THE APPLICATIONS BY ENA SUBJECT TO S.107 REFERENCES

The matters before us which the s.111(1)g) and (m) applications are directed to are as follows:

1. An application by ENA for the making of an award pursuant to Part VI of the Act in part settlement of an industrial dispute in C No. 35747 of 1997 (Exhibit ENA3).

2. Applications under s.149(1) of the Act for an order that, transmission or not, the following Australian Public Service (APS) awards not apply to ENA:

* Australian Public Service, General Employment Conditions Award 1995 [A1660];

* Australian Public Service, General Service Officers (Salaries and Specific Conditions) Award 1995 [A1662];

* Australian Public Service, Technical Officers (Salaries and Specific Conditions) Award 1995 [A1663];

* Australian Public Service, Specific Professional Classifications (Salaries and Specific Conditions) Award 1995 [A1665];

* Australian Public Service, Administrative Service Officers (Salaries and Specific Conditions) Award 1995 [A1666];

* Australian Public Service, Professional Officers (Salaries and Specific Conditions) Award 1995 [A1667]; and

* Australian Public Service, Senior Executive Service (Salaries and Specific Conditions) Award 1995 [A1668].

The Commonwealth, pursuant to ss.44(1) and (2), intervened.

Part of the sequence of events which preceded the present proceedings is conveniently set out in a decision by Deputy President Duncan dated 27 March 1998 [Print P9768]. In the decision the Deputy President declined to grant an application by the Public Employment Placement Enterprise Limited (PEPE) to revoke a finding of dispute between PEPE and the CPSU which he made on 10 October 1997. On 20 November 1997 the PEPE and the Public Employment Placement Enterprise (Administration) Pty Limited changed their names to Employment National Limited (EN) and Employment National (Administration) Pty Limited (ENA) respectively.

The relevant extract from the decision is as follows [pp 1 and 2]:

"The background is complex and what follows is a brief summary.

On 10 December 1996 the then Minister for Employment, Education, Training and Youth Affairs announced the intended creation of the Public Employment Placement Enterprise (PEPE), the successor to the Commonwealth Employment Service (CES) as a commercial company within a competitive employment placement market and went on to state that conditions of employment in PEPE will both protect public servants to be transferred to it and ensure that the PEPE has the flexibility to be competitive in the market. On 4 August 1997 the Minister announced the appointment of Board members to PEPE. The associated documentation stated that the company would be wholly owned by the Commonwealth. On 6 August 1997 the CPSU, the Community and Public Sector Union (CPSU) served a letter of demand and log of claims on PEPE. On 9 September 1997 CPSU notified the Commission of a dispute. The matter was listed for hearing on 10 October. On that day Mr I. Douglas QC, who appeared for PEPEA advised that it was the employer, it was a wholly-owned subsidiary of PEPE and that the latter was not an employer at all. However he advised he was authorised to accept service of a demand and log, that it was conceded CPSU had the right to seek to represent all the employees of PEPEA and that the company:

`had no reason to query the reality of the genuineness of the claims that the union had in its log of claims that was served on the holding company'."

Following the Deputy President's decision not to revoke the dispute finding, conciliation was entered into for the purpose of establishing whether agreement could be reached on the terms of an award covering employees of ENA. The award then being sought by ENA was for one consistent with s.89 of the Act.

One of the matters of contention between the CPSU and ENA was whether, as the CPSU submitted, a transmission of business had occurred in the establishment of ENA. Subsequently, ENA lodged applications in the Federal Court seeking a declaration that ENA was not bound by various APS awards by the application of the transmission of business provisions of the Act.

In proceedings on 6 April before Deputy President Duncan, ENA applied under s.149(1) of the Act for an order, whether transmission had occurred or not, that four public service awards not apply to ENA. In the same proceedings ENA made application under s.107 that the matter C No. 35747 of 1997 and the application under s.149(1) of the Act were of such importance that in the public interest they be referred to a Full Bench of the Commission. On 15 April 1998 the President granted the s.107 application.

ENA made a further application under s.107 that matter C No. 34934 of 1998, applications under s.149(1) of the Act that another three APS awards not apply to it, be referred to the same Full Bench. On 6 July 1998 the President granted this s.107 application.

The Structure and Operation of ENA and the Employment Conditions Covering its Employees

With the exception of the Managing Director, all employees are employed by ENA. The Managing Director is an employee of EN.

At the time of the proceedings there were 1245 employees of ENA, of those 726 were former Australian public servants, a further 281 were employed from the private sector. Of the former APS employees 15 are on contract and 711 have entered into Australian Workplace Agreements (AWAs). In respect of former private sector employees, eight are on contract and 273 have entered into AWAs.

ENA has a corporate head office and 12 business centres across Australia with a further 88 subsidiary service points. ENA competes in the employment services market with 309 private and community providers who were awarded contracts to supply a range of employment services to the Commonwealth Government.

Those employees who were former APS employees and who transferred to ENA up to 1 May 1998 were given certain guarantees by the Government. Those guarantees related to the continuation of coverage of the Long Service Leave (Commonwealth Employees) Act 1976, (the LSL Act) entitlements to the Commonwealth redundancy benefits and the right in certain circumstances to move back to employment in the APS.

All of the guarantees are contained in the AWAs which are being made for a period of three years, the first of these does not expire until early 2001. The AWAs contain a salary structure substantially different to those found in the Australian Public Service, General Employment Conditions Award 1995 [Print M8993 [A1660]] (the GECA Award) and were developed for ENA by Cullen Egan Dell.

The CPSU relied on the affidavits from the following persons:

* V. COLMER, Section Secretary of the Employment, Education Training and Youth Affairs Section of the CPSU [Exhibit R2];

* J. STAPLETON, National Industrial Officer of the CPSU [Exhibit R3].

* R. HALSTEAD, General Manager, Corporate Affairs, ENA [Exhibit D16];

* P. STOREY, Managing Director of EN and ENA [Exhibit D19];

* M. SMITH, Cullen Egan Dell, Consultants [Exhibit D20].

The Commonwealth relied on the affidavit and evidence of:

* B. LEAHY, Group Manager of Policy Group, Department of Workplace Relations and Small Business [Exhibit B1].

The CPSU submitted that the public interest would best be served by the Commission refraining from hearing the matters further, at least at this stage. The CPSU set out the following facts and circumstances which, it submitted, supports such a course in relation to the s.149 application [Exhibit R1, pp 10 and 11]:

"(a) Employment National has made application to the Federal Court for declarations that specified awards do not apply to it, and has made application to this Commission for orders that Employment National not be bound by the awards. Employment National is therefore in two jurisdictions seeking effectively the same result.

(b) This Commission cannot conclusively determine whether or not s.149(1)(d) operates so that Employment National is bound by the awards. Employment National is asking the Commission to ignore its lack of jurisdiction, and assume that the awards apply, in order to make the orders sought. Further, it is being asked to do so in the face of Employment National's own Federal Court application to determine that issue.

(c) The Commission is being asked to render the Federal Court application superfluous, notwithstanding the Commission does not have the jurisdiction to determine the question being considered by the Court. Put another way, the Commission is being asked to pre-empt a decision of the Federal Court that only the Federal Court has the jurisdiction to make.

(d) Further proceedings commenced in the federal Court by the Minister for Workplace Relations and Small Business may result in the awards not applying to Employment National, whatever the outcome of its own application.

(e) All the Federal Court proceedings will be completed in September 1998.

(f) The business of Employment National is operating irrespective of these proceedings. Staff have been engaged on Australian Workplace Agreements, and the awards are not currently being applied. The applications before the Commission will not change that.

(g) The making of any award requires a consideration of what awards currently apply, a matter that will be determined by the Federal Court.

(h) The objects of the Act and the Commission Principles referred to by Employment National might well be satisfied, in whole or in substantial part, given the arbitration that is currently being conducted by the Commission with respect to the awards as part of the award simplification process."

In respect of the ENA award application the CPSU supports its application on the following [pp 12 and 13]:

"(c) Whether or not the Commission could make an award binding on Employment National in the form and content of the APS awards is irrelevant in the context of transmission. Employment National cannot assert that because an award of that type could not be arbitrated, it shouldn't have to comply with the obligations of transmitted awards, and the Commission should simply relieve it of those obligations and make an award within arbitral capacity.

(d) Further, the award simplification process will likely result in an award that is not in the form and content of the current awards. The major conditions award has been the subject of arbitration hearings before Commissioner Larkin, and a decision has been reserved. Five types of leave clauses have been referred pursuant to s.108 to a Full Bench and are to be heard on 7 July 1998. Finally, the paid rates aspect of the awards have been referred to the paid rates Full Bench review and will be heard on 15, 16, 22 and 23 July 1998. It may well be that the appropriate safety net will result from that process, but in any event no sensible submission can be made about form and content until the outcome of the process is known.

(e) The making of an award as sought by Employment National will not in itself facilitate agreement making. An award is not a pre-requisite for making an agreement, and is relevant only for the purposes of the no disadvantage test. Further, there are provisions in the Act whereby an agreement can be certified notwithstanding its failure to pass the no disadvantage test (ss.170LT(3) and (4)) and as such, if the current awards in whatever form they might apply are not appropriate for that test, Employment National can argue that an agreement nevertheless be certified.

(f) Nor can Employment National argue that the DEETYA Agreement prevents an agreement being made. Again, there are provisions in the Act whereby the parties can terminate an agreement (s.170MG). If however the DEETYA agreement did prevent an agreement being made, the Commission cannot make an order that the agreement not apply to Employment National, and making a new award would have no operative effect. Whether or not there is a certified agreement is far less a product of the lack of a new award and far more a product of the attitude of Employment National.

(g) Not making an award as sought by Employment National will also not hinder the making of AWAs. There is again power in the Act by which Employment National can seek to have AWAs approved notwithstanding they don't pass the no disadvantage test (s.170VPB(3)). Thus, if the effect of the award on making AWAs is as asserted by Employment National, there is a mechanism by which that can be addressed.

(h) As Employment National acknowledges, no award made will have any impact for some considerable time on the employment of all current staff. AWAs are in place for the vast majority of staff and any award, either a transmitted award or a new award, will not affect those employees."

ENA opposes the application and seeks the Commission to proceed to exercise its Part VI arbitral functions and powers that will determine:

- "the form and content of the award (if any) that is to be made in part settlement of dispute C No. 35747 of 1998, and:

- whether or not the discretionary power in s.149(1) is to be invoked."

In ENA's submission it is important that an award be made that allows it to retain the flexible and efficient working environment that has been implemented and to encourage and facilitate agreement making. The CPSU in contrast want the APS awards imposed on ENA regardless of the operational consequences.

ENA submitted that it would not be in the public interest for the Commission to conclude as an outcome to these proceedings [Exhibit D3, page 10]:

* "that it should not take immediate steps to examine, and if determined appropriate, eliminate the (escalating) difficulties which EN(A) says are flowing from the APS awards now being `in place' as no less that designated awards, and/or

* that is should not now examine, according to the objects of Act, the suitability of the APS awards `applying' at EN(A) as designated awards in the presumption that the Court will rule that there has been no `transmission', and/or

* that it should not now examine, according to the objects of the Act, the suitability of the APS awards `continuing' as the relevant awards in the presumption that the Court will rule that there has been a `transmission', knowing, if the Court so rules, that it will be a ruling that the `transmission' has been in place since 1 May 1998."

In the submission of ENA the Commission will at some time be required to consider what should be the appropriate terms and conditions in an award covering ENA. Should the Commission grant the CPSU's application and the CPSU are successful in the Federal Court, ENA would bring the matter back before the Commission submitting that the APS awards were not appropriate awards.

The issue, in ENA's submission, was not whether the Commission should conduct an examination of the terms and conditions of employment of ENA but when this should occur. In ENA's submission, the CPSU's application is one designed to prevent a substantial merits examination and determination by the Commission in accordance with the Act as to what should be the appropriate contents of an award to suit the long term needs of ENA and its employees.

It was further submitted that to allow APS awards to remain in place either as relevant awards or as designated awards would be destructive to the business activities and employment environment of EN and ENA. Further, it would discourage and hinder agreement making in the short and long term.

It was submitted by ENA that an ever increasing majority of its employees will, within a framework that is relevant to the Commission's deliberations, be made up of persons from the private sector and not from the APS.

The Commission and the Employment Advocate have determined that the APS awards are the relevant or designated awards for the purposes of the no-disadvantage test. The AWAs are comprehensive in nature and include, in respect of former APS employees, the Government "guarantees" which we have referred to elsewhere in our decision.

In the circumstances, it was put that it will become more difficult for ENA to meet the no-disadvantage test of the APS awards regardless of whether these awards set the test as relevant awards or designated awards. In these circumstances, ENA submits that it is not in the public interest that APS awards be allowed to operate, at least as designated awards, for an indefinite period pending a final decision in the Federal Court, without a merit examination now rather than at some undefined time in the future.

The AWAs are all three year agreements and, as a consequence of s.170VQ, the APS awards, if a transmission of business has occurred, will not have application until the year 2001 at the earliest. ENA submitted that it would be "contrary to the public interest for the Commission to permit the possibility of ENA's workplace being covered by a combination of AWAs and the APS awards".

In an alternate submission, ENA put that the Commission had the power to deal with its application by making a minimum rates award and at the same time protect the position of the CPSU if it ultimately succeeded in the Federal Court.

The Commonwealth submitted that four awards have historically been designed to regulate employment conditions in the APS. The awards are paid rates awards. In the Commonwealth's submission, it was not appropriate that they operate in respect of ENA, an organisation outside the public service. ENA is a commercial enterprise operating in a newly created competitive market and, as such, should not be subject to awards designed to reflect the requirements of the public service.

In the Commonwealth's submission it was in the public interest and consistent with the objects of the Act that an award covering ENA take into account matters relevant to the operation of ENA and its employees. In respect of s.149(1) of the Act it was submitted that the prefatory words in the section placed "a duty on the Commission to examine on application, a proposition that an award is unsuitable in the context of s.149". The Commonwealth concluded by submitting that there were no good reasons for the Commission to exercise its discretion under either s.111(1)(g)(iii) or s.111(1)(m).

For the reasons which follow we have decided not to grant the CPSU's s.111(1)(g) application and the alternative application under s.111(1)(m).

The CPSU have relied on a number of grounds which are set out in their written submission [Exhibit R1] to support its contention that the public interest warrants the Commission refraining from exercising its jurisdiction to hear and determine ENA's award application and s.149(1) applications.

We have weighed up each of the grounds going to public interest against those relied on by ENA and concluded, on balance, that the public interest would be best served by providing ENA with the opportunity now to have the Commission consider, on merit, the terms and conditions of employment that should apply to ENA and its employees.

It is obvious that the Commission will at some point be required to examine whether the contents of the APS awards are ones suitable for ENA and its employees. Should the Commission accede to the CPSU's application and refrain from dealing with ENA's application, this will not conclude the matter of whether the APS awards are the appropriate awards.

ENA have put that following the Federal Court decision they would renew this application irrespective of the outcome. We note that, based on what has been put by the parties, the matters now before the Federal Court are unlikely to be brought to finality for some considerable time. The question we had to decide was not whether the Commission should undertake an examination of the suitability or otherwise of APS conditions applying to ENA, but when.

ENA have stated that it operates in a commercial environment competing for business in the market against other private sector providers. It was put that its future viability, therefore, requires an award which reflects the needs of ENA and its employees operating in a commercial environment and not an award designed to meet the needs of the APS. It was also stated by ENA that the application of the APS awards, however applicable, will have the effect of not encouraging and/or not facilitating agreement making.

In our view, it would be against the public interest not to give an employer the opportunity of putting its case in circumstances where it was argued that a continuation of APS conditions will have an adverse effect on its ability to compete successfully and provide a secure employment environment for its employees.

In any consideration by the Commission of ENA's application for an award, the Commission would commence with a presumption that the various public service awards have application. The Commission would also need to consider in such an examination whether the making of an award now would prevent the exercise of the Commission's discretion at a future time to set aside an award, in whole or in part, if a transmission of business has occurred.

In deciding not to refrain from exercising our jurisdiction, we wish to stress that ENA is still to make out a case on merit as to why the Commission should grant its award application.

In light of our decision to reject the CPSU's s.111(1)(g) application and proceed to deal with ENA's award application under s.89A , we have not found it necessary to consider the matters put by ENA and the CPSU in respect of the orders sought by ENA under s.149(1).

We propose to list for mention the award application at 9:30 am on Friday, 25 September 1998 in Sydney for the purpose of establishing an appropriate programme.

I. Douglas QC and L. Kaufman of counsel with M. Serong, solicitor, for Employment National Limited and Employment National (Administration) Pty Limited.

K. Bell of counsel and S. Ramsay, solicitor, with S. Jones and V. Colmer for the CPSU, the Community and Public Sector Union.

R. Goot of counsel with K.G. Bennett and J. Macken for the Minister for Workplace Relations and Small Business (intervening).

Award - refrain from hearing - s111 Workplace Relations Act 1996 - Full Bench - various employees, Commonwealth employment - union applied to Commission to dismiss applications subject of s107 references made by ENA - alternatively submitted that Commission refrain from further hearing applications until Federal Court proceedings regarding transmission of business and applicability of existing APS awards completed - alternatively submitted that Commission adjourn proceedings under s111(1)(m) - s107 references involve applications by ENA regarding the making of an award and also an order that certain Australian Public Service (APS) awards not apply - ENA submitted important award be made that allows it to retain flexibility and efficient working environment as implemented and to encourage and facilitate agreement making - Union want APS award imposed regardless of operational consequences - Commonwealth intervened submitted that certain awards historically designed to regulate APS employment conditions, that awards paid rates awards and not appropriate that they operate in relation to an organisation outside the public service - Commission determined on balance that public interest best served by providing ENA with opportunity now to have Commission consider on merit terms and conditions of employment that should apply - at some point Commission will examine suitability of APS awards, acceding to Union application not alter this outcome - matters before Federal Court unlikely to finish for some considerable time - against public interest not to give ENA opportunity of putting case in circumstances where continuation of APS conditions would have an adverse impact on employers ability to compete successfully and provide secure employment for its employees - in deciding not to refrain from exercising jurisdiction stressed ENA still to make case on merit as to why Commission should grant its award application - listed for mention for programming in relation to award application.

CPSU, the Community and Public Sector Union and Employment National Limited and Employment National (Administration) Pty Limited and another

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