Health Services Union v Ambulance Service of New South Wales

LEGISLATION CITED: Industrial Relations Act 1996

HSU v Ambulance Service of NSW (No. 1) [2007] NSWIRComm 151 Re Medical Officers - Hospital Specialists (State) Award (1990) 33 IR 79 CASES CITED: Re Public Hospital Nurses' (State) Award (No 4) (2004) 131 IR 17 State Wage Case 2007 [2007] NSWIRComm 118 State Wage Case August 1989 (1989) 30 IR 107 TAFE Case - Full Bench of the Industrial Commission of NSW, Matter Nos 515, 566 and 1619 of 1989, 7 August 1991

HEARING DATES: 19 September 2006, 16 February 2007, 19 February 2007, 20 February 2007, 21 February 2007, 28 February 2007, 10 May 2007

Mr J Murphy of counsel with Mr D Ravlich, Manager Industrial Services LEGAL REPRESENTATIVES: Mr A Morris Blake Dawson Waldron Lawyers

• 18 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES

Health Services Union, New South Wales Branch & Ambulance Service of New South Wales (No. 2)

Notification under section 130 by Health Services Union of a dispute with Ambulance Service of New South Wales re interpretation of agreement and inappropriate classifications

1 On 20 June 2007, the Commission's decision in relation to one of two matters raised for determination was published (HSU v Ambulance Service of NSW (No. 1) [2007] NSWIRComm 151). This decision deals with the other matter namely, whether as the HSU asserts, the Ambulance Service of New South Wales has inappropriately classified Operations Managers employed by the Service to manage its operations in each of its Operational Sectors. 2 In relation to that matter, the HSU seeks the following orders:

1. The Commission orders that persons employed by the Ambulance Service of New South Wales in the position styled "Operations Manager" which was created by the Management Reorganisation in 2002 be classified as Superintendent Level 4 within the Classification Structure of the Ambulance Service of New South Wales Superintendent/Operational Managers (State) Award.
2. The Commission orders that the position styled "Operations Manager" which was created by the Management Reorganisation in 2002 and which is classified as Superintendent Level 4 within the classification structure of the Ambulance Service of New South Wales Superintendent/Operational Managers (State) Award became a Level 4 position when it was created. 3 By way of background, prior to 2002 the Operations Division of the Ambulance Service was divided into eight areas which were aligned with the Area Health Service boundaries throughout New South Wales. Each operational area was managed by an Area Manager who reported directly to the then State Superintendent, the most senior uniformed officer in the Ambulance Service. The areas were in turn divided into sectors with each sector under the control of a Sector Manager (previously called a District Superintendent). In total, there were thirteen sectors and therefore thirteen Sector Managers who reported to their respective Area Managers. 4 In 2002, the position of General Manager, Operations was established in place of the position of State Sperintendent. At the same time, three of the eight operational areas were placed under a Metropolitan Ambulance Services directorate and the remainder under a Rural Ambulance Services directorate. Responsibility for each directorate was given to the newly-created positions of Director, Metropolitan Ambulance Services and Director, Rural Ambulance Services respectively. At the time, the sub-division of areas into sectors remained unchanged but as may be seen, an intermediate level of Director was introduced into the operational management hierarchy between the General Manager, Operations and the Area Managers. Those two directorates as I understood the evidence, merged not too long after their establishment, into a single operational services directorate the responsibility for which was vested in the newly created position of Director, Operational Services. 5 As a further phase of structural reform in March 2002, the Service introduced what was described as a divisionalised operational management structure. This involved replacing the eight designated operational areas with four divisions; the deletion of eight Area Manager positions and the creation of four new Divisional Manager positions. 6 The operational sectors were changed slightly to fit within the new divisional boundaries and one of the sectors (North Sydney and Central Coast Sector) was split into two sectors (North Sydney Sector and Central Coast Sector). In the result, the overall number of sectors increased from thirteen to fourteen thus requiring the creation of an additional Sector Manager position. 7 Another outcome of the 2002 divisionalised operational management structure ("divisionalisation" as it is colloquially known within the Service) was that Sector Manager positions were redesignated as Operations Manager positions with no change in the level of remuneration or grading. It is this aspect of the structural reform process which most aggrieves the union. Operational Managers were and remain graded at Level 2 under the Ambulance Service of New South Wales Superintendents/Operational Managers (State) Award. I will return to that issue shortly but before doing so and for completeness, two additional reform initiatives should be described. 8 The first of those initiatives known as the management realignment project commenced in 2005 and in the result, the position of Director of Operational Services (see [4] above) was abolished thus removing the tier of the operational management hierarchy between the four Divisional Managers and the General Manager, Operations. 9 The second initiative of more recent origin is the decision by the Service to further change the management hierarchy by creating positions of Assistant Divisional Manager to whom Operations Managers report and who in turn report to Divisional Managers. This initiative, although some time in the formulation, was implemented in 2007 and the newly-created positions of Assistant Divisional Manager were and remain graded at Level 4 under the award. 10 As may be seen from the orders sought by the union, this is the level at which Operations Managers believe they should have been graded when their positions were created in 2002. 11 The matter is not without complexity and the parties have plainly struggled long and hard to find an acceptable outcome by means of workplace consultative processes and the dispute resolution provisions of the award. 12 For its part the union sees the duties and responsibilities of the Operations Manager positions as being sufficiently different to those of the predecessor Sector Manager positions to warrant a Level 4 grading and salary rather than the present Level 2 which, as I have said, is the same grading and salary as previously applied to Sector Managers. 13 The Service maintained that the duties and responsibilities of Operations Managers were and are materially indistinguishable from those of Sector Managers and if anything, the divisionalisation and realignment reforms have collectively impacted upon the work of Operations Managers in such a way as to reduce their level of accountability and their burden of responsibility in favour of a closer focus on the core responsibilities of frontline tactical management rather than for example, strategic planning. 14 As the Service submitted, the question to be determined by the Commission is whether the union has made out a case on behalf of Operations Managers to justify a salary increase under the Work Value Principle and whilst the union may seek to characterise the matter as a simple and straightforward grading exercise, it is inescapable and not otherwise argued that the test imposed by the Work Value Principle must be met before the claim may be granted. 15 The principle in its most recent enunciation (see State Wage Case 2007 [2007] NSWIRComm 118] is as follows: (a) Changes in work value may arise from changes in the nature of the work, skill and responsibility required or the conditions under which work is performed. Changes in work by themselves may not lead to a change in wage rates. The strict test for an alteration in wage rates is that the change in the nature of the work should constitute such a significant net addition to work requirements as to warrant the creation of a new classification or upgrading to a higher classification. In addition to meeting this test a party making a work value application will need to justify any change to wage relativities that might result not only within the relevant internal award structure but also against external classifications to which that structure is related. There must be no likelihood of wage leapfrogging arising out of changes in relative positions. These are the only circumstances in which rates may be altered on the ground of work value and the altered rates may be applied only to employees whose work has changed in accordance with this principle. (b) In applying the Work Value Changes principle, the Commission will have regard to the need for any alterations to wage relativities between awards to be based on skill, responsibility and the conditions under which work is performed. (c) Where new or changed work justifying a higher rate is performed only from time to time by persons covered by a particular classification, or where it is performed only by some of the persons covered by the classification, such new or changed work should be compensated by a special allowance which is payable only when the new or changed work is performed by a particular employee and not by increasing the rate for the classification as a whole. (d) The time from which work value changes in an award should be measured is the date of operation of the second structural efficiency adjustment allowable under the State Wage Case August 1989 (1989) 30 IR 107. (e) Care should be exercised to ensure that changes which were or should have been taken into account in any previous work value adjustments or in a structural efficiency exercise are not included in any work evaluation under this Principle. (f) Where the tests specified in (a) are met, an assessment will have to be made as to how that alteration should be measured in money terms. Such assessment will normally be based on the previous work requirements, the wage previously fixed for the work and the nature and extent of the change in work. (g) The expression ' the conditions under which the work is performed ' relates to the environment in which the work is done. (h) The Commission will guard against contrived classifications and over-classification of jobs. (i) Any changes in the nature of the work, skill and responsibility required or the conditions under which the work is performed, taken into account in assessing an increase under any other principle of these principles, will not be taken into account under this principle. (j) In arbitrating an application made under this Principle, the Commission is required to determine whether or not future State Wage Case general increases will apply to the award. 16 For the purpose of these proceedings, the test imposed by the principle is that discussed by the Full Bench of the Commission in Re Public Hospital Nurses' (State) Award (No 4) (2004) 131 IR 17 at [16] to [22] as follows: Work value principle

16 The work value principle allows for award wages to be increased if it can be demonstrated that there have been changes in the nature of the work, skill and responsibility required or the conditions under which work is performed to such an extent that the changes constitute a significant net addition to work requirements so as to warrant the creation of a new classification or upgrading to a higher classification. The principle refers to this test as a "strict test". There must be no likelihood of wage leap frogging either within the internal award structure or against external classifications to which that structure is related.

17 Further, there should be no double counting. That is, changes that were, or should have been, taken into account in any previous work value adjustments are not to be included in any work evaluation under this principle.

18 These requirements under the work value principle impose a significant burden on an applicant, particularly because of the strict test requiring the applicant to demonstrate a "significant net addition to work requirements so as to warrant the creation of a new classification or upgrading to a higher classification". It might be asked how such a burden exists in a decade or more of rapid and continuing workplace change and the almost universal impact that phenomenon has had on employees. But as the principle makes clear, changes in work by themselves may not justify an increase in wages. Some changes bring about a net reduction in work requirements. Others merely reflect the evolving nature of the particular occupation where skills or responsibilities are lost and new ones gained without producing a net addition to work requirements. In many occupations, particularly professional occupations, change, and the requirement to cope with it by coming to terms with new methods and new technology, is an inherent and accepted characteristic of the employment and rarely will this evolutionary process attract extraordinary wage increases under the work value principle. In this respect, we note the observations of Fisher P in Re Medical Officers - Hospital Specialists (State) Award (1990) 33 IR 79 at 84 where, after referring to the work value principle, his Honour said: One of the problems with the application of the "strict test" to professional or managerial employment lies in the nature of the change. Change must be accommodated, being an essential part of what professional practice is all about. It does not follow therefore without more, that changes even spectacular changes, necessarily fall within the work value principle.

Secondly it is to be understood that new techniques and procedures bring with them their own advantages. For every new technological advance there is likely to be somewhere an inferior technology in part or in whole abandoned. Superior technologies give superior results and tend to free practitioners from laborious, uncertain and stressful practice. Changes, subject to habitation, do not necessarily make things more difficult or more demanding. They may, but equally they may remove problems, decrease anxieties and uncertainties and as well be more rewarding and more productive.

19 Other changes to work which have occurred in the quest for greater productivity and efficiency may have already been compensated for by wage increases paid in recognition of the increased productivity and efficiency or by increases granted for earlier work value changes.

20 A tribunal charged with determining whether the tests under the work value principle have been met must carefully sift through the material that has been placed before it and separate out those changes which have occurred to the nature of the work, skill and responsibility of employees or to the environment in which the employees work and which have not previously been the subject of compensation. An objective assessment then has to be made as to whether the changes that have occurred amount to such a significant net addition to work requirements as to warrant the creation of a new classification or upgrading to a higher classification. The change is to be measured from the last time wages were increased on the basis of work value or from the date of operation of the second structural efficiency adjustment allowable under the State Wage Case 1989, whichever is the later. An assessment is then to be made as to how that change should be measured in money terms. Such assessment will normally be based on the previous work requirements, the wage previously fixed for the work and the nature and extent of the change in work.

21 Finally, in relation to the application of the work value principle we refer to the Full Bench decision in The TAFE Case (unreported, Full Bench of the Industrial Commission of New South Wales, Matter Nos 515, 566 and 1619 of 1989, 7 August 1991) where after analysing the work value principle applicable at that time it was held at 44: We consider that reliance on this principle for general wage movements across all classifications in an award is not justified. Consideration of the phrases emphasised [by underlining] show that the purpose of this principle is directed towards specific work changes in specific areas. It was not intended that generalised across the board wage increases should be based on this principle.

22 We consider that the important point to be drawn from The TAFE Case is that if an applicant seeks wage increases for all classifications under an award the applicant carries the onus of demonstrating work value change in respect of each classification. It is not sufficient to contend, for example, that there have been changes in technology over the relevant period that have impacted on the work value of employees generally. It must be demonstrated how that impact has led to a significant net addition to the work requirements of each award classification in respect of which the increase is sought. 17 In addition to the documentary material tendered and relied upon by the respective interests, evidence in relation to the work requirements of Operations Managers was taken from the following witnesses: · Mr Dennis RAVLICH, Manager Industrial Services, Health Services Union · Mr Peter PILON, Operations Manager, Mid North Coast Sector · Mr Phillip WILSON, Operations Manager, South Western, South Eastern and Central Sydney Sector · Mr Michael WILLIS, General Manager, Operations · Mr Denis BEAVAN, Divisional Manager, Southern Division 18 Both Mr Pilon and Mr Wilson were called by the union. They spoke of their extensive careers in the Service and in particular, of their respective roles and functions and the operational resources under their supervisory control within the sectors they manage. 19 Mr Pilon, for example, described the Mid North Coast Sector as having 140 personnel, 14 ambulance stations, one workshop, a sector office, 60 vehicles and associated equipment, an operational budget of 12.6 million dollars and a geographical area extending from Tuncurry to Woolgoolga. He said the divisionalisation reforms in 2002 caused the loss of three Area Manager positions and their replacement by one Divisional Manager position in consequence of which there was an increase in the levels of accountability required by Operations Managers. In effect, Mr Pilon seemed to be saying that he assumed, in part if not in whole, the role and responsibilities of an Area Manager without any recognition by way of increased remuneration. 20 Mr Wilson described the South Western, South Eastern and Central Sydney Sector as having 600 staff, 23 ambulance stations, an operational budget of 47 million dollars and a geographical area extending from Bowral in the Southern Highlands to Sydney Harbour inclusive of the CBD, the eastern suburbs and four airports (Sydney, Bankstown, Camden and Hoxton Park). He described the operating environment within his sector boundaries as unique involving a significant amount of the State's critical infrastructure network - Sydney CBD, domestic and international airports, the underground rail system and the Australian Nuclear Science and Technology Organisation (ANSTO). Mr Wilson said that three Area Manager positions were abolished and one Divisional Manager position created in the 2002 divisionalisation process and that he took over the management of one of those areas (South Eastern and Central Sydney). In the result, he said he assumed responsibility for duties such as finance, staffing and industrial relations which had hitherto been performed by the Area Manager to whom he reported. 21 Additionally, his sector was substantially enlarged by the extension of its boundaries in 2005 to take in the previously separate South Western Sydney Sector. Mr Wilson remains on the same Level 2 of the pay scale as when he was a Sector Manager prior to divisionalisation in 2002. 22 Mr Beavan who was called by the Service, deposed to a similarly extensive career and also to his appointment as Divisional Manager, Southern Division on 25 February 2002. Prior to that, he had been a Sector Manager since 1995. In his role as Divisional Manager, he was directly involved in implementing the divisionalisation reforms including the replacement of eight designated operational areas with four divisions and more particularly for the purpose of these proceedings, including the decision to change the position title of Sector Manager to Operational Manager. 23 Mr Beavan said he was aware of the impact of divisionalisation on Sector Managers/Operations Managers both from the perspective of having been a Sector Manager himself and since 2002, having been directly responsible for Sector Managers (now called Operations Managers) in his role as Divisional Manager. He said the decision to re-name Sector Managers as Operations Managers was made for no reason other than the former position title did not appropriately reflect the operational requirements of the position. He said that divisionalisation did not change the skills required of Sector Managers or the essential nature of their work and other than the obvious job title change, the position description for Sector Manger was not changed in any way for the position of Operations Manager. 24 Mr Beavan, again from his perspective as Divisional Manager, was able to compare the responsibilities and other work requirements of Operations Managers with that of the Operations Centre Manager in Southern Division and expressed the view having regard to the more onerous job functions of the latter, that the present gradings of Level 2 and Level 4 respectively, provide fair and appropriate rates of remuneration in all the circumstances. He pointed, for example, to the one Operations Centre Manager in each division who has responsibility for receipt of all calls and deployment of all on-duty personnel across the whole division whereas with three or four Operations Managers in each division, it can fairly be said that the span of control of the latter is not as great as the former. I note that since Mr Beavan's evidence was taken, Operations Centre Managers have been awarded an 8% increase in their rate of pay (see HSU v Ambulance Service of NSW (No. 1) [2007] NSWIRComm 151). However, the point of Mr Beavan's comparative assessment remains unchanged, as I view his evidence. 25 Mr Beavan disputed the proposition advanced by union witnesses as to the devolution of Area Manager responsibilities to Operations Managers contending instead that such responsibilities were assumed entirely by Divisional Managers. He said that the responsibilities of Operations Managers for matters such as budgeting, staffing and industrial relations are essentially the same as the pre-divisionalisation responsibilities of Sector Managers; that the Divisional Manager is the budget holder for each sector with the same accountabilities for managing the budget as the previous Area Managers and that Operations Managers as with their predecessors, the Sector Managers, are expected to operate within their budget allocation. 26 As to responsibility for industrial relations, Mr Beavan said that all levels of management within the Service have such responsibility on the basis that industrial issues will be initially dealt with at the lowest practicable management level. As industrial issues escalate, so does the level of management involvement. Such a function was routinely delegated to Sector Managers in the same way as it is now delegated to Operations Managers. 27 As to staffing, the same responsibility now rests with Operations Managers that previously rested with Sector Managers namely, to ensure that the sector staffing levels are maintained and this has not changed as a result of divisionalisation or at all. The Divisional Personnel Officer and the Human Resources Department are responsible for filling any vacancies identified by the Operations Manager and State Headquarters is responsible for new recruits. 28 Mr Willis was called by the Service. He deposed to a career which commenced in 1981 and also to his appointment as General Manager, Operations in 2005. In that position he has a thorough knowledge of the role and responsibilities of Operations Managers since those positions report to Divisional Managers with whom he deals on a daily basis. 29 Mr Willis maintained and was strenuously cross-examined on his assertion that the divisionalisation and realignment reforms have individually and severally impacted on Operations Managers in a way which eased the pressure on them and assisted them in carrying out their functions with a sharper focus than previously upon tactical direction, financial management and service delivery within their sectors. In that way, Operations Managers are required to be tactically rather than strategically focused. This is in contrast, according to Mr Willis' evidence, with the more strategic focus of the newly-created Assistant Divisional Manager positions. 30 Mr Willis said that the more recent creation of the Assistant Divisional Manager positions with Level 4 gradings (and with Level 2 Operations Managers notionally reporting to them) was a further indication that the Service did not envisage the sector-based Operations Managers as having or being required to assume duties, functions and responsibilities commensurate with a Level 4 grading. Furthermore, if the fourteen sector-based Operations Managers were to be graded at Level 4 as claimed by the union, it would significantly disturb the established relativities between the thirty-nine officers throughout the Service who are presently employed under the Superintendent/Managers Award and who have been graded according to the requirements of each position relative to others. 31 In the course of argument, the HSU sought to rely upon what was said to be an administrative review of the position description, classification and grading of Operations Managers under the new divisionalisation structure. In fact, the review was carried out by Ms Colleen Fowler, Personnel Services Co-ordinator with the Service, at the request of the Superintendent/Managers Sub-Branch of the HSU. Based on what is recorded as a confidential telephone survey undertaken with a sample of Operations Managers, Ms Fowler purported to set out a list of key changes identified to her in that ostensibly anonymous way between the previous Sector Manager and the new Operations Manager responsibilities. She then made a number of recommendations including the proposed reclassification of Operations Manager from Level 2 to Level 3. 32 Ms Fowler's recommendations on the face of the document in evidence were forwarded initially for consideration by the Manager, Employee Relations (to whom she may have directly reported) and thereafter through the chain of command within the service, to the: · General Manager, Corporate Services · Acting Director Operational Services · Acting General Manager Operations · Acting Chief Executive Officer 33 Neither Ms Fowler nor any of the above persons to whom her recommendations were directed for consideration, gave evidence in relation to this matter, leaving the document to speak for itself and it is unclear, on the face of the document, whether the recommendations it contained received support or endorsement from any of the persons to whom it was directed or indeed whether it was even distributed to those persons. I find myself in agreement with the proposition for which the Service contends namely, that the probative value of the document must be extremely limited. 34 The document created by Ms Fowler is now more than three years old and, on its face, represents no less and no more than the opinion of the Personnel Services Coordinator of the Ambulance Service. An examination of its contents reveals that its conclusions are based largely on unattributed hearsay and it is in many respects qualified in its recommendation that consideration be given to grading Operations Managers at Level 3. As earlier observed, Ms Fowler was not called by the HSU and her reasoning and opinions as well as the source material upon which that reasoning and those opinions were based, are therefore untested. 35 In seeking to have Operations Managers paid as though they are Area Managers, the HSU claim encounters significant difficulties as I am disposed, not the least of which is that on the evidence presented and notwithstanding reference in general terms to the duties of Area Managers, there is no direct or detailed comparison between the overall work requirements, including skills and responsibilities of an Area Manager compared with those of the Operations Manager. For example, the Commission was not taken to the position description for Area Manager and I note as observed at the outset, that there were fourteen Operations Manager positions created at the time of divisionalisation in 2002. Even if it were accepted that the work of the eight Area Manager positions devolved to fourteen Operations Managers, it could only be in part when one considers that there are almost twice as many of the latter than the former. 36 Moreover, it is the consistent and undamaged evidence of the witnesses for the Service that the positions of Divisional Manager which came into existence at the time of divisionalisation in 2002, assumed the roles and functions previously performed by Area Managers. I am inclined on balance, to accept that and in so doing, I have had that regard among other things to the essentially identical (save for the job title) position descriptions for Sector Managers and Operations Managers. 37 That being said, it is clear from the evidence and unsurprising that the range of duties and functions carried out by individual Sector Managers varied depending upon the personal styles and preferences of individual Area Managers. In this regard, both of the union witnesses (Mr Wilson and Mr Pilon) spoke in anecdotal fashion, about what particular Area Managers required of particular Sector Managers at particular times rather than about the formal requirements of the position as determined by the Service and as set out in their position descriptions. 38 Mr Morris for the Service submitted and I agree that it is reasonable and understandable that different Area Managers and their Sector Managers would come to different arrangements in relation to the specifics of delegated work functions and their discharge having regard to personal choice and importantly, having regard to developing experience, competence and performance of the Sector Manager. In my opinion, this evidence does not serve as an objective and reliable point of comparison between what was required of Sector Managers and what has been required of Operations Managers since the creation of that position title in 2002. 39 Moreover and again as Mr Morris submitted, the reliance by the HSU upon an offer made by the Service to grade Operations Managers at Level 3 and the inference to be drawn from the fact that such an offer was made, needs to be balanced against the absence of detailed knowledge on the Commission's part as to the full circumstances surrounding the offer as well as the fact that it was rejected. The evidence was that it was rejected for reasons, among others, that acceptance involved a "spill and fill" arrangement by which each incumbent would be required to make application for the newly graded position. Be that as it may, it remains the fact that the Commission must, independently of whether offers are made or not, satisfy itself that the strict test imposed by the Work Value Principle has been met before moving to consider what if any alteration in wage rates there should be. 40 The HSU also relied in support of its claim upon the outcome of a job evaluation carried out by the firm of consultants Mercers during the realignment reforms. The consultants purported to evaluate the jobs of Operations Managers at Level 4 and Level 3 of the award classification structure using a points system of evaluation methodology. The Service argued, however, that in commissioning the Mercer evaluation it had in contemplation and so implicitly or expressly instructed the consultants, not that the existing Operations Manager positions were to be evaluated but rather revised positions which included additional responsibilities of a strategic nature. These revised positions were in fact the positions that have since been brought into existence and titled Assistant Divisional Manager. 41 Although the HSU plainly understood the then existing Operations Manager positions to have been evaluated, the state of the evidence is not such as to permit a clear conclusion in that regard. I am inclined on balance to accept, as the Service contended, that Mercers were asked to evaluate revised positions with additional responsibilities of a strategic nature over and above the existing Operations Manager positions. In any event, the Mercer evaluation is not of itself determinative of work value change and does not of itself assist in answering the question whether there has been such change constituting, as it must in order to secure increased rates of pay, a significant net addition to work requirements. 42 As things presently stand, I am not persuaded that Operations Managers assumed the role and functions and levels of responsibility previously attaching to Area Managers and I am not persuaded that there has been demonstrated in evidence, changes of the type comprehended by the Work Value Principle, such as to justify reclassification from Level 2 to Level 4 of the award. 43 The application for dispute orders must therefore be dismissed and I do so accordingly.

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