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[2018] FCAFC 154
Federal Court of Australia (Full Court)
2018-09-14
Mr P, Charlesworth JJ
Original judgment source is linked above.
The application of the classification descriptors 55 Schedule 1 to the EA contains the following statement as to the method of applying the skill descriptors: APPLYING THE SKILL DESCRIPTORS Positions should be evaluated as a whole after being: • reviewed against each of the descriptors for knowledge, problem solving and accountability, and • tested against the typical duties, starting with the relevant business area and then looking at other areas as required. The evaluation should be consistent with other evaluations conducted using these skills descriptors. The evaluation will also take into account the benchline established by Clause B4 of Australian Services Union (Qantas Airways Limited) Enterprise Agreement VI. The descriptors for knowledge, problem solving and accountability are graduated scales. Positions should be rated on these scales at the level of best fit, working up the scale. The typical duties are cumulative, so skills required at a lower level may be required at a higher level even though they are not specifically mentioned. Where a skill is repeated at different levels it is mentioned at the higher level for context. Where this occurs the skill concerned should not be used as the differentiating factor to place a position above the first level where the repeated skill is mentioned. ... 56 It can be seen that this statement stipulates an approach to the classification of positions which includes: (a) it is the position which is to be classified and not the person; (b) positions are to be evaluated as a whole; (c) the evaluation is to take account of the descriptors for Knowledge, Problem Solving and Accountability; (d) the evaluation is to include testing against typical duties in both "the relevant business area" and in other areas; (e) the evaluation should be consistent with other evaluations carried out using the skill descriptors; (f) the evaluation should take account of the identified "benchline"; and (g) positions should be evaluated on the basis that the descriptors are graduated scales, with positions rated on those scales at the level of best fit, working up the scales, taking into account that the typical duties are cumulative. 57 As will be seen, the requirement that positions be rated at the level of best fit "working up the scale" is of some significance in the appeal. 58 It is convenient to set out the relevant skills descriptors in a way that permits a ready comparison between the "Knowledge", "Problem Solving" and "Accountability" descriptors for Level 4 through to Level 8: KNOWLEDGE LEVEL 4: • Utilises a greater depth or breadth of knowledge of product, Company policies, procedures and standards within a single functional area than previous levels • Understands how their work area processes interact with other related areas. LEVEL 5: • Utilises expert knowledge of standardised procedures within a single functional area, which may include - • Advising and assisting others in resolving more difficult or non-routine problems within established systems. And/or; • Significant breadth or depth of technical knowledge. And/or; • Understanding the relationships between related work areas. • Has the ability to organise, influence and communicate with others to achieve work objectives on a task or transactional basis. LEVEL 6: • Specialised knowledge including understanding of concepts and principles and ability to analyse and evaluate alternatives. And/or; • Comprehensive operational knowledge of work processes and systems within a single functional area. And/or; • The ability to brief and influence and/or motivate and develop people to achieve desired outcomes. LEVEL 7: • The application of a systematic and coherent body of knowledge gained through working in a variety of situations. This includes a detailed understanding of work practices and precedents. And/or; • The standard application of a theoretical body of knowledge including the underlying principles and concepts. And/or; • Supervisory skills including people management and performance review process. LEVEL 8: • Thorough knowledge of a wide range of Company policies, procedures and relevant legislation. And/or; • Sufficient understanding of business plans and budgets in order to contribute to their development. And/or; • Customer relationship management skills (including internal/external customers) subject to guidelines, standards and procedures. • Supervisory skills including people management and performance review process. PROBLEM SOLVING LEVEL 4: • Achieves prescribed goals using varied techniques, systems, methods or processes within established procedures or operating guidelines, with some latitude to consider which solution might be most appropriate. LEVEL 5: • Within established systems, practices and procedures, problems may be solved based on: • prior experience; • knowledge of precedent and • some interpretation, investigation and judgement. • Guidance is available. LEVEL 6 • Judgement is required to discriminate between alternatives that generally follow a defined pattern. • May exercise judgement and initiative in the investigation of options. • Solutions may be developed and implemented with approval within a single functional area. LEVEL 7 • Use of discretion in applying knowledge of procedures, policy and precedent is used in decision making. • Decisions are made with consultation for issues outside established procedures, policies or precedents. • Analysis, evaluation and judgement are required at this level. LEVEL 8 • Solve problems through considering diversified procedures and precedents covering a variety of situations. • May be required, on occasion to make decisions without consultation on issues outside of established procedures or precedents for this level by recourse to the relevant principles, policies or operating guidelines. • May solve problems using planning /forecasting data. ACCOUNTABILITY LEVEL 4 • Responsible for achieving the required standards and results usually within short time-spans, for example within the shift concerned. • Approval must be sought before deviating from procedures or operating guidelines. • May provide technical advice. May provide on the job training to employees at level 4 or below, for example, demonstration or explanation, but is not accountable for the work of others. • Work is regularly checked or monitored and is subject to regular evaluation. LEVEL 5 • Work is subject to specified procedures and the results are clearly defined. Work is subject to periodic review with guidance and supervision available. • May be accountable for advising or providing guidance to other employees based on advanced technical knowledge and experience but not accountable for the work of these employees. • May be responsible for organising, advising and or assisting a team or work group on a day to day basis. LEVEL 6 • May be accountable for recommendations made for practical solutions to problems. • May be accountable for meeting well-defined objectives. • May be accountable for the work of others by for instance monitoring the quality of information and or products/services provided. • May be responsible for coordination of a work group or for the work of others to maximise operational effectiveness. • Guidance and Supervision is available. LEVEL 7 • May be responsible for the coordination of resources and processes of a work group in order to achieve outcomes for the organisation including conducting performance appraisals and formal counselling. • May be accountable for managing operational issues on a daily basis. • May be accountable for developing team members. • Work is subject to guidance and broad instructions and assistance is available on request. LEVEL 8 • May be accountable for greater decision making than at level seven for example, senior staff member in charge on shift or greater complexity of work supervised within a single functional area. • May be responsible for the coordination of resources and processes of a work group or groups in order to achieve outcomes for the organisation. • May be accountable for analysis, evaluation, review or development of systems and procedures. • Work is subject to guidance and broad instructions and assistance is available on request. 59 Some reference should also be made to the typical duties appertaining to Levels 7 and 8: Typical duties within Airports at Level 7 include: … • Supervise and coordinate the Customer Service team on a shift to achieve prescribed service standards; and/or … Typical duties within Airports at Level 8 include: ... • Manage, motivate and evaluate the effectiveness of training delivered by Training Officers; and, … 60 The preamble to the skill descriptors says this of the typical duties: By providing examples and contextual information, the typical duties provide assistance in interpreting the general descriptors. Typical duties are representative of core functions and activities performed at a particular level in the business area concerned. This Clause does not contain an exhaustive list of duties. 61 The Industrial Magistrate summarised the evidence and made a series of factual findings as to the duties performed by the employees and the skills possessed by them: at [25] - [70]. Then, under the heading "Consideration", the Magistrate found that the employees should have been classified at Level 7. Given the nature of the principal challenge made by Qantas, it is appropriate to extract that part of the 2016 reasons in full. 71 I have considered the respective classification criteria for Levels 4 through to 8, being the graduated scales of the specified skill descriptors 'knowledge', 'problem solving' and 'accountability' together with the corresponding "typical duties within Airports", and the principles for applying the skill descriptors set out at the start of Schedule 1 as summarised above. 72 I commence with Level 8. In my opinion the evidence does not satisfy the fourth dot point of the 'knowledge' criteria that supervisory skills include "people management and performance review process". Of the first three alternate dot points, the applicants satisfy only part of each: the evidence does not establish thorough knowledge of any legislation outside of the APSM content; the applicants have not been directly involved in contributing to the development of business plans; and they have little involvement in external customer relationship management. 73 The first dot point of 'problem solving' skills is satisfied as the applicants have been required to solve a range of problems by applying "diversified procedures and precedents". However they do not satisfy the second dot point, because they do not make decisions without consultation outside of established procedures or precedents. Nor are they required to solve problems "using planning/forecasting data", on the basis that planning for group travel, allocating special seating and moving CSA's within a shift to respond to work flows, do not satisfy this criteria. Their decision making requirements for handling disruption management and associated baggage issues, accommodating late customers and dealing with inappropriate customer behaviour do not fall outside of the detailed policies and established procedures of the APSM. 74 The first 'accountability' dot point requires accountability for greater decision making than for Level 7, which in turn requires accountability for "performance appraisals and formal counselling", or managing operational issues or being accountable for developing team members. As the applicants are not required to do performance appraisals or formal counselling, and the evidence does not support a higher level of accountability than for the next two listed factors, I infer they do not satisfy the first Level 8 'accountability' dot point. The applicants do partly satisfy the second dot point by being partly responsible for the coordination of CSA resources and processes of customer service in order to help achieve on-time departures. They do not fully satisfy the third dot point, although they do contribute informally to the development of systems and procedures. The final dot point is satisfied in that their work is subject to guidance and broad instructions but is not subject to direct day to day supervision by a Duty Manager. 75 Of the listed typical duties at Level 8 only the first is comparable with the applicants' duties. That duty is however part of the first three composite duties and the applicants do not perform the second two. Even then the team of CSA's they supervise does not have "competing demands" that need to be managed beyond optimising the staffing of each work station. While the remaining typical duties are outside or beyond the scope of the applicants' duties, the typical duty of "co-ordinate the training for Customer Services" indicates this Level is close to the applicants' broad role of supervising a large team of CSA's. 76 I have next considered Level 7. I find the applicants have satisfied the first 'knowledge' dot point. They have to apply their wide knowledge of customer service work practices and precedents in supervising their CSA team and meeting their own CSO KPI's. As to 'problem solving' they are required to use some analysis, evaluation and judgement in managing their team and in determining the optimal deployment of CSA's within a shift as the business flexes throughout the day. They have to solve problems, but within the framework of the APSM, unless they consult with or escalate an issue to a duty manager. The first 'accountability' dot point is not met, but the next three are. The applicants are accountable, in the sense they have authority to act and need to produce the measurable end results of on-time departures and their KPI's for managing operational issues amongst the CSA team "on a daily basis", and for developing CSA team members so they achieve their CSA KPI's. Their work is subject to assistance, guidance and broad instruction from a Duty Manager. 77 The applicants' role conforms accurately with the third Level 7 typical duty of "supervise and coordinate the Customer Service team on a shift to achieve prescribed service standards". This duty closely describes their significant supervisory responsibilities for a large team of CSA's whose work is essential to on-time departures, while also recognising the applicants are not ultimately responsible for all aspects of the CSA's work, such as work force planning, formal training, formal human resource functions, or the customer service budget/finance goals. The respondent's competing contention that the applicants do not supervise and coordinate the CSA team on a shift, reflects an unrealistic theoretical position that the Duty Manager does all of this, a position that is not supported by the accepted evidence of the applicants, and more importantly, by the Duty Manager Mr Edkins or the former Duty Manager Ms Fairbrother. 78 The applicants clearly satisfy the three alternate 'knowledge' dot points for Level 6. They also satisfy the three listed 'problem solving' dot points. They are required, not just may be required, to exercise judgement and initiative in developing and implementing solutions, without approval, in coaching CSA's, managing CSA conflicts and moving staff within a shift, or with approval in giving advice to rostering, within the customer service functional area. The applicants are accountable for meeting 'well defined objectives' set by their own KPI's that relate to the CSA's performance and on-time departures. They are also accountable for "monitoring the quality" of information and services provided by the CSA's to flying customers, and are at least responsible for coordinating the customer service work group. 79 The listed Level 6 typical duties appear to be similar or lesser roles than those performed by the applicants. Delivering training to customer service staff is unlikely to be a superior role given the CSO's input into identifying skill deficiencies and training needs. Providing or overseeing customer service functions in only one lounge appears to necessarily be a lesser role than that required of the CSO's, on the basis of the two types of lounges each being only a small sub-set of the broader customer service function but with some additional basic food and drinks service. The applicants' role is also broader and more demanding than "leading a team or work group eg Baggage Services on a single shift", given this function falls within the broader customer service function. 80 The Level 5 'knowledge' and 'problem solving' criteria are very similar to those for Level 6 with only slight differences of wording. I infer a higher level of skills is required for Level 6. The essential difference of the 'accountability' criteria between Levels 5 and 6 is a requirement for advice and guidance without being accountable for those employees, and responsibility for just "organising, advising and or assisting a team or work group on a day to day basis" (Level 5), and being accountable for the work of others (Level 6) or being responsible for coordinating them (Level 6). My conclusion is that the Level 5 accountabilities do not accurately reflect the reality of the full job demands, and in particular the CSO's own KPI's, the inherent greater complexity of the large number of subordinate staff, and the Duty Manager's expectations of their performance. 81 The first example of the Level 5 typical duties refers to a "first level team leader, including organising, advising and assisting a team or work group on operational and technical matters on a single shift." 82 The applicants submit this description significantly understates their responsibilities. Whereas the respondent submits this accurately reflects their roles. Some of the respondent's witnesses also used the words of this description, i.e. assisting on operational and technical matters only, in an attempt to argue the respondent's case. 83 In my opinion the evidence demonstrates that the applicants were required to do far more than this. In addition they were required to supervise and coordinate a large number of subordinates with all the inherent complexities of a large work group, monitor workflows and adjust staffing within a shift, achieve their own KPI's and help the CSA's achieve theirs, and discharge the responsibilities explained by the Duty Managers. 84 The other typical Level 5 duties each describe separate limited aspects of the applicants' role, which individually do not reflect the breadth of their responsibilities. The Level 5 typical duties imply a higher level officer would be supervising and coordinating the CSA's to be responsible for all these duties. 85 My conclusion is the evidence strongly points to a best fit between the applicants' required role and the Level 7 skill descriptors, and a strong match with the typical Level 7 duty of "Supervise and coordinate the Customer Service team on a shift to achieve prescribed service standards". The Level 6 typical duties appear to be at or below the applicants' role while the Level 8 duties appear to be above it. After taking both aspects into account I conclude the applicants have been required to perform a Level 7 job. 62 Qantas submitted that, by reasoning in this manner disclosed in these paragraphs, the Industrial Magistrate had erred by failing to rate the employees "at the level of best fit, working up the scale" as required by the preamble to Sch 1 to the EA. 63 That the Industrial Magistrate did not work up the scale but approached the task in descending order is readily apparent from [72] and following of his reasons. Whilst the Magistrate said that he had read the interpretive principles set out at the beginning of Sch 1, it is plain that he commenced his substantive consideration with an assessment of the employees against the Level 8 skill descriptors, then reasoned downward to Level 7, then to Level 6 and finally to Level 5. We reject the submission to the contrary made by counsel for the employees. The Magistrate's approach may well be explained by the circumstance that the employees' principal claim in the proceedings was that they were properly classified at Level 8. However it may be explained, it is an approach that is inconsistent with that required by the EA itself. 64 The error in approach was productive of further error. The levels being in the nature of a "graduated scale", the skill descriptors at each level had to be understood as requiring something more than the skill descriptors preceding them. By failing to work up the scales, the Industrial Magistrate construed the content of each classification level without proper regard to the relative differences between them and the lower levels and to the cumulative skills involved. The errors are manifest in the 2016 reasons in at least the following respects.
Knowledge 65 A Level 4 employee "[u]tilises a greater depth or breadth of knowledge of … Company policies, procedures and standards within a single functional area". A Level 5 employee "[u]tilises expert knowledge of standardised procedures within a single functional area", examples of which are specified. One of the examples is "[a]dvising and assisting others in resolving more difficult or non-routine problems within established systems" (emphasis added). The Level 6 and Level 7 knowledge descriptors contain no references to standardised procedures or established systems. 66 Qantas's standardised policies and procedures are contained in a manual known as the Airports Product and Services Manual (APSM). The descriptors in Levels 6 and 7 are to be interpreted as requiring something more than an expert knowledge and application of the established systems described in the APSM. The task of ascertaining a "best fit" necessitated an enquiry as to the extent to which the employees worked outside the bounds of the standardised policies and procedures contained within it. 67 To similar effect, the reference in Level 6 to an "ability to brief and influence and/or motivate and develop people to achieve desired outcomes" is to be interpreted as requiring something more than the requirement in Level 5, namely the "ability to organise, influence and communicate with others to achieve work objectives on a task or transactional basis". 68 The accumulative gradations in language used in the descriptors indicate why it is that the task of ascertaining the "best fit" is to be undertaken by working up the scale. 69 In the course of rejecting the employees' claim to be classified at Level 8, the Industrial Magistrate held that the employees did not have thorough knowledge of legislation "outside of the APSM content", that they did not "make decisions without consultation outside of established procedures and precedents" and that their decision making requirements (including in relation to managing disruptions did not "fall outside of the detailed policies and established procedures of the APSM" (at [72] - [73]). 70 The Industrial Magistrate nevertheless proceeded to determine that the first "knowledge dot point" of Level 7 was satisfied because the employees "have to apply their wide knowledge of customer service work practices and precedents in supervising their CSA team and meeting their own CSO KPI's" (at [76]). In making that finding the Industrial Magistrate did not have regard to the difference in text between the knowledge requirements in Levels 4 and 5 and those in Levels 6 and 7. The knowledge to which the Industrial Magistrate referred may also be regarded as "expert knowledge" of the APSM, and so constitute a best fit within Level 5. From the reasons given, it is not apparent what knowledge the employees possessed and applied in addition to their knowledge of the APSM so as to support the conclusion that their "best fit" was at Level 7. 71 Similarly, the conclusion that the applicants "clearly satisfy the three alternate 'knowledge' dot points for Level 6" (at [78]) rested on findings that the employees were required to exercise judgment and initiative in developing and implementing solutions, without approval, in coaching those under their supervision and managing their conflicts and in moving staff within a shift or, "with approval", giving advice as to rostering within their function area. The reasons of the Industrial Magistrate do not explain why demonstration of such knowledge does not create a best fit with the descriptors in Level 5, particularly in its given examples of "resolving more difficult or non-routine problems within established systems". 72 Whilst the Industrial Magistrate acknowledged (at [80]) that a higher level of skills (including knowledge) was required by Level 6 relative to Level 5, he did not identify the relevant differences between the text in respect of the knowledge criteria, nor did he give proper effect to the differences in their application to the evidence and found facts.
Problem solving 73 The problem solving descriptors for Levels 4 and 5 are similar but not identical. Level 4 refers to prescribed goals being achieved within "established procedures or operating guidelines" whereas Level 5 refers to skills being demonstrated "within established systems, practices and procedures". At Level 4, CSOs have "some latitude to consider which solution might be most appropriate" whereas, at Level 5, problems may be solved based on "some interpretation, investigation and judgement". The descriptors in Levels 6 and 7 contain no reference to established systems, practices and procedures. As with the knowledge criteria, this means that ascertainment of the "best fit" required some enquiry as to the extent to which the employees resolved problems other than within established systems, practices and procedures. The reference in Level 7 to "analysis, evaluation and judgment" must be understood as referring to something more than that which is required by Levels 5 and 6. 74 The Industrial Magistrate found (at [76]) that the employees were "required to use some analysis, evaluation and judgement in managing their team and in determining the optimal deployment of CSA's within a shift as the business flexes throughout the day". However, the Industrial Magistrate does not explain why the task of deploying resources within the single business was not more properly characterised as involving "some interpretation, investigation and judgement" within the meaning of the Level 5 descriptors. 75 In our view, there is merit in the complaint of Qantas that the findings of the Industrial Magistrate were "made to fit" an erroneous construction of the EA. That is not to say that the Magistrate consciously contrived to arrive at a desired result. It is simply to say that the Industrial Magistrate described the employees' problem solving skills in the language of the Level 7 descriptors without first considering the accumulation of problem solving skills working up the graduated scales. To illustrate, the words "analysis" and "evaluation" are used by the Industrial Magistrate to describe the task of deploying staff within a shift in a single business area without meaningful consideration of the degree of problem solving denoted by those words relative to that required at the lower classification levels.
Accountability 76 The word "managing" appears in the Level 7 skill descriptors, but not in the lower level descriptors. Again, working up the scale, it is apparent that phrase "managing operational issues" must be a reference to something more than "providing guidance", "organising … a team or work group" (as in Level 5) or "coordination of a work group … to maximise operational effectiveness" (as in Level 6). The findings of the Industrial Magistrate were to the effect that the employees had day to day responsibility for "supervising" CSAs and that the day to day direct supervision did not rest with the duty managers. Assuming that to be the case, the reasons do not adequately identify the features of the supervisor's tasks that elevated the employees' degree of accountability to that of "managing operational issues" (Level 7) as opposed to "coordination of a work group" (Level 6).
Typical duties 77 The Industrial Magistrate placed considerable weight on the typical duties set out in the EA in relation to each of the classification levels, as he was obliged to do. However, the principal task was to construe the skill descriptors and to apply the descriptors, properly construed, to the facts as found. The statements of typical duties were to be utilised as examples to inform that principal task of construction. They do not constitute skill descriptors in their own right.
Conclusion on the application of the descriptors 78 By failing to observe the requirement that the skill descriptors be applied "working up the scale", the Industrial Magistrate failed to identify and give effect to the differences in wording identified above. 79 For these reasons, we are satisfied that the 2017 orders are affected by appealable error by reason of the Deputy President's reliance on the 2016 reasons in forming the state of satisfaction required by s 545(3) of the FW Act. 80 The grounds of appeal raised in [3(b)], [3(c)], [4], [5(a)], [5(e)] and [5(i)] of the Amended Notice of Appeal are established.
Remaining grounds and relief 81 Qantas submitted that, if this Court was satisfied that there was appealable error affecting the 2017 orders, it should determine the proper classification of the employees. It contended that Level 5 was the appropriate classification for each employee. 82 We consider it inappropriate for the Full Court to embark upon the classification task. 83 Classification of employees in accordance with the EA involves a process of detailed and nuanced evaluation. That process is more appropriately carried out in a first instance hearing. So also is the assessment of the relative weight to be afforded to the evidence, the findings of facts and the drawing of inferences from the found facts. Moreover, in the appeal hearing, the Court did not receive detailed submissions concerning all the evidence or the factual findings which may be appropriate on the evidence at trial. For these reasons, we consider that the course proposed by Qantas is not appropriate.
Disposition of the appeal 84 The 2017 orders should be set aside. 85 The Court may, in the exercise of its appellate jurisdiction, remit a "proceeding" to the court from which the appeal was brought for further hearing and determination, subject to such directions as the Court thinks fit: s 28(1)(c) of the Federal Court of Australia Act 1976 (Cth) (FCA Act). 86 The SAET is the only court to which this Court may remit the matter in accordance with this provision. We will make an order to that effect. 87 We will also direct that, on the remittal, the SAET be constituted by a member other than the Deputy President who made the 2017 orders, in order to avoid the perception that he may not now approach the issues with an open mind. It will be for the member of the SAET dealing with the applications on the remittal to determine, after hearing submissions from the parties and taking into account s 32 of the SAET Act, whether to proceed on the basis of the evidence adduced by the parties in the IRCSA with, or without, hearing further evidence. 88 In light of the order for remittal, it is neither necessary nor appropriate for this Court to determine the remaining grounds of appeal. I certify that the preceding eighty-eight (88) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices White, Perry and Charlesworth.
SCHEDULE OF PARTIES SAD 350 of 2017 Respondents Fourth Respondent: EDWARD LENART Fifth Respondent: MATTHEW HASTWELL
Qantas Airways Limited
Ardlie
THE COURT: 1 On 24 June 2015, each of the five respondents to this appeal commenced a proceeding in the Industrial Relations Court of South Australia (IRCSA) against their employer, Qantas Airways Limited (Qantas). In each proceeding, it was alleged that Qantas had contravened s 50 of the Fair Work Act 2009 (Cth) (FW Act) by failing to make payments in accordance with the terms of an enterprise agreement (EA) made under the FW Act. The employees contended that they had been underpaid because they had not been correctly classified by Qantas in accordance with the EA. 2 Amongst other relief, the employees sought orders under s 545(3) of the FW Act requiring that Qantas pay them amounts under the EA and the imposition of penalties under s 546 of the FW Act. 3 The five applications were heard by an Industrial Magistrate in the IRCSA in a single hearing. 4 In a judgment delivered on 16 December 2016 (the 2016 reasons), the Industrial Magistrate found that the employees had been incorrectly classified and that Qantas had thereby contravened s 50 of the FW Act: Ardlie & Others v Qantas Airways Limited [2016] SAIRC 35. No orders were made on 16 December 2016. Instead, the Industrial Magistrate said (at [86] and [87]) that he would hear submissions concerning the quantification of the employees' claims and concerning the imposition of penalties. 5 Subject to what is said below, from 1 July 2017 the IRCSA was dissolved and jurisdiction in respect of certain industrial matters was vested in the South Australian Employment Tribunal (SAET). In Court session, the SAET is known as the South Australian Employment Court. 6 On 7 December 2017, the SAET made orders by consent requiring Qantas to make payments to each of the employees in respect of the underpayment of wages (the 2017 orders). These orders gave effect to the agreed quantification of the employees' entitlements in accordance with the 2016 reasons. We will refer later to the circumstances by which the SAET came to make those orders. 7 Qantas filed a notice of appeal in this Court on 21 December 2017 and an Amended Notice of Appeal on 11 May 2018. The Amended Notice of Appeal commences: The Appellant appeals from the whole of the judgment of the Industrial Relations Court (SA) given on 16 December 2016 at Adelaide [2016] SAIRC 35 (regarding file nos. 1480, 1481, 1482, 1483 and 1484 of 2013) (Judgment) and the Orders of Deputy President Lieschke (formerly Industrial Magistrate SM Lieschke but hereinafter referred to as the Deputy President) of the South Australian Employment Court dated 7 December 2017 (Orders). 8 On 11 May 2018, Qantas gave notices pursuant to s 78B of the Judiciary Act 1903 (Cth) to the Attorneys-General of the Commonwealth and of the States. The matter notified concerned the constitutional validity of the dissolution by the South Australian Parliament of the IRCSA and of the provision concerning the transfer of uncompleted proceedings before the IRCSA to the SAET. 9 Only the Attorney-General for the State of South Australia intervened in the hearing. 10 At the request of the parties, the Court deferred consideration of the constitutional question, on the basis that it would reconvene the hearing for the consideration of that question should it became necessary to do so. 11 For the reasons we set out below, we consider that the 2016 reasons are affected by appealable error. In particular, we are satisfied that the Industrial Magistrate did not determine the classifications of the employees in the manner required by the EA. This error affects the 2017 orders. Accordingly, the appeal is allowed and the matters will be remitted to the SAET for further consideration. 12 We are also satisfied that the constitutional question which is the subject of the s 78B notice does not arise for consideration.
Competency 13 It is convenient to address at the outset an issue as to the competency of the appeal. 14 Section 545 of the FW Act confers jurisdiction with respect to certain matters arising under that Act on specified courts. Subsections 545(3) and (4) provides: Eligible State or Territory courts (3) An eligible State or Territory court may order an employer to pay an amount to, or on behalf of, an employee of the employer if the court is satisfied that: (a) the employer was required to pay the amount under this Act or a fair work instrument; and (b) the employer has contravened a civil remedy provision by failing to pay the amount. … When orders may be made (4) A court may make an order under this section: (a) on its own initiative, during proceedings before the court; or (b) on application. 15 The phrase "eligible State or Territory court" is defined in s 12 of the FW Act to include (relevantly) the IRCSA and "any other State or Territory court that is prescribed by the regulations". 16 By regulation effective from 1 July 2017, the SAET has been prescribed as an "eligible State court": Fair Work Regulations 2009 (Cth) r 1.05; Fair Work and Other Legislation Amendment (South Australian Employment Court) Regulations 2017 (Cth) Sch 1 reg 1. 17 An appeal lies to this Court from "a decision of an eligible State or Territory court exercising jurisdiction under" the FW Act: see s 565(1) of the FW Act. Qantas invokes, or purports to invoke, that right of appeal in respect of both the 2016 reasons (described as a 'judgment' of the IRCSA) and the 2017 orders. 18 Insofar as Qantas seeks to appeal against the 2016 reasons, its appeal is incompetent. That is because the 2016 reasons are not a "decision" to which s 565(1) refers: Maughan Thiem Auto Sales Pty Ltd v Cooper [2013] FCAFC 145; (2013) 216 FCR 197 at [3] (Greenwood and Besanko JJ), at [14]-[47] (Katzmann J). 19 An issue was raised on the hearing of the appeal as to the competency of the appeal by Qantas against the 2017 orders. That issue arose from the complaint of Qantas that the SAET did not have jurisdiction to make the 2017 orders. That complaint was expressed in the first ground of appeal as follows: The Orders were made without jurisdiction, or alternatively, in the absence of extant proceedings to which those orders related - section 69 of the Statutes Amendment (South Australian Employment Tribunal) Act 2016 (No. 63 of 2016) (the Transitional Act) and, in particular, section 69(2) and (13) of the Transitional Act. The proceedings the subject of the Judgment were proceedings brought under sections 50, 539(2) and 545(3) of the Fair Work Act 2009 (Cth) (the Commonwealth FWA). They were not "proceedings under the principal Act" - in accordance with section 69(13) of the Transitional Act, which can only refer to proceedings under the Fair Work Act 1994 (SA) (the SA FWA), and could not be transferred in accordance with that section. The proceedings therefore came to an end when the Industrial Relations Court (SA) was dissolved on 1 July 2017, and no order could be made by the South Australian Employment Tribunal constituted as the South Australian Employment Court with respect to such proceedings on 7 December 2017. 20 If this ground of appeal is upheld, it would have the necessary consequence that the appeal by Qantas against the 2017 orders of the SAET is incompetent because s 565 of the FW Act has the effect that an appeal lies to this Court from a decision of an eligible State or Territory court only when that court is exercising jurisdiction under the FW Act. 21 We record first the course of events after the Industrial Magistrate delivered the reasons on 16 December 2016. 22 The Magistrate did not list the employees' applications for further hearing. Instead, he left it to the parties to agree upon the orders appropriate to give effect to the 2016 reasons. 23 As and from 1 July 2017, the appointment of the Industrial Magistrate to the IRCSA ceased: s 69(3) of the Statutes Amendment (South Australian Employment Tribunal) Act 2016 (the 2016 Amending Act). However, the same Industrial Magistrate held an appointment as a Deputy President of the SAET from at least that date. 24 On 5 December 2017, the solicitors acting for Qantas transmitted an email to the Associate to the Deputy President providing minutes of the orders agreed between the parties to give effect to the 2016 reasons. The email stated (relevantly): After receiving the judgment the parties commenced discussions in relation to the form of the final orders and quantum. On 7 February 2017, the parties were advised by the Associate that the matter would not be listed for another directions hearing on the basis that the matter was to be resolved between the parties and consent orders would be filed. The parties have been in discussions since that time and have agreed to the attached consent orders. These orders incorporate the agreed quantum of the underpayments as well as the agreed amounts of interest. We also note that the Respondent intends to file a notice of appeal with the Federal Court of Australia once these orders have been entered and that the Applicants are on notice of this fact. We have copied the Applicants' representative to this correspondence. Please let us know if you require anything further in order for the orders to be finalised and entered by his Honour. 25 The proposed consent orders attached to the email were on a form headed "IN THE SOUTH AUSTRALIA EMPLOYMENT TRIBUNAL CONSTITUTED AS THE SOUTH AUSTRALIAN EMPLOYMENT COURT". The form contained the action numbers of the proceedings commenced by the five employees in the IRCSA on 24 June 2015. 26 On 7 December 2017, the Deputy President made the 2017 orders in the absence of the parties. They were made by him in his capacity as Deputy President of the South Australian Employment Court. Subsequently, at the request of the parties, on 12 January 2018 the Deputy President stayed execution of the orders pending the determination by this Court of the present appeal. 27 It is the establishment by the Parliament of South Australia of the SAET in 2016, the later vesting in it of industrial jurisdiction, and the sequence of events just described which provide the setting for the issue as to the competency of the appeal against the 2017 orders. 28 The SAET was established by the South Australian Employment Tribunal Act 2014 (SA) (the SAET Act). The 2016 Amending Act vested the SAET with the forms of industrial jurisdiction which had formerly been vested in the IRCSA. The 2016 Amending Act came into operation on 1 July 2017. 29 Section 69 of the 2016 Amending Act is a transitional provision providing for the transfer of certain matters extant in IRCSA to the SAET. It relevantly provides: 69⸺Transitional provisions (1) In this section⸺ determination has the same meaning as in the principal Act; industrial authority means the Industrial Relations Court of South Australia or the Industrial Relations Commission of South Australia; principal Act means the Fair Work Act 1994; relevant day means the day on which this section comes into operation; Tribunal means the South Australian Employment Tribunal. (2) The Industrial Relations Court of South Australia and the Industrial Relations Commission of South Australia are dissolved by force of this subsection. (3) The commencement of this subsection brings to an end the appointment of a person as a member of the Industrial Relations Court of South Australia or the Industrial Relations Commission of South Australia (as the case may be). … (5) However⸺ (a) subsections (2) and (3) do not affect appointment of a person as a member of the Tribunal before the relevant day; and (b) in the case of a member of the Industrial Relations Commission of South Australia who, immediately before the relevant day, was not a member of the Tribunal⸺the person will be taken to have been appointed (by force of this subsection) as a Commissioner under the South Australian Employment Tribunal Act 2014 subject to the following provisions: (i) the person's term of office will (subject to section 17 of that Act) be taken to be a period of 5 years from the relevant day; (ii) the person's appointment will be on any conditions determined by the Governor and specified in an instrument executed by a Minister acting under this provision within 14 days after the relevant day. … (11) A determination of an industrial authority under the principal Act in force immediately before the relevant day will, on and from the relevant day, be taken to be a determination of the Tribunal. (12) A right to bring proceedings before an industrial authority in existence under the principal Act before the relevant day (but not so exercised before that day) will be exercised as if this Part had been in operation before the right arose, so that the relevant proceedings may be commenced before the Tribunal rather than the industrial authority. (13) Any proceedings before an industrial authority under the principal Act immediately before the relevant day will, subject to such directions as the President of the Tribunal thinks fit, be transferred to the Tribunal where they may proceed as if they had been commenced before that Tribunal. (14) The Tribunal may⸺ (a) receive in evidence any transcript of evidence in proceedings before an industrial authority, and draw any conclusions of fact from that evidence that appear proper; and (b) adopt any findings or determinations of an industrial authority that may be relevant to proceedings before the Tribunal; and (c) adopt or make any determination in relation to proceedings before an industrial authority before the relevant day (including so as to make a determination in relation to proceedings fully heard before the relevant day); and (d) take other steps to promote or ensure the smoothest possible transition from 1 jurisdiction to another in connection with the operation of this section. … 30 Section 69 was considered by this Court in Kronen v Commercial Motors Industries Pty Ltd (t/as CMI Toyota) [2018] FCAFC 136. The Court held that s 69(13) refers only to proceedings before an industrial authority in the exercise of jurisdiction under the principal Act, that is, under the Fair Work Act 1994 (SA) (the FW (SA) Act), at [57]-[58]. 31 Qantas is correct to submit that the proceedings commenced in the IRCSA which gave rise to the present appeal, were not proceedings under the FW (SA) Act: Kronen at [29], [38]-[39]. Accordingly, s 69(13) of the Amending Act did not operate to transfer the proceedings to the SAET. 32 However, contrary to the submission of Qantas, that is not conclusive of the SAET's jurisdiction with respect to the employees' proceedings. 33 Regard must also be had to the provisions in s 545 of the FW Act governing the making of payment orders. Subsection (4), set out earlier in these reasons, provides that a court may make a payment order on its own initiative during proceedings before the court or "on application". 34 The FW Act does not contain any provision concerning specifically the manner in which an application may be made for the purposes of s 545(3). However, s 551 provides: 551 Civil evidence and procedure rules for proceedings relating to civil remedy provisions A court must apply the rules of evidence and procedure for civil matters when hearing proceedings relating to a contravention, or proposed contravention, of a civil remedy provision. 35 The effect of s 551, in conjunction with s 79(1) of the Judiciary Act, is that the laws of the State or Territory court relating to procedure are picked up and applied as surrogate federal law in the court's exercise of jurisdiction under s 545: Construction, Forestry, Mining and Energy Union v BHP Coal Pty Ltd [2015] FCAFC 25, (2015) 230 FCR 298 at [55]; Qube Ports Pty Ltd v Maritime Union of Australia [2018] FCAFC 72 at [105]-[107]. 36 The SAET Act does not contain any relevant provision concerning the manner in which applications are to be made to the SAET. However, rules (the South Australian Employment Tribunal Rules 2017) have been made in the exercise of the power conferred by s 92 of the SAET Act. Rule 20(1) requires all initiating applications to be in the approved form. Rule 20(2) also requires all other applications in relation to proceedings to be in the approved form. However, r 28 provides that applications may be made by informal means: 28. Oral applications Notwithstanding anything in the Rules, but subject to any express provision of the SAET Act or a relevant Act, an application for any direction or interlocutory or final order of the Tribunal, and any response, may be made orally or in such other manner as the Tribunal may, in the particular circumstances, determine to be fair and convenient. The Tribunal may make a determination under this rule subject to conditions, including requiring notice to be given to any other party. (Emphasis added) 37 In our opinion, it was open to the SAET to regard the email of 5 December 2017 from the solicitors for Qantas as an application to the SAET by the informal means for which r 28 provides. The parties indicated that it would be proper for the SAET to act on the basis of the 2016 reasons for this purpose. It can be inferred from the Deputy President's conduct in proceeding to make the requested orders, that he determined it to be "fair and convenient" to allow an application for final orders to be made to the SAET by the method of an email request. That inference can be drawn even if the Deputy President incorrectly assumed that the proceedings commenced by summons in the IRCSA had been transferred to the SAET. Accordingly, the SAET was properly seized of the employees' proceedings. 38 We add that, as the employees' proceedings cannot be bifurcated, the SAET was seized with all aspects of their claims. 39 It can also be inferred that the Deputy President made the 2017 orders in reliance on the parties' consent and in reliance on his findings in the 2016 reasons, in particular, the finding at [87] that Qantas had contravened s 50 of the FW Act. That is to say, the Deputy President was satisfied that the conditions enlivening the SAET's power to make orders contained in s 545(3) of the FW Act were satisfied. Qantas did not contend that it had not been open to the Deputy President in the SAET to be satisfied of the preconditions for the making of orders under s 545(3) of the FW Act by reference to the findings in the 2016 reasons and the evidence adduced in the proceedings in the IRCSA. It sought only to challenge the findings of the IRCSA founded upon that evidence and, in so doing, to challenge the 2017 orders. 40 For these reasons, we are satisfied that the 2017 orders were made by the SAET in the exercise of jurisdiction under the FW Act, and that the appeal by Qantas to this Court against those orders is competent. Ground 1 in the Amended Notice of Appeal fails. 41 For the same reasons, we reject the submission by Qantas that the employees' proceedings came to an end for all purposes on the dissolution of the IRCSA on 1 July 2017. Plainly they did not, as Qantas itself contemplated by the email from its solicitors to the Deputy President on 5 December 2017. 42 Had we not been satisfied that the SAET had jurisdiction to hear and determine the claims, we would have found, in accordance with the reasons in Kronen, that the employees' proceedings continued in the IRCSA and that, for the purpose of concluding those proceedings and any appeal, the IRCSA can be reconstituted - see s 16 of the Acts Interpretation Act 1915 (SA). 43 We will now address the substantive issues raised on the appeal.
(2015) 230 FCR 298
(2013) 216 FCR 197