Alleged dispute concerning the refusal of the employer to implement clause 20.6 of the Agreement.

[1] On 3 March 2011, the Communications Electrical and Plumbing Union (CEPU) made an application under s.739 of the Fair Work Act 2009 (the Act) to Fair Work Australia (FWA) to deal with a dispute in accordance with a dispute settlement procedure. The dispute is pursuant to the Telstra Enterprise Agreement 2010-2012 (the Agreement).

[2] The Agreement was made under the Act. The decision approving the Agreement noted that the CEPU is covered by that Agreement. I approved the Agreement on 17 September 2010 and the Agreement operated from 24 September 2010. The CEPU can bring a dispute pursuant to s.739 of the Act in relation to the Agreement.

[3] The disputes avoidance/resolution process of the Agreement is found at Clause 36 of the Agreement. That clause provides as follows:

36.1 The Parties are committed to avoiding industrial disputation about the application of this Agreement.

36.2 This clause sets out the procedures to be followed for avoiding and resolving disputes about matters arising under this Agreement and in relation to the National Employment Standards between Telstra and the Employees covered by it. However, this clause does not apply in relation to disputes about whether Telstra has reasonable business grounds to refuse a request for flexible work arrangements or a request for extended parental leave under the National Employment Standards.

36.3 Telstra aims to provide a productive, safe and non-discriminatory work environment for its Employees. This environment should be characterised by co-operation, mutual respect and open communication between Employees and managers.

36.4 Telstra acknowledges the right of employees to seek the assistance of a representative of their choice who may become involved in the discussion at any stage of the process.

36.5 Where an Employee or more than one Employee seeks assistance in the resolution of a dispute about a matter arising under this Agreement or the National Employment Standards, in the first instance the matter may be raised with their immediate supervisor who will attempt to resolve the problem within two working days.

36.6 If the matter remains unresolved, it may be taken to the supervisor's manager who will seek resolution within two working days, failing which the assistance of a more senior manager may be sought.

36.7 If the matter has not been progressed to the satisfaction of the parties to the dispute within six working days from the time it was first raised with the supervisor, it may be referred to the relevant (Executive) Director Human Resources of the Business Unit and the Director Workplace Relations, for resolution within five working days. During the period referred to in clauses 36.1 to 36.7 inclusive, normal work will continue and Telstra will not implement the matters in dispute. After completion of these steps, Telstra may implement the matters in dispute without prejudice to the final resolution of the matter.

36.8 If the dispute about a matter arising under this Agreement or the National Employment Standards remains unresolved, either party may refer the matter to Fair Work Australia (or its successor) for conciliation. The role of Fair Work Australia is limited to providing assistance to the parties in an attempt to address and, if possible, resolve the matter in dispute by conciliation as quickly as possible.

36.9 If conciliation fails to resolve the matter, and if at the conclusion of conciliation Fair Work Australia indicates in writing to the parties that it considers arbitration of the dispute about a matter arising under this Agreement or the National Employment Standards to be appropriate, then a party may request Fair Work Australia to, and Fair Work Australia will, determine the matter by arbitration.

36.10 The Parties agree that the Director Workplace Relations and the Employee's representative (which may be a union official) may agree to waive these time limits in whatever manner is necessary to aid dispute resolution.

36.11 Nothing in these procedures will prejudice the position of a party in a genuine health and safety situation."

[4] The dispute notified by the CEPU concerns the implementation of Clause 20.6 of the Agreement. Clause 20.6 provides as follows:

20.6 An Employee may apply to forego part of their Actual Salary (Category 1 Employees) or Fixed Remuneration (Category 2 Employees), and where approved Telstra will credit the Employee with additional annual leave. The request to buy extra annual leave must be in writing. Telstra Policy applies to the payment of the benefit and procedures for requesting the benefit."

[5] Telstra advised the Tribunal that pursuant to the Telstra Policy, "Additional Leave Purchase" applications requesting access to the benefit can only be made once a year and that in 2010, applications had to be approved by the employee's one up manager prior to 10 September 2010. I note again in passing that the Agreement operated from 24 September 2010.

[6] The CEPU argues that effectively Telstra have refused to implement Clause 20.6 since none of the employees for whom this was a new benefit under the Agreement have access to the benefit until approximately 12 months after the Agreement came into force.

[7] The scope of the Disputes Avoidance procedure is "disputes about matters arising under the Agreement and in relation to the National Employment Standards between Telstra and the Employees covered by it." This is in the context of a commitment to avoid "industrial disputation about the application of this Agreement."

[8] I am satisfied that the subject matter of this dispute falls within the scope of the Disputes Avoidance clause.

[9] The matter in dispute was not able to be resolved through conciliation. Both parties agree with the conclusion I have reached that the matter in dispute has not been able to be resolved through conciliation and is unlikely to be resolved through further conciliation.

[10] Both parties agree that in the event that I find that I have jurisdiction to arbitrate the dispute, they do not object to my proceeding to arbitrate the dispute. I advised the parties that I consider this appropriate and this decision is written notification to the parties that I do consider arbitration appropriate in the event that I have the jurisdiction to do so. No issue was raised with this approach.

[11] The jurisdictional issue to which I now turn is whether or not the required steps in the disputes settlement procedure have been followed such that it is open to the Tribunal to now arbitrate the matter. The CEPU argues that the necessary steps have been followed and Telstra argues that they have not.

[12] The parties agreed that the matter could be dealt with by written submissions. The CEPU provided its submission on 24 March 2011 and Telstra provided its submission on 30 March 2011. This was consistent with the Directions I issued on 17 March 2011.

Outline of submissions on compliance with Steps 36.5, 36.6 and 36.7

[13] In respect to the first step of the procedure which is Clause 36.5, the CEPU submits that it is discretionary because of the use of the word "may". However notwithstanding this, the CEPU says that the step has been followed. The CEPU provides evidence that a CEPU member who was seeking to purchase annual leave had been advised by his team leader that this was not possible because of the National Policy. This advice was indirect or by implication in that the team leader provided the link to the National Policy which made this clear. The employee concerned was dissatisfied with the response and raised the matter with his union on 24 September 2010 which then raised the matter with a higher level in Telstra, Mr Gerdtz, on 27 September 2010. Telstra says that this does not constitute evidence that the team leader was informed of a dispute and that the employee was seeking to resolve the dispute pursuant to clause 36 and that the team leader was required to attempt to resolve the dispute within two working days. Telstra argued that the long time lapse between the original complaint and the notification of this dispute is inconsistent with the proper application of the Clause which provides for strict time frames for response.

[14] In respect to the second step which is Clause 36.6 the CEPU argues that this is discretionary and that there is no evidence that the CEPU member took this step. The CEPU argues that this step was clearly not appropriate since the matter could not be resolved at this level given the advice from Telstra that the issue was a matter of National Policy. The CEPU says that local managers have no authority to negotiate or amend policy and this is well known to both the local managers and to the employees. Telstra argues that the second step is mandatory.

[15] The final step before conciliation is Clause 36.7. The CEPU submits that a number of approaches have been made at the national level to seek a resolution to the dispute. This has included meetings with Mr Frank Gerdtz, Principal HR Specialist. Telstra in response accepts that the CEPU raised the issue with Mr Gerdtz on 27 September 2010 by email and that Mr Gerdtz advised in reply that the deadline for purchase for additional leave under the Telstra Policy had passed and it will not now be available until the 2011/2012 packaging year. Telstra accepts that the matter was again raised with Mr Gerdtz by the CEPU on 25 November 2010. Telstra says that it was not raised in respect to any specific employee nor was it raised as a dispute under Clause 36.7 of the Telstra Agreement. Telstra argues that Mr Gerdtz is not a Director of Human Resources of the Business Unit nor the Director of Workplace Relations. Telstra also argues that the significant delay between 25 November 2010 and the application for conciliation of the dispute also suggests that the discussion on 25 November 2010 cannot be the third step of the process.

[16] I accept the submission of Telstra that I cannot arbitrate simply because I have conducted a conciliation of the matter. I accept that I can only arbitrate if I am satisfied that the conciliation is pursuant to Clause 36.8. There is clearly a requirement that any earlier conditions of the disputes settlement clause have been met. Essentially there are two requirements. Firstly that the dispute is one that falls within the scope of the clause and secondly, that any mandatory earlier steps in 36.5, 36.6 and/or 37.7 have been completed and the dispute remains unresolved.

[17] Telstra submits that to avoid industrial disputation consistent with the commitment of the parties in Clause 36.1, the parties are required to attempt to resolve any dispute at the workplace level prior to referring the matter to Fair Work Australia for conciliation. I do not accept that referring a matter to Fair Work Australia is necessarily inconsistent with a commitment to avoiding industrial disputation. There is nothing in the words of the Agreement which requires such a conclusion.

[18] Telstra submits that Clause 36.2 states that Clause 36 as whole sets out the "procedures to be followed for avoiding and resolving disputes" and that this is mandatory language which requires the parties to follow each of the steps in clause 36.5 to 36.7 prior to referring the matter to Fair Work Australia for conciliation. I accept that this is mandatory language but all it mandates is that the procedures be followed. In my view, that means where the procedure says something must be done, it must be done and where the procedure says that something must be considered but is discretionary, then it must be considered but then it may or may not be done.

[19] Telstra submits that Clause 36.3 states that Telstra aims to provide amongst other things, an environment characterized by "cooperation, mutual respect, and open communication between employees and managers". Telstra submits that this necessitates an attempt to resolve disputes at a workplace level prior to referring any dispute to Fair Work Australia. I do not agree that referring a matter to Fair Work Australia for conciliation is necessarily inconsistent with cooperation, mutual respect and open communication between employees and managers. I have no evidence that this was the mutual intention of the parties in negotiating/reaching the Agreement. I do not see Clause 36.3 as directly relating to the particular dispute settlement steps required but rather to the general attitude and conduct by one of the parties, Telstra, which will promote disputes avoidance and resolution.

[20] I do not accept the submission of Telstra that it is necessary for the union or the employee to make it clear when raising a matter with management at any step in the process that they are using the disputes settlement procedure, that they require a response by a certain date as required by that procedure and that it is necessary for the union to refer specifically to the particular step in the process. There is nothing in the Clause which requires these things to be done and to import such a requirement would be inconsistent in my view with the objectives set out in Clauses 36.1 to 36.4 and the objective of "avoiding and resolving disputes" in particular. What is important is that the parties seek to resolve the matter. It is the substance of what is done in pursuit of this objective rather than the form which is critical in any judgement as to whether or not a disputes settlement procedure has been followed.

[21] The timelines for responses are only relevant where activated. The timelines in 36.5 and 36.6 are solely a discipline on one party, Telstra. The timelines in 36.7 can be read as a discipline on both parties. Presumably the timelines are to ensure that there is no capacity to unnecessarily frustrate or delay the resolution of matters and to encourage a climate where employees are prepared to raise matters in accordance with the procedure rather than resorting to other means. I can find nothing in the Clause which could be read as suggesting that an employee or their union looses access to the procedure because the timelines are not followed by either party.

[22] There are many reasons why sometimes there are considerable time lags between various steps of a disputes settlement process. Often parties need to consult with others and to consider what is the most appropriate strategy. Often matters are occurring which relate to attempts to resolve a dispute which are not clearly visible or formal. It would not be consistent with the objectives set out in Clauses 36.1 to 36.4 for a failure by a manager to respond within the timeframes set down in the Clause to prevent the matter from being progressed or settled under the procedure. It would be similarly inconsistent with those objectives for delays by the employee or their union as part of their efforts to resolve the matter to prevent the matter from being progressed or settled under the procedure.

[23] I therefore do not accept the submission of Telstra that the delays in this matter mean that the steps have not been followed.

[24] I now turn to the issue of whether or not the word "may" in Clauses 36.5, 36.6 and 36.7 means that it is discretionary to complete each of these steps before progressing to the next one.

[25] I am satisfied that the meaning of "may" in these sub-clauses is unclear in that on a plain reading of the word, either interpretation is possible. The CEPU contends for one interpretation and Telstra contends for the other.

[26] I should not interpret the words in a strict technical fashion but I must have regard for the context of the Agreement as a whole. I should give effect to the mutual intention of the parties who made the Agreement provided that the words can be reasonably interpreted to mean what was intended.

[27] I have regard to the fact that the High Court (in the judgment of Owen J in South Australian Cold Stores Ltd v Electricity Trust of South Australia [1965] HCA 67; (1965) 115 CLR 247 at 264-265) has held that, pending any exceptional circumstances that might point to a contrary intention, the use of the word 'may' prima facie confers a discretion either to do, or not to do, a certain act.

[28] In Finance Facilities Pty Ltd v Federal Commissioner of Taxation [1971] HCA 12; (1970) 127 CLR 106 at 134, Windeyer J, the following was said:

"While Parliament uses the English language, the word 'may' in a statute means may… it is a word of permission, of authority to do something which otherwise he could not lawfully do. If the scope of the permission be not circumscribed by context or circumstances, it enables the doing, or abstaining from doing, at discretion, of the thing so authorised."

[29] Similarly, in the joint judgment of Dixon CJ, Webb, Fullagar, Kitto and Taylor JJ in Wardv Williams1:

"... you begin with the prima facie presumption that permissive or facultative expressions operate according to their ordinary natural meaning. "The authorities clearly indicate that it lies on those who assert that the word "may" has a compulsory meaning to show, as a matter of construction of the Act, taken as a whole, that the word was intended to have such a meaning" - Re Gleeson [1907] VicLawRp 71; [1907] V.L.R. 368, at p. 373."

[30] Telstra argue that the word "may" is used to allow for the possibility that a party or the parties to a dispute may elect not to proceed further with attempting to resolve the matter using the procedure. This could be because the matter is settled or because it is seen as unnecessary or fruitless.

[31] Reading the clause as a whole and its objectives in particular make it unlikely in my view that the clause could be read as meaning that a party could elect to not raise the matter at Steps 36.5, 36.6 and 36.7. That is, I think it unlikely that the clause could mean that a party can simply elect not to raise the matter at any of the earlier steps and can proceed as a first step to raise the matter under Clause 36.8 for conciliation with FWA. Such a reading is not impossible on a plain reading of the words but it is unlikely if the words are read in context. In this respect I reject the submissions of the CEPU.

[32] Two elements of the construction of the clause support this conclusion. Firstly at Clause 36.7 it says "if the matter has not been progressed to the satisfaction of the parties to the dispute within six working days from the time it was first raised with the supervisor..." This clearly suggests that there is an expectation that prior to activating the step in Clause 36.7 it is necessary to have raised the matter with the supervisor under Clause 36.5 at least five days earlier. Secondly at Clause 36.8, it says that "if the dispute about a matter under this Agreement or the National Employment Standards remains unresolved, either party may refer the matter to Fair Work Australia...." This clearly suggests that some earlier steps must have occurred prior to the option of referral to Fair Work Australia being available.

[33] For these reasons I conclude that the steps in 36.5 and 36.7 must be completed prior to conciliation under Clause 36.8 being available to the parties.

[34] I conclude that the word "may" in Clauses 36.5, 36.6, 36.7 and 36.8 is discretionary in the sense that it is not mandatory for a party to raise the matter to the next stage if it is not resolved though the earlier process even though this option is clearly open to either party.

[35] However, there is one other sense in which "may" is discretionary in Clause 36. I consider it unlikely that the term "may" could be read as meaning that a party must follow a step where it is clearly inconsistent with the objectives and guidelines for the procedure taken as a whole which is established in Clauses 36.1 to 36.4. This would be particularly the case where a particular step is incapable of contributing towards a resolution of the dispute. The objectives and guidelines set out in Clauses 36.1 to 36.4 of the procedure establish parameters whereby the procedure could not be read as mandating technical compliance where this is of no utility in the resolution of the dispute.

[36] If the step is incapable of creating a resolution then this would be a situation where the word "may" has a discretionary meaning. A prime example of this would be where use of a particular step would be of no possible utility in the settlement or avoidance of the dispute or where compliance would simply lead to delay or frustration. In such a situation the step can be regarded as complied with and the next step can be activated.

[37] The wording of Clause 36.7 is not in conflict with the possibility that Clause 36.6 may not always be followed. Clause 36.7 can be activated where the matter has not been progressed to the satisfaction of the parties within six working days of the time it was first raised with the supervisor under 36.5.

[38] I consider it unlikely that there will be situations where compliance with 36.7 would be of no possible utility. It is hard to conceive of a situation where there is no utility in an attempt to resolve a dispute at this level prior to proceeding to conciliation.

[39] It would be rare, but not impossible, that there will be situations where compliance with 36.5 would be of no possible utility.

[40] One of two situations will arise at the level of the procedure set out in 36.5. The first is that the grievance is such that it is capable of being resolved at the lowest level in the procedure possible but there might be differences of view. This may lead to an escalation where higher in the procedure someone with greater authority might agree with the aggrieved employee.

[41] The other situation is that it is not capable of being resolved at the lowest level possible because the person concerned lacks the necessary authority to resolve the grievance. This later example will often be evidenced in circumstances where a national policy is involved where lower level supervisors have no capacity to alter policy.

[42] For this reason, it will be more common that there will be cases where compliance with Clause 36.6 would be of no possible utility. An example of this will be where it has already been established at the first stage that only the top level of management has the authority to resolve the grievance, for example where national policy is involved. The matter before me in this case is one such instance.

[43] I regard the steps in Clauses 36.5, 36.6 and 36.7 as sequential steps which must be followed provided that the grievance is capable of being resolved or it is possible that the resolution of the dispute can be advanced through that step. That is provided that there is some utility in the step. Failure to comply with this would mean that there is no access to conciliation and or arbitration of the dispute at Fair Work Australia. Where it is clear that the grievance is incapable of being resolved or the resolution advanced through a particular step then it can be regarded as being complied with and a party or the parties can move onto the next step. "May" is only discretionary in Clause 36 in the sense that a party has the choice to proceed or not proceed but if they wish to proceed further in the process then they must move sequentially through the steps provided that step is capable of resolving or advancing the resolution of the dispute.

Have the necessary steps been complied with in this case?

[44] Clause 36.5 has been complied with in this case because I am satisfied that at least one employee raised the concern about access to Clause 20.6 (purchase of additional annual leave) with first line of management and was effectively advised that nothing could be done because of the policy.

[45] Clause 36.6 does not have to be complied with since the advice of management was that National Policy was applicable and this step could not affect National Policy. Telstra have confirmed that it has been their consistent position that National Policy must be followed in this matter and that there is no discretion available to middle managers in respect to this matter.

[46] Clause 36.7 should not be read narrowly as requiring that the CEPU must write to the nominated official. It is clearly intended that this step is about elevating the matter for discussions at the national union and the national HR level. Advice or discussion with a person who is a direct report to the nominated official could in many cases be fairly regarded as advice or discussions conducted on behalf of or with the authority of that nominated official. Alternatively in many cases it will be clear that the nominated official has been made aware or should have been made aware of the elevation of the issue to the senior national level by that direct report. In this case Mr Gerdtz, Principal HR Specialist, is a very senior HR manager in Telstra and frequently deals with the national officials of the CEPU.

[47] When the matter was notified for conciliation this would have made it even more likely that a nominated Telstra official would have been made aware of the situation and if that nominated official felt that further discussion would be useful then the nominated official could have raised this. Telstra did not suggest in conciliation that there was any utility in further discussions with the nominated official. Telstra made it clear that the decision not to concede to the CEPU request for some opportunity for purchase of additional leave prior to the next due date had been clearly made at the national level of the organisation. This was the basis on which Telstra, the CEPU and I concluded that conciliation would not succeed.

[48] However, Telstra does submit that the only time this matter was discussed at the national level between the CEPU and Telstra was in a meeting with Mr Gerdtz on 25 November 2010. Telstra says that it was not specifically raised as a dispute under Clause 36.7 of the Agreement. In this situation there is some doubt as to whether or not Mr Gerdtz was acting on behalf of the nominated official (ie a Director Human Resources of a Business Unit or the Director Workplace Relations) or alternatively whether or not it was reasonable for Mr Gerdtz to have advised those nominated officials.

[49] There is therefore some doubt as to whether or not the step in Clause 36.7 has been completed.

[50] I therefore require the following to be completed prior to commencing arbitration of this matter. Mr Dwyer or Mr Thiele is to write to Mr Gerdtz who has charge of this matter for Telstra and request that he advise the relevant Director Human Resources of the Business Unit or the Director Workplace Relations of the matter in dispute. Mr Dwyer or Mr Thiele is to request that Mr Gerdtz advise within five working days, after consulting with the relevant Director Human Resources of the Business Unit or the Director Workplace Relations, as to whether or not Telstra is prepared to alter its position in respect to access to opportunities under Clause 20.6. In the event that Mr Gerdtz confirms that Telstra is not prepared to alter its position or fails to respond then the CEPU should advise Fair Work Australia and I will proceed to list the matter for arbitration. In the event that Telstra indicates it is prepared to alter its position then the matter can be listed for further conciliation at the request of either party if the matter is not resolved.

1 [1955] HCA 4; (1955) 92 CLR 496 at paragraphs 505 to 506.

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