CPSU, The Community and Public Sector Union v Telstra

1 This is the continuation of a hearing of an application by a number of unions for the imposition of penalties against Telstra Corporation Limited under s 298U of the Workplace Relations Act 1996 (Cth) for a contravention of s 298K(1). As to the nature of the hearing, see my rulings of 1 May 2001 ([2001] FCA 479) and 14 May 2001 ([2001] FCA 564). It is alleged that for a prohibited reason, Telstra had altered the position of its award and certified agreement based employees to their prejudice within the meaning of s 298K(1)(c). The prohibited reason alleged is that those employees were "entitled to the benefit of an industrial instrument": s 298L(1)(h). 2 The conduct that gives rise to this proceeding is described in my reasons for judgment given on 23 June 2000: Community and Public Sector Union v Telstra Corporation Limited (2000) 99 IR 238. I will not repeat what appears there, except to the extent that it may be necessary to understand the outstanding issue that must be resolved. 3 The alleged contravention of s 298K(1) is said to result from an email sent by Mr Cartwright, Telstra's former group managing director for employee relations, to 275 managers and team leaders in the Employee Relations group. The topic of the email was Telstra's proposed reduction of staff. The email records that Telstra "expected to reduce staff numbers by 10,000 by the end of fiscal 2001/02 and to target reduction of 220 senior manager roles." The critical paragraph of the email (para 6) reads: "Staff members who have transferred to individual contract have placed their trust in their managers and the Company to create a work environment that reinforces respect and dignity for the individual, and which places primary emphasis on productive relationships in which individual accountability encourages each person to contribute to his/her full potential. Managers must not under any circumstances compromise these important values in the way they implement cost reduction initiatives which lead to staff reductions. Managers will be held accountable to support the values of the Company's preferred model of individual employment." 4 It is accepted that the "individual contracts" and Telstra's "preferred model of individual employment" are the Australian Workplace Agreements made between Telstra and a number of its employees. An Australian Workplace Agreement (AWA) is a form of contract of employment that is recognised by the Workplace Relations Act following amendments made by the Workplace Relations and Other Legislation Amendment Act 1996 (Cth). Such a contract is usually arrived at in consequence of individual negotiations, instead of centralised bargaining which has long been a feature of industrial relations in this country. Unsurprisingly, it is a form of employment agreement that has no support from unions. 5 In my earlier reasons I found that the email would be regarded by many managers involved in selecting staff for redundancy as an instruction to discriminate against employees who were entitled to the benefit of an award or a certified agreement. Nevertheless, I said that there had not been a contravention of s 298K(1) because, in my view, no particular employee had been injured or had his or her position prejudicially altered as the email was "no more than an instruction to treat an employee in a different way" and that instruction had not been acted upon. The Full Court did not agree with this view. It held that the mere instruction in the email did alter the position of its award and certified agreement based employees to their prejudice: Community and Public Sector Union v Telstra Corporation Ltd [2001] FCA 267. The Full Court explained that the employment of those employees "had become less secure, in a real and substantial manner, than it had been previously." For that reason it found that "the email and its terms discriminated against each employee of Telstra who was employed under an award or a certified agreement." 6 In virtue of this finding the only matter that the unions must establish to prove that there has been a contravention of s 298K(1) is that Mr Cartwright gave the instruction for the prohibited reason alleged. Because I was of opinion that Telstra had not prejudicially altered the position of its employees, I did not resolve this issue. The finding of the Full Court has now made it necessary for me to do so. In that context I must decide why Mr Cartwright sent the email, for his state of mind will be attributed to Telstra. So much is common ground. 7 Mr Cartwright gave evidence explaining his purpose in sending the email, and what he intended the critical paragraph to mean. I propose to consider Mr Cartwright's evidence in the following context. First, there is the effect of s 298V. So far as is presently relevant s 298V provides that in an application under s 298K, it must be presumed that conduct was carried out for the reason alleged unless the opposite is proved. The result is that Telstra must establish that the email was not sent for a prohibited reason. 8 Second, I must have regard to the terms of the email. That is, to decide why Mr Cartwright sent the email it is appropriate to consider what is stated in the email. If Mr Cartwright's evidence is inconsistent with what he wrote, that inconsistency will bear upon the persuasiveness of Mr Cartwright's explanation, though it need not be decisive. 9 Finally, there is Mr Cartwright's explanation. When a person gives sworn testimony explaining why he took certain action, this will often be the only direct evidence the court will have on the issue. If the evidence is accepted as true, it will resolve the issue one way or the other. Most often the evidence will be tested by cross-examination to assist the court in deciding whether or not to accept the testimony. In this case, Mr Cartwright was not cross-examined. This was as a result of an agreement between the parties. It sometimes happens that the failure to cross-examine a witness is an indication that the witness' evidence is accepted by the opposing party: Seymour v Australian Broadcasting Commission (1977) 19 NSWLR 219, 236. It also happens that the failure to cross-examine a witness may be a bar to the opposing party making a submission that the evidence should not be accepted. This is the result of the so-called rule in Browne v Dunn (1894) 6 R 67 (HL), a much misunderstood, and on one view an unfair, rule of practice. In this case, the failure to cross-examine Mr Cartwright does not prevent the unions arguing that his explanation should be rejected. Mr Cartwright had ample notice that his evidence would be challenged and there would be no unfairness to him if such a submission were made. Indeed, the contrary position was not argued. 10 In his testimony, Mr Cartwright explained why he wrote each paragraph of the email. He said, and I agree, that it was necessary to give that explanation to provide the context in which para 6 is to be understood. There is no need for me to reproduce all Mr Cartwright's evidence. But it will be helpful to summarise that evidence and set out some extracts that will highlight the important points that are made. 11 Mr Cartwright said that the purpose of the email (especially para 1) was to let the Employee Relations group know of the initiatives that were being discussed within Telstra. He wanted to give the employees "a sense of how they would be affected as individuals". Mr Cartwright was also concerned to avoid any suggestion that 10,000 people were being "sacked" by Telstra: that "the real picture [was] not as harsh as [would] be reported in the media". As regards paragraph 6, Mr Cartwright made the following comments: "I was also concerned at how front line managers across the Company would implement staff cuts across groups that may include individuals on AWAs, given limited experience and understanding of the nature of individual employment because of its relative newness to Telstra. … However, Employee Relations has consistently advised managers that fundamental to the offer and acceptance of AWAs must be confidence of fair treatment for the individual. By contrast with the detailed workplace rules and regulated processes embodied in Telstra's awards and agreements, employment under an AWA relies on the exercise of discretion by managers in a system of individual accountability. Managers have considerable discretion in allocating tasks, in assessing performance and in rewarding staff differentially based on performance. There is no detailed redundancy process, as there is for award staff. My concern was that in implementing staff reductions affecting staff on AWAs our managers should pass the fairness 'test' in the eyes of all our employees. … Therefore, I was clear in my thinking that not only must manager behaviour towards AWA staff be seen to be fair, but under no circumstances must they discriminate against them. … I was most concerned to see that our AWA staff were treated fairly in the downsizing exercise. By being treated 'fairly' I did not mean that an AWA staff member is to be accorded favouritism over an award staff member in circumstances where staff are to be selected for redundancy. Indeed, such an exercise is clearly grounded on a manger selecting the best person for a remaining position. Staff members on AWAs must be judged on the basis of their performance and skills, as are award employees. Whatever the instrument of employment, the manger's focus must be on the performance of the individual. … Accordingly, I was concerned to encourage Employee Relations staff to reinforce with managers that any discrimination against AWA staff on this or any other basis would not meet our standards of respect for the individual and fair treatment. … I did not circulate the email to anyone outside Employee Relations, nor did I intend that the email be sent outside of the Employee Relations Business Unit." 12 The point that Mr Cartwright was seeking to make is that para 6 was intended to be an instruction to the Employee Relations group that they not discriminate against employees on AWA's. It was not intended as an instruction that the group discriminate against employees who were covered by awards or certified agreements. 13 Mr Cartwright's explanation must also be considered in the light of the prevailing circumstances. Those circumstance were: (a) That there was in place a redundancy agreement that prescribed a complex process for the redundancy of Telstra's employees; (b) That the processes did not apply to employees on an AWA; (c) That Telstra had introduced a detailed procedure for redundancy, which concentrated on merit in the selection of the employee who was to be made redundant; and (d) Any selection for redundancy was to be made only in an area where there was surplus staff. 14 Telstra relied upon these matters to argue that a manager in the Employee Relations group would not construe the email as an instruction to discriminate against any employee, because the overriding principle that applied to the redundancy process was fairness and equity of treatment. I rejected this argument when deciding the effect of the email. While the prevailing circumstances did not assist Telstra in relation to the meaning of the email, they could be deployed against it on the present question. The existence of a detailed regime for redundancy with fair procedures to ensure an equality of treatment, made it unnecessary for Mr Cartwright to instruct managers to avoid discrimination. Thus, it might be said that Mr Cartwright must have had some other purpose in mind when he sent the email. 15 In the end, I cannot reject Mr Cartwright's evidence, for his explanation might be true. On the other hand, I am not sufficiently persuaded by his testimony to reach the conclusion that it overcomes both the effect of s 298V and the language of the email. In relation to this latter point, the Full Court pointed out that Mr Cartwright's evidence amounts to saying that he did not mean what he wrote in the email. As I say, while that may be true, I am not persuaded that it is. In the result, Telstra has not discharged the onus that it carries, and I must find that it has contravened s 298K(1). 16 It will now be necessary for me to determine the appropriate orders that should be made. This raises some very difficult questions upon which I wish to hear the parties. The matters that must be considered include, but are not limited to, the following. According to the evidence, Telstra has approximately 42,500 employees who are under awards or certified agreements. Given the events that have occurred, one question that arises is whether there has been one contravention or approximately 42,500 contraventions of s 298K(1)? If there have been many contraventions, what principles should the court apply in determining the amount of the penalty that should be imposed? Should the court impose one penalty for all contraventions, or a separate penalty for each? No doubt the parties will wish to raise other matters. 17 In all the circumstances, the parties should be confined to written submissions, which they should file and exchange within fourteen days.