Crown Employees (Teachers in Schools and Related Employees) Salaries and Conditions Award and Crown Employees (Teachers in TAFE and Related Employees) Salaries and Conditions Award [2008] NSWIRComm 209

CORAM: Boland J President; Schmidt J; McLeay C

PRACTICE AND PROCEDURE - Award - Applications to vary awards for salary increases - Applications filed prior to nominal expiry dates of awards - Applications seeking arbitration on an expedited basis of salary claims prior to nominal expiry dates - Whether Commission unable to deal with the applications by virtue of the no further claims provisions in the awards - Consideration of purpose of no further claims provisions in awards - Importance of no further claims provisions to wage fixing generally - Consideration of circumstances under which applications may be filed prior to nominal expiry date of award - No prohibition against filing applications to vary awards prior to nominal expiry date - Conciliation available to the parties but no arbitration of claims prior to nominal expiry date where award contains no further claims provision other than in exceptional circumstances - No exceptional circumstances. CATCHWORDS: AWARD - Applications to vary to increase salaries by five per cent for teachers - Applications filed prior to nominal expiry dates of awards - Applications seeking arbitration on an expedited basis of salary claims prior to nominal expiry dates - Arbitration not available prior to nominal expiry date - Based on Government's Public Sector Wages Policy respondents prepared to agree to increase of 2.5 per cent - Respondent foreshadowed cross applications proposing further salary increases based on cost savings - Commission to increase salaries by 2.5 per cent - Parties directed into conciliation - Dates reserved for arbitration if necessary in March 2009.

LEGISLATION CITED: Industrial Relations Act 1996 s 17

Amcor Limited v Construction Forestry Mining and Energy Union [2005] HCA 10; (2005) 222 CLR 241 Kucks v CSR Ltd (1996) 66 IR 182 CASES CITED: Re Corrections Health Service Nurses' State Award (1999) 90 IR 235 Re Crown Employees (Teachers in Schools and TAFE and Related Employees) Salaries and Conditions Award [2002] NSWIRComm 144; (2002) 116 IR 361 Re NSW Education Employees (Non-Continuing Contract Employment) Award (1998) 92 IR 239 Re Notification under section 130 by the New South Wales Teachers Federation of a dispute with Department of Education and Training re changes to TAFE teacher education programs [2008] NSWIRComm 117

APPLICANT: Mr S Crawshaw of Senior Counsel and Mr M Gibian of Counsel

LEGAL REPRESENTATIVES: RESPONDENTS: Mr P M Kite of Senior Counsel and Ms M M Fraser of Counsel

• 1 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES

RE CROWN EMPLOYEES (TEACHERS IN TAFE AND RELATED EMPLOYEES) SALARIES AND CONDITIONS AWARD

Application by New South Wales Teachers Federation for variation re salaries and other matters

RE CROWN EMPLOYEES (TEACHERS IN SCHOOLS AND RELATED EMPLOYEES) SALARIES AND CONDITIONS AWARD

Application by New South Wales Teachers Federation for variation re salaries and other matters

RE CROWN EMPLOYEES (TEACHERS IN TAFE AND RELATED EMPLOYEES) SALARIES AND CONDITIONS AWARD AND CROWN EMPLOYEES (TEACHERS IN SCHOOLS AND RELATED EMPLOYEES) SALARIES AND CONDITIONS AWARD

Notification pursuant to Practice Direction 8A by New South Wales Teachers Federation re variation of awards

1 On 17 October 2008, the New South Wales Teachers Federation filed two applications, the first being an application to vary the Crown Employees (Teachers in TAFE and Related Employees) Salaries and Conditions Award and the second being an application to vary the Crown Employees (Teachers in Schools and Related Employees) Salaries and Conditions Award. The applications seek an increase of 5 per cent in salaries and allowances, the increase to take effect from 1 January 2009. 2 The grounds and reasons in both applications were the same, namely, that: 1. The nominal term of the current award will expire on 31 December 2008 and the employees covered by the Award (with the exception of a small number of employees) last received an increase in salaries, rates of pay and allowances on 1 January 2008.

The variation sought by the Federation is to increase the salaries, rates of pay and allowances payable under the Award by 5% with effect from 1 January 2009.

The Industrial Relations Commission has jurisdiction to grant the variations sought under section 17 of the Act.

The increase in salaries, rates of pay and allowances sought by the Federation is justified under Principle 10, Special Case, of the Commission's wage fixing principles.

The variation is necessary: (a) to maintain the real value of the salaries, rates of pay and allowances of teachers; (b) ensure that movements in teachers' salaries keep pace with wages and salary movements in the community generally; (c) to ensure that the salaries, rates of pay and allowances of teachers are increased on 1 January 2009.

The Respondent is inflexibly insisting that any increases to the salaries and rates of pay and allowances of teachers covered by the Award comply with the NSW Public Sector Wages Policy 2007 ("the Policy").

Whilst the Policy purports to maintain salaries, rates of pay and allowances in real terms, it requires that any increases to employee related expenses, including salaries, rates of pay and allowances, exceeding 2.5 per cent per annum must be directly funded through employee related reform measures and cost savings.

The approach of the Respondent ignores the fact that Australia and New South Wales are experiencing a period of relatively high inflation which has eroded the real value of the salaries, rates of pay and allowances of teachers covered by the Award.

The Federation is unable to access increases in salaries rates of pay and allowances granted under the State Wage Case 2008 [2008] NSWIRComm 122. Given the approach adopted by the Respondent, the Federation has no alternative except to seek an increase in salaries, rates of pay and allowances payable under the Award under the Special Case Principle.

Such other grounds and reasons as the Commission deems appropriate. 3 Also filed on 17 October 2008, pursuant to Practice Direction 8A, was a Notice of a Major Industrial Case relating to the aforementioned awards. In that notice the applicant stated: The variation applications constitute significant and important proceedings and the Federation respectfully requests that the matters be given priority by the Commission. The nominal terms of both Awards will expire on 31 December 2008. Teachers covered by the Awards have not received an increase in salaries and allowances since 1 January 2008.

The estimated time for hearing of the application is 3-5 days, depending on how much evidence would be called by the Respondent to each Award. 4 On 24 October 2008, a Major Case Conference was conducted, chaired by Boland J, President. It became apparent that the applicant was seeking a hearing of its application prior to the expiry date of the current awards, with a view to seeking a decision that would apply from 1 January 2009. 5 The respondents to the applications are the Director General of the Department of Education and Training and the Managing Director of TAFE. The respondents opposed the Federation's applications and opposed what was, in effect, an application by the Federation for expedition. The respondents foreshadowed that they intended to file applications of their own for new awards. Those awards would be consistent with the Government's 2007 Public Sector Wages Policy, which provided that any increases to employee related expenses, including wages, allowances, superannuation etc, exceeding 2.5 per cent per annum, must be funded through employee related reform measures and cost savings. 6 The respondents contended that the Federation was prevented from proceeding with its claims by virtue of the no further claims provisions in the two current awards. It was put that the Federation's applications should not be dealt with separately from the respondents' foreshadowed applications. It was advised that in light of the current disagreement between the parties over the Government's Public Sector Wages Policy, any arbitration proceedings were likely to take "weeks". However, the respondents indicated that they were willing to participate in any conciliation proceedings relating to the parties' various applications. 7 In light of the procedural disagreement between the parties, the President constituted a Full Bench to deal with the question of whether the Federation's applications should be heard expeditiously, that is prior to 31 December 2008 when the two awards expired, and separately from the respondents' applications. The Full Bench heard the parties on 30 October 2008. This decision deals with the procedural question. Consideration

8 The position is that the Teachers Federation seeks an expedited hearing of its applications and an operative date for any increase from 1 January 2009. It contended that this is justifiable on the basis that teachers have not received a salary increase for 12 months, at a time when New South Wales is experiencing a period of relatively high inflation, (the increase in the Consumer Price Index for Sydney for the September 2008 quarter was 4.9 per cent compared to the national average of 5.0 per cent), which has eroded the real value of the salaries, rates of pay and allowances of teachers covered by the subject awards. Further, that it is appropriate for the matter to proceed immediately to arbitration, because there is a fundamental and irreconcilable difference between the parties, that being the Government's Public Sector Wages Policy. 9 The Federation also indicated that there were further claims that it would wish to pursue at some later time, either by conciliation or arbitration. 10 On the other hand, the respondents' position is: (i) they are bound by the Government's wages policy; (ii) in accordance with that policy they intend, by administrative action, to increase salaries under the subject awards by 2.5 per cent from 1 January 2009; (iii) the no further claims provisions in the subject awards prevents any arbitration of the applicant's claims prior to 1 January 2009; (iv) they had filed, on 30 October 2008, applications of their own to rescind and replace the subject awards consistent with the Government's wages policy, involving salary increases over the next three years funded to the relevant extent by cost savings prescribed by measures in the proposed awards; (v) they are prepared to engage immediately in conciliation in relation to their proposed awards (and in relation to the Federation's claims); and (vi) if arbitration becomes necessary, they submit that each of the awards will need to be heard separately and estimate each will require a hearing time of two weeks, thus a total of four weeks in 2009.

11 There was also a fundamental disagreement between the parties about the effect of the no further claims provisions in the two awards. The provision in the Teachers in Schools Award (cl 33) is in the following terms: Except as provided by the Industrial Relations Act 1996, prior to 31 December 2008, there shall be no further claims by the parties to this Award for changes to salaries, rates of pay, allowances, or conditions of employment in relation to matters expressly contained in this award.

The corresponding provision in the Teachers in TAFE Award (cl 43) is essentially the same as the Schools Award. 12 Senior counsel for the respondents, Mr Kite, submitted that "technically" a party to an award containing a no further claims provision of the type in the subject awards could not make a claim, including an application to vary or rescind an award, during the award's nominal term. However, it was conceded that it would be within the Commission's discretion to countenance an application to vary such an award, or an application for a new award, being filed prior to the nominal expiry date of the award and to proceed to deal with the application by conciliation, but not by arbitration. 13 Senior counsel for the applicants, Mr Crawshaw, submitted that the no further claims clauses only prohibited the making or hearing of an application for changes to salaries, rates of pay, allowances or conditions of employment that were sought to be made operative prior to the nominal expiry date of the award, 31 December 2008. He contended that the clauses did not prohibit the making or hearing of any application prior to 31 December 2008. 14 In the course of argument reference was made to Re Corrections Health Service Nurses' State Award (1999) 90 IR 235, Re Crown Employees (Teachers in Schools and TAFE and Related Employees) Salaries and Conditions Award 2002] NSWIRComm 144; (2002) 116 IR 361, Re NSW Education Employees (Non-Continuing Contract Employment) Award (1998) 92 IR 239 and Re Notification under section 130 by the New South Wales Teachers Federation of a dispute with Department of Education and Training re changes to TAFE teacher education programs [2008] NSWIRComm 117. Each of those cases addressed award provisions relating to no further claims in one context or another, although we note that the claims that were being considered in each case were claims that were sought to be made operative during the period covered by the relevant no further claims provision. That is not the case here. 15 We would observe that no extra claims undertakings were adopted in the early 1980s in the federal Metal Industry Award 1971, as a device to prevent further award, but particularly over award, claims being made for an agreed period. Such undertakings have become a standard feature of wage fixing arrangements both at the federal and State level, especially through the mechanism of wage fixing principles. Commendably, employees, unions and employers have regarded their commitments to make no extra claims during the life of an award or agreement as solemn undertakings and rarely have they been breached. The commitments have been regarded as morally, as well as legally binding.

16 The purpose of no further claims commitments is to ensure certainty during the life of the relevant industrial instrument. That is to say, all matters agreed or arbitrated upon represented a settled arrangement for the term of the award or agreement. Depending on the terms of the commitment, employers could plan and act on the basis that during the life of the award or agreement, they would not incur any additional labour costs or industrial action in support of extra claims, nor would they be required to divert resources to dealing with such claims. Employees and their unions would not face claims to cut wages or alter to their detriment employment conditions prescribed by the award or agreement. 17 In Re Corrections Health Service Nurses' State Award, Wright J, President made certain observations at 245 about the critical importance of no further claims commitments: It should be emphasised that the Commission must ensure the integrity of not only its own wage fixing principles but also the strict observance of agreements and undertakings given by parties compliance with which, properly considered, are important and indeed essential to the integrity to the principles. Undertakings such as no extra claims provisions are crucial parts of the integrity of the system of wage fixation which occurs in the New South Wales system of industrial regulation…. In approaching the construction of no extra claims provisions, or provisions such as those contained in the Heads of Agreement, a strict approach of their construction should be applied consistent with the necessity of maintaining the integrity of the wage fixation principles.

18 There can be no doubt that other than what might be imagined to be the most exceptional of circumstances, the underlying purpose of a no further claims provision, such as those in the subject awards, is to prohibit the award being varied or replaced during its nominal term, in respect of those matters to which the provision applies, where the variation or replacement is contested. But that is not this case. The applicant submitted that the no further claims provision did not prohibit an application to vary being made during the nominal term of the award nor did it act as a bar to the Commission hearing and determining the application, provided the determination did not become operative until after the nominal expiry date of the award. 19 In advancing its argument the Federation relied on the provisions of s 17 of the Industrial Relations Act 1996, which provides: 17 Variation or rescission of award (1) The Commission may vary or rescind an award. (2) Sections 11, 13 and 15 apply to any such variation or rescission. The other provisions of this Division continue to apply to the award as varied. (3) An award may be varied or rescinded in any of the following circumstances only: (a) at any time with the mutual consent of all the parties to the making of the original award,

(b) at any time to give effect to a decision of the Full Bench of the Commission under section 50 or 51 (National and State decisions),

(c) during its nominal term if the Commission considers that it is not contrary to the public interest to do so and that there is a substantial reason to do so,

(d) after its nominal term if the Commission considers that it is not contrary to the public interest to do so. (4) This section extends to a variation or rescission of an award in the course of an arbitration by the Commission under Chapter 3 to resolve an industrial dispute. 20 The Federation's case was that the awards' no extra claims provisions did not preclude the Commission from permitting its applications from being heard as it sought, whether it was s 17(3)(c) or (d) which governed such a hearing. 21 In our view, that argument did not assist the Federation's case. In either case the section requires that the Commission have regard to the public interest. In our opinion, because of the criticality of the no further claims concept to wage fixing, consistently with the public interest, we are not disposed to weaken that concept, certainly not to the extent proposed by the applicant in these proceedings. We agree with Wright J that a strict approach to the construction of no further claims provisions should be applied. That strict approach, however, must pay regard to the need for a "sensible industrial outcome", which allows that "meanings which avoid inconvenience or injustice may reasonably be strained for": see Amcor Limited v Construction Forestry Mining and Energy Union [2005] HCA 10; (2005) 222 CLR 241 at [96] per Kirby J, referring to the reasons of Madgwick J in Kucks v CSR Ltd (1996) 66 IR 182 at 184. 22 We regard it as sensible and practicable for a party wishing to vary an award or to replace the award with a new one, to make the appropriate application at a time prior to the expiry of the current award, but reasonably proximate to the expiry date, even in the case of an award containing a no extra claims provision. That will at least put the other party(s) on notice of what is being sought and may assist in avoiding prolonged delays in processing the claim, especially if it is likely to involve complex matters or disputed matters entailing a large evidentiary component, requiring a lengthy hearing. It would also allow the parties to engage in early discussions about the matters that are the subject of the application, if they consent to doing so. This may involve access to the conciliation processes of the Commission, if they agree. 23 This would all be done in the absence of any industrial action or threat of industrial action. A consequential benefit of this process might be to reduce lengthy periods of retrospective adjustments to salaries and the like. The Commission, however, will not commence any arbitration of the claims prior to the expiry date of the current award other than in the most exceptional of circumstances, which do not exist here. 24 We note the Federation's concern that teachers have not received any salary increase since 1 January 2008 and that inflation is now running at about 5 per cent. That is obviously eroding the real value of teachers' salaries. However, the respondents have indicated that they are prepared to consent to an increase of 2.5 per cent payable from 1 January 2009. Such an increase would provide some immediate relief for teachers and, in our opinion, together with other measures that we will propose, relieves the urgency that is said to accompany the Federation's applications. If there is consent, we propose to vary the awards to apply a 2.5 per cent increase from 1 January 2009. 25 Additionally, the Commission will chair conferences of the parties in November and/or December 2008 according to dates that are convenient. If necessary, the Commission will be available during the law vacation to continue the conferences. The applications that will be the subject of the conferences will be those that are the subject of these proceedings, namely, Matter Nos IRC 1979 and 1980 of 2008 and those filed by the respondents, namely, Matter Nos IRC 2042 and 2043 of 2008. All of these applications seek increases to salaries. The respondent's applications, however, make conditional on cost savings any salary increase above 2.5 per cent. It would seem quite illogical to deal with the applications in separate conciliation proceedings. Should the Federation file the further applications which it has foreshadowed, those applications will also be dealt with in these conciliation proceedings. 26 Whilst we recognise that there is a fundamental disagreement between the parties over the role to be played by the Government's Wages Policy, that disagreement has existed in other significant public sector cases dealt with by the Commission this year. However, with the benefit of conciliation and, ultimately goodwill, claims for salary increases have been satisfactorily resolved. 27 Nevertheless, we have taken the step of reserving three weeks for arbitration proceedings commencing on 16 March 2009 in the event that conciliation is unsuccessful. Questions of joinder of the various matters may be considered in the conciliation conferences if that becomes necessary. If such questions cannot be resolved by agreement, the Commission will determine them. Orders

28 The Commission makes the following orders: (1) the respondents shall, within seven days, file and serve schedules setting out variations to the Crown Employees (Teachers in TAFE and Related Employees) Salaries and Conditions Award and the Crown Employees (Teachers in Schools and Related Employees) Salaries and Conditions Award that give effect to a 2.5 per cent increase in salaries, rates of pay and allowances to take effect on and from 1 January 2009; (2) Matter MIC No 4 of 2008 and Matter Nos IRC 1979, 1980, 2042 and 2043 of 2008 are listed before Boland J, President at 9.30 am Friday, 14 November 2008 for the purpose of making directions regarding conciliation in accordance with this decision and, if there is consent to the variation schedules, for the purpose of varying the subject awards. ______________________________________

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