s.451(1) application for order for protected action ballot to be held

Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia

Application under s.463(5) for an extension of the required notice period for notice of protected action under s.441.

[1] On 3 September 2007 the Commission made orders for the holding of a protected action ballot among certain employees of Australia Post (the ballot order). During the hearing of the application for those orders Australia Post made an application pursuant to s.463(5) of the Workplace Relations Act 1996 for the specification of a longer period of written notice for the purposes of s.441(2)(b). The consideration of that application was adjourned by consent on the basis that Australia Post could renew the application with appropriate evidence if it was so minded and the ballot order varied accordingly in the event that Australia Post was successful on the renewed application.

[2] Australia Post renewed the application and it was heard on 26 September 2007. On 27 September 2007 the Commission informed the parties of its decision to refuse the application. These are the Commission's reasons for refusing the application.

[3] Relevantly for present purposes, subsection 435(1) and (2) authorise employees and their union to take industrial action against the employer "for the purpose of... supporting or advancing claims made in respect of [a] proposed collective agreement... if the organisation, member, officer or employee does so, the organising of, or engaging in, that industrial action is protected action."

[4] Section 441 relevantly provides:

"441 Exclusion - notice of action to be given

Notice of employee and employee organisation actions

(1) Any action taken as mentioned in subsection 435(2) by:

(c) an officer or employee of such an organisation acting in that capacity; or

is not protected action unless the requirements set out in subsection (2) are met.

(a) if the action is in response to, and is taken after the start of, industrial action against employees by the employer in respect of the proposed collective agreement - the organisation, or the employee who is a negotiating party, has given the employer written notice of the intention to take the action; or

(b) in any other case - the organisation, or the employee who is a negotiating party, has given the employer at least the required written notice of the intention to take the action.

(3) For the purposes of paragraph (2)(b), the required written notice is:

(b) if a ballot order made under section 462 in respect of the action specifies a higher number of days - that number of days' written notice.

Note: For the maximum number of days the ballot order can specify, see subsection 463(5).

Notice to state nature of intended action and start day

(6) A written notice or other notification under this section must state the nature of the intended action and the day when it will begin.

[5] Subsection 463 deals with matters to be included in a ballot order. Subsection 463(5) provides:

"(5) If the Commission is satisfied, in relation to the proposed industrial action that is the subject of the order, that there are exceptional circumstances justifying the period of written notice referred to in paragraph 441(2)(b) being longer than 3 days, the order may specify a longer period, of up to 7 days."

[6] The issue for the purposes of the present application is whether there are "exceptional circumstances justifying" the Commission varying the ballot order to specify a period of written notice for the purposes of s.441(2)(b) that is longer than 3 working days. Australia Post seeks a variation that specifies the maximum period of 7 days.

[7] The better view is that when s.463(5) is construed in context, particularly by reference to the terms of s.441, the reference to "7 days" in s.463(5) should be interpreted as a reference to 7 "working days". Argument proceeded on the assumption that "working days" refers to week days and does not include weekend days. I am far from satisfied that this assumption is correct. There is much to be said for the argument that the expression "working days" refers to the days of the week ordinarily worked in the business of the particular employer. However, that issue need not be resolved on this application.

The expression "exceptional circumstances justifying" in s.463(5)

[8] Neither the explanatory memorandum nor the second reading speech provide any assistance in construing the expression "exceptional circumstances justifying" in s.463(5). There is nothing in the context of the Act to suggest that the expression should be given anything other than its ordinary meaning.

[9] The meaning of the expression "exceptional circumstances" in s.106KA of the Health Insurance Act 1973 (Cth) was considered by Rares J in Ho v Professional Services Review Committee No 295 [1] where his Honour made reference to the relevant authorities in holding:[2]

"23. I am of opinion that the expression 'exceptional circumstances' requires consideration of all the circumstances. In Griffiths v The Queen [1989] HCA 39; (1989) 167 CLR 372 at 379 Brennan and Dawson JJ considered a statutory provision which entitled either a parole board or a court to specify a shorter non-parole period than that required under another section only if it determined that the circumstances justified that course. They said of the appellant's circumstances:

'Although no one of these factors was exceptional, in combination they may reasonably be regarded as amounting to exceptional circumstances.'

24. Brennan and Dawson JJ held that the failure in that case to evaluate the relevant circumstances in combination was a failure to consider matters which were relevant to the exercise of the discretion under the section (167 CLR at 379). Deane J, (with whom Gaudron and McHugh JJ expressed their concurrence on this point, albeit that they were dissenting) explained that the power under consideration allowed departure from the norm only in the exceptional or special case where the circumstances justified it (167 CLR at 383, 397).

25. And, in Baker v The Queen [2004] HCA 45; (2004) 223 CLR 513 at 573 [173] Callinan J referred with approval to what Lord Bingham of Cornhill CJ had said in R v Kelly (Edward) [1999] UKHL 4; [2000] QB 198 at 208, namely:

'We must construe "exceptional" as an ordinary, familiar English adjective, and not as a term of art. It describes a circumstance which is such as to form an exception, which is out of the ordinary course, or unusual, or special, or uncommon. To be exceptional a circumstance need not be unique, or unprecedented, or very rare; but it cannot be one that is regularly, or routinely, or normally encountered.'

26. Exceptional circumstances within the meaning of s 106KA(2) can include a single exceptional matter, a combination of exceptional factors or a combination of ordinary factors which, although individually of no particular significance, when taken together are seen as exceptional. Thus, the sun and moon appear in the sky everyday and there is nothing exceptional about seeing them both simultaneously during day time. But an eclipse, whether lunar or solar, is exceptional, even though it can be predicted, because it is outside the usual course of events.

27 It is not correct to construe 'exceptional circumstances' as being only some unexpected occurrence, although frequently it will be. Nor is it correct to construe the plural 'circumstances' as if it were only a singular occurrence, even though it can be a one off situation. The ordinary and natural meaning of 'exceptional circumstances' in s 106KA(2) includes a combination of factors which, when viewed together, may reasonably be seen as producing a situation which is out of the ordinary course, unusual, special or uncommon. And, the section is directed to the circumstances of the actual practitioner, not a hypothetical being, when he or she initiates or renders the services."

[10] In this passage his Honour was concerned with the ordinary meaning of the expression "exceptional circumstances" and the approach identified is, in my view, equally applicable to the use of that expression in s.465(3). In summary, the expression "exceptional circumstances" requires consideration of all the circumstances. To be exceptional, circumstances must be out of the ordinary course, or unusual, or special, or uncommon but need not be unique, or unprecedented, or very rare. Circumstances will not be exceptional if they are regularly, or routinely, or normally encountered. Exceptional circumstances can include a single exceptional matter, a combination of exceptional factors or a combination of ordinary factors which, although individually of no particular significance, when taken together are seen as exceptional. It is not correct to construe "exceptional circumstances" as being only some unexpected occurrence, although frequently it will be. Nor is it correct to construe the plural "circumstances" as if it were only a singular occurrence, even though it can be a one off situation. The ordinary and natural meaning of "exceptional circumstances" includes a combination of factors which, when viewed together, may reasonably be seen as producing a situation which is out of the ordinary course, unusual, special or uncommon.

[11] However, it is important to note that when considering whether to make an order pursuant to s.463(5) the Commission is not simply concerned with determining whether there are exceptional circumstances. There must be exceptional circumstances "justifying" the specification of a longer notice period. The notion of justification is critical and calls for a consideration of the purpose of the notice required by s.441.

[12] The predecessor of s.441 of the current Act was s.170MO of the pre-reform Act. A majority of the Full Court of the Federal Court in Davids Distribution Pty Ltd v National Union of Workers [3] held that s.170MO of the pre-reform Act and, in particular, s.170MO(5)

"...was designed to ensure that industrial disputants who are to become affected by protected action, in relation to which their usual legal rights are significantly diminished, are at least able to take appropriate defensive action." [4]

[13] This was a statement of the purpose or intent of the pre-reform Act in providing for a period of notice before protected action could be taken being notice that specified the nature of the intended action and the day when it will begin. The majority provided examples that explained the notion of "appropriate defensive action":

"For example an employer may operate a sophisticated item of equipment that will be damaged if precipitately shut down. If warned in advance of a ban that might affect the continued operation of that plant, the employer might choose a controlled shut down during the period of the notice. More commonly, perhaps, an employer might use the notice time to communicate with suppliers and customers, and thereby reduce the consequences for them of the notified industrial action."

[14] As the clear successor of s.170MO, this reasoning is equally applicable to s.441 of the Act and must therefore be relevant to s.463(5), concerned, as it is, with an extension of the required notice period referred to in s.441(2) and (3).

[15] Reading s.441 and s.463(5) together suggests that the legislature intended that the period of 3 working days specified in s.441(3)(a) was an appropriate period to allow an employer faced with protected action to undertake "appropriate defensive action" unless there are "exceptional circumstances justifying" a longer period, up to a maximum of 7 working days.

[16] That there should be limits on the extent of the notice required to be given under s.441 is explained by an understanding of the role and significance of protected action. The amendments effected by the Workplace Relations Amendment (WorkChoices) Act 2005 (WorkChoices Act) are but the latest in a series of reforms that have seen the power of the Commission to make awards in settlement of disputes, including disputes over wages and conditions of employment, diminished. The WorkChoices Act effectively removes that power altogether.

[17] At the same time, successive reforms have shifted the focus of Australia's federal industrial relations system to individual and collective bargaining. Where employees elect to pursue collective bargaining, the bargaining process for a collective workplace agreement is, for all practical purposes, the only opportunity those employees have to exercise bargaining power to improve wages and conditions for an extended period.

[18] The only occasion that employees covered by the federal system, or their union, can legally take industrial action is during the course of bargaining for a collective workplace agreement. Such action is referred to as "protected action". The Act imposes an extensive series of restrictions and requirements that must be satisfied before industrial action taken during a bargaining period can be protected action. Industrial action taken in any other circumstance is illegal and exposes employees and unions involved in that action to civil penalties. [5] In particular, there is no such thing as lawful industrial action during the nominal life of a collective workplace agreement.[6]

[19] If, after genuinely attempting to reach an agreement, and if the other requirements of the Act are satisfied, a union bargaining for a collective workplace agreement is unable to reach agreement with an employer, the Act recognises that, subject to various constraints, relevant employees [7] can take protected action to place pressure on the employer to reach agreement. The employer is also permitted, subject to far more limited constraints, to take protected action in the form of a lockout in order to place pressure on the employees and their union to reach agreement.

[20] Taking protected action costs workers. An employer is prohibited from paying employees in respect of periods of protected action [8] and must deduct a minimum of 4 hours pay for any protected action.[9] Employees are prohibited from accepting such payments in any event.[10] A union is prohibited from claiming or taking action to obtain a payment for days employees are engaged in protected industrial action.[11] Contraventions of these prohibitions attract pecuniary penalties. A diminution in the effectiveness of protected industrial action involves an increase in the cost to relevant employees. That is, employees will need to take a given form of industrial action for a longer period in order to inflict a given level of pressure on the employer and thus forego a greater amount of their own pay in order to achieve that level of pressure on the employer. If the employer is able to take effective defensive action the duration of protected action necessary to achieve a given level of pressure on the employer may be greatly increased.

[21] Essentially, what is required in determining whether exceptional circumstances justify an extension of the required notices period is a weighing of the interests of the employer and third parties in the employer having a greater opportunity to take appropriate defensive action as against the diminution in the effectiveness of the employees' bargaining power that results from such an extension. The fact that the legislature has seen fit to condition the ordering of an extension of the required notice period on the presence of exceptional circumstances justifying it, as distinct from merely conferring a simple discretion to extend the required notice period, indicates that ordinarily there should be no extension.

[22] The first example provided in Davids Distribution provides an illustration of where exceptional circumstances may justify an extension of the required notice period. A sophisticated piece of plant, such as a smelter, may take many days to shut down without damage. The employer is exposed to wholly disproportionate damage if it is prevented by too limited a notice period from undertaking an orderly shutdown of the plant. A further example may be afforded by a strike by teachers where the school needs to be able to notify parents of the strike so as to give them an opportunity to make alternative arrangements for the care of their children on the days of the strike. Typically, three working days will be insufficient for this purpose.

Are there exceptional circumstances justifying an extension of the required notice period?

[23] The circumstances said by Australia Post to be exceptional circumstances justifying the specification of the maximum permissible notice period of 7 (working) days were specified in detail in the written and oral submissions of Australia Post. While I have taken account of the detail of that specification, for present purposes it is sufficient to summarise the circumstances relied upon by Australia Post:

(a) The statutory obligation on Australia Post to provide a letter service as a monopoly provider and to meet service delivery standards mandated by regulation together with the general importance of a reliable letter service to community.

(b) The size of Australia Post and the number of sites and premises which may be affected by the proposed industrial action.

(c) The high mail volumes experienced each year in the October-December period.

(d) The fact of the forthcoming federal election and the role of the postal service in connection with enrolments, the distribution of electoral advertising and postal voting.

(e) The fact that Australia Post provides other significant services in connection with bill payment, passports and authentication of identity which, if disrupted, would cause inconvenience or hardship in the community.

[24] I am satisfied that the matters referred to in (a) and (d) are each exceptional circumstances. As to the matter in (b), it does not seem to me that the size of Australia Post and the number sites and premises that may be affected by industrial action is an exceptional circumstance in the relevant sense: there are many businesses in Australia that operate a large number of sites and premises. As to the matter in (c), the fact that there is a seasonal peak in the core business of Australia Post is not an exceptional circumstance: it is commonplace for employers to have seasonal peaks in their business. As to the matter in (e), the fact that Australia Post provides significant services, in addition to the letter service, which, if disrupted would cause inconvenience to the community is not, in my view, an exceptional circumstance when viewed in isolation. The provision of services the disruption of which would cause inconvenience to the community is a common incident of big business. It is true of banks, insurance companies and many other businesses. Nevertheless, the matters in (b), (c) and (e) should be considered in conjunction with the matters in (a) and (d) and, indeed, along with all the circumstances of the case, in determining whether there are exceptional circumstances justifying an extension of the required notice period because circumstances that are not exceptional when considered in isolation may combine with other circumstances that, when taken together, can be said to be exceptional.

[25] In short, I am satisfied that there are exceptional circumstances in the present case. The issue is whether those exceptional circumstances justify an extension of the required notice period.

[26] Australia Post called evidence from Mr Ben Franzi, Manager, Network Customer Requirements within the National Logistics section of Australia Post's Mail and Networks division. Mr Franzi impressed as an intelligent witness who gave careful and truthful evidence. Nevertheless, counsel for the CEPU correctly identified deficiencies in the evidence of Mr Franzi; not, I hasten to add, deficiencies indicating that his evidence was unreliable, but rather deficiencies in the sense that his evidence did not adequately prove some of the matters upon which Australia Post's submissions depended.

[27] Mr Franzi gave evidence of defensive steps already taken by Australia Post that could well result in a major reduction in the extent of disruption to the mail service from protected action taken by the CEPU and relevant employees. CEPU submitted that an extension should be refused on a discretionary basis because "the Commission should not be helping an employer that has not helped itself". This submission was based cross-examination of Mr Franzi directed at establishing that defensive preparation by Australia Post to this point has been limited. I do not accept the CEPU's submission. The CEPU sought a ballot for the approval of a very broad range of forms of protected action. Australia Post does not know until it receives a notice or notices under s.441 precisely when, and in what form, industrial action will be taken in which of its approximately 1700 workplaces. Given the size and scope of Australia Post's business it is unrealistic to expect that Australia Post could do significantly more than the general preparation indicated in Mr Franzi's evidence. Detailed preparations can only be undertaken when Australia Post becomes aware of the precise form, location and timing of industrial action that the CEPU and its members will be taking.

[28] The potential adverse impact of protected action by the CEPU and its members on the forthcoming federal election is a matter of importance. There is a risk of disenfranchisement arising from delays in the delivery of enrolment applications posted by persons who are eligible to be on the electoral roll but who are not presently on the roll and also in relation to delays to the delivery of applications for postal votes and for postal votes themselves.

[29] The evidence on the extent of the adverse impact of protected action on the forthcoming federal election was not particularly cogent. I agree with the submissions of counsel for the union in this regard and note that Australia Post did not lead any quantitative evidence on the level of disenfranchisement that would be likely to result from any given level of disruption to the mail service caused by protected action taken by the CEPU and its members. While it may be inferred that there will be some adverse impact, the magnitude of that impact is, on the evidence, left as a matter of speculation. This is perhaps unsurprising because the impact on the mail service, and thus the adverse effects on the electoral process, will depend upon the degree of disruption to the mail service caused by industrial action. This, in turn, will depend upon the form, location and timing of protected action, matters that are not yet known. Australia Post has some 34,000 employees. Approximately half of these employees are members of the CEPU. A protracted strike by all CEPU members employed by Australia Post would undoubtedly cause a significant disruption to the letter service. However, in that circumstance there would be substantial prospects that an application to suspend or terminate the bargaining period would be successful because it is probable that this will quickly sound in circumstances that will justify a suspension or termination of the bargaining period under s.430(3). On the other hand, the level of disruption caused by protected action taken by the CEPU and its members may be so minor as to regarded as de minimis because the CEPU chooses less damaging forms of industrial action, at least in the first instance, and or because of the success of mitigation strategies deployed by Australia Post. If there is a substantial disruption to the mail service then it is probable that this will quickly sound in circumstances that will justify a suspension or termination of the bargaining period under s.430(3) or s.433.

[30] It is also important to appreciate that an extension of the required notice period will not necessarily remove any adverse impacts that protected action may have on the federal election. Protected action taken by CEPU members may cause disruption to the mail service irrespective of any extension of the required notice period and defensive action taken by Australia Post. That is, some level of disenfranchisement may result from the taking of protected action irrespective of whether or not the required notice period is extended. On the evidence and uncontested submissions it is impossible to quantify the extent to which any disenfranchisement will be reduced by extending the required notice period.

[31] The potential for citizens to be prevented from participating in the election notwithstanding their eligibility to be included on the electoral roll has been increased by recent changes to the Commonwealth Electoral Act 1918 that result in the electoral roll being closed at an earlier time that was previously the case. This suggests a degree of comfort on the part of the legislature with a minor degree of disenfranchisement of persons who have delayed attending to their enrolment. Given the relevant time frames I am not persuaded on the evidence that delays in the delivery of electoral advertising will prevent delivery of such material well before the election (unless there is a wholesale disruption to the letter service which will inevitably attract an application to suspend or terminate the bargaining period). Similarly, I am not persuaded on the evidence that delays in relation to postal voting will necessarily result in a material number of postal votes not being cast or counted. On balance, it seems to me that the extent of adverse impacts on the federal election is not sufficiently established on the evidence to justify, in combination with the other circumstances relied upon by Australia Post, imposing the added burden on employees of Australia Post participating in protected industrial action that will result from an extension of the required notice period, particularly when there are mechanisms in the Act for Australia Post and affected third parties (including, in particular, the AEC) to seek the suspension or termination of the bargaining period in the event that such protected action as may be taken by the CEPU and its members in fact causes significant adverse impacts on the election or otherwise adversely impacts on the community in a substantial way.

[32] Having regard to the interests of employees in not having the effectiveness of protected action diminished I think it preferable to allow these problems to be addressed by an appropriate party (including the AEC) through an application to suspend or terminate in the event that such protected action as occurs results in a more substantial rather than a less substantial disruption to the letter service.

[33] The assessment involved in determining whether a given set of circumstances constitute exceptional circumstances "justifying" an extension of the required notice period for the purposes of s.441 is an assessment on which, in some cases, reasonable minds might differ. In this difficult case the competing factors weigh, in my view, close to equally. However, on a relatively fine balance, I am not persuaded, in the exercise of my discretion, that there should be an order extending the required period. When I weigh the factors that I am required to weigh, I am not persuaded that the circumstances relied upon by Australia Post, while exceptional, are such as to justify an extension of the period in all the circumstances of this case and the diminution in the effectiveness of the bargaining position of employees that this entails.

Mr R Reitano of counsel for the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia.

Mr M Tehan of Minter Ellison for the Australian Postal Corporation.

Printed by authority of the Commonwealth Government Printer

[1] [2007] FCA 388 (27 March 2007)

[3] [1999] FCA 1108; (1999) 91 FCR 463

[4] at 495 per Wilcox and Cooper JJ

[7] That is, employees who will be covered by the proposed agreement, who are members of the union and who are not party to an Australian Workplace Agreement that has not passed its nominal expiry date.