Re Crown Employee (Household Staff - Department of Education and Training) Wages and Conditions Award [2012] NSWIRComm 85; Director of Public Employment (by her agent the Commissioner of NSW Fire Brigades) and New South Wales Fire Brigades Employees' Union [2008] NSWIRComm 158; (2008) 180 IR 170; Re State Rail Authority Firefighters Award 2001 [200] NSWIRComm 159; Zoological Parks Board of New South Wales and The Australian Workers' Union, New South Wales [2004] NSWIRComm 85; George A Bond & Co Ltd (in liquidation) v McKenzie

DECISION 1The genesis of this matter seems to have been an "ASU-USU Branch Grievance Notification Form Stage 1". This is a form used by delegates of the New South Wales Local Government, Clerical, Administrative, Energy, Airlines & Utilities Union ("USU") to raise grievances with the employer on behalf of members. The form named Liverpool City Council ("the Council") as the employer involved in the dispute. The form stated: Council has put the Litter & Rubbish/Dead Animal collection for the Western Area out to tender on a permanent basis. This work has been on trial and we only found out about this tender when an employee noticed the tender in the newspaper. This work has been performed by our staff for over 30 years and only due to staff shortages have we been unable to complete the work. Our previous Co-ordinator had the Litter Crews going out after lunch to clean one rural street per day and this reinstated the service to this area. We are short staffed because council formed the Mud Crew which took away two permanent staff (floaters) and created the OH&S officers position doing away with another Team Leaders position creating the shortage. 2The issue described in the grievance notification form was the subject of a dispute notification by the USU to the Commission dated 25 May 2012. The notification described the dispute in the following terms: a. In or around early 2011 Council put out a tender for the contracting out of work including litter removal and pick up of dead animals. b. This is work that has traditionally been performed by the Western Litter Crew employees. c. This tender was put out on a trial basis. d. There was no consultation regarding this. e. This was in breach of Clause 35 'Workplace Change and Redundancy' of the Local Government (State) Award 2010. f. Since February 2011 the Union and Council have been in correspondence regarding this matter and have had numerous meetings and have exchanged numerous letters. g. Council did not consult with the Union or with our members about the contracting out of the work once the trial period was over. Nor did Council take this matter to the Joint Consultative Committee as required in Clause 28 of the Local government (State) Award 2010. h. On 26 April 2012 Union members lodged a grievance with Council. i. Council informed the Union that it was not required to consult regarding the work as the work was "new work" and had not previously been performed by employees. This is incorrect. j. Approximately one week ago, the Union saw on Council's website that a tender had been out on a permanent basis for "rural roadside rubbish and dead animal removal." Applications for this tender closed on 26 April 2012. k. Neither the Union nor our members were informed of this tender by Council. l. This is in breach of Clause 36 'Competitive Tendering' of the Local Government (State) Award 2010. m. The Union seeks the assistance of the Commission in ensuring Council complies with its obligations under the Award. 3The dispute was the subject of conciliation proceedings before Ritchie C on 8, 18 and 27 June 2012 but these proved to be unsuccessful. 4On 27 June 2012, Ritchie C made a recommendation that "that the council should refrain from granting of a permanent contract to cover this work that's in question". The Commissioner issued directions for the filing of evidentiary material. At the conclusion of the proceedings the Commissioner issued a Certificate of Attempted Conciliation pursuant to section 135 of the Act. 5As a result of an urgent request from the Union, the matter was re-listed on 23 July 2012 at which time Ritchie C issued a Recommendation in the following terms: Recommendation (1)This matter was filed by the New South Wales Local Government, Clerical, Administrative, energy, Airlines & Utilities Union (the Applicant) as a dispute under section 130 of the Industrial Relations Act, 1996 with Liverpool City Council (the respondent) re competitive tendering. (2)The matter has been before the Commission on a number of occasions in an endeavour to settle the dispute. On the last occasion the Commission made a recommendation "that the council should refrain from granting of a permanent contract to cover this work that's in question". (3)A timetable for the filing and serving of evidentiary material was provided to the parties and hearing dates of 23 August 2012 and 19 September 2012 were allocated. (4)It is hoped that after discussions with the parties today, those dates can be varied and the matter can be heard on earlier dates. (5)The Commission brought the matter back on today as a consequence of receiving an urgent written request from the applicant seeking the matter be re listed. The reason being that "The Union notes that Liverpool City Council is holding a Council meeting tonight in which Council intends to put the disputed tender to vote". (6)Mr Barnes for the applicant stated that if the Council went ahead and awarded the contract it would effectively be prejudicial to the forthcoming proceedings as the contract is for three years. (7)He also stated that it may place the Council in breach of the Local Government (State) Award and in a form be a de facto lock out of the employees of this work. (8)Mr Nassif for the respondent reiterated what he had stated on the previous occasion that the respondent in accordance with Section 55 (3)(n) of the Local Government Act, and Regulation 163 (2), had to act as a consequence of the ceiling of the present contract of $150,000 being reached in August 2012, as well as local governments going into care taker mode in early August 2012 due to local elections taking place. (9)The Commission recognised that the respondent has these statutory constraints which it must adhere to. The Commission also recognises that the applicant has a right to have it's matter heard and determined. (10)It is both appropriate and logical that when parties come to a hearing before this Commission, they are on a level playing field with neither having an advantage over the other. (11)I therefore make these further recommendations in an endeavour to protect the interests of both parties and are accepted by parties on a without prejudice basis with respect to the forthcoming hearing. (12)I make the following recommendations: (i)That the respondent tonight refrains from making a determination with respect to the granting of a permanent contract for the work in question. (ii)That the work in the intervening time is done by the employees of the respondent on a temporary basis until this matter is heard and determined. (iii)That the General Manager of the respondent takes whatever action that is necessary to bring these recommendations to the attention of the Councillors of the respondent. 6The matter was originally listed for hearing before Ritchie C on 23 August and 19 September 2012. However, the parties sought an additional hearing date which the Commissioner could not accommodate because of his impending retirement. The file was subsequently re-allocated to the Commission as currently constituted and heard over five days during which evidence was received from sixteen witnesses. 7Subsequently, the dispute proceeded to arbitration. The relief sought by the USU was expressed to be in the following terms: The Commission, pursuant to its powers including pursuant to sections 136, 137, 138 and 175 of the Industrial Relations Act 1996 (NSW), makes the following orders, recommendations and/or directions, however described, that: 1. Liverpool City Council ("the Council') engaged in or about January 2011 in the following acts: (a) The Council forwarded requests for quotation on works for rural roadside maintenance and service; (b) The Council provided a "Specification for Rural Roadside Maintenance and Service", which was put out with the Council's request for quotations; (c) The Council received quotations from three companies; (d) The Council awarded the work to a contractor, and these acts fell within "competitive tendering" on the correct interpretation of clause 36(i) of the Local Government (State) Award 2010 ("the Award"). 2. The Council engaged in or about April 2012 in the following acts: (a) The Council issued the "Request For Tender For Contract ST 2114 Rural Roadside Rubbish and Dead Animal Removal"; (b) The Council received tenders; (c) The Council awarded the work to a tender bid, and these acts fell within "competitive tendering" on the correct interpretation of clause 36(i) of the Award. 3. In or about January 2011 and continuing the Council has contravened the obligations in sub-clauses (ii) and (iii)(a), (b), (c) and (d) of Clause 36 Competitive tendering of the Award. 4. The Council shall within one month comply with the Council's obligations in sub-clauses (ii) and (iii)(a), (b), (c) and (d) of Clause 36 Competitive Tendering of the Award. 5. The Council shall cease or refrain from engaging a tenderer or contractor to perform work under the "Request For Tender For Contract ST 2114 Rural Roadside Rubbish and Dead Animal Removal" unless and until the Council has complied with the Council's obligations in sub-clauses (ii) and (iii)(a), (b), (c) and (d) of Clause 36 Competitive Tendering of the Award. 6. In or about January 2011 and continuing the Council has contravened the duties in sub-clauses (i)(a) and (ii)(a) of Clause 35 Workplace Change and Redundancy of the Award. 7. The Council shall cease or refrain from engaging a tenderer or contractor to perform work under the "Request For Tender For Contract ST 2114 Rural Roadside Rubbish and Dead Animal Removal" unless and until the Council has complied with the Council's duties in sub-clauses (i)(a) and (ii)(a) of Clause 35 Workplace Change and Redundancy of the Award. 8. In or about January 2011 and continuing the Council has contravened clause 28 Consultative Committees of the Award in that it failed to consult with the Joint Consultative Committee regarding any decision to contract out the rural litter and dead animal collection services. 9. The Council shall within one month comply with the Council's obligations under Clause 28 Consultative Committees of the Award. 10. Such other Orders as the Commission deems appropriate. 8The parties agreed at the conclusion of their submissions in the arbitration proceedings that the Commission should make findings of fact regarding the matters in dispute and make findings regarding the interpretation of the disputed provisions in the Local Government (State) Award ("the Award"). The appropriate form of relief could then be considered with further proceedings before the Commission if that became necessary. The Commission will adopt that approach. 9As it will have been seen, the dispute concerns alleged breaches of clauses 28, 35 and 36 of the Award by Liverpool City Council ("the Council") in respect of the Council's decision to contract out work including litter removal and picking up dead animals initially on a trial basis in 2011 and then on a permanent basis in 2012. The Council denies such breaches.

Relevant Award provisions 10The relevant Award provisions are in the following terms: 28. CONSULTATIVE COMMITTEES A. AIM The parties to the Award are committed to consultative and participative processes. There shall be a consultative committee at each council which shall: (i) provide a forum for consultation between council and its employees; (ii) positively co-operate in workplace reform to enhance the efficiency and productivity of the council and to provide employees with access to career opportunities and more fulfilling, varied and better paid work. B. SIZE AND COMPOSITION (i) The size and composition of the consultative committee shall be representative of council's workforce and agreed to by council and the local representatives from the following unions: USU; depa and the LGEA and such agreement shall not be unreasonably withheld. (ii) The consultative committee shall include but not be limited to employee representatives of each of the unions who have members employed at council. (iii) Officers of the union(s) or Association(s) may attend and provide input to meetings of the consultative committee, at the invitation of the consultative committee or their respective members. C. SCOPE OF CONSULTATIVE COMMITTEES (i) The functions of the consultative committee shall include: (a) Award implementation (b) training (c) consultation with regard to organisation restructure (d) job redesign (e) salary systems (f) communication and education mechanisms (g) performance management systems (h) changes to variable working hours arrangements for new or vacant positions (i) local government reform (j) proposed variations to leaseback vehicle arrangements. (ii) The consultative committee shall not consider matters which are being or should be processed in accordance with Award clause 31 Grievance and Disputes Procedures. D. MEETINGS AND SUPPORT SERVICES (i) The consultative committee will make recommendations based upon consensus. Where there is no consensus on a particular item, the recommendation to council should note the dissenting views. (ii) The consultative committee shall meet as required. 35. WORKPLACE CHANGE AND REDUNDANCY (i) Council's Duty to Notify (a) Where a council has made a definite decision to introduce major changes in production, program, organisation structure or technology that are likely to have significant effects on employees, the council shall notify the employees who may be affected by the proposed changes and the unions to which they belong. (b) "Significant effects" include termination of employment, major changes in the composition, operation or size of the council's workforce or in the skills required, the elimination or diminution of job opportunities, promotion opportunities or job tenure, the alteration of hours of work, the need for retraining or transfer of employees to other work or locations and the restructuring of jobs. Provided that where the Award makes provision for the alteration of any of the matters referred to herein an alteration shall be deemed not to have significant effect. 36. COMPETITIVE TENDERING (i) Competitive tendering is the calling of tenders by council for the provision of service(s) that are currently being performed by council employees where council's in-house service unit submits a bid as well as external contractors. Council then makes its decision based on the tender bids about who will provide the service. (ii) Prior to making a decision to competitively tender a service, council shall notify and consult with the relevant union(s) which have members likely to be affected by the decision. (iii) (a) Where a council makes a definite decision to competitively tender a service council shall notify the employees who may be affected by the proposed tender of such services and the union(s) to which they belong. (b) Council shall discuss the competitive tendering process with the affected employee(s) and union(s) and give prompt consideration to matters raised by employee(s) and the union(s) to which they belong. (c) Discussions between council and the affected employee(s) and relevant union(s) shall commence as early as practicable after a definite decision has been made to competitively tender a service. (d) For the purposes of the discussion council shall provide to the employee(s) and the union(s) to which they belong, all relevant information about the tendering process including the nature of the service to be tendered, the proposed timetable for the tender of the service, the expected effects upon employee(s), a process for the formulation of an in-house bid and any other matters likely to affect the employee(s). (iv) Where a contract is won by an in-house bid, an agreement stating the duration and other relevant terms shall be entered into.

Evidence for the Union 11The USU's evidence, in addition to documentary material, included: (a) a colour coded map of Liverpool City Council suburbs; (b) a statement of Ms N Dabarera, Legal and Industrial Officer employed by the USU since March 2010; (c) a statement of Mr D Musso, a member of the West Litter crew for about 2 years. Mr Musso had been employed by the Council for five years. Mr Musso was required for cross-examination; (d) a statement of Mr G B Papagna, a member of the Western Litter Crew for three years. The Council had employed Mr Papagna for about five years. Mr Papagna was required for cross-examination; (e) a statement and statement in reply of Mr R W Stokes, Team member - Waste Services. The Council had employed Mr Stokes for about six years. Mr Stokes worked on the Western Litter Crew for about three years. His understanding was that there were three litter crews: Western, Eastern and Central. Mr Stokes was required for cross-examination; (f) a statement of Mr R Woods. Mr Woods was Assistant Coordinator in Cleansing and Waste and union delegate and since 2011 Workplace Health and Safety Officer. The Council had employed Mr Woods for 12 years. Mr Woods was aware of three litter crews: Western, Eastern and Central; (g) a statement and statement in reply of Mr H M Wojciechowski, whose role at the time he gave his evidence was Team Leader, Household Waste. The Council had employed him since 2001. Mr Wojciechowski stated that, during his employment with the Council, he worked as a member of the Western Litter Crew. Mr Wojciechowski was required for cross-examination; (h) a statement and statement in reply of Mr D Roberts, Waste Labourer. The Council had employed Mr Roberts for nine years. During his employment he worked as a member of the Western Litter Crew. Mr Roberts was required for cross-examination; (i) a statement of Mr K F Kelly, Waste Labourer. The Council had employed Mr Kelly for 15 years. In that time he worked as part of the East Liverpool Litter Crew. Mr Kelly was required for cross-examination; (j) a statement and statement in reply of Mr G Svirevic, Waste Labourer. The Council had employed Mr Svirevic for 18 years. In that time he worked as part of the Central Litter Crew; (k) a statement and statement in reply of Mr F Belli, Team Member, Waste Services. The Council had employed Mr Belli for six years. Mr Belli was aware of three litter crews: Western, Eastern and Central. Mr Belli was required for cross-examination; (l) a statement and statement in reply of Mr G E Jones, Street Sweeper. The Council had employed Mr Jones for 11 years. Mr Jones was aware of three litter crews: Western, Eastern and Central. Mr Jones was not required for cross-examination; (m) a statement and statement in reply of Mr C P Gill, organiser with the USU. Mr Gill had been employed by the USU for three years. It was Mr Gill's understanding the Council had three litter crews: Western, Eastern and Central. Mr Gill was required for cross-examination.

Evidence for Council 12The Council's evidence, in addition to documentary material, included the following: (a) an affidavit of Mr D J Tuxford, Director of City Services for the Council. The Council had employed Mr Tuxford since December 2003, commencing as Manager Corporate Services. Mr Tuxford deposed there was no crew whose sole purpose was to service the Western area. That area had been serviced on an "ad hoc basis". Mr Tuxford was required for cross-examination; (b) an affidavit of Mr G J Hope, Coordinator of Cleansing and Waste. Mr Hope commenced employment with the Council in that role in August 2011. Mr Hope was required for cross-examination; (c) an affidavit of Ms S A Kubecka, Manager, Recreation Maintenance and Cleaning. Ms Kubecka had been employed by the Council since 1995. Ms Kubecka deposed that to her knowledge Council employees had not undertaken works in the rural area on a regular basis but rather it was done ad hoc. Ms Kubecka was required for cross-examination; (d) an affidavit of Mr D J Gibson, Director, Workplace Solutions Division, Local Government and Shires Association of NSW. Mr Gibson was not required for cross-examination.

Applicant's submissions 13Ms Natalie Dabarera, USU Industrial Officer, gave evidence that she had assessed all the material provided by Council in response to a summons and could not find any documents relating - - to a decision by the elected Council to contract out the services provided by the Western/Rural Litter Crew on a trial basis. - to a cost/benefit analysis, or a comparison, of providing the Western/Rural Litter Crew services in house as opposed to contracting it out; and - when Council either informed or consulted with the Joint Consultative Committee regarding the decision to contract out the services of the Western/Rural Litter Crew on a trial or ongoing basis. 14The case for the applicant may be summarised as follows: (a) Council contracted out work including litter removal and picking up dead animals initially on a trial basis in 2011 and then on a permanent basis in 2012. The work was to be done in an area referred to from time to time as the "Western Area". Specifically, the area was described in the "Request for Tender" issued by the Council in 2012 as: "All roads, road reserves and nature strips within the area bounded by Elizabeth Drive to the North, The Northern Road to the west, Bringelly Road to the south and the Sydney Water Supply Canal/28th Ave to the East. Also Greendale road (sic) and all roads branching from Greendale Rd within the Liverpool LGA" (b) the work that was contracted out was work performed by Council employees over many years on a regular basis and was being performed by Council employees at the time the work was contracted out; (c) pursuant to cl 36 of the Award the contracting out in 2011 and 2012 should have been the subject of competitive tendering whereby services that were currently being performed by Council employees were put out to tender and Council's in-house service unit submitted a bid as well as external contractors. Prior to making a decision to competitively tender a service, Council must notify and consult with the relevant union which has members likely to be affected by the decision; (d) Council failed to comply with cl 36 in that it did not put the service out to competitive tender and did not consult or notify the USU. Council is in breach of cl 36; (e) having made a definite decision to introduce major changes likely to have significant effects on employees, the Council failed to notify the employees who may be affected by the proposed changes and the unions to which they belong. Consequently, the Council failed to comply with cl 35 of the Award; (f) Council contravened cl 28 of the Award in that it failed to consult with the Joint Consultative Committee regarding any decision to contract out the rural litter and dead animal collection services.

Respondent's submissions 15The respondent's submissions may be summarised as follows: (a) prior to the contracting out there were limited roads, streets, etc, in the Western Area cleaned by Council employees on a programmed basis but mostly it was done on an ad hoc or needs basis; (b) prior to the contracting out, Council employees did not regularly clean all roads in the Area contracted out; (c) the contract requires the removal of all rubbish, dead animals etc on "all roads", etc in the designated area on a "2 weekly cycle"; (d) the fact that the work has been contracted out has meant a significant improvement in the service; (e) no employee has had their employment terminated as a consequence of the contracting out; (f) the Council continues to have three litter crews including one called the western crew with a truck and two employees (Mr Musso and Mr Papagna); (g) Mr Musso and Mr Papagna, the two employees potentially most affected by the contracting out, continue to be engaged on a programmed basis removing litter and dead animals, albeit in a smaller region of the Western Area than that over which they were previously engaged on an ad hoc basis. In respect of the Western Area they continue to perform some litter functions on an as required basis i.e., picking up dead animals and larger rubbish. They continue to drive the same vehicle. Prior to the contracting out, the litter collection work of these two employees west of the Sydney Water Canal was done on an ad hoc basis and was a minor aspect of the work performed by them; (h) the services carried out by Council employees prior to the contracting out were materially different to the services that were contracted out in that the services provided by Council employees were mainly on an unsatisfactory ad hoc or needs basis whereas the contracting out requires a systematic service to be provided on a 2 weekly cycle covering all roads, etc in the Western Area; (i) the process of competitive tendering envisaged by the USU and its members is that employees would not be tendering for the work themselves, but in effect the Council would be required to competitively tender with itself by comparing the cost of contracting out with the cost of doing it in-house; (j) there was no breach of cl 28 of the Award because there was no obligation on Council to refer any matter to the Consultative Committee, as the contracting out was not part of the function of the Committee (see cl 28(C)(i)); (k) there was no breach of cl 35 of the Award because there was no major change likely to have a significant effect on employees; (l) cl 36 does not apply to all contracting out by Council, but only to that contracting out that falls within the definition of "competitive tendering" in the clause. The contracting out that occurred in 2011 and 2012 was not competitive tendering because: (i) there must first be an in-house bid and Council did not, at its discretion, seek such a bid; and (ii) the services that were contracted out were not "services that are currently being performed by council employees". Accordingly, the Respondent submitted, there was no breach of cl 36.

Principles of interpretation 16These proceedings require disputes about facts to be resolved, but they also require the Commission to interpret the Award. In respect of this latter function the Commission derives its power to do so from s 175 of the Industrial Relations Act 1996, which provides: 175 Powers of interpretation The Commission may, for the purpose of exercising its functions in connection with a matter before it, determine any question concerning the interpretation, application or operation of any relevant law or instrument (including the industrial relations legislation and any industrial instrument). See also Re Crown Employee (Household Staff - Department of Education and Training) Wages and Conditions Award [2012] NSWIRComm 85 at [40]-[43] ("HouseHold Staff Award"). 17There appeared to be no issue between the parties as to the relevant principles to be applied in approaching the task of award interpretation as the principles are well known and, in that respect, I refer to the decision of Boland J, President in the HouseHold Staff Award at [42]-[43], Director of Public Employment (by her agent the Commissioner of NSW Fire Brigades) and New South Wales Fire Brigades Employees' Union [2008] NSWIRComm 158; (2008) 180 IR 170 at [37] to [46], Re State Rail Authority Firefighters Award 2001 [200] NSWIRComm 159 at [22]-[32] and Zoological Parks Board of New South Wales and The Australian Workers' Union, New South Wales [2004] NSWIRComm 85 at [43]-[47]. 18In Fire Brigades, the Full Bench at [42] identified four principles to be applied in connection with the interpretation of an award, which may be interpolated as follows: (1) award construction must involve a purposive approach. That is to say, a construction that would promote the purpose or object underlying the award (whether or not that purpose or object is expressly stated in the award) shall be preferred to a construction that would not promote that purpose or object. However, in interpreting an award a tribunal must determine what was meant by the words used, not what the framers of the award intended to say. What is involved is the search for an objective intention of the framers of the award, not their subjective intention; (2) it is the context to be considered in the first instance, not merely at some later stage when ambiguity might be thought to arise, and context is used in its widest sense to include such things as the existing state of the law and the mischief which, by legitimate means one may discern the award was intended to remedy; (3) extrinsic materials may be considered for certain specified purposes in ascertaining the meaning of legislation: see s 34 of the Interpretation Act 1987. However, the content of any extrinsic material cannot be used to simply rewrite the terms of the statutory provision; (4) whilst awards are instruments to be construed according to the terms of the Interpretation Act, consideration should be given to the differences between statutes and awards. "[I]t must be remembered that awards are made for the various industries in the light of the customs and working conditions of each industry, and they frequently result, as this award in fact did, from an agreement between parties, couched in terms intelligible to themselves but often framed without that careful attention to form and draughtsmanship which one expects to find in an Act of Parliament": George A Bond & Co Ltd (in liquidation) v McKenzie [1929] 28 AR (NSW) 498 at 503. 19At [47] the Full Bench stated: [47] ... In interpreting the provisions of an award the intention of the drafters must be ascertained by reference to the actual words used (and those words should be given their plain, ordinary meaning), thereby disclosing the underlying purpose or object of the award and its context, using that term in its broadest sense, including extrinsic material. Thus, attention must at all times be given to the meaning and effect of the award as it appears from the plain and ordinary meaning of the words used: see Zoological Parks at [43]. It is not permitted to attach to a provision of an award a meaning which the words of the award cannot reasonably bear: Cooper Brookes (Wollongong) Pty Ltd v The Commissioner of Taxation of the Commonwealth of Australia [1981] HCA 26; (1981) 147 CLR 297 at 321 (per Mason and Wilson JJ).

Underlying purpose of cll 28, 35 and 36 20Having regard to cll 28, 35 and 36 of the Award, one can discern an underlying purpose as being to require the employer, within certain parameters, to notify and consult with employees in relation to decisions taken, or to be taken, by the employer that may have an impact on employees.

Clause 36 21The Competitive Tendering Guidelines (the Guidelines) issued in January 1997 by the Department of Local Government contains an introduction from the then Minister for Local Government, Mr Ernie Page, MP, who confirmed that "It is also essential that councils consult closely with employees, local government unions and the communities they represent before final decisions are made." 22In relation to cl 36 the requirement to notify and consult is clear where there is a "calling of tenders by Council for the provision of service(s) that are currently being performed by Council employees where Council's in-house service unit submits a bid as well as external contractors." 23Clause 36 is, however, poorly and inadequately drafted. For example, what is an "in-house service unit"? Is it the employees themselves who put in a competitive tender? If so, is it the employees who then perform the service if they win the tender? How is that to be reconciled with their duties and obligations towards the employer? Is it a matter in the Council's discretion as to whether there will be an in-house bid? Is a competitive tender something different to contracting out? Almost inevitably such poorly drafted provisions lead to disputes, as evidenced by the current proceedings. 24Because of the poor drafting, the purpose of cl 36 is obscured. In my opinion, however, the purpose is to provide the opportunity for in-house providers of Council services, including employees, to compete with external providers where the Council decides to put out a service performed by employees to competitive tender. Prior to Council making a decision to put out a service to competitive tender, a Council is required to notify and consult with the relevant union that has members likely to be affected by the decision. Clause 36(iii) then requires further notification and consultation if the Council makes a definite decision to competitively tender a service. 25The steps contemplated by cl 36 would appear to be as follows: (a) Council considers whether it should put out to competitive tender a service performed by council employees; (b) prior to making a decision to competitively tender a service, Council shall notify and consult with the relevant union; (c) having notified and consulted in accordance with (b) above, a Council may make a definite decision to competitively tender a service. If it does so, it must then notify the employees who may be affected by the proposed tender of such services and the union(s) to which they belong; (d) having made a definite decision to competitively tender a service: (i) the Council shall discuss the competitive tendering process with the affected employee(s) and union(s) and give prompt consideration to matters raised by employee(s) and the union(s) to which they belong. (ii) discussions between Council and the affected employee(s) and relevant union(s) shall commence as early as practicable after a definite decision has been made to competitively tender a service. (iii) for the purposes of the discussion Council shall provide to the employee(s) and the union(s) to which they belong, all relevant information about the tendering process including the nature of the service to be tendered, the proposed timetable for the tender of the service, the expected effects upon employee(s), a process for the formulation of an in-house bid and any other matters likely to affect the employee(s); (e) once the consultation and discussion referred to above has occurred between Council and its employees and their union, the Council instructs its in-house service unit to put in a bid; (f) Council then makes its decision based on the tender bids about who will provide the service; (g) where a contract is won by an in-house bid, an agreement stating the duration and other relevant terms shall be entered into.

Competitive tendering 26The term "competitive tendering" is given a special or technical meaning in the Award. The term is not to be construed in accordance with its ordinary meaning, but in accordance with the way it is defined in the Award, that is, "...the calling of tenders by council for the provision of service(s) that are currently being performed by council employees where council's in-house service unit submits a bid as well as external contractors." 27In other words, the Award limits the meaning of "competitive tendering" to circumstances where tenders are called by the Council from external contractors and where the in-house service unit also puts in a bid. If the in-house service unit does not put in a bid, there is no competitive tendering under the Award. 28The reference to "council's in-house service unit" suggests to me that Council has set up, or may set up, a unit within Council for the purpose of organising/coordinating a bid to compete with external providers where Council has made a definite decision to put a service out to competitive tender. That is to say, the unit is set up by the Council and subject to Council's direction and control. If no instruction comes from Council to its in-house service unit to put in a bid, then there cannot be "competitive tendering" as defined by the Award. 29There is no evidence in this case that an in-house service unit even existed within the Council, let alone that Council instructed its in-house service unit to put in a bid for litter/dead animal collection. There was no evidence of any in-house bid having been made that would give rise to a competitive tender within the meaning of cl 36. Accordingly, in the absence of competitive tendering as defined in cl 36 of the Award, there was no obligation on the Council to notify and consult with unions and/or employees. 30It is clearly the case that Council decided that rather than put litter/dead animal collection in the Western Area out to competitive tender, it decided to simply contract that work out to an external contractor. It did so through a tender process, but not one defined by the Award. 31The USU submitted that unless cl 36 was construed in accordance with its contentions, the clause would have no work to do. However, it cannot be the case that each time a council wished to contract out a service, no matter how large or small, it was required to do so in accordance with cl 36 and put in an in-house bid in relation to the service. 32To adopt such a construction would impose an unduly onerous obligation on Councils. In my opinion, the construction that reflects the intent of the clause is the one I have given it and that means the discretion as to whether a service should be the subject of an in-house bid lies with the Council. Where the Council exercises its discretion to make an in-house bid, cl 36 will have work to do. 33That opinion is supported in the Guidelines where the Minister for Local Government, in his introduction, states that, in introducing competition reform in local government, Councils have been "given flexibility and autonomy so as to reap the most from the ongoing reform process". That discretion is provided in order that Councils may take "advantage of the competitive marketplace in an attempt to obtain the best value for the community."

Service performed by Council employees 34If I am wrong about the discretion lying with Councils as to whether an in-house bid will be made, cl 36 requires that the competitive tender must be "service(s) that are currently being performed by council employees". 35The contracting out occurred in 2011 and 2012. In 2011 the contracting out was for a trial period only for 12 months. It was done on a more permanent basis in 2012. 36The services that were contracted out were: Removing rubbish (individual items and or dumped piles of no more than one cubic metre) and or dead animals (dead animals up to and under 30 kg) on all rural roads, roadsides (i.e. edge of tar road surface to the nature strip) and nature strips in the map attached. ... Each road, roadside and nature strip identified on the attached map must be serviced once every two weeks. Dead animal/s must be removed within 2 days of receiving notification from Council regardless of program schedule. 37The area ("the Western Area") in respect of which the services were to be provided was defined as follows: All roads, road reserves and nature strips within the area bounded by Elizabeth Drive to the North, The Northern Road to the west, Bringelly Road to the south and the Sydney Water Supply Canal/28th Ave to the East. Also Greendale road (sic) and all roads branching from Greendale Rd within the Liverpool LGA 38The motivation for contracting out in 2011 appears to be related to a less than satisfactory service provided by Council in relation to rural areas. A proposal was put to Council for funds to enable the purchase of plant and equipment and the employment of additional personnel in order to provide an improved service for the rural areas within the Council's responsibility. Limited funds only were provided and a decision was made to contract out the services on a trial basis. No consultation about this decision occurred with the USU or its members. 39The USU did raise concerns with the trial contracting out during 2011. Nevertheless, Council took a decision to contract out the services earlier described on a permanent basis and the Council issued a Request for Tender, with bids closing on 26 April 2012. Subsequently, a contractor was engaged. The placing of the tender was not advised to the USU or its members. 40It was the evidence of Mr Tuxford and Ms Kubecka that all of the work in the Western Area was done on an ad hoc basis and there was no such thing as a Western Litter Crew. Mr Tuxford stated: ... What I am saying is that the western area was serviced on an ad hoc basis through customer requests. There were no programmed rubbish removal out in the west... ... What I'm saying is that it was not a western litter crew. So if he was out there picking up the rubbish it would have been under the direction of the then co-ordinator to go up, go out and pick up rubbish...and that would have been through... the customer request system. 41Ms Kubecka stated: To my knowledge council employees had not undertaken works in the rural area on a regular basis. Council staff were performing some tasks in the rural areas on an adhoc basis as complaints were received and program availability occurred.... 42The evidence about whether litter/dead animal collection in the Western Area was done on a regular programmed basis or on an ad hoc basis was not entirely straightforward. I am not inclined, however, to accept the unequivocal statements of Mr Tuxford and Ms Kubecka that all of the work was done on an ad hoc basis and that there was no such thing as a Western Litter Crew. There were documents in evidence that referred to "West Litter Crew" and documents referring to litter pick up programs in the Western Area. Whether these were "official" Council documents or documents used unofficially by cleaning crews would seem to be neither here nor there. Council should have been aware of them because they reflect what was occurring on the ground. 43In my opinion, the evidence taken as a whole shows that prior to the contracting out, Council employees were involved in the Western Area in collecting litter and dead animals. However, it was only a minority of that work that was carried out on a regular, rostered or programmed basis. The bulk of it was done on an ad hoc or needs basis. This ad hoc approach to collecting litter and dead animals was an arrangement that was found to be unsatisfactory and inefficient and attracted complaints from residents; it was not a systematic "whole of area" servicing of a large sector of the Council's rural responsibility. 44The finding that most of the work performed by Council employees prior to contracting out was on an ad hoc basis is supported by the following evidence: (a) Mr Musso was not doing programmed work collecting litter but for Edmondson Avenue, Devonshire Road and Cross Road in Austral. These constituted a small proportion of the roads in the Western Area; (b) Mr Papagna did not perform programmed litter collection work prior to the contracting out; (c) Mr Woods, a Union delegate and co-delegate over the last eleven years, gave evidence that work in the Western Area was not done on a programmed basis, but rather on the basis that when employees had completed their assigned work (such as around shopping centres, school fronts and crossings) they would be required to clean up specific roads in the Western Area; (d) Mr Stokes agreed in cross-examination that programmed work in connection with litter collection was limited to about four or five roads as he could recall roads in the Western Area. 45It is true that Council employees performed the work of litter collection and dead animal collection in the Western Area prior to the decision to contract out. However, I do not think that one is able to take the approach that if Council employees performed the work of litter/dead animal collection that work is to necessarily be regarded as a service. In the context of cl 36, I regard the use of the term "service(s)" as connoting an organised system designed to meet the needs of the community that the Council serves on a regular and consistent basis. 46An arrangement whereby litter/dead animal collection occurs as a consequence of a resident's complaint or where the collection occurs only occasionally on an ad hoc basis or haphazardly, falls short in my view of being able to be regarded as an organised system designed to meet the needs of the community on a regular and consistent basis. 47If the parties to the Award had intended that work previously performed by Council employees could be the subject of competitive tendering rather than the more limited notion of a service, then it would have been a simple matter of wording cl 36(i) to read: Competitive tendering is the calling of tenders by council for work that is currently being performed by council employees... 48The work performed by Council employees was not an all-embracing, systematic, regular service of litter/dead animal collection that was required to address every road, etc, in the Western Area so that the objective was that road, etc, was to be cleaned every two weeks. Granted, there were some areas that were addressed on a regular, programmed basis, but clearly that was limited and unsatisfactory. 49The service to be contracted out required additional plant, and equipment and labour in order for it to be performed. The nature and quality of the service that the Council contracted out was materially different to the work performed by Council employees. 50Accordingly, the pre-condition in cl 36 that the service of litter, etc., collection was one performed by Council employees was not satisfied.

Clause 35 51Clause 35 of the Award provides that where a Council has made a definite decision to introduce "major changes" in production, program, organisation structure or technology that are likely to have "significant effects" on employees, the Council shall notify the employees who may be affected by the proposed changes and the unions to which they belong. "Significant effects" is defined to include: [T]ermination of employment, major changes in the composition, operation or size of the council's workforce or in the skills required, the elimination or diminution of job opportunities, promotion opportunities or job tenure, the alteration of hours of work, the need for retraining or transfer of employees to other work or locations and the restructuring of jobs. Provided that where the Award makes provision for the alteration of any of the matters referred to herein an alteration shall be deemed not to have significant effect. 52The issue is whether the contracting out of litter/dead animal collection in the Western Area was a major change in program and/or organisation that had significant effects on employees. 53The contracting out certainly involved change to program and/or organisation. However, as the Respondent submitted, the contracting out only affected Mr Musso and Mr Papagna. Yet both employees remain employed by Council. Moreover, both employees continue to work on a litter crew albeit in a smaller region than previously was the case. They continue to drive the same vehicle and still perform some litter functions over the whole Western Area on an as required basis collecting dead animals and picking up larger rubbish. They both work out of the same depot with the same fellow employees and same coordinators. 54One could not describe the contracting out as a major change having significant effects on employees. As the Respondent submitted: (a) no employee's employment was terminated as a consequence of the contracting out; (b) no major changes occurred in the composition, operation or size of the Council's workforce or in the skills required, (c) there was no elimination or diminution of job opportunities, promotion opportunities or job tenure; (d) there was no alteration of hours of work, (e) there was no need for retraining; (f) the transfer of employees to other work or locations and the restructuring of jobs was relatively minor and affected only two employees. 55The contracting out of the litter/dead animal collection service in the Western Area was a relatively minor change to the Council's operations. Its impact on employees is barely discernible.

Clause 28 56The Respondent is correct in its submission that there is no obligation on the Council to refer any matter to the Consultative Committee under cl 28 of the Award. Clause 28(C)(i) provides a list of matters that are referred to as the "functions" of the Consultative Committee. It is debatable whether cl 28(c)(i)(c) or (d) applies, although I think it would be putting it too highly to regard the contracting out of litter etc., collection as "organisation restructure" or "job redesign" given the very limited impact on employees of the changes. 57Although, strictly speaking, there was no obligation under the Award for Council to notify the USU or its employees of the decision to contract out the litter/dead animal collection service in the Western Area, I would proffer the opinion that it would have been industrially sensible to do so and, in the course of doing so, to explain the minimal impact on employees. Perhaps in that way the dispute could have been avoided before the parties took up entrenched positions. That opinion is supported by the Competitive Tendering Guideline which, under the heading "Overview and Aim of the Guideline" states: The decision to competitively tender services is best made by each council, after assessing all relevant local circumstances, and in partnership with staff, local government unions and the community...:

Directions 58It should be obvious from the terms of my decision that I would not grant the relief sought by the USU. Nevertheless, in accordance with the understanding I earlier set out, I will refrain for the time being from making orders. 59Either party is given liberty to apply in accordance with this decision on 14 days' notice.

COMMISSIONER 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: 28 October 2013