Nurses and Midwives' Association v Justice Health and Forensic Mental Health Network

DECISION OF THE COMMISSION 1The New South Wales Nurses' and Midwives' Association ("the appellant") has sought leave to appeal and, if leave is granted, to appeal from a decision of Harrison DP in which his Honour upheld the right of Justice Health and Forensic Mental Health Network (a Division of NSW Health) ("the respondent") to cease paying for meal breaks taken by nurses at the Forensic Hospital, Malabar: Notification under section 130 by Justice Health and Forensic Mental Health Network (a Division of NSW Health) of a dispute with NSW Nurses and Midwives' Association re paid meal breaks [2012] NSWIRComm 119.

Background 2The background to the appeal is set out in the decision of Boland J, President where his Honour granted a stay of the Deputy President's decision: Nurses and Midwives Association v Justice Health and Forensic Mental Health Network (a Division of NSW Health) [2012] NSWIRComm 148 at [3]-[10]. 3The Forensic Hospital, which is a maximum-security facility of 135 beds, has a complement of in excess of 203 full time equivalent nurses. The Hospital is located adjacent to the Long Bay Correctional Facility and its purpose is to provide care and therapeutic treatment for male and female patients. In the stay decision, Boland J observed that: [T]he health services now provided at the Forensic Hospital were originally provided through the Prison Medical Services operated by the Department of Corrective Services. At that time, the health facilities/hospitals were located within gaols and the nurses were employed by the Public Service. As such, the routines and protocols in those health facilities were regulated by or operated in conformity with the gaol. In 1994, nursing staff in the Prison Medical Service were transferred from the Public Service to the public health system and became employees of the Department of Health. Although it is not certain, it appears that meal breaks for nurses employed in the gaols were paid in order to fit in with gaol routines and protocols. The practice of paying meal breaks extends back for many decades and at least of the order of 47 years. 4The evidence of Mr Christopher Blair, an industrial officer with the appellant, and the evidence of Mr Brian Owens, a registered nurse, indicates that by the 1960s, nurses in the Prison Medical Services were working straight eight-hour shifts with a paid meal break. 5Upon the transfer of employees to the Health Service in 1994, nursing employees continued to receive paid meal breaks. According to the evidence of Mr Owens, at the time of the transfer representatives of the Health Department made representations to him to the effect that nursing employees (as opposed to clerical staff) would continue to enjoy existing hours of work arrangements, including paid meal breaks. 6The Forensic Hospital commenced operation in November 2008. A number of nurses (about 40) moved to the Hospital from the Long Bay Complex. The practice of paid meal breaks was identified as henceforth being unwarranted and notice of the respondent's intention to cease paying for meal breaks was given to the appellant on 25 November 2008. Boland J noted that, according to the evidence in the stay proceedings of Ms Judith Neville, Director of Workforce at Justice & Forensic Mental Health Network, the respondent sought to remove the payment at the Forensic Hospital because: a. the practice meant that Justice Health paid each nurse on every rostered shift for their half hour meal break even if the nurse did not work during the break; b. the practice arose by reason of scheduling and contextual issues that no longer apply; c. the Public Health System Nurses' and Midwives' (State) Award and its predecessors, as well as Policy Directive of NSW Health PD2005_334, provide for paid meal breaks but only when the nurse is required to work during the break. As such, the practice was contrary to the Award provisions; d. the 'over-award payment' for meal breaks is financially unsustainable and had resulted in the rostered shifts being limited to 8 hours (not 8 hours plus 30 mins break) thus reducing the time available for training etc; e. the payment was not made consistently as, after 24 September 2012, it was not paid to new recruits engaged as nurses at the Forensic Hospital who had been engaged on or after 10 May 2012 and it was not paid to casual employees; and f. by reason of the clear terms of the Policy Directive of the Director-General dated 27 January 2005, there was no extant authority for the payment of paid meal breaks. 7However, following negotiations between the parties it was agreed that the status quo regarding the paid meal break would be maintained. As Boland J noted in the stay decision at [6]: The apparent reason for the practice continuing was that it was uncertain at the time of opening of the Hospital how shift arrangements would work in practice as beds and wards were being opened progressively, leading to a view within the respondent that nurses may be called upon to work in their meal breaks. 8Ms Brenda McPhail, an enrolled nurse, gave evidence that when she moved to the Hospital from the Long Bay Complex in 2008 she was advised during union meetings that Justice Health had indicated nurses would continue to receive the paid meal break. Mr Michael Whaites, an organiser with the appellant, who was involved in the meeting on 28 November 2008 with the respondent, where it was agreed the paid meal break would be retained, confirmed this. 9The paid meal break continued to be the subject of discussions about its future. As Boland J noted: In January 2009, the respondent advised that the paid meal break was "unsustainable". At a meeting of the Staff Consultative Committee on 28 July 2009, the respondent indicated that the paid meal break should be removed so as to be consistent with the Public Health System Nurses' and Midwives' (State) Award ("the Award"). This was reiterated in August, September and October 2009. Nothing further of any significance seems to have been done by the respondent towards the removal of the paid meal break until 2011. On 25 October 2011, the respondent wrote to the Association advising that it intended to cease the paid meal break from Monday 7 November 2011. On 14 November 2011, Justice Health sent a memo to all nursing staff advising the implementation of unpaid meal breaks from 5 December 2011. 10It may be noted, however, that in June 2010, the respondent informed the appellant that it had been decided "at this point in time not to proceed and will continue with the paid meal allowance for nursing staff." 11In December 2011, the respondent notified the existence of an industrial dispute to the Commission advising that the appellant had invoked cl 48(vii) of the Public Health System Nurses' and Midwives' (State) Award ("the Award") in relation to the dispute. Clause 48 (vii) provides for the status quo to be maintained whilst the dispute procedure under the Award is being followed. 12The dispute was the subject of conciliation proceedings before Kavanagh J, but was unable to be resolved. The matter then came before Harrison DP for arbitration where the respondent sought the following: ... (2) The Commission makes a determination pursuant to s 175 of the Industrial Relations Act 1996 (NSW) (the Act) that there is no award or other industrial entitlement for Paid Meal Breaks for nursing staff at the Forensic Hospital; (3) The Commission makes a recommendation that: (a) the Justice Health has provided sufficient notice to the Association and its nurse employees to remove Paid Meal Breaks; (b) as and from the date of this recommendation, the Commission finds that Justice Health is no longer under any obligation to provide Paid Meal Breaks; (c) the Association accept the cessation of Paid Meal Breaks forthwith. (4) The Commission notes that the notice provided and the consultation undertaken with the Association has been reasonable in all of the circumstances. (5) The Commission refuses of the Respondent's application to vary the Public Health System Nurses and Midwives (State) Award, 2011 to include Paid Meal Breaks. 13With exceptions, the status quo, that is the practice of providing paid meal breaks, continued in place in accordance with cl 48(vii) of the Award since the notification of the dispute and until Harrison DP handed down his decision on 5 November 2012. The exceptions are that: (a) as from 13 August 2012, the respondent has not provided paid meal breaks to any casual nurses at the Forensic Hospital; and (b) as from 24 September 2012, the respondent has not provided paid meal breaks to any permanent nurse employee engaged after 10 May 2012. 14Paid meal breaks are still provided to nurses engaged prior 10 May 2012 (save for casuals) pending the outcome of these proceedings. The respondent submitted that in the interim: Due to the significant cost associated with Paid Meal Breaks, the Respondent has implemented a rostering system for those nurses to whom Paid Meal Breaks are still provided. Instead of rostering a shift for 8.5 hours (being 8 hours work time plus an unpaid 30 minute break) for those nurses, the total shift is set at 8 hours. As such, those nurses only work 7.5 hours and take a 30 minute Paid Meal Break. For the remainder of the nurses (to whom Paid Meal Breaks are not provided), their shifts are regular in that they are rostered for 8.5 hours being 8 hours work time and a 30 minute unpaid break.

Decision at first instance 15The decision of Harrison DP at first instance is accurately summarised in the stay decision at [11]-[17]: [11] Having outlined the background to the dispute, Harrison DP referred to the relevant Award provision dealing with meal breaks, namely, cl 4(ix): (ix) Each employee who works in excess of five hours must have a break of not less than thirty minutes and not more than sixty minutes for each meal occurring on duty as follows: Breakfast-between 6am and 9am Midday Meal-between 12 noon and 2pm Evening Meal-between 5pm and 7pm Night Meal-between 10pm and 2am. Employees must not be required to work during meal breaks as a matter of routine practice unless mutually agreed at the local level. Provided that any time worked during such break shall count as working time and unless the employee is permitted to finish duty early on the same shift then overtime becomes payable once the total ordinary work time of the shift has elapsed. Provided further that where practicable an employee engaged to work for five hours or less in any one shift may elect not to take a meal break as otherwise provided for in this subclause without penalty to the employer. The term "where practicable" encompasses regard being paid to the service requirements of the employer. [12] Harrison DP noted at [12] that the practical and legal effect of the Award provision was that where a nurse was required to work during a meal break, whether that be occasional or by local agreement as a matter of routine practice, entitlement to payment arises. [13] His Honour then addressed the Association's contentions in support of retaining the paid meal break. In respect of the contention that the respondent was prevented from removing the paid meal break because of a no extra claims provision in the Award, his Honour considered the respondent was not so constrained. [14] In respect of the contention that the practice of a paid meal break for nurses in the Corrective System is a "crystallised custom and practice", Harrison rejected it, essentially on the basis that the Forensic Hospital constituted a different environment to that of a gaol and this involved "a paradigm shift in the way in which the patients are treated." [15] The Association submitted before his Honour that employees were informed on engagement that they would have the benefit of a paid meal break and, accordingly, this entitlement was specifically imported into the contract of employment. Harrison DP rejected this submission, essentially on the basis that the Award was the relevant source for determining whether meal breaks were to be paid or unpaid. [16] As to arguments of the Association going to "industrial merit" his Honour held "There is no impediment on the basis of industrial merit or practicality to the employer arranging shifts on the basis of an unpaid meal break." [17] At [98]-[103] of his decision the Deputy President summarised his conclusions in the following terms: [98] For the reasons discussed above I find in favour of the applicant. [99] Pursuant to s 175 of the Act I determine that payment for time worked is regulated by the Award. There is no other legal entitlement. [100] I find that the notice and consultation undertaken by the parties has been reasonable in all the circumstances to bring to an end any agreement implied or notional that nurses at the Forensic Hospital work through meal breaks as a matter of routine practice. [101] I direct management to put in place an appropriate system for supervisors to clearly record any and all requirements for a nurse to work through a meal break and for the release of a nurse to an off duty area for the purpose of a meal break. [102] The application by the Association to refer the Award for variation to include paid meal breaks is refused. [103] I so decide.

Grounds of appeal 16There were nine grounds of appeal. The first ground, which related to a no extra claims commitment, was not pressed. The grounds were in the following terms: 1. The Honourable Deputy President erred in failing to find that the proceedings brought by the Justice Health and Forensic Mental Health Network seeking to remove paid meal breaks for nursing staff at the Forensic Hospital at Long Bay contravened the "No Extra Claims" commitment contained in the Memorandum of Understanding between the NSW Government and the Nurses' Association dated 22 February 2011. 2. The Honourable Deputy President erred in failing to find that nursing staff working at the Forensic Hospital were entitled to paid meal breaks by reason of the long-standing custom and practice applying to nurses employed working within Justice Health and previously Corrections Health and the Prison Medical Service. 3. The Honourable Deputy President erred in failing to find the long-standing custom and practice applying to nurses employed working within Justice Health and previously the Prison Medical Service did not apply to nurses working at the Forensic Hospital by reason of the circumstances of the Forensic Hospital's operation. 4. The Honourable Deputy President erred in failing to find that nursing staff working at the Forensic Hospital were entitled to paid meal breaks by reason of representations made to individual nurses at the commencement of their employment that their conditions of employment would include a paid meal break. 5. The Honourable Deputy President erred in finding that the entitlements of nursing staff working at the Forensic Hospital could be altered by notice or by reference to "management's right to organise the hospital" in circumstances in which there was no evidence of the employees had agreed to not receiving paid meal breaks. 6. The Honourable Deputy President erred in failing to find that nursing staff working at the Forensic Hospital are entitled to be paid during meal breaks under the Award in circumstances in which they are required to respond to incidents when on breaks and are not, as a practicable matter, able to leave the workplace during breaks. 7. The Honourable Deputy President erred in failing to find that, as a matter of industrial merit, nursing staff working at the Forensic Hospital should be entitled to be paid during meal breaks in circumstances in which they are required to respond to incidents when on breaks and are not, as a practicable matter, able to leave the workplace during breaks. 8. The Honourable Deputy President erred in concluding that it is sufficient for nursing staff to be released to an off duty area within the Forensic Hospital for the purpose of having a meal break. 9. Such other or further grounds as this Honourable Commission considers appropriate.

Leave to appeal 17We propose to grant leave to appeal. Whilst Harrison DP ultimately concluded nurses at the Forensic Hospital were not entitled to paid meal breaks, a conclusion with which we generally agree, the basis upon which his Honour arrived at this conclusion was wrong. It is in the public interest that we correct the errors because they involve matters of general significance including the importance of establishing the existence of employment contracts by proper evidence if reliance is to be placed on rights arising under such contracts, the circumstances in which representations may constitute binding contractual terms and a consideration of whether changed circumstances justify the removal of paid meal breaks where it is contended such meal breaks are a longstanding custom and practice.

Section 175 of the Act 18Section 175 of the Act is in the following terms: 175 Powers of interpretation The Commission may, for the purpose of exercising its functions in connection with a matter before it, determine any question concerning the interpretation, application or operation of any relevant law or instrument (including the industrial relations legislation and any industrial instrument). 19The principal relief sought by the respondent in the proceedings before Harrison DP was a determination pursuant to s 175 of the Act that "there is no award or other industrial entitlement for Paid Meal Breaks for nursing staff at the Forensic Hospital". We note that to make such a determination would be inconsistent with the Award, which provides for paid meal breaks where there is mutual agreement: (cl 4(ix)). But, in any event, in responding to the relief sought Harrison DP stated: [99] Pursuant to s 175 of the Act I determine that payment for time worked is regulated by the Award. There is no other legal entitlement. 20What his Honour appears to have determined is that payment for time worked during meal breaks is regulated by the Award and that there is no other source of any "legal entitlement" to such payment. In order to understand what his Honour meant, the whole of his Honour's decision has to be read because, taken in isolation, [99] is meaningless. 21Upon a reading of the decision as a whole, what his Honour appears to have meant is that in applying s 175 to the facts and law as presented to him, the sole source of any employee's "legal entitlement" to be paid for time worked during meal breaks is the Award and that no such entitlement derives from any other law including the common law as it may apply to any contract of employment to which the employee is a party. 22An immediate issue arises as to whether it was open to the Deputy President to make a determination under s 175 about whether or not a right to paid meal breaks arose from any contract of employment. The issue arises because of the question whether a contract of employment could be regarded as an "instrument" as referred to in s 175 and whether the reference in the section to "law" is sufficient to provide the necessary power to determine any question concerning the interpretation, application or operation of the common law relating to contracts of employment.

Contracts of employment 23Those questions lead to a more fundamental issue and that is whether, in fact, there existed any contract of employment between the nurses and the respondent. No findings were made in this respect and it appears it was simply assumed by the parties and by his Honour that such contracts did exist. Importantly, no findings were made about the terms of the contracts. 24Despite the absence of findings, Harrison DP appears to have accepted that paid meal breaks were a term of the employment contracts of those nurses who transferred from the gaol to the Hospital in 2008. However, his Honour considered that, upon the transfer, the circumstances that applied at the gaol, that is, the "procedures, customs or practices" that applied in the "incarceration model" no longer applied in the "therapeutic model" at the Hospital. Therefore, the contention that paid meal breaks continued to apply could not be sustained. 25In other words, interpolating what the Deputy President appears to have determined, nursing services were no longer organised around the protocols and schedules of inmates of the gaol and nurses were not required to work through their meal breaks. Therefore, the rationale underpinning paid meal breaks no longer applied and it followed paid meal breaks were no longer terms of any contracts of employment. 26In respect of the nurses who transferred from the Correctional Facility, the evidence was that at some point in time, when nurses providing health services were employed within the Prison Medical Service under the Department of Corrective Services, it was often difficult for nurses to arrange to cover during meal breaks and because it was inconvenient for nurses to take a meal break, nurses began to be paid for the meal break, as they were often called upon to work during the meal break. 27We do not know whether, at the relevant time, the nurses were party to formal written employment contracts, or whether the contracts were partly written and partly oral, or whether the contracts were wholly oral, or whether there was any contract of employment at all given the possibility that employment may have been regulated wholly by statute or partly by statute and partly by industrial instrument. There was no evidence in this respect. But what we are asked to accept is that paid meal breaks became the custom, which evolved into an implied contractual term. 28We note that prior to 1988 nurses in the Prison Medical Service were subject to the terms of the Public Service Act 1979 and its predecessors, which gave power to the Public Service Board to regulate employment conditions for such nurses. It was accepted that the status of the nurses was that of "public servant". It may well have been the case that the nurses' employment conditions were determined by the Board under the Public Service Act or a regulation made under that Act. This was commonly the case. 29Thus, as Brennan J stated in Director-General of Education v Suttling [1987] HCA 3; (1987) 162 CLR 427 at 437-438: The relationship between a civil servant of the Crown and the Crown has often been described as contractual, though the civil servant has been appointed pursuant to statute ... If the relationship is contractual, the contract must be consistent with any statutory provision which affects the relationship. No agent of the Crown has authority to engage a servant on terms at variance with the statute. To the extent that the statute governs the relationship, it is idle to inquire whether there is a contract which embodies its provisions. The statute itself controls the terms of service. 30In any event, assuming for the moment the contracts were formal written contracts, for a term to be implied it must: (a) be reasonable and equitable; (b) be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it; (c) be so obvious that "it goes without saying"; (d) be capable of clear expression; and (e) not contradict any express term of the contract. See BP Refinery (Westernport) Pty Ltd v Hastings Shire Council (1977) 180 CLR 266. 31Not knowing the terms of the contracts, we have no way of determining whether, for instance, the asserted implied term of a paid meal break contradicted an express term of the contract. 32If we proceed on the further assumption that the contract was not wholly in writing, a term may be implied where it is necessary for the reasonable or effective operation of the contract in the circumstances: Byrne & Frew v Australian Airlines Ltd [1995] HCA 24; (1995) 185 CLR 410 at 422. 33What was said about this in Byrne & Frew v Australian Airlines Ltd by Brennan CJ, Dawson and Toohey JJ was that: Further, as Deane J has observed (see Hospital Products Ltd v United States Surgical Corporation [1984] HCA 64; (1984) 156 CLR 41 at 12), the cases in which the criteria in BP Refinery (Westernport) Pty Ltd v Shire of Hastings have been applied in this Court are cases in which there was a formal contract, complete on its face. He pointed out that a rigid approach should be avoided in cases, such as the present, where there is no formal contract. In those cases the actual terms of the contract must first be inferred before any question of implication arises. That is to say, it is necessary to arrive at some conclusion as to the actual intention of the parties before considering any presumed or imputed intention. And the test to be then applied was in a later case formulated by Deane J in these terms (Hawkins v Clayton (1988) 164 CLR 539 at 573): "The most that can be said consistently with the need for some degree of flexibility is that, in a case where it is apparent that the parties have not attempted to spell out the full terms of their contract, a court should imply a term by reference to the imputed intention of the parties if, but only if, it can be seen that the implication of the particular term is necessary for the reasonable or effective operation of a contract of that nature in the circumstances of the case. That general statement of principle is subject to the qualification that a term may be implied in a contract by established mercantile usage or professional practice or by a past course of dealing between the parties." 34Given the absence of evidence about the terms of the contracts (or even their existence) and our view of the distinct possibility that the employment of the nurses in the Correctional Facility was regulated wholly or partly by statute and an industrial instrument, which may well have dealt with paid meal breaks, it is not open to conclude that, on the balance of probabilities, provision in the employment contracts for paid meal breaks was necessary for their reasonable and effective operation. It would not have been necessary if agreement to provide for paid meal breaks was provided for in a statute or industrial instrument. 35In 1994, nurses in the Prison Medical Service became "Public Hospital" employees of Corrections Health Service under Schedule 3 of the Health Administration Act 1982 and were no longer public servants. Staff were advised there would be little effect on their employment and that in accordance with Schedule 3 certain conditions would be preserved for existing staff members. No reference in the preserved conditions was made to paid meal breaks, but it appears this arrangement was preserved. The difficulty is in not knowing on what basis. 36The first industrial instrument to contain a reference to meal breaks, in so far as the evidence in these proceedings is concerned, was the "Corrections Health Service Enterprise (State) Award, June 1994". The relevant provisions in that Award were very similar to cl 4 (ix) in the present Award. It would appear that successive awards covering nurses in correctional facilities all largely reflected the current provisions regarding meal breaks. 37For nurses entering into a contract of employment with the respondent or its predecessor on or after June 1994, it would seem to us unnecessary to imply in the contract (if it existed) an agreement to pay for time worked during meal breaks when the relevant award provided for such breaks where there was agreement. In other words, paid meal breaks were not necessary for the reasonable and effective operation of any employment contract entered into by nurses on or after June 1994 because successive awards made provision for such breaks: see Byrne & Frew v Australian Airlines Ltd at 423-424. By its conduct, that is continuing to pay for meal breaks, the respondent may be taken to have given its consent in accordance with the terms of the successive awards. 38The effect of the foregoing considerations is that: (1) Harrison DP erred in accepting that, at some point, paid meal breaks were a term of the nurses' contracts of employment and consequently erred in finding that as a result of the transfer from the Correctional Facility to the Forensic Hospital that had the effect of removing paid meal breaks as a term of the employment contracts; and (2) the appellant has not established in respect of nurses transferring from the Correctional Facility to the Hospital in 2008 that, at that time, paid meal breaks were a term of the nurses' contracts of employment. 39These findings have implications for his Honour's determination that: Pursuant to s 175 of the Act I determine that payment for time worked is regulated by the Award. There is no other legal entitlement. 40Putting aside s 175, it is unmistakably the case that payment for time worked during meal breaks is a matter regulated by cl 4(ix) of the Award. There was no proper basis, however, upon which Harrison DP could have made the finding that "[t]here is no other legal entitlement."

Express contractual representation 41Harrison DP seems to have accepted that express representations were made to certain nurses that constituted binding contractual terms (see [59] of his Honour's decision). However, his Honour appears to have determined that the respondent was entitled to change the contractual terms by virtue of Award provisions regarding notice and consultation and because of the employer's right "to organise the hospital in the most efficient manner": (at [63]). 42His Honour erred in accepting that express representations were made to certain nurses that constituted binding contractual terms. We should add, as an aside, that even if his Honour was correct in finding express representations were binding, he would not have been correct in finding the Award allowed the respondent to change the contractual terms. There is nothing in the Award that would entitle the employer to unilaterally cease paying for meal breaks if such meal breaks constituted a contractually binding term. Nor would any employer's right to organise work efficiently unilaterally override such a contractual term. 43There was evidence from nurses, other than those who transferred from the Correctional Facility, that in seeking employment at the Hospital it was expressly represented to them that their conditions of employment would include the provision of paid meal breaks. 44 The appellant referred to the example of Ms Terri Vaughan. She gave evidence of the following conversation with a representative (Ms Julia Shaw) of the respondent shortly after Easter 2008 in respect of Ms Vaughan's job application at the Hospital: Ms Shaw: We will be working 12 ½ hour shifts, will that be a problem for you? Ms Vaughan: Absolutely not, because at the moment I am working 14 hour days. Ms Shaw: You will be working 12 ½ hour shifts but you will be paid your meal break so you will be paid for 12 ½ hours. Half an hour will be paid at overtime everyday. Ms Vaughan: That's great. 45Similarly, reference was made to the evidence of Ms Lynda Shaw, a registered nurse who commenced employment at the Hospital in 2009. Her evidence was that she attended an orientation presentation whilst employed casually at the Hospital in about mid-2009 and was informed to the following effect: You will be working twelve 12 ½ hour shifts and one 8 hour training day every 4 weeks and you will be getting paid meal breaks. You will be paid ½ hour overtime on a 12 ½ hour shift. 46 Ms Shaw said this representation was "very influential " in her decision to apply for full time employment at the Hospital. 47In respect of nurses such as Ms Vaughan and Ms Shaw who were recruited to work in the Hospital during or after 2008, but who had no history of working previously in the Correctional Facility, it was submitted for the appellant that it had been represented to these nurses that paid meal breaks was an express term of their employment contract. 48As the appellant correctly submitted, representations made to prospective employees in relation to the terms and conditions of employment are capable of giving rise to a binding contractual entitlement. The question of whether a representation made in connection with the employment of an employee has contractual force will depend upon an assessment of the intentions of the parties judged objectively: Ermogenous v Greek Orthodox Community of South Australia Inc [2002] HCA 8; (2002) 209 CLR 95 at [25]. 49In Goldman Sachs JB Were Services Pty Ltd v Nikolich [2007] FCAFC 120; (2007) 163 FCR 62 Black CJ, in dealing with the question of intention to be bound by a representation, stated at [23]: [23] ... It is well established that if a reasonable person in the position of a promisee would conclude that a promisor intended to be contractually bound by a particular statement, then the promisor will be so bound. This objective theory of contract has been repeatedly affirmed as representing Australian law by the High Court. Thus, in Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 51; (2004) 219 CLR 165, 179, the Court said: It is not the subjective beliefs or understandings of the parties about their rights and liabilities that govern their contractual relations. What matters is what each party by words and conduct would have led a reasonable person in the position of the other party to believe. References to the common intention of the parties to a contract are to be understood as referring to what a reasonable person would understand by the language in which the parties have expressed their agreement. The meaning of the terms of a contractual document is to be determined by what a reasonable person would have understood them to mean. That, normally, requires consideration not only of the text, but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction. See also Public Service and Professional Officers' Association Amalgamated Union of NSW v Director of Public Employment [2011] NSWIRComm 152 at [87]-[103]. 50Goldman Sachs and Toll (FGCT) Pty Ltd v Alphapharm Ltd [2004] HCA 52; (2004) 219 CLR 165 were concerned with contractual documents, but we think the principle is the same, that is, "[w]hat matters is what each party by words and conduct would have led a reasonable person in the position of the other party to believe" and that requires, inter alia, "consideration of the surrounding circumstances known to the parties, and the purpose and object of the transaction." 51After November 2008, it was known to the parties that the Hospital had indicated an intention to end the practice of paid meal breaks and to henceforth rely on the terms of the Award. The Hospital relented, and indicated that nurses would continue to receive their paid meal break. However, the respondent had put the appellant on notice that it was the respondent's intention to cease the paid meal break. 52It appears that the reason the respondent agreed that paid meal breaks ought be retained was that during the initial set up period for the Hospital, shift arrangements had not been finalised, beds were being opened on a gradual basis and there was limited staff. In addition, the kitchen and vending machine facilities were not yet operational. 53It could not have been the case that after November 2008 a reasonable person would conclude the respondent intended to be contractually bound by any conduct or statement indicating it agreed to payment for meal breaks. The respondent had put the appellant and nurses on notice of its intention to cease the practice and revert to the Award. A reasonable person would conclude that the respondent did not intend to enter into a binding contract that would thwart its stated intention to, in future, rely on the Award. The respondent did say to the appellant in June 2010, that it had been decided "...not to proceed and will continue with the paid meal allowance for nursing staff", but that was qualified by the statement "at this point in time..." 54In relation to the class of nurses represented by Ms Vaughan, that is, those nurses recruited to work in the Hospital prior to November 2008, but who had not previously worked in the Correctional Facility, there is no evidence of what representations were made to them other than that of Ms Vaughan. In Ms Vaughan's case, the representation made and accepted, was that she would be working 12 ½ hour shifts and paid for any meal break occurring in the 12 ½ shift, half an hour of which was to be paid at overtime rates. 55Nurses were advised in March 2012 that 12 hour shifts would cease, to be replaced by an 8-hour shift model. The half hour overtime payment would also cease. At the same time, nurses were advised that meal breaks would be unpaid on the basis they would no longer be required to work during meal breaks. Ms Vaughan moved to the new shift arrangements and the half hour overtime payment ceased. Paid meal breaks remained the subject of dispute proceedings before the Commission. However, it is quite clear that in introducing new shift arrangements, which were accepted by Ms Vaughan, the respondent was intending that paid meal breaks would not be part of these new arrangements because nurses would not be required to work during meal breaks. 56The appellant cannot sustain a claim for paid meal breaks to continue where a nurse has moved to new shift arrangements that do not require the nurse to work during meal breaks. That is to say, a nurse cannot accept, on the one hand, that he or she will no longer be required to work during meal breaks, but on the other hand insist that he or she continue to be paid for such breaks on the basis it was expressly represented to her that she would receive a paid meal break. 57The basis upon which that representation was made, prior to November 2008, was that the nurse would be called upon to work during the meal break. Ms Vaughan's evidence was that she was required to work during meal breaks. With the announcement that nurses would no longer be required to work during meal breaks a claim to continue to be paid for meal breaks cannot be sustained. In other words, even if there had been an express representation to Ms Vaughan that could be regarded as contractually binding, the representation was that in order to receive a paid meal break Ms Vaughan would be required to work during meal breaks. The respondent's position now is that Ms Vaughan will no longer be required to work during meal breaks, a condition that Ms Vaughan apparently accepts. That being the case, Ms Vaughan has no basis upon which to insist that a paid meal break remains a binding term of her contract of employment.

Industrial merit 58Whilst we have arrived at the conclusion by a significantly different route to Harrison DP, one result is effectively the same, namely, that the appellant has failed to establish paid meal breaks were a contractual term binding on the respondent and nurses employed at the Hospital. 59Harrison DP, of course, went further and found the question of whether a nurse at the Hospital was entitled to a paid meal break was to be exclusively determined by the Award. Further, that the respondent had done what was reasonable in terms of notice and consultation "to bring to an end any agreement implied or notional that nurses at the Forensic Hospital work through meal breaks as a matter of routine practice." 60We have considered whether Harrison DP was correct in deciding that the respondent was entitled to bring an end to the practice of paid meal breaks. As far as we are able to gather from the limited evidence, nurses in the correctional environment were essentially "on call" during their meal breaks and, if called upon to work, did so because of the need for nurses to prioritise their work within the limits on access to inmates caused by the routines dictated by the environment. 61Whilst we accept the evidence is unsatisfactory, we think it may reasonably be inferred, particularly from evidence given by Mr Owens, that, at some point in time, a blanket arrangement was implemented in the correctional environment whereby all nurses would receive a paid meal break because of the unpredictablilty of when the priorities of a nurse, and the need to fit those into the gaol's routine, might require them to work during her or his meal break. Rather than determine any entitlement on a case by case basis, it was presumably found to be administratively simpler to provide the entitlement to all nurses. As we have explained, the legal basis for this is unknown. 62If that arrangment continued to be the case at the Forensic Hospital, there may be a strong case for contending the practice of all nurses receiving a paid meal break should also continue. In that regard, one has to consider the evidence. 63For the appellant, the evidence was that the circumstances at the Forensic Hospital required nurses to be available to work and they did work during meal breaks. Nurses working at the Forensic Hospital gave evidence that it was their understanding that they were not permitted to leave the premises during meal breaks as a result of the need to respond to incidents or emergencies. For example, nurses have been directed in the following terms: Can I please remind all staff that they are paid for meal breaks therefore are expected to remain within the forensic hospital for all breaks as they are also required to provide ERT response throughout their shift and, if not directly, they provide response to the unit to support the teams across the hospital. Therefore, leaving the grounds of the hospital without approval at any time whilst on duty is unacceptable ... 64Ms McPhail gave evidence that if an incident occurs whilst a staff member is on a meal break, the nurse is required to respond to the incident or at least return to their unit in order to cover the other staff members required to respond to the incident. Mr Owens and Ms Vaughan gave evidence to the effect that it was a frequent occurrence for nurses to be unable to take a meal break, have their meal break interrupted or be required to take a meal break later than scheduled as a result of the demands of the job and requirements to supervise patients, intervene in incidents and ensure security is maintained. 65Evidence was given that it was not viable to leave the premises of the Forensic Hospital during a meal break. To leave the premises, staff would be required make their way to the main gate, return keys, undergo security screening and finger print/retinal scanning and return through the same process. This process, it was submitted, rendered it impracticable to leave the premises, have a meal and return within a 30-minute meal break. Counsel for the appellant submitted nurses were not, by reason of the inherent nature of the workplace at the Forensic Hospital, able to have a break away from the workplace and away from the stress and pressure of their work. 66In responding to the appellant's evidence regarding the taking of meal breaks, the respondent relied on the evidence of Ms Neville. In her evidence Ms Neville stated: All nurses carry duress alarms when at work and on the premises. On each shift particular nurses will be nominated as a First Responder or a Second Responder. Each of these responders will carry a pager which receives messages upon a duress or other alarm. The nurses with these pagers form part of the Emergency Response Team and are required to respond to any incident. On some but not all wards a practice has developed that when a nurse who is a First or Second Responder takes a meal break that they continue to hold the pager, and may be called upon to respond during their meal break. This practice ought not continue. It is preferable that when a First or Second Responder proceeds on a meal break that they hand over the pagers to a nurse who will be the First or Second Responder on that shift in their absence on a meal break. It is preferable that the First or Second Responder already be on the ward to respond to an incident, rather than have to first return from a meal break in order to respond. All new staff who have are not being paid for meal break are to be directed to hand over their pagers when taking a meal break. The same change to practice will be introduced for all staff. The practice will not continue once the meal break is not paid. It was the practice that if nurses were being paid for their meal break that they did not leave the hospital during those paid meal breaks. That practice does not now apply to new staff who are not being paid for their meal breaks, and those staff are permitted to leave the hospital during their meal breaks if they wish. Once meal breaks are unpaid staff will not be required to remain at the hospital and will be able to leave the hospital premises if they wish. Justice Health provides facilities on site for staff to use during their meal breaks. There is a staff common room where staff can take their meal breaks. There are refrigerators in the common room to store food brought in by staff. It is not the case that mandatory staff management and education sessions are conducted mostly during nurses' paid meal breaks. There is no common meal break time, and meal times can be flexible. The introduction of the 8/8/10 shift arrangement provides greater flexibility for staff management and education within shift and without interruption to meal breaks. Nursing staff are allowed the meal breaks and other breaks provided for in the Award. Within the staff room there are ample refrigerators for staff to store food if they wish to bring it with them. The staff rooms also have microwaves to heat up the food. Staff are able to use the kiosk if they wish. Staff asked to stay back after a rostered shift are now provided with meals. The past practice of those on a paid meal break not leaving the hospital will not be applied if the meal break is unpaid. It is incorrect to say that nurses provide security services at the Forensic Hospital. All staff are part of the treatment plan which includes safety for all. Staff are trained to manage aggressive incidents with patients but do not provide a security services. I am only aware of one incident in the last four years where because of an incident and staff retreating to the central desk they were unable to take their meal break on that shift. 67The direction to nurses that they were expected to remain within the Forensic Hospital for all breaks, as they were also required to respond as part of the Emergency Response Team (ERT) throughout their shift, was a direction given at the time the Hospital was continuing to apply the paid meal break provisions of the Award. It is clear from Ms Neville's evidence that the respondent has proposed new arrangements that may only require certain nurses to be available to work during meal breaks, that is, those with pagers who form part of the ERT. 68In our opinion, any nurse who may be required (and agrees) to respond to a call during their meal break is, for the purposes of cl 4(ix) of the Award, required to work during their meal break and shall be paid accordingly. 69Other nurses will be entitled to take an uninterrupted meal break. If that meal break is interrupted and a nurse is required to work, they shall be entitled to be paid for the time worked in accordance with the relevant Award provision. 70The factual circumstances of this appeal are different to those considered by Watson J In re Federated Ironworkers' Association of Australia, New South Wales Division and Australian Fertilizers Ltd Re Ovetime [1977] AR (NSW) 17. There his Honour considered a dispute that arose following a claim on behalf of production workers for concessions similar to those allowed for maintenance workers, which involved the employer, as an overaward arrangement, providing a taxi to return home after overtime. The employer responded by withdrawing the benefit for maintenance workers, a benefit that had applied for 20 or more years. 71Watson J decided that the provision of a taxi amounted to a "usage" and should not be discontinued. There was no discussion in the decision regarding the existence or terms of any contracts of employment other than his Honour apparently accepting that the "usage" was to be regarded as an implied contractual term. But, in any event, there had been no change in circumstances in respect of maintenance workers that would have justified removing a benefit that had been applied for 20-odd years. In the present appeal, circumstances have changed such that other than those nurses who may be designated to be available to respond during meal breaks, there will be no requirement to work during meal breaks as a matter of routine practice. 72As for the contention that it is impractical for nurses to leave the precincts of the Hospital during meal breaks, that is not a basis upon which payment should be made for such breaks. It is not unusual that employees are unable to leave the workplace during meal breaks because of the nature or location of that workplace. The question is whether the employee is working. In the present case, other than exceptions, the employer will not require nurses to work during meal breaks. What is more, facilities are provided for nurses to store and prepare meals and an area is set aside for eating meals. 73Harrison DP found at [100] that "the notice and consultation undertaken by the parties has been reasonable in all the circumstances to bring to an end any agreement implied or notional that nurses at the Forensic Hospital work through meal breaks as a matter of routine practice." Notice and consultation did not bring an end to any agreement to work through meal breaks because it had not been established there was any "agreement implied or notional". What is more, there was no basis to conclude notice and consultation was sufficient to bring an end to a contractual term that provided for paid meal breaks if such a term had applied. Nevertheless, as to what might be industrially fair and reasonable, the nurses have been appropriately consulted and given reasonable notice that the respondent no longer requires them to work through meal breaks as a matter of routine practice. 74 Furthermore, we consider his Honour's direction at [101] to management to "put in place an appropriate system for supervisors to clearly record any and all requirements for a nurse to work through a meal break and for the release of a nurse to an off duty area for the purpose of a meal break" is appropriate in the circumstances.

Reference to the President 75It is not clear what Harrison DP meant when he stated at [102], "The application by the Association to refer the Award for variation to include paid meal breaks is refused." It would appear, however, his Honour declined a request by the appellant to refer the question of whether the Award should be varied to clarify that employees are entitled to be paid for meal breaks to the President for allocation to a Full Bench as an arbitrated case pursuant to Principle 8 of the Wage Fixing Principles: State Wage Case 2010 (No 2) [2011] NSWIRComm 29; (2011) 206 IR 218. That exercise of discretion was not available to his Honour under Principle 8 and in that respect his Honour erred. 76The appellant will need to consider what course it wishes to take in respect of its application in light of this decision.

Orders 77The Full Bench makes the following orders: (1) Leave to appeal is granted. (2) The determination at [99] of the decision of Harrison DP that there is no other legal entitlement to a paid meal break other than under the Award is quashed. (3) His Honour's finding at [100] that the notice and consultation undertaken by the parties has been reasonable in all the circumstances to bring to an end any agreement implied or notional that nurses at the Forensic Hospital work through meal breaks as a matter of routine practice is set aside. (4) His Honour's direction to management at [101] to put in place an appropriate system for supervisors to clearly record any and all requirements for a nurse to work through a meal break and for the release of a nurse to an off duty area for the purpose of a meal break is confirmed. (5) His Honour's refusal at [102] to refer the appellant's application to vary the Award in respect of paid meal breaks pursuant to Principle 8 of the Wage Fixing Principles is set aside. (6) The appeal is otherwise dismissed.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 17 April 2013