and gave rise to a relevant unfairness for the purposes of s 106. The conduct referred to was the alleged unfairness of the treatment of the appellants from 1996 onwards, including the conduct by the respondent in misleading the appellants into believing that if they agreed to the EA they would be secure in their jobs, enticing them to give up certain of their industrial rights and the alleged humiliating process by which employees were selected for retention or retrenchment. Further, that if the system of seniority and the assurances about job security reflected in the terms of the 1990 Award and EA had not become part of the appellants' contract of employment, Schmidt J erred in not varying the contracts of employment to include those terms. 6. Whilst the 1990 Award and the EA prescribed minimum terms and conditions of employment, they conferred a benefit upon employees and a protection against being paid less than the amounts prescribed. Neither the 1990 Award nor the EA as minimum prescriptions purported to prevent the payment of improved or increased terms and conditions of employment whether relating to termination or any other matter. They did not have anything to say about whether relief flowing from the unfair operation of a contract or arrangement was ever recoverable. In other words, since the Court in Byrne v Australian Airlines and Kilminster v Sun Newspapers (1931) 46 CLR 284 necessarily recognised the capacity and entitlement of employees and their unions to negotiate and bargain for terms and conditions in excess of, or higher than those prescribed by an industrial instrument, it must necessarily be open to the Commission in Court Session under s106 of the Act to grant relief in relation to terms and conditions bargained for in excess of those prescribed by an industrial instrument and, indeed, to grant relief in excess of the terms prescribed by the minimum rates industrial instrument. 7. Her Honour concluded that the Commission in Court Session did not have jurisdiction to require parties to adhere to terms more favourable than a Federal Award and an Enterprise Agreement if this would amount to an interference with the adjustment of industrial relations established by the Federal Award with respect to matters formally in dispute. The appellants submitted that her Honour arrived at this conclusion without citing authority or other basis for the conclusion but in any event the authorities do not support a conclusion that interference with the adjustment of industrial relations may be the touchstone of determining whether jurisdiction exists pursuant to s 106 of the Act to require parties to adhere to terms more favourable than those prescribed by a federal industrial instrument. 8. In relation to her Honour's finding that the appellants were, in reality, claiming that the respondent had breached its obligations under the 1990 Award and EA, the appellants submitted that such a contention did not form any part of the appellants' case at first instance. 9. Her Honour failed to deal with the appellants' claims that bonuses paid to the appellants should have been included in the calculation of payments on termination of employment.

30 Mr H J Dixon SC and Mr B K B Cross of counsel appeared for the respondent. It was submitted for the respondent that, contrary to the contentions of the appellants, Schmidt J dealt with all aspects of the appellants' claims, including the claims made in relation to the alleged unfair conduct of the respondent and bonus. It was also submitted her Honour dealt with the claims made in the appellants' closing submissions before her Honour that, if the 1990 Award and EA were not in fact incorporated into the relevant contracts of the employment, the Court should either vary the contracts to insert the provisions as terms of the contracts or vary the contracts to insert similar types of provisions.

31 The respondents further submitted that the appellants' case before Schmidt J had essentially four elements to it. The first element was an allegation that cl 24 of the 1990 Award provided for a reduction of hands according to seniority and cl 37 of the EA provided job security and that these provisions were expressly incorporated into the appellants' contracts of employment which were subsequently breached by the respondents in terminating the employment of the appellants. The second element was that the two clauses were incorporated into the appellants' contract of employment by implication. The third element was that if it were found that the clauses had not been incorporated into the contracts of employment then the Commission in Court Session should exercise its power under s 106 to vary the contracts to incorporate those terms. The fourth element was that, by its conduct over a period extending from 1996 and culminating in the dismissal of the appellants, the respondent had rendered the contracts of employment unfair.

32 As to the first element relating to express incorporation of the Award by letters of appointment, the respondent submitted Schmidt J was correct in finding at [143] and [144] of her judgment that: 143 None of the letters of appointment made specific reference to the seniority provisions of the Award here in question. Coincidentally, no reference was made to the EA in any of those letters, or in any other correspondence concerning the contracts of employment. 144 As observed by the High Court in Byrne, (see for instance at p421), all that the references in these letters to the applicable awards pointed to, was an appreciation of the fact that the applicable award attached to the employment which the parties had created by their contract, given the operation of the applicable statute and that as a result, the award conditions applied. From neither the applicants' point of view, nor that of the entity which employed them, was there any need to convert such award rights and obligations, into contractual rights and obligations.

33 As to express incorporation of cl 37 of the EA, it was submitted her Honour was correct in finding at [134] of her judgment: The evidence did not, however, permit the conclusion that either the applicants, or the respondent, thereby intended that when the EA was made, the applicants' contracts of employment would also thereupon be varied, so as to incorporate into each of them the terms of the EA. The evidence did not even permit the conclusion that this was something to which either the respondent, or any of the applicants, turned their minds at the time, not even those who attended the Singleton meeting and voted in favour of the EA.

34 The respondent submitted that the proper approach to express incorporation of award terms into a contract of employment was outlined in BHP Iron Ore Pty Ltd v Australian Workers' Union & Ors (2000) 171 ALR 680.

35 Regarding the claim by the appellants that they were promised job security at the meeting in 1996 at the Singleton Civic Centre and that, therefore, this representation was expressly incorporated into their contracts of employment, it was submitted by Mr Dixon no such blanket guarantee was given. It could not be said that by voting in favour of the EA at the meeting, by implication, the appellants were accepting the alleged representation of job security.

36 As to the second element of the appellants' case relating to implied incorporation, Mr Dixon submitted that Schmidt J was correct in finding at [145] and [146] of her judgment that: 145 Nor can it be concluded that the Award or EA were implied terms of these contracts. As to the Award provision in relation to seniority, there was evidence that seniority was a concept of longstanding operation, both at the Mt Thorley mine and elsewhere in this industry. Various of the applicants gave evidence, for example, that they had experienced the operation of the Award reduction in hands clauses at other mines at which they had been employed in the past. Others had experienced the operation of the clause while employed at this mine. 146 Such experiences were entirely consistent with the fact that the clause was an award obligation, which was not only binding upon the respondent and predecessor operators of the mine, but also upon the unions party to the Award and their members, such as the applicants. It was also an award provision part of a long history of award regulation as to such matters in this industry …

37 The respondent submitted that as to incorporation generally, Schmidt J correctly applied the principles in Byrne v Australian Airlines.

38 The third element of the appellants' case, according to the respondent, was that if it were found that the 1990 Award and EA clauses had not been incorporated into the contracts of employment then the Commission in Court Session should exercise its power under s 106 to vary the contracts to incorporate those terms. The respondent characterised these claims as new claims because, it was contended, they were raised for the first time in the appellants' closing submissions at first instance. It was submitted that the new claims were not included in the summonses for relief and no application was made to amend the summonses. Schmidt J agreed with the respondent in this regard and it was submitted that her Honour's findings in respect of the new claims were entirely consistent with authority and with the Rules of the Commission and that her Honour applied the correct principles in exercising her discretion not to allow the new claims to be pursued.

39 In any event, the respondent submitted, Schmidt J was prepared to assume that the new claims could be entertained and formed the view - correctly - that no orders were available in respect of these matters because of inconsistency with the Award and EA. The respondent referred to Schmidt J's findings at [175] and [176] of her judgment: 175 It cannot be doubted that the parties were entirely free to agree on such terms, considerably more generous than those provided in the Award and the EA, had they wished to do so. They did not. On the applicants' case, at its highest, they had only agreed to the incorporation of the Award and EA provision into their contracts, nothing more generous. The inescapable result of the granting of the orders sought would be that the respondent, by order of this Court rather than the parties' agreement, would be required to pay more to the respondents than the Award and EA required upon termination of employment in relation to the matters there dealt with. The resulting conflict is inescapable. 176 In the alternative, it was argued that the contracts of employment would be varied to insert the Award and EA provisions. Were these claims to be entertained, this too could only lead to the same result. The reality of the claim, so pressed, was that it was pursued because the legislative enforcement scheme which applied to any breach of the Award and the EA, did not provide for the type of relief which s106 of the Act grants in respect of unfair contracts. I am far from convinced that this would be a proper basis for a finding of unfairness in relation to these contracts, even were the summonses amended to permit such claims to be advanced. The observations of the High Court in Byrne were directly to the point in relation to this difficulty.

40 As to the fourth element of the appellants' case, namely, that by its conduct over a period extending from 1996 and culminating in the dismissal of the appellants, the respondent had rendered the contracts of employment unfair, the respondent submitted her Honour was plainly aware of this element and expressly dealt with it. At [177] her Honour stated: 177 The same result flows in relation to the various claims advanced in relation to unfair conduct. The Award expressly required that dismissal not be harsh etc. It is difficult to see that the claim as to the respondent's unconscionable conduct towards the applicants in selecting them for dismissal was not, in truth, a claim that this Award requirement had been breached. The Award also made express provision as to how such disputes were to be dealt with. That was a different mechanism for dealing with such a dispute, to a claim which might be brought under the unfair dismissal provisions of the Federal legislation in relation to those same matters. Breach of that Award provision, like a claim for any other award breach, was nevertheless, one for which provision was made in the Workplace Relations Act 1996. The Federal legislative scheme in the context of these Award and EA provisions, simply leaves no room for the exercise by this Court of the s106 jurisdiction, in the manner here sought.

41 In respect of the question of constitutional inconsistency it was submitted for the respondent that Schmidt J correctly applied the relevant principles and law. Mr Dixon, in his submissions, canvassed extensively the relevant authorities in relation to inconsistency as they might be applied to the circumstances of this case. Mr Dixon submitted that, consistent with her Honour's findings: (a) It was not relevant that parties to the relevant employment contracts were free to, or could agree with each other to, contractual terms which were more generous. It was to the Court's order that attention had to be directed, and the power given by s 106 was a statutory interference with the parties' right to contract as they wished. (b) The award making powers of the AIRC and the power to certify agreements, thus giving them the force of award, are also statutory powers which interfere with contractual agreements parties have otherwise made or might be free to make. (c) While the parties to a contract of employment, which attracts the terms of such an award or agreement, may still have the right to agree to more generous arrangements than those provided in such federal instruments, the Court does not have the jurisdiction to require such parties to adhere to more favourable terms which it, not they, determine, if the end result be an interference with the adjustment of industrial relations established by the award with respect to the matters formerly in dispute. (d) Even if the relevant terms of the 1990 Award and EA had been incorporated into the contracts of employment and were breached, such breach, together with the respondent's alleged unconscionable conduct in relation to representations made as to security of employment and in how it selected employees for redundancy, ignoring its obligation to give effect to the Award seniority provisions, would lead to orders relating to termination of employment and other matters expressly dealt with in the 1990 Award and EA. (e) The inescapable result of the granting of the orders sought would be that the respondent, by order of the Court rather than the parties' agreement, would be required to pay more to the applicants than the 1990 Award and EA required upon termination of employment in relation to the matters there dealt with. (f) The resulting conflict between the orders on the one hand, and the 1990 Award and EA on the other, was inescapable. (g) Moreover, the claims for variation of the contracts raised in closing submissions, if entertained (being claims relating to termination of employment) would lead to the same result. (h) The payments sought in respect of the respondent's alleged unconscionable conduct in relation to representations made as to security of employment and in how it selected employees for redundancy, ignoring its obligation to give effect to the 1990 Award seniority provisions, would lead to orders requiring various payments. Those payments related to termination of employment, namely that dismissal not be harsh, unjust or unreasonable. (i) It was difficult to see that the claim as to the respondent's unconscionable conduct towards the applicants in selecting them for dismissal was not, in truth, a claim that this Award requirement had been breached and: (i) The 1990 Award also made express provision as to how such disputes were to be dealt with; (ii) That was a different mechanism for dealing with such a dispute, to a claim which might be brought under the unfair dismissal provisions of the Federal legislation in relation to those same matters; (iii) Breach of that Award provision, like a claim for any other award breach, was nevertheless, one for which provision was made in the Workplace Relations Act 1996 ; and (iv) The Federal legislative scheme in the context of the 1990 Award and EA provisions, simply left no room for the exercise by this Court of the s106 jurisdiction, in the manner here sought. (j) In respect of the first alternative form of money order which was advanced, by way of amendment, and in respect of which no clear basis of quantification had been advanced: (i) Order A2 was for a payment until age 65 in respect of termination of employment in the circumstances in which it arose; (ii) this claim effectively entirely removed the Award and EA rights to termination of employment prior to age 65; and (iii) that was startlingly inconsistent with the Award and EA provisions as to termination of employment. (k) In respect of the second alternative form of money order, claimed by reference to Order A3 of the Summonses (relating to payments on termination), Order A6 (relating to "an amount of money in connection with the contract of employment so avoided and varied" - a reference to Orders A4 and A5 concerning termination of employment, and money payments on such termination), and Order A7 (relating to payment of interest), the result was no different in that it conflicted and was inconsistent with the 1990 Award and EA provisions. CASE FOR THE COMMONWEALTH

42 Mr R Crow of counsel appeared for the Attorney-General of the Commonwealth. Mr Crow indicated that the Attorney-General's position was one of support for the respondent. Mr Crow submitted that the question on appeal was not one of the relationship between the general area of operation of the IR Act (Cth) and the general area of operation of the IR Act (NSW). He submitted it was not to the point to characterise the field of operation of the Commonwealth Act as, say, industrial regulation and the field of operation of the NSW Act as, say, contractual unconscionability (as Haylen J did in Thornthwaite v Australian National Credit Union Ltd (2002) 116 IR 438 at 470-71, pars [79] and [81]). The question to be answered in applying s 152 of the Commonwealth Act is not one of the relationship between the federal provisions for making awards (including certified agreements) and the New South Wales provision for an unfair contracts jurisdiction, but of the relationship between the federal award and the orders sought.

43 Mr Crow submitted that, where a federal award (including a certified agreement) deals with rates of pay, overtime or recreation leave, for instance, a State law dealing with those matters is excluded for employees covered by the federal instrument and no different result could ensue in relation to a s 106 order requiring payment of an amount to compensate for salary levels found to be unfair or varying levels of overtime payment or recreation leave. Equally, where the federal instrument dealt comprehensively with grounds and process for termination of employment, a s 106 order affecting the grounds of termination or the period of notice and moneys to be paid on termination because of unfairness in the process of termination would be inconsistent with the federal instrument.

44 It was further submitted that, even if the award and agreement conditions have been incorporated into the employment contract (as the appellants contend is the case here), s106 orders would not be valid if they would be inconsistent with or deal with the same matters as the federal instruments. The contract of employment may provide for above award conditions, and s 152 is enacted against that background. However, s 152 clearly provides for federal instruments to prevail over orders of State industrial authorities which are inconsistent with, or deal with matters that are dealt with, in federal instruments. A section 106 order, like any other State law or award, cannot 'give the employee a right' more generous than the federal instrument (Blackley v Devondale Cream (Vic) Pty Ltd, Ltd (1968) 117 CLR 253 at 258), even if the employee and employer may negotiate more generous conditions in a contract of employment. As the respondent pointed out, the question is not one of the relationship between the contract of employment and the federal instrument; the application of s 152 involves a question of the relationship of the federal instrument and the s 106 orders.

45 Mr Crow submitted that in this case, Schmidt J correctly characterised the 1990 Award and EA provisions as dealing comprehensively with termination of employment and the orders sought under s 106 would, if made, be inconsistent with the 1990 Award and EA. The Commission does not have jurisdiction to make the orders sought.

46 It was accepted by the appellants that Schmidt J correctly characterised their primary position as being to the effect: [T]hat a system of seniority based on service at the mine in particular classifications, reflecting experience, as provided in the Award had operated as a part of the applicants' contracts of employment and other arrangements. The EA also formed a part of the applicants' contracts of employment or comprised a collateral arrangement.

47 The appellants added that it was not the EA itself that provided certain assurances about job security but that the respondent also gave these assurances to the appellants in the context of the negotiations for the EA in 1996 and thereby constituted part of the appellants' contracts of employment or comprised collateral arrangements. Whether Award and EA incorporated into employment contracts

48 Schmidt J found that neither the 1990 Award nor the EA formed part of the appellants' contracts of employment either by express incorporation or by implication. This, then, is the first issue to be considered on appeal.

49 As we understand their submissions, it was contended by the appellants that the 1990 Award, including cl 24, was expressly incorporated into the contracts of employment by virtue of letters of appointment given to each of the appellants by the respondent. It was submitted for the appellants that: Those letters of appointment contain a number of provisions which are strongly indicative of an intention on the part of the parties that the award terms and conditions should form part of the contract of employment of each of the Appellants. They certainly make clear beyond contradiction that the terms of the award and the other matters referred to in those letters formed part of the contractual arrangements of the Appellants with the Respondent.

50 In relation to the letters of appointment Schmidt J observed in her judgment: [T]he evidence was that the applicants were all employed at different times and in a variety of classifications. In some cases the Award, or its predecessors, did not apply when the applicants were originally employed at the mine. It later came to apply to them when they were appointed to positions to which the Award applied. In each case however, on termination of their employment, they were employed in a position to which the Award did apply. 141 Various references were made in letters of appointment to awards. Not all of them were predecessors to the Award. None of those references can be read as evincing an intention that any award provisions would thereby be incorporated in the contract of employment. … 144 As observed by the High Court in Byrne, (see for instance at p421), all that the references in these letters to the applicable awards pointed to, was an appreciation of the fact that the applicable award attached to the employment which the parties had created by their contract, given the operation of the applicable statute and that as a result, the award conditions applied. From neither the applicants' point of view, nor that of the entity which employed them, was there any need to convert such award rights and obligations, into contractual rights and obligations.

51 The letter of appointment in relation to Mr Burgess, dated 23 September 1981, was in the following terms: September 23, 1981 Dear Mr Burgess Further to your interview on site, we are pleased to offer you the position of Stores Clerk at our Mount Thorley Colliery. Your employment classification in accordance with the "B" Division of the Collieries Staff Award is that of Stores Clerk, Classification 51, the current rate being $267.10 per week. However, as you are transferring from another R.W. Miller Colliery, we will maintain your rate of pay on classification 50, which is currently $272.50 per week. In addition, you will receive the following payments, all of which are subject to variation according to national indexation wage movements: Bonus $103.60 per week Open Cut Allowance $12.50 per week Travelling Allowance $ 5.54 per attendance at work Experience Allowance $ 7.50 per week

We would like you to take up your appointment on Monday, October 19, 1981. Initially you will be employed on Day Shift, but after a settling in period, you will be required to work Afternoon Shift and Night Shift.

Your appointment is made in terms of this letter and we confirm that there are no other arrangements between us, oral or written, regarding your employment. Should alterations be made by agreement with you, they will likewise be confirmed in writing. We would ask you to acknowledge receipt of this letter (by signing and returning the attached copy), signifying your acceptance of our offer and confirming that you will be commencing here on Monday, October 19, 1981.

We wish you every success in your new appointment and hope you will find working at Mount Thorley a rewarding and satisfying experience.

Yours sincerely Keith D. Smith Mine Manager Mount Thorley Colliery

52 It appears from the evidence that the Mount Thorley Mine was originally owned by R W Miller Pty Ltd. In 1986 the Mine changed hands and came under the control of Coal & Allied Industries Limited. During the early 1990s the Mine came to be conducted as a joint venture, 80 per cent of which was ultimately controlled by Coal & Allied, a wholly owned subsidiary of the Rio Tinto Group of companies, and 20 per cent by Pohang Industries, a Korean based manufacturing corporation.

53 The "Collieries Staff Award" referred to in the letter to Mr Burgess was the Collieries Staff Award 1973 ("the 1973 Award"), which was the predecessor award to the Coal Mining Industry (Collieries Staff) Award 1984 ("the 1984 Award") and to the 1990 Award which is the award that applied at the time of the appellants' termination. Thus, in Mr Burgess' case the position was that his employment at the Mount Thorley Mine continued uninterrupted from 1981 to 1997, notwithstanding the changes in ownership of the Mine, and his employment was covered successively by the 1973, 1984 and 1990 Awards. In relation to his 1981 letter of appointment, apart from a letter in 1989 promoting Mr Burgess to senior stores clerk, there were no subsequent letters varying or voiding the arrangements referred to in the 1981 letter.

54 In relation to the successive Awards, Schmidt J observed at par [149] of her judgment: 149 The Collieries Staff Award 1973 was in evidence. It did not contain a seniority provision, but included a savings provision, in clause 24, for customs and practices reflected in agreements between the parties, except in so far as the award expressly interfered with them. The Collieries Staff Award 1984 contained Clause 17 Reduction of Hands, which made provision for seniority, in terms not significantly different to the Award. It also contained a provision, in clause 32, which contemplated that agreements substituting and/or trading off and/or setting off award provisions, could be agreed between employers and employees, with prior approval of the ACSA and the Coal Industry Tribunal. Existing customs and practices and agreements, were again protected in clause 37, but there was no evidence of any other relevant custom and practice, which this award provision protected. The Award, made in 1990 to replace the 1984 Award, again contained clause 37, seniority here relied upon.

55 The 1981 letter to Mr Burgess is, on its face, an offer of employment. It appeared to be uncontested that Mr Burgess either accepted the terms of the offer by signifying his acceptance according to the directions in the letter or, alternatively, he indicated his acceptance by his conduct in taking up employment on the terms offered. The offer of employment involved Mr Burgess working as a stores clerk at Mount Thorley Mine in a particular employment classification under the 1973 Award at a certain pay level. However, because he was transferring from another R W Miller colliery, his pay was to be maintained at the previous higher level than that provided for in the 1973 Award. In addition to the weekly wage rate of $272.50 Mr Burgess was offered certain 'overaward' payments not prescribed in the 1973 Award. The offer indicated "there are no other arrangements between us, oral or written, regarding your employment". Mr Burgess did, however, receive other benefits during his period of employment, including the reimbursement of telephone rental and reasonable calls. Whether these other arrangements arose out of the provision in cl 24 the 1973 Award - "Conditions not dealt with in the Award", was not in evidence. Mr Burgess was also entitled to superannuation and was almost certainly entitled to long service leave but it is not known when he became entitled to these benefits. 56 In Byrne v Australian Airlines (1995) 185 CLR 410 it was held that the terms of the relevant award were not incorporated into the contract of employment independently of the intention of the parties; that the award operated with statutory force and there was no need to convert statutory rights and obligations into contractual rights and obligations. At 420 and 421 Brennan CJ, Dawson and Toohey JJ said: A right to the payment of award rates is imported by statute into the employment relationship, which is contractual in origin, and, express promise apart, it is only in that sense that it can be said that award rates are imported into the contract of employment. The award regulates what would otherwise be governed by the contract. But award rates are imported as a statutory right imposing a statutory obligation to pay them. The importation of the statutory right into the employment relationship does not change the character of the right. … In a system of industrial regulation where some, but not all, of the incidents of an employment relationship are determined by award, it is plainly unnecessary that the contract of employment should provide for those matters already covered by the award. The contract may provide additional benefits, but cannot derogate from the terms and conditions imposed by the award ( Kilminster v Sun Newspapers Ltd (1931) 46 CLR 284) and, as we have said, the award operates with statutory force to secure those terms and conditions. Neither from the point of view of the employer nor the employee is there any need to convert those statutory rights and obligations to contractual rights and obligations. There is, therefore, an insuperable obstacle in the way of the appellants' second argument that the terms of an award such as cl 11(a) are implied terms of the contract of employment.

57 In BHP Iron Ore Pty Ltd v Australian Workers' Union & Ors (2000) 171 ALR 680 at 701 the Full Court of the Federal Court said: [I]t is now authoritatively established that if an award is to be incorporated into a contract of employment, express provision to that effect is required (see Byrne v Australian Airlines Ltd (1995) 185 CLR 410). In Byrne it was held that the obligation to observe an award arose by force of statute, not because the award was imported into a contract of employment independently of the parties' intention; and that the provisions of the award were not an implied term of the contracts of employment, because their implication was not necessary for their reasonable and effective operation in all the circumstances.

58 In our opinion, the 1981 letter to Mr Burgess is a document evidencing or recording terms of his contract of employment. That is not to say, however, we agree with the appellants that the letter represents an express incorporation of the 1973 Award into Mr Burgess' contract of employment. The letter merely refers to the fact that Mr Burgess' employment classification would be in accordance with the Collieries Staff Award. The letter falls well short of stating that the 1973 Award would form part of Mr Burgess' contract of employment (cf Moama Bowling Club Ltd v Armstrong (No 1) (1995) 64 IR 238 at 239-240). The Award, being a statutory creation, had its own independent existence. There was no need for any reference to have been made to an award in the 1981 letter because in a sense it was a "given". All that the letter did in so far as an award was concerned was to convey to Mr Burgess the important information about his award employment classification. The letter said nothing more about the terms of the 1973 Award and there was no need to do so given the Award's existence independent of the employment contract: See Byrne v Australian Airlines. Thus, there was no indication in the letter that the parties intended that the 1973 Award should form part of Mr Burgess' contract of employment.

59 We find that the 1981 letter to Mr Burgess did not expressly incorporate the 1973 Award into Mr Burgess' contract of employment and that there was no evidence of a subsequent agreement to expressly incorporate the 1984 Award or the 1990 Award into Mr Burgess' contract of employment.

60 We have examined the letters of appointment provided to all of the other appellants and have reached the same conclusions as those reached in respect of Mr Burgess. The letters are essentially offers of employment on particular terms that have been accepted by the appellants but they do not expressly incorporate any award into the appellants' contracts of employment. We consider that Schmidt J was correct in observing at [144] of her judgment that: [A]ll that the references in these letters to the applicable awards pointed to, was an appreciation of the fact that the applicable award attached to the employment which the parties had created by their contract, given the operation of the applicable statute and that as a result, the award conditions applied. From neither the applicants' point of view, nor that of the entity which employed them, was there any need to convert such award rights and obligations, into contractual rights and obligations.

61 The appellants contended that it could be implied the 1990 Award formed part of their contracts of employment because of a presumed or imputed intention of the parties. Reference was made to BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1984) 180 CLR 266. We consider that implication of the Award terms was not necessary for the reasonable and effective operation of the employment contracts: See Byrne v Australian Airlines at 422-423 and BHP v AWU at 701. There was no error on the part of Schmidt J in concluding that the Award was not an implied term of the appellants' contracts of employment.

62 Whilst there was some confusion about this, the appellants appeared to contend, in the alternative, that retrenchment according to seniority was a well-established custom and practice in the coal mining industry. Hence, even if it were found that cl 24 of the 1990 Award had not been expressly incorporated into the contracts of employment of the appellants, it could be implied, by virtue of a longstanding industry practice, that terms reflected in cl 24 did form part of the appellants' employment contracts or were a separate arrangement within the meaning of s 106 of the IR Act (NSW).

63 It is clear from the evidence that there had been a longstanding practice in the coal mining industry that, in general terms, if retrenchments became necessary, employees were retrenched on the basis of seniority. That is, the more senior employees were retained in employment in preference to those with less seniority. Reference was made by Schmidt J to the judgment of Wilcox J in Cumnock No 1 Colliery Pty Ltd v Construction, Forestry, Mining & Energy Union (unreported, Wilcox J, 23 March 1998) where his Honour observed that 'by 1983, the type of clause inserted in the Illawarra award had become common in the mining industry'. Her Honour did not, however, find that the practice of retrenching employees according to seniority was "so well known and acquiesced in that every one making a contract in that situation can reasonably be presumed to have imported that term into the contract": Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Limited (1986) 160 CLR 226 at 236.

64 Rather, her Honour considered that the experience of the appellants in relation to seniority was not inconsistent with the existence of an award provision to the effect of the provision in cl 24 of the 1973 Award and the reduction of hands provisions in the 1984 and 1990 Awards. At [150] of the judgment Schmidt J concluded that: It follows that the evidence of the applicants' experience of the respondent's past compliance with the relevant Award obligations, does not provide a basis for conclusion that another custom and practice was operating as to seniority. Indeed, such a conclusion would be contrary to the case advanced by the applicants, which was that the Award seniority provision was an express term of the contracts. We agree. 65 The appellants' alternative submission was that the Award seniority provision constituted an arrangement for the purposes of s 106 of the IR Act (NSW).

66 Taking firstly Mr Burgess' evidence about seniority on retrenchment, he gave evidence that he had been aware of the industry rules relating to seniority from as early as 1972. In 1981, when Mr Burgess was offered employment at the Mount Thorley Mine, there was no award provision of the nature of cl 24 of the 1990 Award. There was, however, a provision in cl 24 of the 1973 Award entitled "Conditions Not Dealt With By The Award" as follows: (a) This award is to be read as not interfering with existing customs and practices except insofar as it expressly interferes with them. These customs and practices being in substance agreements between the parties it is directed that any discontinuance of them which alters existing conditions shall entitle any of the parties to apply to have the award varied to fit the altered conditions. (b) Except insofar as it expressly interferes with them, this award is also to be read as not interfering with any award, order or determination made or given by competent authority and in force immediately prior to the date of operation of this award.

67 The first sentence in cl 24(a) is unexceptional. Further, and importantly, the provision does not save or preserve existing customs and practices but rather directs that in the event existing conditions are altered, any party shall be entitled to apply to vary the award "to fit the altered conditions". Clause 24(b) would appear to mean that any award, order or determination etc., in force immediately prior to the date of operation of the 1973 Award would continue to apply except to the extent that the 1973 Award expressly "interferes" with the previous award, order or determination. 68 As Schmidt J noted in her judgment, a reduction of hands provision was later inserted in the 1984 Award in terms not dissimilar to the provision in cl 24 of the 1990 Award. Both the 1984 and 1990 Awards also contained provisions in the same terms as cl 24 of the 1973 Award.

69 Assuming that the practice of retrenchment according to seniority met the test laid down in Con-Stan Industries and given that cl 24 of the 1973 Award did not, by its terms, save the practice, the question arises as to the effect of the penultimate paragraph in Mr Burgess' 1981 letter of appointment. That paragraph provided that apart from the matters referred to in the letter "there are no other arrangements between us, oral or written, regarding your employment". The appellants submitted that it would not be a sensible reading of the 1981 letter to accept what it says in the penultimate paragraph at face value because to do so would preclude matters such as superannuation and long service leave which must be taken to have been part of the general employment arrangements between the parties. In Mr Burgess' case, however, there was no evidence as to any arrangement regarding superannuation or long service leave in 1981. It may have been the case that Mr Burgess had an award entitlement to long service leave, for example, but that may be regarded as having a separate existence from the "arrangements" referred to in the letter: See Byrne v Australian Airlines.

70 In our opinion, the industry practice of retrenchment according to seniority was not part of Mr Burgess' contract of employment and was not an arrangement for the purpose of s 106 of the IR Act (NSW) when he accepted the offer of employment in 1981. Mr Burgess would not have become entitled to any benefit relating to retrenchment according to seniority until the making of the 1984 Award. From that point onwards Mr Burgess' entitlement to retrenchment according to seniority was governed by the relevant award. 71 In relation to Messrs Wills, Bright, Hoye, Veigel and Brown, these appellants were first offered employment at the Mount Thorley Mine between 1985 and 1989 and were covered by the 1984 Award. Their letters of appointment spelt out the award coverage and other additional benefits including overaward allowances, long service leave, pension, superannuation and other benefits. Each of the letters stated that there were no other arrangements, oral or written, regarding their employment. We can only conclude from this that retrenchment according to seniority was governed by the 1984 Award and did not form part of the appellants' contract of employment or an arrangement within the meaning of s 106.

72 In relation to Messrs Jones and Smith they were employed at the Mine in 1991 and 1992 respectively and their employment was covered by the 1990 Award. Their position is similar to appellants referred to in the previous paragraph.

73 Messrs Mitchell, Fong and Phillips commenced employment at the Mine in occupations governed by the Coal Mining Industry (Mechanics) Award 1973 which contained a provision in the following terms: REDUCTION OF HANDS 19 When a reduction of hands is decided upon by the management it shall be regulated by the principle ' the last to come the first to go' in the respective classes according to length of service at the mine. Provided that if with regard to any mine an agreement is arrived at between the management and the organisations whose members will be affected by a reduction of hands, such agreement will bind such members notwithstanding that it may be inconsistent with the foregoing provisions of this clause.

74 Messrs Mitchell, Fong and Phillips all commenced working in the coal mining industry after the commencement of the 1973 Mechanics Award so it could not be said that upon the commencement of their employment at Mount Thorley that the principle of 'last to come the first to go' was imported into their contracts of employment because in their case, from the outset of their employment in the industry, it had been an award provision. See Byrne v Australian Airlines at 423-424.

75 Mr Cuddigan and Mr Irvine commenced employment at Mount Thorley in 1981. These two appellants commenced in occupations covered by the Coal Mining Industry (Engine Drivers and Firemens) Award 1973. That Award did not contain a reduction of hands provision but it did contain a provision in the same terms as cl 24(a) of the 1973 Award. The letters of appointment offering positions to Messrs Irvine and Cuddigan in July 1981 did not contain a provision to the effect that there were no other arrangements applicable to their employment and so it might be arguable that if the industry practice relating to seniority on retrenchment did in fact exist that it had been imported into their contracts of employment. However, in Mr Irvine's case, in March 1982 he accepted employment as a foreman, such occupation being covered by the 1973 Award. Mr Irvine accepted his appointment as foreman on the basis that there were no other arrangements in relation to his contract of employment other than those specified in the letter. Mr Cuddigan's position followed a similar course to that of Mr Irvine.

76 Mr Sampson's position was the same as that of Mr Burgess, which we have already described.

77 In addition to it being submitted that the letters of appointment provided evidence as to the importation of seniority into the appellants' contracts of employment, it was also submitted that seniority was a matter discussed between managers of the respondent and the appellants on a regular basis. The evidence in this respect is too vague to support the proposition that seniority may be implied into the employment contracts.

78 Given the foregoing analysis, we are led to conclude that the industry practice of retrenchment according to seniority was not imported into the appellants' contracts of employment or, if it was in relation to some of the appellants, at various points in time they each agreed that the practice would no longer form part of their employment contract. We reach the same conclusion in relation to the appellants' contention that the industry practice constituted an arrangement within the meaning of s 106.

79 We turn to consider whether the terms of the EA were expressly or impliedly incorporated into the appellants' contracts of employment or whether they formed an arrangement or collateral arrangement to the contracts. As we understand the appellants' contentions in this respect they were that, in the course of convincing the appellants to agree to the 1996 EA, assurances were given by the respondent employer to each of the appellants as to job security except Phillips, who was unable to attend the meeting where it was alleged the assurances were given. However, it was put his conduct was consistent with him having affirmed the EA. This job security was said to be reflected in cl 37 of the EA. It was submitted that by their specific acknowledgment and acceptance of the EA the appellants may be taken to have endorsed it as part of their individual contracts of employment with the respondent. Further, that the terms of the EA, operating as they did at common law, constituted an arrangement or collateral arrangement within the meaning of s 106: Construction, Forestry, Mining and Energy Union v Australian Industrial Relations Commission and Another (2000) 103 IR 473; Legal and General Assurance v Stock (1993) 49 IR 464.

80 Schmidt J concluded that the EA did not form part of the appellants' contracts of employment. Her reasoning is set out at [131] to [139]. Apart from the question of whether the EA constituted an arrangement or collateral arrangement for the purpose of s 106 - a matter we propose to separately address - we do not consider Schmidt J erred in reaching these conclusions. 81 As we noted, the appellants contended that the terms of the EA constituted an arrangement or collateral arrangement for the purposes of s 106. This was said to flow from the fact that once an agreement was made the agreement had effect according to the general law: See CFMEU v AIRC (2001) 103 IR 473 at 480-481. Schmidt J took the view that, even if the EA operated as a common law agreement once it was entered into, it only bound the parties to the agreement unless it was adopted by others (i.e., the appellants) "in some effective fashion". This does not, however, answer directly the appellants' contention that the terms of the EA constituted an arrangement or collateral arrangement for the purposes of s 106.

82 Schmidt J concluded at [133] of her judgment that the appellants who voted at the Singleton meeting in favour of adopting the EA were voting in favour of the named parties (CFMEU, ACSA and the respondent) entering into such an agreement which was then to be certified. This finding was clearly open to her Honour. The effect of her Honour's finding was that on the evidence the appellants were not a party to the agreement to be certified. Not being a party to the agreement the appellants have no standing to seek orders in relation to the agreement because of the terms of s 108 of the statute: See Metrocall Inc v Electronic Tracking Systems Pty Ltd (No 2) (2000) 102 IR 309 at par [16]; Heath Group Australasia Pty Ltd v Pengly [2001] NSWIRComm 241; Bowker v Software Engineers Australia (NSW) Pty Limited [2003] NSWIRComm 213. New claims

83 The respondent had contended before Schmidt J that a number of the appellants' alternative claims were "new claims" in the sense that they were only raised by the appellants in their closing submissions. The claims were for variation of the appellants' contracts of employment. For example, the appellants submitted in their closing submissions before Schmidt J that: If in the alternative the Court is not satisfied that seniority constituted a term of the employment of each of the employees, the Court should exercise its power under s 106 of the Act, and vary the contracts of employment of each of the Applicants to include a term to the effect that seniority according to length of service at the mine should be applied in the case of any retrenchment.

84 In the further alternative, the appellants submitted before Schmidt J that if the Court was not satisfied that the relevant terms of the 1990 Award and the EA, particularly in relation to seniority and retrenchment, had become parts of the contracts of employment the Court should vary the contracts of each of the appellants to include the relevant terms.

85 In yet another alternative the appellants submitted that each of the contracts of employment should be varied to include the following "key terms": (a) a term to the effect that where there is a reduction of hands retrenchments will be allocated on the basis of seniority; (b) a term to the effect that retrenchments were only to occur where the business situation deteriorated sufficiently; (c) a term to the effect that in any decision taken by MTO to force retrenchments contractors would be retrenched first; and (d) a term that MTO would deal fairly, openly and reasonably in relation to any attempt it might assay to have the Applicants agree to a variation of their contracts. together with additional terms that MTO would deal fairly with each of the Applicants, that the contracts would not be varied or brought to an end in a certain manner in terms concerning consequential reparation upon failure or breach.

86 As we have already noted, her Honour considered that "the new claims for variation of the contracts first articulated in closing submissions were not available to the applicants." Her Honour said that: It is not now open as a matter of justice between the parties, for the Court to depart from the claims pressed, so as to vary the contracts the subject of these applications, by inserting the Award and EA as terms, or to vary the contracts in the other ways articulated in closing submissions.

87 In any event, Schmidt J was prepared to assume that the new claims could be entertained and formed the view that no orders were available in respect of these matters because of inconsistency with the Award and EA: See [175] and [176] of her Honour's judgment.

88 The appellants submitted on appeal that the alternative variations particularised in closing submissions did not cause any injustice to the respondent. The appellants made reference to the claims in the summonses, including claims for orders declaring void in whole or in part or, alternatively, varying the arrangement or collateral arrangement to the contract of employment between the applicants and the respondent whereby the respondent paid monies upon termination of the employment to the applicant. It was submitted by the appellants that the respondent at no stage sought particulars or further particulars of the claims set out in the summonses. It was submitted that there was sufficient scope in the pleadings (including, in particular, ground 15) for the alternative variations articulated in closing submissions to be pressed by the appellants, especially given they were not new claims but rather were a particularisation of the terms of the orders the Court was urged to make in the appellants' favour.

89 It was further submitted that the precise terms of the contracts of employment and the variations which would be appropriate in the circumstances, could only be finally made upon hearing the evidence of the respondents, particularly those of the respondent's witnesses who were alleged to have made representations to the employees. Mr Kenzie submitted that: Her Honour clearly understood … that our case was that the terms of the agreement and award were incorporated [into the appellants' employment contracts]. Why would you not expect an argument that if not so found the contract should be varied to incorporate them? In so far as it is complained in [relation to one of the alternative claims articulated in closing submissions] that the reduction of hands by reference to seniority was not confined to any class of employees, the Appellants say that the relief sought was directed to the assurances referred to in the complaints. In so far as it was a newly formulated claim it was based on well articulated claims of unfairness and that there was no surprise in this when regard is had to the way the case was run, including a failure on the part of the Respondents to seek particulars.

90 In Gough & Gilmour Holdings Pty Ltd and ors v Caterpillar of Australia Ltd (No.13) [2003] NSWIRComm 26, after referring to s 170 of the Industrial Relations Act and rr 18A, 57 and 148 of the Industrial Relations Commission Rules 1996 and also to a number of cases including: Banque Commerciale SA In Liquidation v Akhil Holdings Ltd (1990) 169 CLR 279 at 293 per Dawson J; Klein, PMG & Ors v Adler [1996] NSWIRC 184; Robert Rolles and Others v Donald Scott Surgicals Pty Ltd and Anor (Unreported, Fisher P, Cahill V.P, Bauer J, 19 February 1988); Munro v Chubb Security Holdings Australia Ltd & Ors [2000] NSWIRC 215, Boland J concluded at pars [25] and [26] that: 25 It is clear from the foregoing that pleadings are not an end in themselves. Certainly, in so far as proceedings under s 106 are concerned, a party is not strictly limited to what it has put in its summons for relief provided that the respondent is not prejudiced or put at a disadvantage by the introduction of some new issue or claim that may have arisen in the course of proceedings. If that occurs it is a matter for the court to consider whether it will amend the pleadings "in such manner as the tribunal considers to be necessary in the interests of justice."

26 The function of pleadings, however, is more than merely stating the overall ambit of the dispute between the parties. A respondent is entitled to know with certainty the nature and extent of the claims being made against it and the Court would not proceed to vary a contract without first ensuring the respondent is fully aware of the claims and has been given the opportunity of addressing those claims. Where that is not the case the Court will not countenance the claims: see Vision Publishing Pty Limited v PK Lane Holdings Pty Ltd (1998) 84 IR 277; Bourke Air Charter v Easton (2001) 109 IR 443; Pilgrim v Wendy's Supa Sundaes and Ors [2002] NSWIRC 308.

91 We generally agree with his Honour's conclusions. In the present appeal there was no application by the appellants at first instance to amend their claims notwithstanding the fact, as they submitted, any variations which would be appropriate in the circumstances could only be finally determined upon hearing the evidence of the respondents. Once that evidence had been adduced, it was open to the appellants at first instance to seek leave to amend the proceedings and thereby put the Court and the respondent on notice of the changed circumstances.

92 In our opinion, that is the course that should have been followed. The proceedings before Schmidt J were not without complexity, involving as they did 14 applicants and significant issues of fact and law. It is not sufficient to say that the respondent should have anticipated claims in the alternative, or should have sought particulars of the claims, when the claim was developed unequivocally on the basis that the Award and EA had been expressly or impliedly incorporated into the appellants' contracts of employment or constituted an arrangement or collateral arrangement. It would have been unfair to the respondent to have to meet an alternative claim not articulated until closing submissions that if it were found there was no incorporation the Court should, nevertheless, vary the contracts to achieve that end.

93 To emphasise the unfairness against the respondents, the only relevant variations sought to the contracts of employment in the amended summonses (as opposed to orders declaring them void) were in claimed order A4 as follows: (a) the company may terminate the employee's employment upon giving to the employee twelve months notice of termination or payment in lieu of twelve months notice of termination;

(b) in the event that termination of employment is a result of redundancy and/or company restructuring the employee shall be paid in addition to twelve months notice of termination an amount equivalent to four weeks pay for each completed year of service;

(c) termination of employment shall not be harsh, unjust or unreasonable. For the purpose of this clause termination of employment shall include termination with or without notice or termination by reason of redundancy.

94 As we have already noted, one of the alternative claims put in closing submissions at first instance by the appellants was that if the Court was not satisfied that the relevant terms of the 1990 Award and the EA, particularly in relation to seniority and job security, had become part of the contracts of employment the Court should vary the contracts of each of the appellants to include the relevant terms. The variation claim in order A4 in the amended summonses was obviously constructed in the expectation that the Court would find that the contracts of employment had incorporated in them the 1990 Award and EA and that the respondent's failure to observe the terms of the 1990 Award and EA in relation to seniority and job security amounted to unfairness within the meaning of s 106. On that basis, the appellants sought the orders referred to in order A4 varying the employment contracts in relation to the alleged unfairness. That was the case the respondent was required to meet in relation to variation of the employment contracts.

95 To have allowed the appellants to pursue the claim in their closing submission that, choosing from a range of alternatives, the contracts of employment should be varied in a significantly different manner to that claimed in the amended summonses in order to protect against the possibility that the Court might not uphold their case that the employment contracts incorporated the 1990 Award and EA, would have been prejudicial to the respondent.

96 Moreover, a number of the alternative claims were expressed in wider terms than the original claims. That is, whereas the appellants had originally contended the contracts of employment had incorporated in them cl 24 of the 1990 Award and cl 37 of the EA and that the respondent breached those provisions, some of the alternative claims were broader in their reach than what was set out in cll 24 and 37. Such alternative claims are not sustainable on the basis that they somehow relate to one of the grounds in the summonses. As Boland J observed in Gough & Gilmour (No 13) "A respondent is entitled to know with certainty the nature and extent of the claims being made against it" and should not be put to the task of second guessing what those claims might be.

97 Finally on this issue, it is to be kept in mind that the primary contention by the appellants was that their employment contracts were unfair because the respondent breached terms reflected in cl 24 of the Award and cl 37 of the EA. It is quite illogical to contend in the alternative that if the Court were to find that the relevant terms of the EA and the 1990 Award were not incorporated into the employment contracts, the Court should vary the terms of the contracts to include those terms. Such a variation could only be made if the contracts were found to be unfair within the meaning of s 106. But if the Court were to find - as Schmidt J did - that the relevant terms of the Award and EA did not constitute part of the employment contracts there could be no basis for a finding of unfairness other than on the basis that the contracts were rendered unfair by the respondent's conduct.

98 We would emphasise that this conclusion is not be taken as indicating that this Court should act as a Court of strict pleadings. (See Gough & Gilmour at [25]). Rather, it was incumbent upon the appellants to seek leave to amend the applications at an appropriate time, a step which they expressly rejected.

99 The appellants' case regarding conduct, however, was not sought to be made out on the basis of the absence of the relevant terms of the Award and EA in the employment contracts. Consequently, we can see no proper basis upon which Schmidt J could have varied the employment contracts to include the terms of the Award and the EA.

100 In any event, we do not find any error in the exercise of discretion by Schmidt J to exclude the appellants' alternative claims for variation of the contracts first articulated in closing submissions.

101 The appellants referred to the claim in order A2 of the summonses for relief to vary the arrangements or collateral arrangements to the contracts of employment between the respondent and the appellants. It was submitted that this claim encompassed the alternative variations referred to in the appellants' closing submissions. The appellants submitted that in considering the terms of order A2 the Court should regard the reference to "arrangement" and "collateral arrangement" as referring to the whole of the contractual arrangements existing between the appellants and the respondent including what was described as "the Work/Wages Bargain, pursuant to which work was performed and wages paid" and "All implied duties and obligations cast upon employers and employees by the common law". It was also said to include the assurances given to the appellants regarding job security at the time they voted in favour of the EA in September 1996. If this is what order A2 purports to represent we must say it is rather oddly expressed. 102 In our opinion, the reference to arrangements and collateral arrangements in order A2 of the summonses was as the respondent contended, namely, the terms of the 1990 Award relating to seniority and the "essential terms" of the EA (presumably those essential terms were cl 37). The reference to a work/wages bargain was no more than a reference to the terms of the (unwritten) contracts of employment. Apart from the alleged assurances given to the appellants regarding job security there were no other relevant arrangements or collateral arrangements existing between the appellants and respondents. 103 We have already found that the relevant terms of the 1990 Award and EA did not constitute an arrangement or collateral arrangement. As to the assurances given to the appellants regarding job security at the time they voted in favour of the EA in September 1996, it will be seen later in this judgment the assurances given by the respondent were conditional and did not provide any "guarantee" about job security. Even if it could be said the assurances about job security constituted an arrangement or collateral arrangement, they were limited by the condition such security would exist only for the life of the EA provided the business situation did not deteriorate.

104 We have concluded that there were no arrangements or collateral arrangements between the appellants and the respondent within the meaning of s 106 capable of being varied to incorporate the alternative claims identified in the appellants' closing submissions before Schmidt J.

105 In summary, our findings thus far are as follows: (a) That neither the Award nor the EA had been incorporated or imported into the appellants' employment contracts with the respondent. (b) That neither cl 24 of the Award nor a system of seniority based on length of service at the mine and in particular classifications was part of the appellants' contracts of employment and other arrangements. (c) That cl 37 of the EA did not form part of the appellants' contracts of employment or arrangements or collateral arrangements. (d) That Schmidt J was correct in declining to entertain the appellants' claim to vary the appellants' contracts of employment or arrangements or collateral arrangements to include a system of seniority and assurances about job security.

106 The main thrust of the appellants' case was that the terms of the 1990 Award relating to seniority and the terms of the EA relating to job security had become incorporated into their contracts of employment. The appellants claimed that the respondent had breached these terms, rendering the contracts unfair. On the basis of findings that the 1990 Award and EA provisions regarding seniority and job security did not form part of the appellants' contracts of employment, no issue can arise as to the question of constitutional inconsistency between the Award and EA on the one hand and orders under s 106 of the IR Act (NSW) on the other. The issue does arise, however, in relation to the appellants' claim that regardless of the terms of the contracts of employment, the conduct of the respondent throughout the course of 1996 and 1997 was unconscionable and that this rendered the contracts of the appellants unfair in the relevant sense.

107 The appellants asserted that: [T]he conduct of the employer in reaching the 1996 Agreement was such as to render the Appellants' contracts unfair … and that in 1997 the Respondent's Managers were directed to embark upon a process aimed at reducing the numbers of employees in all classifications, and that the process was not carried out either by reference to seniority or consistently with the terms of the 1996 Agreement. The Appellants contended that the process was carried out unfairly in the sense that there was either no rational method used for selecting or deselecting employees for retention or retrenchment, or that any system devised was either not applied or applied inconsistently as between the employees. The Appellants also contended that the process was carried out in an unnecessarily humiliating way, and that thereafter the employer did a number of things which further damaged many of the Appellants' interests.

108 In relation to the allegations regarding the respondent's conduct Schmidt J said at [160] - [161] of her judgment: 160 As to the complaints about the respondent's conduct, while s106(2) requires that the Court take into account the parties' respective conduct, it is neither appropriate, nor available as a matter of jurisdiction, for this Court in these proceedings to simply proceed from a conclusion that such conduct was relevantly unfair, if that conclusion be open, to the making of the orders here sought. 161 This conclusion flows of necessity from the inevitable inconsistency between what the Award and the EA obliged the respondent to do when contemplating a restructure of it operations; what it was obliged to pay the applicants, in order to lawfully terminate their employment and what the applicants seek by way of order in these proceedings in relation to such termination. This goes to the jurisdictional points argued, to which I will turn below

109 Schmidt J concluded that even if the appellants had been successful in making out their claims regarding the incorporation of the 1990 Award and EA into their employment contracts: [T]he resulting conflict between the outcome of the two statutory regimes if the orders sought were made, could not be avoided. That conclusion too must lead to the result that even if the applicants were to be permitted to amend their summonses in accordance with the claims advanced in closing submissions, they must fail.

110 Her Honour went on to find at [177] that: The same result flows in relation to the various claims advanced in relation to unfair conduct. The Award expressly required that dismissal not be harsh etc. It is difficult to see that the claim as to the respondent's unconscionable conduct towards the applicants in selecting them for dismissal was not, in truth, a claim that this Award requirement had been breached. The Award also made express provision as to how such disputes were to be dealt with. That was a different mechanism for dealing with such a dispute, to a claim which might be brought under the unfair dismissal provisions of the Federal legislation in relation to those same matters. Breach of that Award provision, like a claim for any other award breach, was nevertheless, one for which provision was made in the Workplace Relations Act 1996. The Federal legislative scheme in the context of these Award and EA provisions, simply leaves no room for the exercise by this Court of the s106 jurisdiction, in the manner here sought.

111 It may be seen from the judgment that her Honour considered it unnecessary to determine whether the respondent's conduct was unfair because she concluded any order she might have made pursuant to s 106, if unfairness were found, would have been inconsistent with the provisions of the Award and EA. It would appear that, in this regard, Schmidt J accepted the submissions put on behalf of the respondent that both the Award and the EA expressly dealt with termination of employment across a range of circumstances, including redundancy following upon organisational restructure. The conduct required of the respondent in such circumstances was prescribed by the Award and EA, as were the payments to be made to employees, in the event of termination of employment.

112 In other words, Schmidt J considered that the appellants' complaint, for example, that the respondent's conduct in selecting employees for redundancy was unconscionable was a matter dealt with in not only the Termination, Change and Redundancy (TCR) provisions of the EA (clauses 7, 29, 30, 31) generally but also specifically by cl 5(f) of the 1990 Award which provided that "Termination of employment by an employer shall not be harsh, unjust or unreasonable."

113 The appellants contended that both the respondent and Schmidt J mischaracterized the nature of their case by regarding it as one exclusively concerned with termination of employment and the money required to be paid to the appellants on such termination. As we have already stated, the appellants asserted that the relief sought by them concerned the whole of the conduct of the respondent from 1996 to the time of their termination. This conduct, it was submitted, was aimed at enticing the appellants and other employees to give up certain of their negotiated entitlements, including entitlements reposed in their contracts of employment by giving them false assurances as to job security. The employees, it was asserted, were then "deselected" and subjected to unnecessary humiliation in the lead up to their final termination. 114 The significance of the characterisation of the case is that if the respondent's characterisation is to be preferred this raises squarely the issue of constitutional inconsistency. That is, as we have said, if the appellants' claim was directed only at the termination of their contracts of employment by reason of redundancy and the money to be paid on being made redundant, it raises for consideration whether any orders the Commission in Court Session might make pursuant to s 106 (if it were to find unfairness) would be wholly inconsistent with the relevant provisions of the federal Award and EA and, therefore, beyond jurisdiction. On the other hand, if the appellants' characterisation is accepted, there may be no inconsistency or only partial inconsistency.

115 The appellants' case regarding the alleged unfair conduct on the part of the respondent consisted of what we consider to have been four elements:

1. That the appellants were misled into voting in favour of the 1996 EA by the respondent "painting a picture" of job security that was not genuine. That the "misleading" involved overstating the respondent's financial difficulty, overstating the risks facing the respondents and then "painting a picture" that the strategy (which included the 1996 EA) would confer job security by solving the problems without massive downsizing and forced retrenchments. The appellants said they voted in favour of the EA and thereby gave up important industrial rights including agreeing to the rescission of all existing site agreements and giving up their capacity to object to the use of contractors on certain major work. 2. That during early 1997 the respondent and its officers misled the employees about the financial position and whether the 1996 strategy had worked. It was alleged that the respondent used this to get some employees to agree to a "spill and fill" process which involved giving up seniority entitlements and potentially their permanent employment (if they were not successful in gaining a position in the "fill"). Some employees agreed to the spill and fill and diminished the capacity of the appellants to object to any abrogation of their seniority rights. 3. That either in late 1996 or early 1997 the respondent took a decision that it would downsize the workforce by 250 and that the respondent did so in circumstances where it was not necessary to maintain the viability of the mine. 4. That from June 1997 to October 1997 it was alleged that the respondent's officers subjected employees including the appellants to a process of selection and "deselection" which was flawed, a sham and humiliating for the appellants. It was further alleged that the decision to retrench the 14 appellants was taken in November 1997 at a time when the financial position of the mine was beginning to improve.

116 There is some difficulty in accepting the appellants' characterisation of their case regarding conduct, and the inherent proposition in that characterisation that their case was not solely about termination and monies payable on termination. The appellants asserted in the proceedings before Schmidt J that: It is far more likely that the managers [of the respondent] had in mind a substantial downsizing exercise before the finalisation of the 1996 Agreement … The evidence suggests that the 1997 plan [to downsize] was being developed before 30 September 1996 when the 1996 Agreement was certified in the AIRC … The Court should conclude that the managers entered into the 1996 Agreement in a misleading manner without full disclosure of their intentions. This conduct was unconscionable and to the extent it was allowed or not prevented by the Applicants' contracts they were unfair.

117 It does not seem to us that the appellants can logically contend, on the one hand, that the respondent had a secret plan to downsize its workforce from the outset and, on the other hand, assert that their case could not be characterised as one solely about termination and monies payable on termination.

118 In any event, we consider that it is only the first element of the appellants' case regarding conduct (that they were misled into agreeing to the EA) which could be said to be not relevantly connected with the subject matter of termination of employment. The other three elements go to: the respondent's reasons or motives for retrenching the appellants; the validity of the respondent's decision to make employees redundant; and, the process followed by the respondent in selecting employees for retrenchment.

119 These latter three elements raise the issue of potential conflict between any orders that might be made under s 106 of the IR Act (NSW) on the one hand and the terms of the 1990 Award and EA on the other. For example, the appellants seek an order (order A4 in the summonses for relief) varying the contracts of employment to provide for the payment of four weeks' pay for each year of completed service where the employee's employment had been terminated as a result of redundancy and/or company restructuring. The EA, on the other hand, provides for two weeks' pay for each completed year of service where the employee is retrenched by reason of technological change, market forces or diminution of reserves. The question arises as to whether there would be a direct inconsistency between the order sought under s 106 and the terms of the EA. Further, Schmidt J described the Award and EA as dealing with termination of employment "in the most comprehensive way imaginable", thereby raising the question as to whether the Award and EA covered the field to the exclusion of orders under s 106.

120 The approach we propose to take on appeal is to consider, firstly, the submission by the appellants that the respondent had secretly planned to retrench a significant number of employees and had encouraged the appellants to enter into the EA without disclosing this plan. We will then consider the first element of the appellant's case concerning conduct separately from the remaining three elements on the basis that the first element was not related to the issue of termination of employment and, therefore, no question of constitutional inconsistency could arise. We then propose to address the other three elements in the context of whether any orders that might be made under s 106 give rise to inconsistency.

Whether respondent's plan from the outset involved retrenchment 121 The appellants submitted that the respondent had planned to retrench a significant number of employees and had encouraged the appellants to enter into the EA without disclosing this plan. This was a submission not so much based on concrete evidence but rather it was put that, given the respondent's high production strategy they sought to adopt in about August or September 1996 so quickly became unviable, thereby giving rise to the need for large scale retrenchments, the Court should draw an inference that "the managers had in mind a substantial downsizing exercise before the finalisation of the 1996 Agreement." It may well have been that the respondent's managers did have in mind the prospect of downsizing but that appears to be in the context of an alternative strategy. In proceedings before Commissioner Leary of the AIRC at the time of certification of the EA (30 September 1996) Ms Honey, the advocate for the respondent, submitted that the plan to bring the Mine back to profitability was "extremely high risk" and she went on to say: If we are not successful in increasing our productivity to be able to move an additional 6 to 8 million b.c.m. (sic) per year, we will be in an even more difficult position than we are at the moment and we will need to review alternative business options including the downsizing option.

122 It cannot be inferred from this that the respondent misled the appellants into voting for the EA with the later intention of implementing large-scale retrenchments. Moreover, we note that the appellants' submissions regarding the respondent's intentions at the time the EA was being negotiated were more in the vein of it was "more likely" that the respondent had in mind a substantial downsizing exercise before the finalisation of the 1996 Agreement rather than in fact this was the respondent's secret intention. Further, we note on the appeal the appellants submitted that it was "either in late 1996 or early 1997" the respondent took a decision that it would downsize the workforce.

123 We do not consider the appellants have established that, on the balance of probabilities, the respondent, from the outset, had a secret strategy to downsize the workforce and that this strategy was deliberately kept from the appellants at the time the EA was negotiated. Respondent's assurances regarding job security

124 We deal next with the first element of the appellants' conduct case, namely, the allegation that they were duped into voting for the EA on the basis of false assurances of job security. The evidence does not reveal that the respondent "guaranteed" employment levels if the appellants voted in favour of the EA. The respondent made it clear to employees that it could not guarantee manning levels because the business situation was difficult at the time. In their affidavit evidence, however, most of the appellants alleged that at the meeting at the Singleton Civic Centre to consider the proposed EA, the respondent's representatives guaranteed employment security. For example, Mr Cuddigan said: I understood the Enterprise Agreement and the assurance given by Dudley Isles, Belinda Honey and Helen Spencer to be to provide me with a two year secure employment under the terms and conditions negotiated by the Enterprise Agreement Committee. It was implied by Dudley Isles, Helen Spencer and Belinda Honey and I understood, that if we voted for the Enterprise Agreement which was for a duration of two years it would make the pit viable for the next 15 years.

125 However, in the cross examination of a number of the appellants at first instance, it was put to them that representatives of the respondents made it clear that if the terms of the EA were adhered to by the employees and the business situation did not deteriorate then employment would be secure for at least the life of the EA. Invariably, the witnesses agreed with this proposition.

126 The exchange with Mr Cuddigan was as follows: Q: And you voted in favour of the enterprise agreement? A: Yes I did.

Q: And do you recall at the meeting there were company representatives present? A: There was, yes.

Q: And do you remember Mr Isles and Ms Spencer being present? A: They were, yes.

Q: And do you remember them making it clear that if the terms of the EA were adhered to by the employees and if the business situation did not deteriorate, then employment would be secure for at least the life of the EA, do you remember that being said? A: I remember that.

127 The appellants contended that this understanding by the witnesses of the respondent's position regarding job security was tainted by the fact that the respondent, through its managers, particularly Ms Spencer the respondent's Manager - Organisation, sought to "paint a picture" of job security; that there was something misleading in the respondent emphasising job security in its bid to win support for the EA. There could only be false misrepresentation if it could be shown that at the time of seeking to gain support for the EA the respondent did not intend to adhere to its assurances regarding job security. The evidence does not support such a finding. Furthermore, the assurances have to be seen in the context in which they were given, namely, that provided the business situation did not deteriorate then employment would be secure for at least the life of the EA. The appellants have not made out a case that the respondent's conduct was unfair in relation to the issue of assurances regarding job security. Whether orders sought by appellants give rise to inconsistency

128 We turn to the second, third and fourth elements of the appellants' conduct case and the issue of whether any orders that might be made under s 106 if unfairness were found, would give rise to constitutional inconsistency. By constitutional inconsistency we mean, of course, the inconsistency of laws arising from the application of s 109 of the Commonwealth Constitution which provides: When a law of a State is inconsistent with a law of the Commonwealth, the latter shall prevail, and the former shall, to the extent of the inconsistency, be invalid.

129 Whilst there was some debate about whether s 152 of the Industrial Relations Act 1988 (Cth) or s 170LZ of the Workplace Relations Act 1996 (Cth) was applicable, the appellants did not press the argument that s 170LZ applied. Consequently we have proceeded on the basis that the 1990 Award and EA are awards for the purpose of the 1988 Act and s 152 of that Act applies to them. Section 152 provides: Where a State law, or an order, award, decision or determination of a State industrial authority, is inconsistent with, or deals with a matter dealt with in, an award, the latter prevails and the former, to the extent of the inconsistency or in relation to the matter dealt with, is invalid.

130 There is to be found in Barry v Australian Broadcasting Corporation (2002) 112 IR 33 extensive consideration of constitutional inconsistency involving s 106 of the Act. We adopt that consideration for present purposes.

131 We should note at this point that although the appellants relied on Thornthwaite it was not a focus or significant element of their case. On the other hand, the Commonwealth contended that it was not to the point to characterise the field of operation of the IR Act (Cth) as, say, industrial regulation and the field of operation of the NSW Act as, say, contractual unconscionability as Haylen J did in Thornthwaite. Rather, it was submitted, the question to be answered in applying s 152 of the Commonwealth Act is not one of the relationship between the federal provisions for making awards (including certified agreements) and the New South Wales provision for an unfair contracts jurisdiction, but of the relationship between the federal award and the orders sought.

132 It will be seen from what follows that we have not found it necessary in this appeal to consider the issues involving the question of constitutional inconsistency in the context of two separate fields of operation, namely, "industrial regulation" versus "contractual unconscionability". We have examined in depth the orders sought by the appellants and where it becomes necessary, to consider whether the orders would be inconsistent with the 1990 Award or the EA or the Commonwealth Act.

133 The relevant orders sought by the appellants (order A5 was not pressed) were: A1. Orders declaring void in whole or in part the contracts of employment between the respondent and the appellants either from commencement or from some other time. A2. In the alternative, orders declaring void in whole or in part or varying the arrangement or collateral arrangement to the employment contracts whereby the respondent paid monies upon termination of the employment to the applicants. A3. In addition, orders that the contracts of employment or the arrangement or collateral arrangements relating to payments upon termination were unfair, harsh and unconscionable and contrary to the public interest. A4. In addition, orders varying the employment contracts or the arrangements or collateral arrangements relating to payments upon termination to provide for notice of termination, payment in lieu of notice, redundancy pay and a prescription that termination of employment shall not be harsh, unjust or unreasonable. … A6. An order that the respondent pay to the appellants such amount of money in connection with the contract so avoided or varied as may appear just in the circumstances.

134 Various alternative money claims were advanced and, as Schmidt J noted in her judgment, "each of which involved an improvement on the entitlement to payments which the applicants had on termination under the EA or the Award." It would appear that the appellants also sought compensation for the alleged humiliating treatment at the hands of the respondent and for "the harm done to the Applicants future prospects, their work reputation and their health, particularly having regard to the absence of apology from the Respondent for its unfair treatment of the employees as a result of deselection." Schmidt J referred to the alternative claims at [178] to [184] of her judgment as follows: 178 Two other alternative forms of money order were advanced. They were inserted into the summonses by way of amendment after the judgment given by Marks J. Compensation of $250,000 was claimed in Mr Burgess' case and different sums in the other applicants' summonses. How that sum was arrived at in each case was not made clear in the summonses. 179 Order 2 in Mr Burgess' summons provided: In the alternative the Applicant claims the sum of $250,000 by way of compensation and/or the payment of money consequent upon the making of claimed orders 1 and 2 in paragraph A hereof. 180 In closing submissions, Mr Howells explained that this had regard to payment until age 65, as fair payment in respect of termination of employment in the circumstances which here arose, where there was a legitimate expectation of employment to age 65, subject to a number of potential exigencies not identified in detail, but including the possibility of an earlier retirement date. This, it was explained, was an appropriate basis for the monetary reparation sought, given the assurances in relation to seniority and job security which were contained in the Award and EA. 181 Order 3 in Mr Burgess' summons provided: In the further alternative the Applicant claims the sum of $250,000 by way of compensation and/or the payment of money pursuant to claimed orders 3 and/or 6 and/or 7 in paragraph A hereof. 182 This, it was explained, referred to the claims made in paragraphs 3, 6, and 7 of the summonses. It was designed to meet the respondents' inconsistency arguments and had regard to the unusual contractual arrangement relied upon, which included the seniority provision and assurances about job security, contained in the Award and EA. The claim was said to have regard to the Court's wide discretion under the section to craft money orders, just in the circumstances of the case. It also included an interest component. 183 The alternative claims so advanced suffered from various difficulties, including the case of those applicants whose employment would not have continued, had the Award seniority provision been applied. Even more fundamentally however, the power to make money orders under s106(5), is a wide one, but must be exercised in accordance with the jurisdiction and in any event, as the High Court has observed, on a cautious basis. As Peterson J observed recently in McGowan v ABC : However, as I understand s.106, there remains an obstacle which must defeat the summons. That is, by s.106(5), the power to make an order for the payment of money depends upon an underpinning order which affects "any contract declared wholly or partly void, or varied . . .". If the Court is unable, as the result of the constitutional protection afforded to a determination of the ABC, to make an order voiding in whole or in part or varying the contract, no order for a money payment can be made (See Reich at 83.1). Accordingly, conduct unfairness can, in a case such as this, give rise to no remedy. 184 In my view, those alternative claims, advanced on the basis explained, could not overcome the problems of inconsistency here arising. The first alternative effectively entirely removed the Award and EA rights to terminate employment, prior to age 65. That has an obvious discriminatory impact, as well as being startlingly inconsistent with the Award and EA provisions as to termination of employment. The second alternative, even though more difficult to understand, led to no different result. Obscurity cannot provide a basis for the view being reached that inconsistency is thereby avoided. Nor can it be ignored that this order too seeks payment of a considerable sum in addition to the money already paid in order to satisfy the Award and EA obligations. As a matter of discretion an award could not be made on such a basis.

135 The alternative forms of money order were inserted into the summonses by way of amendment. The basis of the claims were not made at all clear in the summonses themselves and lead to great confusion. However, what we understand to be the rationale underpinning the alternative money orders is that the majority of the appellants had a legitimate expectation, based on what they considered to be provisions incorporated into their contracts of employment (or arrangements or collateral arrangements) regarding seniority and job security, that they would remain in the respondent's employ until age 65. It appears that the figure of $250,000 in respect of Mr Burgess was a nominal figure only as to what he might be entitled to on the basis of a putative retirement at age 65. It was submitted that the particular circumstances of each appellant would need to be considered and appropriate calculations made to take account of such matters as the prospect of early retirement, a discount for monies potentially earned in other employment, bonus allowances, etc.

136 In relation to order D2 it was put that a money order for the sum of $250,000 in Mr Burgess' case could be made consequent upon the making of orders A1 and A2 in paragraph A of the summons. However, orders A1 and A2 were expressed in the alternative so we presume what was meant was orders A1 or A2. In relation to order A2 it appears that what was contemplated by the appellants was that the "contractual arrangement" be varied so that they were in the nature of fixed terms contracts to age 65 years "because of the operation of the terms as to seniority and security of employment". Further, that order D2 could then be made in consequence of that variation under order A2. However, order A2 is not available because we have earlier concluded that there were no relevant arrangements or collateral arrangements to be declared void or varied. That leaves order D2 being in consequence of order A1 in paragraph A of the summonses.

137 If order A1 were to be made on the basis of a finding of unfair conduct by the respondent in breaching assurances regarding seniority and job security, it would seem to us that a consequential money order in the nature of order D2 could not be dismissed on the basis it was discriminatory. The reference to age 65 is merely a benchmark by which calculations could be made in relation to such matters as superannuation and in that context could not be regarded as discriminatory. However, whilst it may have been the case the appellants had an expectation that they were secure in their employment with the respondent until retirement, as we have already decided, that expectation could not have derived from any contract or arrangement or collateral arrangement to which s 106 of the IR Act (NSW) applied. On that basis, no order in the form of order D2 is available.

138 The alternative proposition is that order A1 could be made on the basis of a finding of unfair conduct arising out of the alleged unconscionable treatment of the appellants and the damage done to their work reputations and prospects for future employment. However, given the rationale underpinning order D2 we do not consider that a consequential money order in the form of order D2 would be appropriate or "just in the circumstances of the case". This is because the underpinning rationale for the order (based on contractual entitlements or assurances as to seniority and job security) would not have the relevant connection to an order under s 106(3) (order A1) made on the basis of a finding of unfair conduct arising out of the respondent's treatment of the appellants.

139 As to the proposed order D3, it appears to rely on the same rationale as that underpinning order D2 but it was put in the alternative as being in consequence of orders A3 and/or A6 and/or A7. Orders A6 and A7 are money orders, not orders voiding or varying a contract or arrangement, so order D3 could not be made on that basis. Order A3 is also not an order voiding or varying a contract or arrangement and thus could not support order D3. No basis exists for making order D3.

140 The reference by Schmidt J at [183] of her judgment to the judgment of Peterson J in McGowan v ABC [2001] NSWIRComm 49 is apposite, not only in respect of the alternative monetary orders sought but also to the claimed relief generally. We have already found that orders A1, A2 and A3 in the summonses are not available to the appellants on the ground that the respondent breached Award and EA terms said to have been incorporated or imported into the contracts or arrangements because these terms were not, in fact, incorporated or imported. The appellants, nevertheless, claimed that the respondent's conduct was unfair thereby rendering the contracts or arrangements unfair and providing a basis upon which orders A1 or A2 and A3 could be made.

141 In considering the appellants' case regarding unfair conduct, order A1 may be regarded as a claim for an order under s 106(3) of the Act, that is an order declaring a contract "wholly or partly void … either from the commencement of the contract or from some other time." Order A2 is not available for the reasons earlier expressed. Order A3 is merely a declaration that the contracts or arrangements or collateral arrangements were unfair within the meaning of s 106 of the Act and is not an order voiding or varying a contract or arrangement. The intention in seeking an order in the form of order A3 appears to have been to underpin order A4 by a necessary finding of unfairness in the form of an order. Order A4 may be regarded as a claim for an order under s 106(1) of the Act. Order A4 seeks benefits (notice, payment in lieu of notice, redundancy payments, etc.,) on termination of the appellants' employment greater than that provided by the Award and EA. Order A6 is an order for the payment of money. 142 In the absence of order A2, and given that order A3 is merely a declaration of unfairness, orders A1 and A4 are the only primary orders available to the appellants that would underpin an order for the payment of money under s 106(5) of the Act. 143 We thus arrive at the position where, potentially, what is left open to the appellants to pursue, if it could be proven that their contracts were rendered unfair by the respondent's conduct, is an order (order A1) declaring the employment contracts void in whole or in part, an order declaring the contracts unfair, harsh and unconscionable and contrary to the public interest (order A3) and an order (order A4) varying the contracts to provide for notice of termination or payment in lieu, redundancy pay and a provision that termination of employment shall not be harsh, unjust or unreasonable. The money order available under s 106(5) of the Act would be order A6 as particularised in the summonses. The summonses also provided for further or other orders as the Court considered appropriate (order A9).

144 As to the claim relating to order A1, an order wholly voiding the employment contracts, especially from commencement, is completely inconsistent with a case the central element of which was that employments contracts were unfair because the respondent breached terms relating to seniority and job security. The ritualistic framing of summons for relief under s 106 to reflect the entire range of relief under that section of the Act without proper regard to the nature of the case to be conducted would seem to us to be an unwise and potentially fatal practice.

145 An order wholly voiding the employment contracts would also mean that there was no relationship of employer and employee between the respondent and the appellants thereby depriving the federal industrial instruments, depending as they do on such a relationship being in existence, of any application. The inconsistency between such an order and the federal instruments is obvious. It would negate completely the rights, obligations and privileges conferred by the EA and 1990 Award. 146 In the alternative, the claim in order A1 seeks to have the employment contracts declared partly void either from commencement or some other time. No particulars were provided as to how this was to be done. It is difficult to see how an order declaring the employment contracts partly void could be made in the circumstances of this case without encountering the obstacle of constitutional inconsistency. But whatever form it took it could only be in respect of a finding of unfair conduct arising out of the appellants' claims relating to their unconscionable treatment at the hands of the respondent.

147 We acknowledge that in this case the appellants had sought to make out a case of unfair conduct beyond the circumstances of termination and monies paid on termination. The appellants referred to the conduct by the respondent in 1996 in misleading the appellants into believing that if they agreed to the EA they would be secure in their jobs thereby enticing them to give up certain of their industrial rights. However, we have earlier concluded that the evidence was insufficient to demonstrate that appellants were misled. The remaining unfair conduct alleged by the appellants is all related to the restructuring of the respondent's operations, and the effect of this on the appellants, and to the process, and fact, of termination and the effects of the aftermath of termination on such matters as the appellants' work reputations, prospects of future employment and health.

148 In relation to the process leading up to their termination the appellants variously claimed that there was a lack of proper communication about the restructuring process, use of "phantom interviews", inadequate job descriptions in the new structure, gross incompetence on the part of the respondent's officers in the interviewing process, unfair decisions about which staff employees would be eligible for positions in the new structure and an absence of an overall fair selection procedure as to who would be retained in employment and who would be retrenched. The appellants contended that the whole selection process was a sham.

149 The respondent, on the other hand, contended in this respect that the federal instruments covered the field and there was no scope for any orders to be made under s 106 providing relief to an employee covered by a federal award who complained, for example, that in being selected for retrenchment he or she was subjected to humiliating or unconscionable treatment or that his or her work reputation or health had been damaged by being unfairly selected for retrenchment.

150 Given the way the parties argued their cases on appeal we do not consider we have been provided with complete assistance on the relevant issue and, therefore, consider it appropriate to provide the parties with an opportunity to address this relatively narrow issue of whether an order could be made, and on what terms, declaring the appellants' employment contracts partly void either from commencement or some other time, having regard to what we have decided in this judgment and the observations contained herein.

151 Regardless of whether such an order could be made it leaves for consideration whether any other orders, including money orders, are available to the appellants and we deal with that question below. Before doing so, however, we refer to an observation by the Full Bench in Hudson v Qantas Airways Limited (1985) 10 IR 331 at 333-334 that: [I]t cannot be said that, as a general rule, inconsistency would arise simply because a federal award regulates a particular employment in respect of which an order may be sought under s 88F(1) avoiding or varying the contract of employment or any collateral contract or arrangement, or, under s 88F(2), to rectify or adjust, by the payment of money sums, any unfairness or the like which may have been suffered. Apart from the need to examine the declarations and orders which might be made under s 88F in the light of what is embraced by the particular award and the settlement achieved by it, the special nature and purpose of s 88F makes inconsistency potentially unlikely to arise, especially where an alleged unfair situation relates to aspects of the employment relationship extraneous to the specific subject matters regulated by the award. We consider that the observation of the Full Bench in that case applies equally to proceedings pursuant to s 106 of the current statute.

152 We have already referred to the order claimed in par A3 of the summonses and the fact it is merely a declaration that the employment contracts or the arrangements or collateral arrangements were unfair, harsh and unconscionable and contrary to the public interest. We concluded earlier there were no relevant arrangements or collateral arrangements. That leaves for consideration whether an order could be made in relation to the employment contracts if there were to be a finding of unfair conduct. We earlier noted that order A3 is not an order voiding or varying a contract or arrangement so it could not underpin an order under s 106(5) of the Act. Order A3 is also not an order authorised by s 106 although the Commission in Court Session may make a declaratory order pursuant to s 154 of the Act whether or not any consequential relief is or could be claimed. The claim for an order in A9 of the summonses provides scope for the making of a declaratory order under s 154.

153 We note the 1990 Award provides that "Termination of employment by an employer shall not be harsh, unjust or unreasonable". However, what the appellants seek here is an order that the contracts of employment between the appellants and the respondent were unfair, harsh and unconscionable and contrary to the public interest. We do not consider any direct inconsistency necessarily arises between the provisions of the Award and an order in the terms of A3. That a contract of employment might be held to be unfair and contrary to the public interest is not necessarily a finding that the termination of the employment relationship was harsh, unjust or unreasonable.

154 Moreover, in the context of this case it could not be successfully contended that the 1990 Award and EA, in conjunction with the relevant provisions of the IR Act (Cth), covered the field to the exclusion of the unfair contracts provisions of the IR Act (NSW) in the manner described by Dixon J in Victoria v The Commonwealth (1937) 58 CLR 618 at 630 (quoted with approval by a unanimous High Court in Telstra Corporation Ltd v Worthing (1999) 197 CLR 61 at 76), namely: Moreover, if it appears from the terms, the nature or the subject matter of a Federal enactment that it was intended as a complete statement of the law governing a particular matter or set of rights and duties, then for a State law to regulate or apply to the same matter or relation is regarded as a detraction from the full operation of the Commonwealth law and so as inconsistent.

155 The federal instruments and legislation, in the context of these proceedings, may be said to deal with the subject matter of termination of employment in a most comprehensive way. However, s 106 of the IR Act (NSW) is directed much more broadly to the question of an impugned contract whereby a person performs work in any industry, whether existing or terminated, as to the fairness of its express or implied terms: see Beahan v Bush Boake Allen Australia Limited (1999) 93 IR 1 at 35. In Beahan the Full Bench said: What emerges from the above authorities, we think, is the now settled view that s.106 (as with the previous s.88F of the 1940 Act and s.275 of the 1991 Act) is directed to an impugned contract of employment, whether existing or terminated, as to the fairness of its express or implied terms. Such unfairness will depend upon the facts of each particular case by focusing attention on the contractual relationship between a particular employer and employee and where the unfairness may arise from the terms of the contract itself, the surrounding circumstances and/or the manner of performance or operation of the contract. The section, we emphasise, is not concerned with re-establishing an employment relationship which has ended nor with compensating an employee for the loss of his employment contract. In other words, the section is properly concerned with the fairness of the terms of a contract of employment in its various respects and, if relevantly found to be unfair, to provide remedial relief by avoiding or varying the terms of that contract and to order the payment of money in connection with any contract so avoided or varied as is considered just in the circumstances of the case.

156 Of course, when one comes to examine the question of inconsistency between two closely related, indeed often overlapping, fields such as unfair dismissals and unfair employment contracts it is necessary to look closely at the particular circumstances of the case. Our view of the evidence in this case is that the appellants' complaints regarding the respondent's unfair conduct (except the complaint about the appellants being misled and being given false assurances) were overwhelmingly complaints about their dismissal - not only the actual dismissal but the process leading up to the dismissal and the consequences of dismissal. The relief sought focused on notice of termination, payment in lieu of termination and retrenchment pay; the grounds in support of the claims for relief consistently and repeatedly refer to termination of employment and the unfairness caused by such termination. 157 As we noted earlier, the 1990 Award provides that "Termination of employment by an employer shall not be harsh, unjust or unreasonable" and provides a process for resolving any disputes or claims in respect of unfair dismissal including that, if the matter is not settled, it is to be submitted to the Australian Industrial Relations Commission which shall endeavour to resolve the issue by conciliation. By making an order that the employment contracts were unfair, etc., the Court would be doing so on the basis that the process leading to termination, the actual termination and the consequences of termination were unfair. This would, in effect, be pre-empting the outcome of the dispute settlement procedure in cl 5(g) of the Award, pre-empting the outcome of any claim for a penalty in breach of cl 5(f) under s 178 of the Workplace Relations Act or recovery of wages under s 179 of that Act and pre-empting the outcome of an application by an employee for relief under Part VIA - Division 3 of that Act on the ground that the termination was harsh, unjust or unreasonable. In those circumstances, we consider an order in the form of order A3 would be inconsistent with the terms of the 1990 Award.

158 The appellants also seek relief in the form of orders A4 and A6 of the summonses. That relief would involve the making of orders providing for greater periods of notice and payment in lieu of notice and higher payments on termination of employment than those the respondent was obliged to pay under the EA and the 1990 Award.

159 That is, an order to the effect of orders A4(a) and (b) or order A6 in the summonses would impose on the respondent legal obligations that it did not carry under the terms of the 1990 Award or the EA in circumstances of termination of employment and the monies to be paid on termination. It would also involve making an order (order A4(c)) that termination of employment shall not be harsh, unjust or unreasonable in circumstances where the Award provides in cl 5(f) a provision that "Termination of employment by an employer shall not be harsh, unjust or unreasonable" and a regime for dealing with disputes relating to unfair dismissals. As to the making of an order that termination of employment shall not be harsh, unjust or unreasonable, this provision is the same as that in cl 5(f) of the Award. It would appear that if an order were to be made in those terms there would be no direct inconsistency because it would be possible to simultaneously obey both the Award and the order under s 106. However, it seems to us that, in relation to this particular matter, the 1990 Award occupies the field in respect of which order A4(c) purports to intrude. 160 Returning to consider orders A4(a) and (b), in Hudson what was being attacked under s 88F of the Industrial Arbitration Act 1940 (a predecessor to s 106) was an agreement that an employee covered by a federal award take unpaid leave whilst criminal charges were pursued against him. It was agreed there was no capacity for such leave in the relevant federal award and that the agreement between the parties was an "arrangement collateral to the employment contract" (at 333). The appellant sought to have the collateral arrangement declared unfair. The Full Bench found there was a direct collision between what it regarded as the appellant's claim for wages and travelling allowance during the period of unpaid leave and the provisions of the federal award. At 336 the Full Bench said in relation to the salary component of the claim: [T]o the extent that it relates to restitution of salary lost during the period of leave without pay, is based on what is prescribed by the award, not some contracted amount. On that basis, an order under s 88F(2) would, in effect, impose an obligation to pay the award salary in respect of a period during which, because of particular circumstances of the case, there was no obligation under the award to pay such salary … Assuming an order were to be made under s 88F(1) to avoid the leave without pay agreement, what may validly follow, therefore, could not, in our view, be an order under s 88F(2) for payment related to salary or travelling allowances lost during the period of the absence.

161 Thus, in Hudson the Full Bench considered that an order to compensate for the loss of a travelling allowance would make the respondent liable to pay the allowance in circumstances "beyond those specified in the award as the basis for entitlement" and to pay wages in respect of a period during which there was no award obligation to pay such wages. It seems to us, notwithstanding the appellants' attempts to distinguish Hudson, there is a distinct parallel between that case and the present proceedings for the reasons demonstrated. That is, in broad terms, both the claims in Hudson and the claims before us sought orders in respect of employees covered by federal instruments. The orders sought would have required the respondents to provide a benefit beyond, or in excess of, what the relevant Federal instrument prescribed.

162 Whilst the Full Bench in Hudson did not refer to it in terms, their Honours appear to have found direct inconsistency of the kind spoken of by Barwick CJ in Blackley v Devondale Cream (Vic) Pty Ltd (1968) 117 CLR 253. In that case it was held by Barwick CJ, McTiernan, Taylor and Menzies JJ, Kitto J dissenting, that a determination made by a State wages board fixing the lowest weekly and hourly rates that might be paid to any person employed in certain kinds of work was inconsistent with an award made under the Conciliation and Arbitration Act 1904 (Cth). Accordingly, it was found that the determination was invalid under s 109 of the Commonwealth Constitution to the extent of the inconsistency. At 257 Barwick CJ said: [I]t is sufficient, in my opinion, for present purposes that the Act operating upon the award requires the respondent to pay to Macdonald not more than the stated sum as a wage for the performance of the work in question. In my opinion, it is the obligation which the statute imposes upon the respondent with which this appeal is concerned, not with the rights or obligations inter se of the respondent and its employee. It may be true that the award does not purport directly to regulate those rights and obligations. But that, to my mind, does not leave open an area in which laws may be made which impinge upon the obligation which the award imposes on the employer.

163 His Honour noted the argument that non-unionists did not feature in the dispute which gave rise to the award, and were, therefore, not part of the "field" over which the award operated. However, this argument was rejected in the following terms (at 257-259): I am unable to accept such an analysis. It seems to me that it attempts to dissociate in an inadmissible way the right of the employee to recover a wage from the obligation of the employer to pay it. On the assumption I have for present purposes been prepared to make, the non-unionist employee has no right to recover the wage the award prescribes. But to so say does not deny that the employer bound by the award is under obligation to pay it - an obligation at least enforceable by the employee organization both civilly and criminally. Properly understood, the act and the award, in placing that obligation upon the employer, enacts, in my opinion, that the sum so to be paid is the only sum which by law the employer is obliged to pay. The description "minimum wage" must not, in my opinion, be allowed to obscure the fact that in truth the prescribed wage is the largest wage which the employer is required by the Act and the award to pay. It is also of course the least he can lawfully pay. But no room is left, in my opinion, for a statute of the State to require the payment of a larger sum by way of wages than the amount prescribed by the award. To give the employee a right to be paid the larger wage is, in my opinion, to come into direct collision with the provisions of the award. It is not possible, in my opinion, to dissociate his right from the obligation of the employer: but, in any case the Victorian Act purports to impose an obligation on the employer to pay the specified wage.

In my opinion, there is no need in this case to seek to define the intended field of the federal legislation in order to resolve the question of inconsistency. The case, to my mind, is one of direct collision in which the State law, if allowed to operate, would impose an obligation greater than that which the federal law has provided should be the amount which the employer should be bound by law to pay.

Obedience to the one, the award, is disobedience to the other, the determination. Payment by the respondent of wages conforming to the award involved it in disobedience of the State provisions. Of course both may be obeyed by the employer by abandoning the protection of the Act and award and paying the larger sum. But, in my respectful opinion, that they may both be obeyed in that sense indicates their inconsistency. Taylor J came to a similar view at 270 as did Menzies J at 272-273. Kitto J considered that non-unionists were not a part of the field and, therefore, not within the purview of the award at 262-263.

164 In Telstra Corporation Limited v Worthing (1999) 197 CLR 61 the High Court was concerned with the question of inconsistency between Commonwealth and State laws relating to workers' compensation. In a unanimous decision the High Court gave express approval to what the majority said in Blackley v Devondale Cream. The Court said at 76: [27] The applicable principles are well settled. Cases still arise where one law requires what the other forbids. It was held in Wallis v Downard-Pickford (North Queensland) Pty Ltd (1994) 179 CLR 388 at 389 that a State law which incorporated into certain contracts a term which a law of the Commonwealth forbad was invalid. However, it is clearly established that there may be inconsistency within the meaning of s 109 although it is possible to obey both the Commonwealth law and the State law ( Viskauskas v Niland (1983) 153 CLR 280 at 291-292). Further, there will be what Barwick CJ identified as "direct collision" where the State law, if allowed to operate, would impose an obligation greater than that for which the federal law has provided ( Blackley v Devondale Cream (Vic) Pty Ltd (1968) 117 CLR 253 at 258-259; see also at 270 per Taylor J; at 272 per Menzies J; Australian Broadcasting Commission v Industrial Court (SA) (1977) 138 CLR 399 at 406; Dao v Australian Postal Commission (1987) 162 CLR 317 at 335, 338-339). Thus, in Australian Mutual Provident Society v Goulden (1986) 160 CLR 330 at 339, in a joint judgment, the Court determined the issue before it by stating that the provision of the State law in question "would qualify, impair and, in a significant respect, negate the essential legislative scheme of the Commonwealth Life Insurance Act ". A different result obtains if the Commonwealth law operates within the setting of other laws so that it is supplementary to or cumulative upon the State law in question ( Ex parte McLean (1930) 43 CLR 472 at 483; Commercial Radio Coffs Harbour v Fuller (1986) 161 CLR 47 at 57-58. But that is not this case.

165 Similarly, in Clyde Engineering Co Ltd v Cowburn (1926) 37 CLR 466 the High Court held invalid a State law setting a 44 hour week to the extent it impinged upon the operation of a federal award requiring a 48 hour week. As Starke J said at 525: An award that a person shall pay a certain minimum rate of wage involves, in its negative aspect, that he need pay no more. It is not consistent with such a direction to say that [the employer] shall pay a lower or a higher rate of wage.

166 Having regard to the claims in order A4(a) and (b) of the summonses, which seek greater notice of termination or payment in lieu and higher redundancy benefits than what the respondent is required to provide under the 1990 Award and EA, inevitably the conclusion must be that order A4(a) and (b) would be inconsistent with cl 7(d) as to notice of termination, cl 30 as to redundancy, cl 31 as to severance and retrenchment of the EA and cl 5 Contract of Employment and cl 26 Severance and Retrenchment Pay of the 1990 Award. Accordingly, there is no jurisdiction to entertain the claims in order A4(a) and (b) of the summonses.

167 As to order A6, the claim was that "the respondent pay the applicant such amount of money in connection with the contract of employment so avoided or varied as may appear just in the circumstances of the case." This claim was particularised in each of the summonses. In Mr Burgess' case the particulars referred to 30 months' payment in lieu of notice and a redundancy payment at the rate of four weeks' pay per year of service. In addition, the particulars referred to "Loss of COSAF Superannuation" (approximately $14,300 based on 30 months notice) and "Coal & Allied Superannuation Plan No 1) (being the appropriate difference between the amount paid and entitlements at 65 years) - $14,686.08". The particulars relating to the other appellants also referred to pay in lieu of notice, redundancy pay and superannuation but, of course, the amounts claimed in each case differed.

168 For the same reasons we expressed as to the inconsistency in relation to order A4, the claim in order A6, in so far as it involves money orders relating to payment in lieu of notice and redundancy pay, also leads to direct inconsistency with the relevant Award and EA provisions. As to superannuation, there was no evidence before us that superannuation was the subject of regulation by the federal industrial instruments or that orders in respect of superannuation were otherwise capable of giving rise to inconsistency. We intend to give the parties the opportunity of addressing the question of superannuation further but, of course, any orders relating to superannuation payments would depend on whether an order could be made partly voiding the employment contracts.

169 The appellants claimed that Schmidt J failed to deal with a claim relating to bonus payments. As we understand the claim it was that the appellants at first instance had sought the inclusion of bonus payments in the calculation of monies payable on termination of employment. These bonus payments, it was said, were contractual entitlements, not entitlements arising out of the 1990 Award or EA.

170 The respondent, on the other hand, submitted that her Honour did deal with the issue of bonus payments but, in any event, the appellants had no contractual entitlement to bonus payments on termination of employment. It was submitted that payments relating to severance or retrenchment were governed by the EA, which provided that such payments were to be calculated on an employee's base rate of pay not including bonus payments.

171 Taking Mr Burgess' case as an example, the claim particularised in the summons was that on termination he should have been paid a payment in lieu of notice at the rate of $1315.14 per week for 30 months. In relation to a redundancy payment the claim was for four weeks' pay per year of service at the rate of $1315.14 per week in respect of 23 years' service. There does not appear to have been any dispute between the parties regarding the weekly rate relevant to the claim for payment in lieu of notice, namely, $1315.14. However, in relation to redundancy pay, Mr Burgess received his base rate of pay of $710.60 per week as opposed to the claimed rate of $1315.14 per week. We were not advised what it was that constituted the difference between the base rate of pay of $710.60 per week and the amount of $1315.14 per week payable as pay in lieu of notice or whether it was derived from the 1990 Award or EA or was a separate contractual entitlement.

172 We note that Mr Burgess' weekly salary including bonus was said to be $1862.19 but this was not the figure claimed by Mr Burgess in relation to how his redundancy pay should be calculated. If the difference between $1315.14 and $1862.19 was constituted by a bonus payment there was no claim in respect of Mr Burgess for such a payment and no such claim can be pressed on appeal. The same rationale can be applied to the payments relating to the other appellants where there is a difference between the claimed rate for calculating redundancy pay and the rate applied by the respondent.

173 The issue then becomes, if unfairness were found and a money order was to be made in Mr Burgess' favour in relation to redundancy pay, whether any payment should be based on the claimed weekly rate of $1315.14. This could only be in prospect if the difference between $710.60 per week and $1315.14 per week was an overaward or contractual entitlement not derived from the Award or EA and if it were appropriate or just to be paid in the circumstances of termination of employment. We intend to provide the parties with an opportunity of addressing this outstanding issue because, as we have said, we were not informed as to what constitutes the difference between $710.60 and $1315.14. Of course, if there is no basis for making an order declaring the contracts of employment partly void, which is the other matter on which the parties are required to address (in addition to superannuation), then the question of a money order becomes entirely academic.

174 We summarise our main findings as follows: (1) That neither the Award nor the EA had been incorporated or imported into the appellants' employment contracts with the respondent. (2) That neither cl 24 of the Award nor a system of seniority based on length of service at the Mine and in particular classifications was part of the appellants' contracts of employment and other arrangements. (3) That cl 37 of the EA did not form part of the appellants' contracts of employment or arrangements or collateral arrangements. (4) That Schmidt J was correct in declining to entertain the appellants' claim to vary the appellants' contracts of employment or arrangements or collateral arrangements to include a system of seniority and assurances about job security. (5) That there were no arrangements or collateral arrangements between the appellants and the respondent within the meaning of section 106 of the Industrial Relations Act 1996 (NSW) capable of being varied to incorporate the alternative claims identified in the appellants' closing submissions before Schmidt J. The claim for an order in par A2 of the summonses is, therefore, not available to the appellants. (6) That the appellants did not establish on the balance of probabilities the respondent, from the outset, had a secret strategy to downsize the workforce and that this strategy was deliberately kept from the appellants at the time the EA was negotiated. (7) That the evidence does not support a finding that the respondent's conduct was unfair in relation to the giving of assurances regarding job security at the time the EA was submitted for approval by the appellants in September 1996. (8) That no order in the form of the orders sought in pars D2 and D3 of the summonses is available to the appellants. (9) That the orders sought in pars A1 and A4 of the summonses are the only primary orders available to the appellants that would underpin an order for the payment of money under s 106(5) of the Act. (10) That an order wholly voiding the employment contracts, especially from commencement, is completely inconsistent with a case the central element of which was that employments contracts were unfair because the respondent breached terms relating to seniority and job security. (11) That an order wholly voiding the employment contracts would mean that there was no relationship of employer and employee between the respondent and the appellants thereby depriving the federal industrial instruments, depending as they do on such a relationship being in existence, of any application. The inconsistency between such an order and the federal instruments is obvious. It would negate completely the rights, obligations and privileges conferred by the EA and Award. (12) That in the alternative, the claim in par A1 of the summonses seeks to have the employment contracts declared partly void either from commencement or some other time. No particulars were provided as to how this was to be done. It is difficult to see how an order declaring the employment contracts partly void could be made in the circumstances of this case without encountering the obstacle of constitutional inconsistency. But whatever form it took it could only be in respect of a finding of unfair conduct arising out of the appellants' claims relating to their unconscionable and humiliating treatment at the hands of the respondent. (13) That the parties are to be provided with an opportunity to address the narrow issue of whether an order could be made, and on what terms, declaring the appellants' employment contracts partly void either from commencement or some other time, having regard to what we have decided in this judgment and the observations contained herein. (14) That an order in the form of order A3 would be inconsistent with the terms of the 1990 Award. (15) That the claims in order A4(a) and (b) of the summonses, which seek greater notice of termination or payment in lieu and higher redundancy benefits than what the respondent is required to provide under the Award and EA, inevitably lead to the conclusion that an order in the form of A4(a) and (b) would be inconsistent with cl 7(d) as to notice of termination, cl 30 as to redundancy, cl 31 as to severance and retrenchment of the EA and cl 5 Contract of Employment and cl 26 Severance and Retrenchment Pay of the 1990 Award. Accordingly, there is no jurisdiction to entertain the claims in order A4(a) and (b) of the summonses. (16) That an order in the form of the order in par A4(c) of the summonses would be inconsistent with the 1990 Award. (17) That for the same reasons expressed as to the inconsistency in relation to order A4(a) and (b), the claim in order A6, in so far as it involves money orders relating to payment in lieu of notice and redundancy pay, also leads to direct inconsistency with the relevant Award and EA provisions. (18) That there was no evidence superannuation was the subject of regulation by the federal industrial instruments or that orders in respect of superannuation were otherwise capable of giving rise to inconsistency. Subject to whether an order can be made partly voiding the appellants' employment contracts and the form of such an order the parties are to be given the opportunity of addressing the question of superannuation further. (19) That, subject to whether an order can be made partly voiding the appellants' employment contracts and the form of such an order, the parties are to be given an opportunity of addressing whether the rate for calculating redundancy pay for each of the applicants should be a rate higher than the base rate of pay.

175 We make the following orders and directions: 1. The appellants are to file and serve short minutes of order in respect of the appeal and submissions in writing in relation to the matters referred to in par 174(13), (18) and (19) hereof and the costs of the appeal within 21 days of the date of this judgment. 2. The respondent is to file and serve written submissions in reply within 14 days of receiving the appellants' submission. 3. The Full Bench shall sit at 9.30 am for one hour on Wednesday 4 February 2004 to hear any oral submissions regarding the outstanding issues. 4. Leave is granted to extend time for appeal in relation to costs at first instance. The question of costs, including that relating to the Commonwealth's intervention, is reserved. _____________________________

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