Public Service Association and Professional Officers Association Amalgamated Union of New South Wales v Director of Public Employment

Industrial Relations Commission (NSW)|2011-07-27|Before: Boland J, Staff J

licant) Mr M Kimber SC with Mr M Easton of counsel (Respondent) W J McNally Jones Staff (Applicant) Crown Solicitor's Office (Respondent) Unions NSW (Intervenor) File Number(s): IRC 1286 of 2011

Relief Sought 7The relief sought by the PSA in the amended application (supported by Unions NSW) is in the following terms:

A declaration that Premier's Memorandum M2008-22, Managing Excess Employees forms part of the contracts of employment of public sector employees who had been declared excess in accordance with that policy prior to 1 August 2011 ("the employees").
A declaration that the contracts of employment of the employees include the following terms after each employee was declared excess: (a) A 12 month retention period for the purposes of allowing redeployment. (b) Salary maintenance for a period of up to 12 months when allocated work of lower value to their substantive grade. (c) Retention and salary maintenance periods would be suspended if temporarily appointed to a suitable position. (d) Forcible retrenchment would only occur as a last and unavoidable resort after the 12 month retention period in accordance with Premier's Memorandum M2008-22, Managing Excess Employees . (e) The payment of severance payments upon forcible retrenchment calculated in accordance with Premier's Memorandum M2008-22, Managing Excess Employees .
An order declaring that any decision to forcibly retrench any of the employees would contravene section 56 of the Public Sector Employment and Management Act 2002 and thereby be void and to no effect.
In the alternative: (a) An order declaring that the contracts of employment and/or employment arrangements and/or related conditions and/or collateral arrangements between or involving each employee whereby those persons perform work in an industry ("the Contracts") are unfair, harsh, unconscionable and/or contrary to the public interest. (b) An order varying the Contracts so as to include the following terms to apply in the event that the employee is declared excess to the staffing requirements of the Department or agency in which he or she is engaged: i. A 12 month retention period for the purposes of allowing redeployment. ii. Salary maintenance for a period of up to 12 months when allocated work of lower value to their substantive grade. iii. The retention and salary maintenance periods will be suspended if the employee is temporarily appointed to a suitable position. iv. Forcible retrenchment will only occur as a last and unavoidable resort after the 12 month retention period in accordance with Premier's Memorandum M2008-22, Managing Excess Employees. v. The payment of severance payments upon forcible retrenchment calculated in accordance with Premier's Memorandum M2008-22, Managing Excess Employees.

Grounds and reasons 8In support of its amended application the PSA cited the following grounds and reasons: 13. The proposed application of the new Managing Excess Employees Policy, June 2011 to the employees is unlawful for reasons including: (a) The benefits set out in Premier's Memorandum M2008-22, Managing Excess Employees constituted a part of the employees' ongoing contracts of employment and to forcibly retrench any employee. (b) In the alternative, upon being declared excess, the employees' contract of employees were varied so as to incorporate the elements of Premier's Memorandum M2008-22, Managing Excess Employees set out in correspondence addressed to the employees. (c) The retrenchment of any of the employees would be unlawful by reason that the requirements of s 56 of the Public Sector Employment and Management Act 2002 to be satisfied before the services of the employee could be dispensed with would not be satisfied. 14. In the alternative, the contracts of employment and/or employment arrangements and/or related conditions and/or collateral arrangements between each of the employees are unfair, harsh, unconscionable and/or contrary to the public interest, including for the following reasons: (a) They permit the Government to depart from representations made to employees declared excess to the staffing requirements of a Department or agency under Premier's Memorandum M2008-22, Managing Excess Employees ; (b) They permit an employee declared excess under Premier's Memorandum M2008-22, Managing Excess Employees to be forcibly retrenched public sector employees without the payment of a fair and reasonable severance payments (sic); (c) They permit an employee declared excess under Premier's Memorandum M2008-22, Managing Excess Employees to be forcibly retrenched even if the retention period promised to the employee has not expired; (d) They fail to ensure that all practicable steps are made to redeploy employees declared excess to the staffing requirements of a Department or agency within that Department or agency or in another Department, agency or public sector service; (e) They permit an employee to be forcibly retrenched even if there is ongoing work for the employee to perform or a position into which the employee could be redeployed; (f) They permit the Government to impose arbitrary, unfair and capricious changes to the conditions of employment of the employees declared excess to the staffing requirements of a Department or agency; (g) They do not fairly balance the interests of the Respondent and its employees; (h) The employees are placed in an unequal and inferior bargaining position as to their remuneration vis--vis the employer; and (i) They are otherwise unfair, harsh and unconscionable and contrary to the public interest upon such other grounds and reasons as the Commission may find.

Interim relief 9The PSA sought an interim order in the following terms: That the Director of Public Employment take no further steps to implement the proposed Managing Excess Employees Policy, June 2011 distributed by Premier's Memorandum M2011-11 pending hearing and determination of the proceedings. 10This interlocutory judgment deals with the claim for interim relief.

Power to order interlocutory relief 11The question is whether the DPE should be restrained from taking further steps to implement the 2011 Policy regarding excess employees pending the hearing and determination of the substantive issues raised in the amended application. 12There was no issue regarding the Court's power to order relief in the form of an interim injunction in order to preserve the subject matter of the proceedings, pending hearing and determination. The power has been exercised on a number of occasions in the past by the Court: see for example Hill v Director General of the Department of Education and Training (1998) 85 IR 201; Sea Acres Rainforest Centre Pty Ltd v State of New South Wales [2001] NSWIRComm 207; (2001) 109 IR 56; Newsagents Association of NSW and ACT Ltd v John Fairfax Publications Pty Ltd [2006] NSWIRComm 409; (2006) 160 IR 421; Kenoss Contractors Pty Ltd v Allied Constructions Pty Ltd [2001] NSWIRComm 19; (2001) 104 IR 66; Sydney Water Corporation v Australian Services Union (NSW and ACT Branch) [2005] NSWIRComm 305; (2005) 146 IR 388 and the cases referred to therein. The approach considered appropriate in those cases (and others) was that of Mason ACJ in Castlemaine Tooheys Ltd v South Australia [1986] HCA 58; (1986) 161 CLR 148. 13However, I think reference needs to be made to Australian Broadcasting Corporation v O'Neill [2006] HCA 46; (2006) 80 ALJR 1672. In that case Gleeson CJ and Crennan J stated at [19]: [I]n all applications for an interlocutory injunction, a court will ask whether the plaintiff has shown that there is a serious question to be tried as to the plaintiff's entitlement to relief, has shown that the plaintiff is likely to suffer injury for which damages will not be an adequate remedy, and has shown that the balance of convenience favours the granting of an injunction. These are the organising principles, to be applied having regard to the nature and circumstances of the case, under which issues of justice and convenience are addressed. We agree with the explanation of these organising principles in the reasons of Gummow and Hayne JJ (see [65]-[72]) and their reiteration that the doctrine of the Court established in Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618 should be folIowed (see also Firth Industries Ltd v Polyglas Engineering Pty Ltd (1975) 132 CLR 489 at 492 per Stephen J; Winthrop Investments Ltd v Winns Ltd [1975] 2 NSWLR 666 at 708 per Mahoney JA; World Series Cricket v Parish (1977) 16 ALR 181 at 186 per Bowen CJ). 14Gummow and Hayne JJ said in O'Neill at [65]: Interlocutory injunctions [65] The relevant principles in Australia are those explained in Beecham Group Ltd v Bristol Laboratories Pty Ltd . This Court (Kitto, Taylor, Menzies and Owen JJ) said that on such applications the court addresses itself to two main inquiries and continued ((1968) 118 CLR 618 at 622-623): The first is whether the plaintiff has made out a prima facie case, in the sense that if the evidence remains as it is there is a probability that at the trial of the action the plaintiff will be held entitled to relief ... The second inquiry is ... whether the inconvenience or injury which the plaintiff would be likely to suffer if an injunction were refused outweighs or is outweighed by the injury which the defendant would suffer if an injunction were granted. By using the phrase 'prima facie case', their Honours did not mean that the plaintiff must show that it is more probable than not that at trial the plaintiff will succeed; it is sufficient that the plaintiff show a sufficient likelihood of success to justify in the circumstances the preservation of the status quo pending the trial. That this was the sense in which the Court was referring to the notion of a prima facie case is apparent from an observation to that effect made by Kitto J in the course of argument ((1968) 118 CLR 618 at 620). With reference to the first inquiry, the Court continued, in a statement of central importance for this appeal ((1968) 118 CLR 618 at 622): How strong the probability needs to be depends, no doubt, upon the nature of the rights [the plaintiff] asserts and the practical consequences likely to flow from the order he seeks. 15Gummow and Hayne JJ also stated, however, at [70]: [70] When Beecham and American Cyanamid are read with an understanding of the issues for determination and an appreciation of the similarity in outcome, much of the assumed disparity in principle between them loses its force. There is then no objection to the use of the phrase 'serious question' if it is understood as conveying the notion that the seriousness of the question, like the strength of the probability referred to in Beecham , depends upon the considerations emphasised in Beecham . 16What appears to emerge from O'Neill is that an applicant for an interlocutory injunction must establish two things: that there is a prima facie case in the sense that if the evidence remains as it is there is a sufficient likelihood that at the trial of the action the applicant will be held entitled to relief ( O'Neill; Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618) ; and whether the balance of convenience favours the granting of the interim order in that the court must be satisfied that "the inconvenience or injury which the applicant would be likely to suffer if an injunction were refused outweighs or is outweighed by the injury which the defendant would suffer if an injunction were granted" ( Beecham ). Factors that the court may take into account in establishing this balance include the strength of the applicant's case, the prejudice and hardship likely to be suffered by the defendant, third persons and the public generally if an injunction is granted and the possibility of irreparable damage or harm ( that is, harm for which damages will not be an adequate remedy) to the applicant if the injunction is refused.

Evidence 17The PSA's evidence is an affidavit of Alison Louise McRobert, the solicitor with carriage of the matter. The PSA also tendered a list of employees continuing in temporary employment. It showed that a number of employees (28) held temporary appointments or were on secondment for various periods, one as late as June 2013. The Court was informed that employees would continue in their temporary/secondment positions for the duration of these appointments. The PSA indicated the list was not final because time had defeated the gathering of all of the information. 18Annexed to Ms McRobert's affidavit were the following: (a) copies of letters sent to some of the employees named in the Schedule to the amended application at the time they were declared excess. So, for example, Mr Peter Thompson was advised on 8 July 2010 that his substantive position as a Senior Project Officer CMA (Central West), Environmental Officer Class 9 EPRG Operations Division, North West Branch, position no 09231 had been deleted. Mr Thompson was advised in the letter of his various options under the then existing policy relating to the management of excess employees. Apparently, however, Mr Thompson continued in some form of employment; (b) copies of letters sent to some of the employees named in the Schedule to the amended application at the time they were offered a voluntary redundancy package including the offer of an additional $10,000. So, for example, in a letter dated 23 June 2011 from the Office of Environment & Heritage, Mr Peter Thompson was advised of the offer and the consequences of refusing it. He was advised that he was required to inform the employer of his decision by 11 July 2011 and if he accepted the offer his last day of service would be 22 July 2011; (c) copies of letters sent to some of the employees named in the Schedule to the amended application who were declared excess after 22 June 2011; (d) copy of the circular C2008-47 Voluntary Redundancy Payments issued out of the Department of Premier and Cabinet on 24 November 2008. The circular stated, inter alia: Public sector employees in NSW in a bona fide redundancy situation are entitled to a severance payment prescribed in Ministerial Memorandum 97-27 of 2 October 1997 to be superseded in near future by a new Memorandum ("Memorandum"). All Memoranda represent a direction from the Premier to Ministers and their provisions must be applied by all NSW public sector agencies, except State Owned Corporations. Most public sector employees are not employed under a written contract nor do awards applying to their employment conditions refer to entitlements to severance payments or the method of calculating the payment in a bona fide redundancy situation. Rather, these entitlements are prescribed in the Memorandum, which also prescribes other entitlements such as Job Assist Schemes. It is relevant to note that the redundancy payments in the Premier's Memorandum form part of the contract of employment of public sector employees. The payments are acknowledged by the Government to be an entitlement of the employees and it is mandatory for all agencies other than State Owned Corporations to apply the entitlement in a redundancy situation. ... Whilst the employment contract entered into by the employee with the NSW Government does not contain a specific clause which provides for redundancy, it is mandatory for all agencies of the NSW Government (other than State Owned Corporations) to apply the Memorandum. ... Given the NSW Government agencies must apply the Memorandum and redundancy formula in the case of an employee's redundancy, it follows that the NSW Government treats the Memorandum as a binding commitment. As such, it represents a written contract with the employee, irrespective of any connection with the employment contract. ... Therefore it follows that employees who had entered into a written contract with the NSW Government at any time before 10 May 2006, had a written contract as at that date which provided an entitlement to a life benefit termination payment, and also specified a formula to work out that entitlement. Accordingly, life benefit termination payments paid on or after 1 July 2007 and before 1 July 2012 in respect of NSW public sector employees who had entered into a written contract with the NSW Government at any time prior to 10 May 2006 should satisfy the requirements under the transitional provisions. (e) copy of the Managing Excess Employees Policy, November 2008; (f) copy of the Managing Excess Employees Policy Directive published on 23 June 2011; (g) copy of Memorandum M2011-11, Changes to the Management of Excess Employees; (h) copy of Memorandum M1996-05, Managing Displaced Employees; (i) copy of Memorandum M1997-27, Managing Displaced Persons.

First and second orders 19The first order sought by the PSA was an order declaring the 2008 Policy to be part of the contracts of employment of public sector employees who had been declared excess in accordance with that Policy prior to 1 August 2011. The second order sought was a declaration that the contracts included certain terms that were contained in the 2008 Policy. 20As noted earlier, circular C2008-47, Voluntary Redundancy Payments, issued out of the Department of Premier and Cabinet ("DPC") on 24 November 2008, contained an extract from an application by DPC for a Tax Ruling. The application submitted that: It is relevant to note that the redundancy payments in the Premier's Memorandum form part of the contract of employment of public sector employees. ... Whilst the employment contract entered into by the employee with the NSW Government does not contain a specific clause which provides for redundancy, it is mandatory for all agencies of the NSW Government (other than State Owned Corporations) to apply the Memorandum. This Memorandum sets out the employees' entitlement to redundancy payments and the method to work out the amount of redundancy. Given that NSW government agencies must apply the Memorandum and redundancy formula in the case of an employee's redundancy, it follows that the NSW Government treats the Memorandum as a binding commitment. As such, it represents a written contract with the employee, irrespective of any connection with the employment contract. 21The Memorandum referred to in the application by DPC was "NSW Ministerial Memorandum 97-27 of 2 October 1997 to be superseded in near future by a new Memorandum". The new Memorandum is M2008-22, which remains in force until 1 August 2011 when it is to be superseded by the 2011 Policy. 22It is apparent then that the New South Wales Government represented the terms of the 2008 Policy applicable to employees up until 1 August 2011 dealing with persons declared excess to requirements as being a written contract with employees such as Mr Thompson who I referred to earlier. This representation, conveyed to public sector employees, is an indicator of the existence of a contract reflecting the terms of the 2008 Policy, but it is not conclusive and on its own would not establish the existence of the relevant contract in respect of each employee that is the subject of the claim. Moreover, whilst there was no evidence contradicting the existence of employment contracts, there was no evidence of how the 2008 Policy became incorporated into the contracts of employment with the employees (which is what at least one part of circular C2008-47 seems to suggest), there was no evidence regarding the formation of a contract separate from the contract of employment incorporating the 2008 Policy (which another part of circular C2008-47 seems to suggest) and the identity of all employees in respect of whom the PSA seeks relief is not known (the amended application identifies 72 employees whereas it appears there are 91 employees who declined the "incentivised" offer). 23It seems to me that if the evidence remains as it is, there is not a sufficient likelihood that in the proceedings dealing with the substantive amended application the applicant will be held entitled to relief claimed in orders 1 and 2 in relation to the 72 employees identified in the schedule to the amended application. The fact that the employer has represented that the 2008 Policy forms part of the contract of employment of public sector employees, or that it "represents a written contract with the employee, irrespective of any connection with the employment contract", is not sufficient to establish that there is a probability the application will succeed.

Third order 24The third order sought in the amended application was an order declaring that any decision to forcibly retrench any of the employees would contravene s 56 of the Public Sector Employment and Management Act 2002("PSEM Act") and thereby be void and to no effect. 25Section 56 provides: 56 Excess officers of Department (1) This section applies where: (a) the appropriate Department Head is satisfied that the number of officers employed in the Department exceeds the number that appears to be necessary for the effective, efficient and economical management of the Department's functions and activities, and (b) the appropriate Department Head has taken all practicable steps to secure the transfer of the excess officers to the service of another Department or in any other public sector service. (2) The appropriate Department Head may, with the approval of the Director of Public Employment, dispense with the services of any such excess officers who cannot be found useful work in another Department or in any other public sector service. 26The basis upon which the third order was sought was that the 2011 Policy makes no attempt to comply with the requirements in s 56. For example, it was submitted, the 2011 Policy provides for an offer of voluntary redundancy to be made immediately upon an employee being declared excess, that is, when the employee no longer has a substantive position (cl 4.2). No steps are required to be taken to secure the transfer of an officer to another position. The 2011 Policy limits redeployment to a "permanent placement in a funded position on an agency's establishment" (cl 6). That is, employees will be forcibly retrenched if they do not secure a "permanent placement in a funded position" even though there may be "useful work" for the employee to perform for the purpose of s 56 of the PSEM Act. 27Senior counsel for the DPE submitted that the Court did not have jurisdiction to make an order declaring that there had been a contravention of a provision of a statute. 28Section 154 of the Industrial Relations Act is in the following terms: 154 Declaratory jurisdiction (1) The Commission in Court Session may make binding declarations of right in relation to a matter in which the Commission (however constituted) has jurisdiction. The Commission in Court Session may do so, whether or not any consequential relief is or could be claimed. (2) Proceedings before the Commission in Court Session are not open to objection on the ground that a declaration of right only is sought. 29The terms of s 154 have been considered in a number of cases. In Atlantis Relocations (NSW) Pty Ltd v Department of Industrial Relations (1997) 99 IR 125 at 126-127 a Full Bench of the Commission in Court Session dealt with the Commission's declaratory jurisdiction: The declaratory jurisdiction arises "in relation to a matter" in which the Commission has jurisdiction whether or not any consequential relief is or could be claimed (s.154(1)). The declaratory power is therefore not contingent upon the existence of proceedings which are otherwise within jurisdiction as the power arises in relation to a matter as opposed to proceedings. In this case a controversy exists between the parties as to whether, after the depot was re-located, company removalists were entitled to the benefits of the award rather than those provided by the Enterprise Agreement. The Commission has jurisdiction in relation to that matter. Such jurisdiction may be invoked under various provisions of the 1996 Act, see for example ss. 364, 365 and Division 2 of Sch.4 and s.380. It follows that the Commission in Court Session is empowered to grant declaratory relief of the nature of that sought in these proceedings. 30In Ford v SAS Trustee Corporation [2000] NSWIRComm 92; (2000) 98 IR 444 at 450-451 Hungerford J also dealt with the Commission's declaratory jurisdiction: [9] Given the general power of the Court to make a binding declaration of right under s 154 of the Industrial Relations Act , subject to it being in relation to a matter in which there is jurisdiction and as to which I will return, the present approach adopted in terms of principle to the grant of a declaration was stated in the following way by Gibbs J, as he then was, in Forster v Jododex Australia Pty Ltd (1972) 127 CLR 421 at 437-438: It is neither possible nor desirable to fetter the broad discretion by s 10 by laying down rules as to the manner of its exercise. It does, however, seem to me that the Scottish rules summarized by Lord Dunedin in Russian Commercial and Industrial Bank v British Bank for Foreign Trade Ltd [1921] 2 AC 438 at p 448, should in general be satisfied before the discretion is exercised in favour of making a declaration: "The question must be a real and not a theoretical question; the person raising it must have a real interest to raise it; he must be able to secure a proper contradictor, that is to say, some one presently existing who has a true interest to oppose the declaration sought." Beyond that, however, little guidance can be given. As Lord Radcliffe said in Ibeneweka v Egbuna [1964] 1 WLR 219 at p 225: "After all, it is doubtful if there is more of principle involved than the undoubted truth that the power to grant a declaration should be exercised with a proper sense of responsibility and a full realisation that judicial pronouncements ought not to be issued unless there are circumstances that call for their making. Beyond that there is no legal restriction on the award of a declaration." I will so approach the present matter. 31In A v Commission for Children and Young People [2001] NSWIRComm 194; (2001) 107 IR 211 Hungerford J again considered the Commission's jurisdiction to make declaratory orders: [8] The respondents initially took the position that the Court did not have jurisdiction to make the declaration sought. However, at the hearing they conceded that indeed jurisdiction did exist. I think the concession was properly made: see Atlantis Relocations (NSW) Pty Ltd v Department of Industrial Relations (Inspector O'Regan) (1997) 99 IR 125 at pp 126-127; Re Glass Workers' Redundancy (State) Award [1998] NSWIRComm 297; and Kellogg (Aust) Pty Ltd v National Union of Workers, New South Wales Branch (1998) 89 IR 391. In Ford v SAS Trustee Corporation (2000) 98 IR 444, I had occasion to make a declaration as to a person's rights under the Police Regulation (Superannuation) Act 1906 in relation to his entitlement to certain leave and, as to the existence of jurisdiction, observed (at p 476): The fundamental nature of the declaratory power in s 154 of the Industrial Relations Act is, in the opinion I hold, based on the existence of a matter about which the Commission (either as the Commission or sitting as the Court) has jurisdiction and even though no consequential relief is or could be claimed. In other words, a declaration of right may be made once there be identified a matter otherwise within the Commission's or the Court's jurisdiction, regardless whether any proceedings exist as to that matter, provided the declaration as sought relates to it. [9] In the present case, the Commission has power to make an order under s 9 of the Child Protection (Prohibited Employment) Act declaring that that Act is not to apply to a particular person who is a prohibited person; central to that determination is the status as such of the person concerned. The declaration sought here from the Court, in my view, relevantly relates to a matter within the Commission's jurisdiction, namely, the matter of the making of an order under s 9 in relation to the applicant as a person alleged to be a prohibited person. It follows, I am satisfied, that the Court has power to make the declaration sought under s 154 of the Industrial Relations Act as to whether the applicant is a prohibited person. See also Public Service Board (NSW) v Public Service Australia (NSW) (1986) 14 IR 445; Crewdson v Department of Community Services (No 2) [2002] NSWIRComm 121; T v The Commission for Children and Young People. Application by T for declaratory relief under s 154 of the Industrial Relations Act 1996 [2008] NSWIRComm 21; Public Service Association and Professional Officers' Association Amalgamated Union of New South Wales v Commissioner of Police [2007] NSWIRComm 298. 32I do not accept there is necessarily an absence of jurisdiction to make an order declaring that a particular act would be in contravention of a provision of the PSEM Act. Mentioned earlier in this judgment was the existence of an industrial dispute between the PSA and DPE where it was alleged that the 2011 Policy contravenes s 56. A declaration that a decision to forcibly retrench an employee in accordance with the 2011 Policy may relevantly relate to a matter within the Commission's jurisdiction, namely, the matter of the making of orders under Pt 1 of Ch 3 of the Industrial Relations Act to resolve a dispute, or Pt 6 of Ch 2 in relation to unfair dismissal, or Pt 9 of Ch 2 of that Act in relation to unfair contract. 33The order sought by the PSA, however, is drawn in terms that are far too broad. It refers to "... any decision to forcibly retrench any of the employees would contravene section 56 ..." A properly framed order, more precise in its terms, could provide the basis for the Court to exercise its declaratory jurisdiction. Such an order would need to be supported by relevant evidence, which at the moment appears to be absent. Whilst it is apparent from the evidence that has been presented that under the 2011 Policy it is the employer's intention employees will be retrenched if they do not secure a "permanent placement in a funded position", what is absent is any indication there may be "useful work" for the employees or any of them to perform for the purpose of s 56 of the PSEM Act. In the absence of such evidence I am unable to conclude there is sufficient likelihood the applicant would be successful at trial. 34It is not for the Court to frame a proper order. If the PSA wish to pursue this aspect of its claim for interlocutory relief it is a matter for the PSA, but it would need to be supported by relevant evidence.

Fourth order 35The fourth order sought by the PSA, in the alternative, was an order declaring that the contracts of employment and/or employment arrangements and/or related conditions and/or collateral arrangements between or involving each employee whereby those persons perform work in an industry are unfair, harsh, unconscionable and/or contrary to the public interest. A consequential order was sought varying the contracts so as to include the relevant terms of the 2008 Policy for managing excess employees to apply in the event that the employee is declared excess to the staffing requirements of the Department or agency in which he or she is engaged. 36Whilst it is not evident at this stage of the proceedings that contracts of employment exist that incorporate the 2008 Policy, a different situation exists as to whether there are relevant "contracts of employment, employment arrangements and/or related conditions and/or collateral arrangements" in the context of unfair contract proceedings. The PSA contends that unfairness arises because the employees are subject to contracts, employment arrangements and/or related conditions and/or collateral arrangements that: permit the Government to depart from representations made to employees declared excess to the staffing requirements of a Department or agency under the 2008 Policy; permit an employee declared excess under the 2008 Policy to be forcibly retrenched without the payment of a fair and reasonable severance payment; permit an employee declared excess under the 2008 Policy to be forcibly retrenched even if the retention period promised to the employee has not expired; failed to ensure that all practicable steps are made to redeploy employees declared excess to the staffing requirements of a Department or agency within that Department or agency or in another Department, agency or public sector service; permit an employee to be forcibly retrenched even if there is ongoing work for the employee to perform or a position into which the employee could be redeployed; permit the Government to impose arbitrary, unfair and capricious changes to the conditions of employment of the employees declared excess to the staffing requirements of a Department or agency. 37In my opinion, on the evidence that presently exists, there is, for the reasons contended by the PSA, a sufficient likelihood that at trial the Court would find the existence of a contract, arrangement or related condition or collateral arrangement whereby an employee performs work in an industry that is unfair as a consequence of the operation of the 2011 Policy: see, for example, State of New South Wales v Banas [2004] NSWIRComm 255; (2004) 137 IR 63.

Balance of convenience 38Turning to the question of the balance of convenience, the DPE contended that the Court should refuse to make the interim order sought, as there could be no irreparable damage or harm caused to the employees who were the subject of the amended application because damages or compensation would be an adequate remedy. In other words, even if it were found that there had been a breach of contract, damages were available or, if the contracts or arrangements were found to be unfair, compensation was available under s 106(5) of the Industrial Relations Act . 39All of the employees who are the subject of the amended claim have been declared excess to requirements. Many, if not all, would presently be holding a temporary appointment or on a trial placement or have been seconded to a position. The period during which the employees will continue to occupy their present roles differs significantly. Under the 2008 Policy a retention period of 12 months applies. 40The retention period means that where an employee has been declared excess, the Department or agency is obliged to seek out redeployment opportunities, either permanent or temporary. If the employee is placed in a temporary position, the retention period is suspended whilst the employee remains in the temporary position. So that if an employee who is declared excess is immediately placed in a temporary position for six months, the retention period will not commence to operate until the employee completes the period of temporary employment. The retention periods applicable to each of the employees the subject of the claim will, therefore, vary from employee to employee. For example, an employee may be assigned to a temporary position until December 2011 and after that period there may be a further eight months remaining of the retention period during which, under the 2008 Policy, the employer is required to source another temporary or permanent position. At the expiry of the retention period, the employee may be considered for compulsory retrenchment, but that, according to the 2008 Policy, would be as a "last and unavoidable resort". 41The effect of the DPE's submission regarding the balance of convenience is that if the Court were to find the contract or arrangement was unfair, under s 106(5) the Court could order compensation based on the benefits provided to a retrenched employee under the 2008 Policy. Therefore, according to the respondent, any loss incurred by the employee would be fully made up. If that be the case, the respondent submitted, there was no basis to order interim relief especially as it would be prejudicial to the New South Wales Government by disrupting the implementation of a significant reform measure designed to achieve savings in circumstances where it was said to be vital to the State that those savings be made. 42For its part, the PSA submitted the prejudice to the employees lies in the application of the 2011 Policy, which provides that an excess employee has two weeks to choose between two courses of action:

Accept an offer of voluntary redundancy and leave the service within two weeks of accepting the offer or at a time nominated by the agency. If voluntary redundancy is declined it will not be offered again.
Decline the voluntary redundancy offer and pursue redeployment during the three month retention period. If an excess employee: a) leaves at any time after declining the offer of voluntary redundancy, they will receive a payment using the calculation described in section 7.1 of this policy, or b) is not redeployed at the conclusion of the retention period, they will be made forcibly redundant and receive a payment using the calculation described in section 7.1 of this policy. 43It was submitted for the PSA that within a two week period an employee will have to make a choice of taking voluntary redundancy or hope within the three months' retention period they will be redeployed with the risk that if they are not redeployed they will be made forcibly redundant on terms inferior to what they were entitled to under the 2008 Policy. 44In relation to employees presently filling temporary positions that do not expire prior to 1 November 2011 (the three months' retention period), they would not face the prospect of forcible retrenchment in three months' time. They would, however, be forcibly retrenched at the completion of their temporary assignment and the voluntary redundancy package would not be available to them. Thus, on the face of it, all employees that are the subject of the PSA's claim will be in the position of having to decide whether they take up the offer of voluntary redundancy within two weeks because if they do not it will not be offered a second time. 45Taking the earlier example of the employee who is in a temporary position until December 2011, that employee will have to make a choice of accepting the voluntary redundancy package within the next two weeks and leaving public sector employment or continuing to work until December when the employee will be forcibly retrenched and would receive a retrenchment payment less than what is available under the voluntary package. The employee would also be forced to forego the benefit of any remaining retention period that had been available under the 2008 Policy. 46By its application for interlocutory relief, the PSA wishes, in effect, to forestall the employees being forced to make the choice, described in the preceding paragraph, within the next two weeks. On the other hand, if an injunction is ordered staying the respondent's hand until the substantive claims are heard and determined, any proceedings in the Court's unfair contracts jurisdiction is likely to take many months, with evidence being required regarding the individual circumstances of each employee that is the subject of the claim. This, according to the respondent, would be prejudicial to the government's restructuring plans and its efforts to achieve necessary cost savings. 47The loss that an employee may incur if no injunction is granted is the loss of opportunity of continuing temporary employment for a fixed duration if the employee decides to take voluntary redundancy. But a real difficulty may arise, it seems to me, in determining what was the loss or damage incurred. Any other loss (loss of the benefit of any remaining retention benefit and the loss caused by the difference between the redundancy benefits under the two Policies) may be more readily assessable, but such losses could not be regarded as irreparable harm because damages or compensation would be an adequate remedy and, therefore, an injunction could not be justified. 48In any event, the following analysis is relevant: as the employees who are the subject of the PSA's claim have declined the "incentivised" offer involving an additional $10,000 payment it is most unlikely, a few weeks later, they will opt for a voluntary redundancy payment that does not include the $10,000, or opt to be made forcibly redundant after three months with an even lower retrenchment payout, or opt to take the slim chance they might be redeployed in the three months retention period. In other words, having been advised of their options under the 2011 Policy it is likely that the employees (having regard to their particular circumstances including such matters as their age, years of service, family circumstances, when superannuation entitlements become available, opportunities for other employment) have calculated what is the best option for them and have essentially decided they will continue in their temporary position for its duration and be paid the lesser redundancy payment applicable to forcible retrenchment. 49That was a decision for each individual employee to take given his or her particular circumstances and the Court should not, at this stage, intervene by way of a blanket interim order that would likely have to remain in force for an extended period. If the applicant is successful in obtaining its declaratory relief and if there is any loss for which damages or compensation is an adequate remedy that will be a matter to be determined in other proceedings. 50In the circumstances, I consider the balance of convenience does not favour the PSA and the application for an interim order is refused. The Court so orders. 51The amended application is listed for directions at 9.30 am on Monday 1 August 2011.

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: 29 July 2011

[1998] NSWIRComm 297

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Judgment (12 paragraphs)

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Cases Cited (30)