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Federal Court of Australia |
Last Updated: 18 May 2001
Schanka v Employment National (Administration) Pty Limited [2001] FCA 579
INDUSTRIAL LAW - representative proceeding - Australian Workplace Agreements ("AWAs") - duress - illegitimate pressure - abolition of Commonwealth Employment Service ("CES") - creation of competitive market for provision of employment placement services - offer of employment to employees of CES by company formed by Commonwealth to participate in employment placement services market - offer conditional on entry into AWA
WORDS AND PHRASES - "duress"
Workplace Relations Act 1996 (Cth) s 170WG(1)
Public Service Act 1922 (Cth) s 81C
Schanka v Employment National (Administration) Pty Ltd (1999) 166 ALR 663 followed
Schanka v Employment National (Administration) Pty Ltd [2000] FCA 202; (2000) 97 FCR 186 followed
Maritime Union of Australia v Burnie Port Corporation Pty Ltd (2000) 101 IR 435 distinguished
PETER SCHANKA, ERICA ALDRIDGE, RICHARD WALDEN AND JAMES BURNS v EMPLOYMENT NATIONAL (ADMINISTRATION) PTY LIMITED (ACN 080 046 411)
NG 461 OF 1998
MOORE J
18 MAY 2001
SYDNEY
IN THE FEDERAL COURT OF AUSTRALIA |
|
NEW SOUTH WALES DISTRICT REGISTRY |
1. The parties prepare and serve short minutes of orders to give effect to these reasons within seven days.
2. The application be stood over until 9.00am Friday 1 June 2001 or such other time as the Court may direct.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA |
|
NEW SOUTH WALES DISTRICT REGISTRY |
JUDGE: |
MOORE J |
DATE: |
18 MAY 2001 |
PLACE: |
SYDNEY |
Introduction
1 These proceedings now have a lengthy history. On 15 May 1998 an application was filed under s 170VV of the Workplace Relations Act 1996 (Cth) ("WR Act") alleging contravention of s 170WG by Employment National (Administration) Pty Ltd ("ENA"). Section 170WG provides that it is an offence to apply duress to an employee in connection with an Australian Workplace Agreement ("AWA") which is an agreement regulated by the WR Act concerning terms and conditions of employment and made by an employer and an individual employee. The applicants were named individuals and the Community and Public Sector Union ("CPSU"). The proceedings were instituted as representative proceedings under Part IVA of the Federal Court of Australia Act 1976 (Cth) ("FC Act").
2 On 31 July 1998 ENA filed a notice of motion raising several issues. The principal issue was whether an order should be made under s 33N of Part IVA of the FC Act that the proceedings no longer continue as a representative proceeding. It was agreed, during the hearing of that notice of motion, that the CPSU should not be a party to the proceedings. Of the named applicants Mr Peter Schanka, Ms Erica Aldridge and Mr Richard Walden indicated they wished to continue as applicants. Mr James Burns was later added as an applicant by order of the Court.
3 It was alleged by the applicants that a significant number of Commonwealth employees employed in the Australian Public Service ("APS") had been offered employment with ENA on the condition that they enter an AWA and, in the circumstances, this constituted duress. The gravamen of the submissions of ENA in the notice of motion was that the proceedings could not continue as a representative proceeding because the applicants' allegation required a consideration of the individual circumstances of each person who was said to have been subjected to duress and consideration of the quality of each individual's consent to make or enter an AWA. Plainly the application under s 33N raised even if only on a preliminary basis, the legal issue of what was comprehended by duress in s 170WG. An order was made on 9 September 1998 dismissing the application under s 33N: see (1998) 86 IR 283.
4 ENA sought leave to appeal against that order. The application for leave was heard by a Full Court on 1 March 1999. What occurred at that hearing and later when the matter returned to my docket is recounted in a later judgment I gave: (1999) 166 ALR 663 at 669:
"Employment National (Administration) Pty Ltd (ENA) sought leave to appeal against the judgment of 9 September 1998. The application for leave to appeal was heard by a Full Court on 1 March 1999. The parties have since provided me with a copy of the transcript of the proceedings before the Full Court. What emerges from the transcript is that members of the Full Court raised with the parties the prospect of a question or questions being formulated that would address issues of concern to both parties. In the result, agreement was reached between the parties that I would determine certain preliminary questions. They are recorded in the following extract from the transcript:`The court: Very well. The court notes the following agreement of the parties that the docket judge determine as a preliminary question and separately from any other questions in the proceeding whether on the proper interpretation of s 170WG(1A), a person can ever be said to have applied duress to an employee in connection with an AWA by requiring the employee to make an AWA as a condition of appointment to the employment be duress or whether duress in s 170WG(1) is limited to the conduct of the alleged perpetrator. Secondly, that the standing of Mr Burns as an applicant be determined by the docket judge at the same time as the question set out above.'
Having noted that agreement, the Full Court then refused the application for leave to appeal from the earlier judgment and did so by consent.
The matter came before me as docket judge on 25 March 1999. I heard brief submissions from the parties and made orders, the terms of which were provided by the parties, designed to facilitate the further hearing of the matter. Those orders included an order:
`1. The following question be determined as a preliminary question in the proceedings:
On the proper interpretation of s 170WG(1):
(a) can a person ever be said to have applied duress to an employee in connection with an AWA by requiring the employee to make an AWA as a condition of appointment to the employment; and
(b) is duress in that section limited to the conduct of the alleged perpetrator.'
I also ordered that the standing of Mr Burns as an applicant be determined at the same time as the determination of the preliminary question. On 24 March 1999 the High Court gave judgment in Bass v Permanent Trustee Co Ltd [1999] HCA 9; (1999) 161 ALR 399. In that matter the court considered the circumstances in which it was appropriate for a court to undertake the preliminary determination of questions of law formulated by the parties. I was, having regard to that judgment, concerned to ensure that the procedure that had earlier been agreed during the hearing of the appeal was consistent with the approach of the High Court. To that end I invited submissions from the parties which I heard on 28 April 1999 and I was satisfied that the matter could proceed on the agreed basis. However, it became apparent at that hearing on 28 April 1999 that there was likely to be a difference between the parties about the meaning of the preliminary question I had earlier ordered be answered. In particular, counsel for ENA viewed para (a) as raising the question of whether the mere act of requiring an employee to make an Australian Workplace Agreement (AWA) as a condition precedent to employment could involve the application of duress. For the applicants' part, the question was one that would, even if answered in the affirmative, allow for a consideration of the factual circumstances in which the offer of employment and the imposition of the condition precedent occurred. The applicants' position was that the question was intended to raise the issue of whether it was the conduct of the alleged perpetrator which would establish a contravention of s 170WG and contravention did not require proof of the actual response or reaction of the employee to that conduct.
Counsel for ENA submitted that the facts sufficient to enable the question to be answered had been admitted by ENA. The admitted facts were:
1. That all persons (save for managerial or executive employees) who were offered employment with the respondent in the period from about February to May 1998 inclusive and who were at the time of the said offer employees of the Commonwealth were offered employment by way of a letter which, in so far as it dealt with the requirement to enter into an AWA, was in substantially the same terms as annexure VC1 or VC4 to the affidavit of Vivienne Colmer or annexure RH4 to the affidavit of Rod Halstead dated 31 July 1998.
2. That all persons offered employment as described in paragraph (1) above in order to accept such employment were required to sign the letter referred to in paragraph (1) above.
It should be noted that apart from these admitted facts the position remains the same as I described it in my reasons for judgment of 9 September 1998. That is, the background I described in the quoted extract is to be gleaned from affidavits filed by both the applicants and ENA but which has not yet been tested. The facts are not agreed."
5 On 24 September 1999 I gave judgment: (1999) 166 ALR 663, on the questions effectively remitted to me by the Full Court though they were reformulated for reasons I gave at 681:
"However, the question is not, in my opinion, as precise as it might be having regard to the way the issues have developed and been refined during argument. A court can, of its own motion, reformulate a question: see Attorney-General (Cth) v Breckler [1999] HCA 28; (1999) 163 ALR 576. Subject to any submissions being made in opposition to a reformulation of the questions, I propose to vary the order I made on 25 March 1999 so as to read:1. The following questions be determined as preliminary questions in the proceedings:
(a) Can a person, by their conduct, contravene s 170WG(1):
(i) before an AWA is made by the person to whom the conduct was directed;
(ii) irrespective of whether an AWA is made by a person to whom the conduct was directed; or
(iii) if an AWA is not made by a person to whom the conduct was directed.
It follows from the reasons given that I would answer each of the above in the affirmative and allow Burns to be a party to the proceedings. If Burns never intended to make an AWA, a fact asserted by ENA in its submissions, and that was known to ENA, then it may be that ENA, by its conduct, could not have intended Burns to make an AWA against his free will. However, even if that is so, it does not, as the facts are presently proved or agreed, deny him standing."
6 ENA appealed against the determination of these preliminary questions. On 3 March 2000 the Full Court granted leave to appeal but dismissed the appeal: [2000] FCA 202; (2000) 97 FCR 186. An application for special leave to appeal from the Full Court's judgment was dismissed by the High Court on 24 November 2000. During 2000, the matter remained in my docket and issues arose about the adequacy of the pleadings and the nature of the proceedings resulting in one interlocutory judgment of 2 June 2000 concerning the statement of claim: [2000] FCA 730. The hearing of the matter commenced on 27 November 2000 but a successful, though late, application to further amend the pleadings resulted in the hearing being adjourned until January-February 2001 when it concluded.
7 Before turning to consider the evidence, it is convenient to summarise the general background by repeating a summary in my judgment of 9 September 1998 ((1998) 86 IR 283 at 284):
The Commonwealth Employment Service ("CES") was an agency of the Commonwealth engaged in placing people in employment whether employed or unemployed. It operated within the administrative structure of the Department of Employment, Education, Training and Youth Affairs ("DEETYA"). Commonwealth employees engaged in CES's operations were employed under the Public Service Act 1922 (Cth) ("PS Act") and their terms and conditions of employment were predominantly regulated by the Australian Public Service, Administrative Services Officers (Salaries and Specific Conditions) Award 1995 and the Australian Public Service, General Employment Conditions Award 1995. Executives in the CES had their terms and conditions of employment regulated by the Australian Public Service, Senior Executive Service (Salaries and Specific Conditions) Award 1995.In August 1996 the Australian Government announced that a new competitive market would operate in relation to the provision of employment placement services. It announced that there would be a publicly owned provider competing in the new market and CES would cease operations. To that end a company, Employment National Limited ("EN"), was incorporated under the Corporations Law with all shares owned by the Commonwealth. EN contracted to DEETYA to provide employment services. The contract was secured through a national tendering process and EN is one of a considerable number of providers of employment services. ENA is a wholly owned subsidiary of EN and has contracted to EN to provide all services, including staff, required by EN to perform its contract with DEETYA. In some of the material in evidence a rigid distinction is not drawn between EN and ENA concerning which company is the employer. I will repeat what the material says and thus it may appear, at times, that EN, and not ENA, is the employer.
In October/November 1997 certain of CES's functions were transferred to an agency called Centrelink and 2,900 staff who had worked in the CES transferred to that agency. Towards the end of 1997 expressions of interest were sought from staff of the CES to work for ENA. Schanka, Aldridge, Walden and Burns expressed interest in working for ENA. In February 1998 Aldridge received an email advising her that she had obtained a position with ENA. She was invited to respond and did so, indicating she accepted the position.
On about 25 February 1998 the staff of CES were sent a survey that had to be completed by 13 March 1998. It asked each employee to indicate their preference for a number of options concerning future employment. The survey form said that by indicating a preference the employee was not committing themselves to an option nor was a guarantee being provided that their preference would be met. The options were employment in EN, voluntary retrenchment, redeployment to Centrelink (while remaining a member of the Australian Public Service) or redeployment elsewhere within the Australian Public Service. On 25 February 1998 Walden received a letter offering employment with ENA. It provided:
I am pleased to be able to invite you to join Employment National (Administration) Pty Ltd, as Associate Consultant, from the 1st of May 1998. This position will be initially located at Sydney CBD.
As you are aware, we are currently developing the employment framework with existing employees and these will be finalised and reflected in a Certified Agreement before you transfer across to us on the 1st of May. The terms and conditions in this agreement will incorporate the Government guarantees announced in December 1996 and will reflect the employment arrangements outlined in the Employment Relationship Agreement and the Personnel Policies and Procedures Manual, under which current staff are employed. Any movement in remuneration that arises from the current DEETYA negotiations on a certified agreement for Network staff will also be incorporated.
Should you have any questions in relation to these arrangements, or should you wish to review any of the documents I have referred to, please see your Business Manager.
As you would appreciate, it is necessary or [sic] Employment National to continue to manage the Network until 30 April 1998 and you will contribute to the successful finalisation of that contract.
In the meantime, I need to know for planning purposes, if you intend to take up the offer of employment and I would be grateful for advice of your intentions by 4 March 1998.
I look forward to working with you to achieve our goal of making Employment National the market leader in employment services.
Yours sincerely, I accept, subject to the finalisation of a
Satisfactory employment framework.
Bob Hall
Regional Manager Richard Walden
Sydney Metropolitan Region
Burns received a letter in the substantially same terms dated 26 February 1998. On 27 February 1998 Burns signed the letter of invitation and returned it to the manager of ENA who had sent him the letter of 26 February 1998. Walden took a similar step on 3 March 1998 by emailing an acceptance "subject to finalization of a satisfactory employment framework".
On 20 March 1998 the board of ENA passed a resolution in exercise of powers thought to be conferred by s 81C(3) of the PS Act which provides:
For the purpose of facilitating a transfer of persons into the employment of a Commonwealth authority, the Commonwealth authority may, notwithstanding anything in any other law (other than an industrial award), determine any special terms or conditions of employment that are to apply to the persons.
This section applies when the Prime Minister has certified that a function performed by persons appointed or employed under the PS Act is to be performed by a Commonwealth authority. It provides a mechanism for the transfer, by operation of law, of the employment of employees by the Commonwealth in the Australian Public Service to employment by the relevant authority. A Commonwealth authority is defined to include a company in which the Commonwealth has a controlling interest: see s 7 of the PS Act. The exercise of this power by the board appears to have proceeded on the assumption that EN or ENA (which is the relevant Commonwealth authority performing the function is not clear and may have been relevant to the valid operation of s 81C) would be performing functions formerly performed by members of the Australian Public Service employed under the PS Act.
On 22 March 1998 the managing director of ENA sent a memorandum to staff of the CES. It read:
Today the board has authorized me to make the following announcement regarding recruitment to Employment National.
1. Basis of Employment - Your Choice
Staff joining Employment National on or before 30 April 98 may elect, at their discretion, to work under the terms of an Australian Workplace Agreement (already signed by some 250 colleagues) or to work under terms identical to those of the AWA but without the formal agreement (as determined by the Board today under s 81c [sic] of the Public Service Act).
In due course, pending proceedings in the AIRC, a Certified Agreement will be offered to staff.
2. Salaries and Bonuses - Further Benefits
All staff joining Employment National from the CES will receive the financial benefits agreed by the Network with DEETYA, specifically: 2% salary increase plus a $500 bonus.
In addition to this, staff joining employment National from the CES on or before 30 April 98 will receive a further 2% salary increase and a further $500 bonus on 1 December 98.
3. Timing
To enable staff to fully consider this offer the closing date for acceptance has been extended until 3 April 98.
A further and more detailed memorandum was sent shortly after to staff of the CES. The memorandum indicated that EN was seeking to put in place the certified agreement as soon as possible and it would replace the determination that the board had earlier made. The memorandum included:
All operational staff (excluding Business Managers) who have signed up to date on AWAs can transfer to the determination made by the Board if they wish. Similarly, you can elect to sign an AWA, and not fall under the determination. The option is yours.
At this point EN was managing the operation of CES and had been doing so since December 1997. On 2 April 1998 CPSU wrote to ENA threatening legal action if the determination made under s 81C(3) of the PS Act was not revoked. As a result of this action by the CPSU, the option that employees might have their employment with ENA regulated by the s 81C(3) determination was withdrawn. This occurred on or about 18 April 1998 though the precise time does not clearly emerge from the material to which I have been referred. From that point any employee accepting employment with ENA had to sign an AWA. In early April 1998 Schanka and Walden received an offer of appointment to the staff of ENA though the letter contained the following:
It is a condition of this offer of employment that you and the Company enter into two Agreements: firstly, an Employment Relationship Agreement which is an Australian Workplace Agreement (AWA) made under the provisions of the Workplace Relations Act 1996 and secondly, an Agreement to terminate that AWA when a Certified Agreement is made and certified by the Australian Industrial Relations Commission. Copies of both Agreements are included in the Information Kit that accompanies this letter.
The letter went on to detail the process that would lead to the signing of the AWA and how information would be provided concerning it. It nominated a person who could answer any queries. It also contained an explanation about the termination agreement. As stated in the letter, it was accompanied by an information kit. Burns received a similar letter on 1 April 1998.
On 6 April 1998 the CPSU issued a bulletin informing members that it was not necessary to sign an AWA if they had been offered a job in EN and wanted to take it up. The bulletin said:
If you sign an AWA then you accept those employment conditions until and unless we can improve them through a certified agreement. If you agree to transfer without an AWA, then at the very least your conditions will be those outlined in the AWAs, and if our legal challenge is successful they will be better.
By email dated 15 April 1998 Burns indicated he did not wish to sign an AWA but wished to be transferred under s 81C(3) of the PS Act. On 20 April 1998 he was advised that the option under s 81C(3) was no longer available and, accordingly, Burns declined the offer of employment. Also on 20 April 1998 Aldridge was told that if she did not sign an AWA she would not have a job with ENA. On 22 April 1998 Aldridge accepted an offer of employment and signed an AWA. On 23 April 1998 Schanka was told that if he did not sign an AWA his offer of employment would be withdrawn. That day he signed one. On 29 April 1998 Walden accepted his offer of employment and signed an AWA.
On 30 April 1998 the CES ceased to function. At that time there were 4,400 employees employed in its various operations. Two thousand had accepted an offer of voluntary retrenchment, 450 had transferred to Centrelink, 150 were to be retrenched voluntarily later in 1998, 600 were declared excess to requirements and 150 would be declared excess to requirements when winding up duties had been completed. The two lastmentioned groups constituted 750 former CES staff who were seeking redeployment.
On 1 May 1998 Schanka, Aldridge and Walden commenced employment with ENA. The declaration made under s 81C of the PS Act transferring certain former employees of the CES to ENA was gazetted on 4 May 1998 effective 1 May 1998. By 12 May 1998 1,100 people who had been employed in the CES had taken up employment with ENA. 400 of them were temporary staff and 930 were employed on AWAs.
8 Except for some of the figures in the last two paragraphs and certain specific matters which I will later refer to, the evidence at the final hearing established, as a matter of fact, the various matters referred to in the preceding passage. From this point it will be convenient to refer to the form of letter sent to Walden on 25 February 1998 referred to in the above passage as "the February 1998 invitation letter" and the condition in the letter sent to Schanka and Walden in April 1998 as "the April 1998 condition". It is appropriate to turn now to some of the evidence in greater detail and make findings about some contentious factual issues.
The evidence
9 I should, at the outset, note that both the applicants and ENA tendered various types of documents such as newsletters or notices from the CPSU to its membership in the Department of Employment, Education, Training and Youth Affairs ("DEETYA") and notices or bulletins from the management at DEETYA or ENA to employees or prospective employees. At one point during the hearing, a question arose about the evidentiary status of these documents. It was ultimately accepted, however, that they could be treated as not only what, on their face, they purported to be (a newsletter, a notice or a bulletin) but also as evidence tending to establish the truth of facts recounted in them. Their tender had the potential of creating problems of the type adverted to by Kirby and Callinan JJ in Tepko Pty Ltd v Ministerial Holding Corporation [2001] HCA 19 at par 171. In addition, the oral evidence called by the parties tended to cover a more limited range of events than the documents themselves. But often the documents presented an incomplete picture of events to which they related. Accordingly the evidence is, in some respects, incomplete and this may be reflected in the following discussion.
(i) The industrial manoeuvring
10 It is to be recalled that generally the terms and conditions of employment of employees in the CES (and more generally DEETYA) were regulated by the Australian Public Service, Administrative Services Officers (Salaries and Specific Conditions) Award 1995 ("the Salaries Award") and the Australian Public Service (General Employment Conditions) Award 1995 ("the Conditions Award") (collectively "the applicable Awards"). Executives in the CES had their terms and conditions of employment regulated by the Australian Public Service, Senior Executive Service (Salaries and Specific Conditions) Award 1995. With the prospect that significant numbers of employees in DEETYA might take up employment with ENA, the CPSU tried, mainly during 1997 and 1998, to create a situation where any such employees would, when employed with ENA, have the same or substantially the same terms and conditions of employment as in the applicable Awards. This was an outcome which was resisted by ENA. In the result, the CPSU and ENA engaged, in that period, in what might be described as industrial manoeuvring to bring about the desired result as each saw it. The following reflects findings I make about these and related events.
11 Reference has already been made to the decision the Commonwealth Government made in August 1996 concerning the creation of what was described as a competitive employment placement market. This led to an industrial campaign by the CPSU to maintain the CES in the public sector. On 10 December 1996 the Minister for Employment, Education, Training and Youth Affairs ("the Minister") announced the Government's response to its consultation with community groups about its reforms. The Minister indicated the Government would create the Public Employment Placement Enterprise ("PEPE"), the successor to the CES, as a commercial company within the competitive market and that staff of that company would be employed on terms and conditions determined by its board. However the Minister also indicated that staff transferring from DEETYA would retain some public sector conditions and that other terms and conditions would be contained in an initial certified agreement negotiated by PEPE and its "staff organisations". The terms guaranteed by the Minister included maintenance of salary for a specified period, retention of sick leave credits and recreation leave credits, access to the Commonwealth superannuation and long service leave schemes, mobility rights enabling reemployment in the APS and APS redundancy entitlements.
12 Also on 10 December 1996, the CPSU indicated in a bulletin that the Minister's proposal concerning transferring DEETYA staff was an improvement on earlier announcements, but the union maintained an objective of retaining all current entitlements and maintaining employment in the public service. However a decision was taken in the following weeks by members of the CPSU to suspend industrial action and enter negotiations with DEETYA about the transfer of employees. The CPSU was then proposing to obtain legal advice about how it could establish the continued application of the applicable Awards. On 11 January 1997 an internal CPSU committee authorised steps to be taken "to maintain appropriate Award coverage and achieve a Certified Agreement for members in PEPE employment".
13 On 28 February 1997 the CPSU wrote to the departmental secretary of DEETYA requesting immediate discussions about a number of matters including working conditions of any DEETYA staff who transferred to PEPE. The CPSU indicated that if there was no genuine commitment to deal with those matters, other options would be considered including seeking the assistance of the Australian Industrial Relations Commission ("the Commission"). In a response dated 5 March 1997, the departmental secretary indicated that issues in relation to PEPE would have to be discussed with PEPE management. By the end of March 1997 the CPSU was developing a strategy which involved serving on PEPE a log of claims for the purpose, I infer, of creating an industrial dispute which could be settled by the making of a certified agreement. By mid-May 1997, the CPSU was indicating in a bulletin to DEETYA members that it had advice that the effect of the provisions of the WR Act concerning a transmission of a business was that the applicable Awards would apply to PEPE and staff it engaged and that the applicable Awards would be the measure of whether any certified agreement satisfied the "no disadvantage test". In that bulletin the CPSU also indicated the Minister disagreed with these contentions.
14 As part of the CPSU campaign, parliamentarians were lobbied to amend legislation before Parliament concerning the reform of employment services. In mid-June 1997 the CPSU announced the Senate had amended the legislation to create PEPE as, I infer, a statutory authority. However this did not eventuate.
15 In July 1997 staff of DEETYA were sent a staff circular inviting applications to fill approximately 100 positions with PEPE. The new staff were to be responsible for establishing PEPE as a going concern in the sense of preparing the tender bid for Government business, developing frameworks for non-Government business and related work to give substance to PEPE in an operational sense. The invitation was directed to staff at a comparatively senior level namely ASO5, ASO6 or Senior Officer level. PEPE was incorporated on 4 August 1997. On 6 August 1997 the CPSU served on the executive chairman of PEPE a letter of demand and a log of claims. This was plainly in furtherance of the CPSU's objective stated earlier of involving the Commission and enabling a certified agreement to be reached with PEPE. Indeed in August and September 1997 CPSU sent bulletins to its members outlining its strategy to obtain a certified agreement negotiated with it and inviting the membership to support that approach by resolutions at meetings.
16 On 10 October 1997, in proceedings in the Commission, a finding of the existence of an industrial dispute was made which was based on the demand and claims of the CPSU. At that time it was revealed that a subsidiary company of PEPE, and not PEPE itself, would employ the staff that PEPE would need to perform its functions. The subsidiary company was incorporated on 18 September 1997. It is unnecessary to continue to draw a distinction between the holding company and the subsidiary unless the context requires it. It is sufficient to note that the subsidiary company came to be the company named ENA and PEPE came to be the company called Employment National Ltd ("EN"). The Commonwealth beneficially owned all the shares in EN. The Minister had power to appoint its directors and the executive chairman.
17 By at least this time, if not earlier, diverging strategic approaches of the CPSU and PEPE (concerning the industrial regulation of the employment of employees of PEPE) were being adopted. The CPSU wanted to negotiate a certified agreement, to which it was a party, which would apply to CPSU members who might be employed by PEPE. It would be doing so against a background where it was asserting that the applicable Awards would apply by operation of the transmission provisions of the WR Act. The type of agreement apparently contemplated by CPSU was either an agreement under s 170LJ or an agreement under s 170LO. In either case the CPSU would be a party to the agreement. The CPSU's objective was to have the agreement embody, insofar as it was achievable and practicable, the terms of the applicable Awards.
18 PEPE, on the other hand, wanted to create a situation where a limited number of senior employees, employed initially on AWAs, could enter a collective agreement of the type contemplated by s 170LK of the WR Act. That is, an agreement between an employer and a majority of its employees which could be certified under s 170LT. As a prelude to doing so it had a stated objective (articulated at the hearing before the Commission on 10 October 1997) of having an award made prescribing minimum conditions of employment of the type identified in s 89A of the WR Act ("the s 89A award"). Such an award could provide the reference point for the application of the no-disadvantage test applied by the Commission when an agreement was certified: see s 170LT(2) and Part VIE, or applied by the Employment Advocate approving an AWA: see s 170VPB(1)(a), or the Commission approving an AWA: see s 170VPG(2).
19 In early October 1997, the interim general manager, human resources, of PEPE (Mr Foster) corresponded with the Public Service and Merit Protection Commission ("the Public Service Commission") about how it could establish terms and conditions of employment consistent with a Cabinet decision (that PEPE staff be employed outside the Public Service Act 1922 (Cth) ("the PS Act") so that PEPE could compete on an equal footing with the private sector and not for profit competitors) but also consistent with the undertaking of the Government concerning some minimum APS employment conditions for employees transferring from the APS. The correspondence was inconclusive though the Public Service Commission canvassed the use of s 81C of the PS Act.
20 By mid-October 1997, CPSU was alive to the possibility (as revealed in a bulletin to members and an electronic intranet publication) that the initial 100 employees of PEPE ("the PEPE 100") would be employed on AWAs and could be called on to adopt a collective agreement by majority vote. In late October 1997 CPSU sent letters to at least some of the PEPE 100 offering to act as their bargaining agent to negotiate an AWA. The evidence does not indicate the extent to which CPSU achieved this objective though the CPSU did receive authorities from some of the PEPE 100. In late October 1997, PEPE began recruiting at least the bulk of the PEPE 100.
21 At the end of October 1997 CPSU began a process of organising an industrial campaign against the proposals of PEPE concerning the setting of employment conditions. On 13 November 1997 the Commission convened a conference involving the CPSU and PEPE which resulted in agreement about a framework for further discussions and also agreement that the applicable Awards (and other specific public sector awards) would be the relevant or designated awards for the purposes of the no-disadvantage test. By 14 November 1997 members of the CPSU had voted in support of industrial action. It appears the recruitment of the PEPE 100 was complete by mid-November 1997. A stop work meeting of CPSU members occurred on 17 November 1997 and there was a general stoppage on 27 November 1997. In a bulletin published 2 December 1997, CPSU indicated that PEPE had or was considering altering its position on some matters to be included in the individual contract for the PEPE 100 as a result of negotiations with the CPSU. It also indicated, however, that PEPE was maintaining its position that it would not negotiate with CPSU on a certified agreement. CPSU was, in late December, negotiating with PEPE about the terms of the proposed s 89A award which might apply to PEPE employees though it was doing so without prejudice to its asserted position that the applicable Awards would apply by operation of the WR Act.
22 CPSU members in DEETYA were informed in a CPSU bulletin dated 14 November 1997 that there was a possibility of their "forcibl(e) transfer" to PEPE by use of s 81C of the PS Act. The bulletin also asserted that PEPE wanted to use a draft AWA as the basis for a certified agreement to be agreed to by 55 of the PEPE 100. That agreement would apply to future employees and contained a range of conditions that, by implication, were not acceptable to CPSU. This bulletin resulted in an open letter from the chairman of PEPE, Mr Don Swan, to probably the same group of employees putting in issue much of what appeared in the bulletin. Nothing was said in that letter about compulsory transfer. However in what appears to be an open letter from Swan to DEETYA employees, published electronically on an intranet on about 14 November 1997, it was stated that no one would be forced to join PEPE. However Swan made it clear that any certified agreement would be made directly with employees and not with the CPSU. It was also made clear that this would be achieved by employing some staff under AWAs and having them adopt a certified agreement.
23 I earlier mentioned that from this time ENA was managing the operations of the CES. It did so from 1 December 1997 until 30 April 1998.
24 On 18 December 1997 a letter was sent from the Employment Advocate to PEPE indicating that the applicable Awards (and two other public sector awards for senior and professional staff) would be the designated awards for the purpose of s 170XE(2) (to apply the no-disadvantage test). Also in December, correspondence passed between various Government departments canvassing employment issues concerning the potential transfer of DEETYA staff to PEPE.
25 In January 1998 Mr Peter Storey was appointed managing director of ENA. He wrote to staff of ENA on 21 January 1998 about a number of matters including the progress of entering AWAs. He said that 30 of the PEPE 100 had received their AWAs and seven had been executed. He indicated that ENA's plan was to have completed AWAs for the PEPE 100 and Branch Managers by the end of February 1998 and a certified agreement ready for consideration by March 1998. On 29 January 1998 copies of the departmental correspondence referred to in the preceding paragraph were sent to Foster at ENA by the departmental secretary of DEETYA. In one of those letters (from the Department of Workplace Relations and Small Business) the possibility was canvassed, in the context of potential difficulties concerning long service leave, of using s 87(1) of the PS Act to treat PEPE as a Commonwealth authority if an agreement could not be certified before May 1998. It is comparatively clear from that letter of 29 January 1998 that there was an expectation on at least DEETYA's part that various employment conditions of transferred staff would be addressed in a certified agreement and the transfer of DEETYA staff to employment with ENA would be effected under s 81C of the PS Act.
26 On 12 February 1998 Foster reported to the board of ENA. As to past events, he recounted that 55 offers of employment under AWAs had been made, 25 had been accepted and 18 of those were being processed. He also recounted that there had been a conciliation hearing before the Commission on 3 February 1998 about the proposed s 89A award and a timetable determined for further discussions and an arbitration in the first half of March. As to future events he recounted that ENA hoped to have 350 to 400 people employed under AWAs by the first week in March. This group was viewed by Foster as the group who could "help formulate and vote on the certified agreement" at that time. However Foster acknowledged in his report that the timeframe for voting on an agreement and having it certified by 1 May 1998 (the start-up date for ENA's operations and when it would take on a significant portion of its employees) was "extremely tight". In this context he canvassed in his report the option of the determination by the board of ENA of the conditions of employment of transferring staff under s 81C(3) of the PS Act. He described this as the preferred option. The other option being explored was employing all staff under AWAs.
27 It is convenient, at this point, to set out s 81C:
"(1) Where the Prime Minister certifies in writing that a function that has been performed by persons appointed or employed under this Act is to be performed by a Commonwealth authority, the board may, by declaration in writing published in the Gazette, declare that specified officers or classes of officers are in the employment of the Commonwealth authority.(2) An officer specified, or included in a class of officers specified, in declaration under subsection (1):
(a) on the day specified in the declaration for the purpose of this subsection, ceases to be an officer; and
(b) from and including that day, is employed by the Commonwealth authority specified in the declaration.
(3) For the purpose of facilitating a transfer of persons into the employment of a Commonwealth authority, the Commonwealth authority may, notwithstanding anything in any other law (other than an industrial award), determine any special terms or conditions of employment that are to apply to the persons."
28 It can be seen that this section deals with two separate but related matters. First the section empowers (subs (1) and (2)) the Prime Minister to certify that a Commonwealth authority is to perform functions presently performed by public servants and, effectively, transfers specified public servants from their employment in the APS to employment with that authority. It is convenient to refer to this as the automatic transfer power. Secondly the section empowers (subs (3)) the authority to determine special terms or conditions of employment for the transferring employees. It is convenient to refer to this as the prescription of conditions power.
29 On 13 February 1998 the Minister responsible for the APS (who also had, independently, portfolio responsibility for the establishment of EN) wrote to the Prime Minister seeking his agreement to a proposal that would involve the Prime Minister exercising the automatic transfer power notwithstanding that apparently the Minister could exercise the power himself under some form of delegation. The Minister was concerned about a possible perception of a conflict of interest.
30 On 20 February 1998 Storey sent a notice to staff indicating that ENA had 48 working days before it was to "open (its) doors". He reported that there had been discussions between the CPSU and ENA on 17 February 1998 in a meeting involving the Commission about the proposed s 89A award and that there would be further discussions/an arbitration hearing on 5, 6, 16 and 17 March 1998. He indicated that ENA was still working towards securing a certified agreement by the end of March 1998. On 24 February 1998 the CPSU wrote to Senior Deputy President Duncan, the member of the Commission handling the issues concerning employment conditions at ENA, inviting him to refer to this Court the legal question of whether the applicable Awards (and other related awards) would continue to apply to employees of ENA by operation of s 149 of the WR Act. CPSU indicated it would seek to address that matter at the hearing on 5 March 1998. On 25 February 1998 the CPSU wrote to Foster concerning the proposed s 89A award effectively putting a negotiating proposal to ENA for its consideration.
31 On 5 March 1998 a hearing took place in the Commission. Apart from the matter the CPSU raised in its letter of 24 February 1998 (the reference of the question of law), it had foreshadowed in correspondence to ENA the previous day that it proposed to ask the Commission to refrain from further hearing the dispute. On the morning of the hearing, counsel for ENA sought to have the Commission revoke the finding of the dispute before the questions of referring of a question of law or refraining from hearing the dispute could be dealt with by the Commission. It also announced that it had, that day, made application to the this Court for a declaration that no public sector award would apply to ENA because of the transmission provisions in the WR Act.
32 On 6 March 1998 Storey wrote to the Minister. In that letter he said:
"Update on Employment Relations Framework I think it is appropriate that I provide you with an update on the development of Employment National's employment framework. As you know we have an integrated, two pronged strategy that allows us to recruit an initial workforce via Australian Workplace Agreements (AWAs) while at the same time develop a minimum rates, safety net award under the auspice of the Australian Industrial Relations Commission that can be used as the basis on which a certified agreement is developed to employ the great bulk of our staff from the 1st of May.
The AWA aspect of the strategy is progressing satisfactorily, we have developed agreements to employ both operational staff and managers and to date over 400 have been issued and over 80 have been signed and returned. We expect the number signed and returned to grow significantly in the next two weeks.
The other phase of the strategy (the development of the safety net award) has been underway for over three months and until this week had been on schedule for completion within the timeframes needed to employ staff under a certified agreement from 1 May. The Commission had set aside four days this month to arbitrate on the outstanding issues between EN and the CPSU. Virtually on the eve of the commencement of the arbitration hearing the union made two applications to the Commission, one to ask Deputy President Duncan to refer the question of `transmission of business' to the Federal Court and the second was to stop the arbitration process until the matter was determined by the Federal Court. This process could, of course, take many months and frustrate the Company's efforts to have an appropriate certified agreement in place by 1 May.
In view of the actions taken by the union, EN, at the hearing before the Commission on 5 March sought revocation of the dispute, that was the basis of the award making process, on the grounds that the applications to the Commission by the union demonstrate the dispute is not genuine. We also informed the Commission that we had now made application to the Federal Court for a direction that no `transmission of business' exists between EN and DEETYA via the out-sourcing of CES operations. The Minister for Workplace Relations and Small Business was represented at the hearing by Mr Les Kauffman [sic] and while he made no formal submission during the proceeding, he indicated he supported the action taken by EN.
Clearly the actions taken by the union will prevent us from having an appropriate certified agreement in place by 1 May and it is our intention to recruit all our staff under AWAs and put an appropriate certified agreement in place once the matters before the Federal Court are determined.
The implications of these developments are as follows:
1. The commitment to employ the great bulk of staff under a certified agreement has not been abandoned but simply delayed. This delay is the direct result of the union's action.
2. The commencement of operations by Employment National will not be interrupted by the union's actions.
3. The referral of the question of transmission of business to the Federal Court provides the opportunity to kill off this issue permanently.
4. There is now an opportunity to operate award and union free.
5. The union is likely to increase its focus on our AWA process and intensify its campaign of disinformation.
6. If the Commission does not revoke or dismiss the dispute it will lead to the making of an 89A Award, contrary to the Union's wishes.
I will keep you informed of any further developments."
33 Storey wrote to the Minister again on 13 March 1998 and his letter included the following:
"We will be back in the AIRC on the 16th and 17th of March when the application to revoke the dispute finding will heard. Irrespective of the outcome, it will now be impossible to put an appropriate certified agreement in place in time to transfer staff to the Company under that employment framework. In our view it would be better to employ all staff under AWA's, transfer them across under section 81C of the Public Service Act, then at a future date, when an appropriate safety net award is in place, develop a certified agreement to replace the AWA's signed by operative staff. As part of our initial strategy we have made over 400 offers of employment under AWA's and to date some 200 have been signed."
34 In a further letter to the Minister dated 16 March 1998, Storey indicated that it appeared there would be a shortfall of 200-300 CES employees taking up employment with the ENA. In that letter Storey expressed concern about the possible compulsory transfer of CES employees to ENA. On 18 March 1998, the Minister wrote to Swan. He noted what Storey had said in his letter of 16 March 1998 and asked what EN would do to attract "sufficient "volunteers" from the CES" to avoid an understaffing of EN. It appears that after this letter was written the Minister visited the offices of ENA (on Friday 20 March 1998). Swan wrote to the Minister on 24 March 1998 and thanked him for visiting. Swan said that by the evening of the visit (viz, the evening of 20 March 1998) staff had been informed they could join ENA and elect, at their discretion, to work under an AWA or the board's determination. Swan complained in that letter of the unconditional nature of DEETYA's invitation to all staff to apply for voluntary redundancy when, as Swan perceived it, the people who were said to be redundant had an offer of a permanent job (I infer he meant with ENA).
35 In the general background in par 7 above, I set out the terms of a memorandum from the managing director of ENA (Storey) which I said was sent on 22 March 1998 concerning the option of employment under the determination made by the board on Friday 20 March 1998. The memorandum was dated 26 March 1998 though from other evidence this appears to be wrong. Indeed the better view is that it was sent on Friday 20 March 1998 (and not 22 March 1998 which was a Sunday) which was the day the board made its decision. It is a memorandum which assumes some significance in these proceedings. It was followed by a notice from Storey posted electronically on 25 March 1998 which repeated that employment could be taken up with ENA under the determination made by the board and without having to enter an AWA. Indeed the notice states that any person (operational staff but not Branch Managers) who, by then, had signed an AWA, could "transfer to the determination made by the Board if they wish". The clear import of this last statement was that anyone who had signed an AWA but did not wish to be employed under it could have their terms and conditions of employment regulated by the board's determination and not the AWA. In that notice Storey acknowledged that a certified agreement would not be in place by 1 May 1998 (he mistakenly referred to April). Storey did say, however, that ENA was continuing the process of putting a certified agreement in place as soon as possible which would eventually replace the board determination.
36 On 30 March 1998 the Commission certified an agreement entitled "the DEETYA Network Certified Agreement 1998" ("the Network Agreement"). Its effect is discussed later.
37 On 2 April 1998 the general secretary of the CPSU wrote to Storey about what the board had done on 20 March 1998. In the letter the general secretary said the CPSU had advice that the determination by the board was invalid because it had been a determination of general terms and not special terms and conditions which was what s 81C(3) authorised. The CPSU also asserted the provision was invalid and the exercise of the prescription of conditions power involved the acquisition of property other than on just terms. Other legal issues were adverted to. The general secretary invited ENA to revoke the determination and indicated that if it was not revoked its validity would be challenged in proceedings in this Court and injunctive relief, both final and interlocutory, would be sought. The general secretary indicated, however, that interlocutory injunctive relief would not be sought if the CPSU received an undertaking by 6 April 1998 that ENA would not implement the determination.
38 At some stage prior to 6 April 1998, the Commission refused to revoke the finding of dispute. On that day there were further proceedings before the Commission. Counsel for ENA was unable to secure an undertaking from the CPSU to agree to an arbitration for the purpose of making the s 89A award and thereupon made an application that arbitration occur without delay and an application for an order that s 149 would not apply to the applicable Awards (and related awards). Counsel for ENA complained about it having been frustrated for nearly six months in its attempt to put in place a proper minimum rates award. Counsel for ENA then applied for both applications to be dealt with by a Full Bench (s 107). The matter was adjourned on the basis that the President of the Commission would consider the application under s 107.
39 At about this time, CPSU published a bulletin dated 6 April 1998 to members in DEETYA. It may have been written shortly before the date as it spoke of events occurring on 6 April 1998 as if they were to happen in the future. However, of some importance, is that the bulletin referred to what was probably the electronic notice of 25 March 1998 from Storey and, in that context, stated (part of it was set out earlier):
"If you have been offered a job in EN and want to take it up, you do not have to sign an AWA. This has been confirmed by Employment National Managing Director Peter Storey in a staff circular dated 25 March 1998. If you sign an AWA then you accept those employment conditions until and unless we can improve them through a certified agreement. If you agree to transfer without an AWA, then at the very least your conditions will be those outlined in the AWAs, and if our legal challenge is successful they will be better."
The reference to legal action is a reference to the legal action threatened in the letter from CPSU of 2 April 1998 which was discussed in the first paragraph of the bulletin.
40 On 8 April 1998 Storey wrote to the Minister informing him that it was then his expectation that ENA would be able to meet its initial staffing requirements of approximately 1200 from current serving CES staff.
(ii) The recruitment of staff and the intentions of ENA in March and April 1998
41 In the preceding discussion (part (i)) I did not deal with the recruitment of the employees who are said to have been subjected to duress. I do so now and also make findings concerning the plans of ENA about offering AWAs, the difficulties it was having in recruiting employees, why it adopted the option of prescribing conditions of employment by using s 81C(3) on about 20 March 1998 and why it withdrew the option in the latter part of April 1998.
42 A convenient starting point is the evidence of the applicants and one other member of the group, Ms Valinda Brushe, about attempts to recruit them into employment with ENA. In an affidavit read in these proceedings, each of Schanka, Walden, Burns and Brushe gave evidence in what was essentially a standard form that towards the end of 1997, expressions of interest were sought from staff of the CES to work for ENA.
43 I first consider the position of Burns from that point on in more detail. His evidence was credible and I accept it. In late 1997 Burns was employed as an acting senior case manager at the Ballarat office of the CES. In that position Burns worked with predominantly long-term unemployed people in an effort to place them in employment which involved assessing their skills and barriers to employment, initiating case management plans to overcome those barriers and job matching them to suitable vacancies. It is not clear the form in which the expression of interest was sought from Burns but it led to a selection interview process with ENA. He later received the February 1998 invitation letter (on probably 27 February 1998). On receiving the letter he signed it, signifying that he accepted an invitation to join ENA as an employment consultant from 1 May 1998 in the Victorian central highlands area but subject to the finalisation of a satisfactory employment framework. It is to be recalled that the letter spoke of the employment framework being developed with existing employees which would be reflected in a certified agreement. Burns had been sent the letter by the area manager of ENA Geelong to whom he returned the signed copy. He also sent a copy to the signatory to the letter, the regional manager. On 12 March 1998, Burns completed a survey questionnaire in which he indicated that he had been made an offer of employment by EN and indicating, as employment preferences (from most preferred to least preferred), a position with ENA, voluntary retrenchment, other APS redeployment and redeployment to Centrelink under a DEETYA/Agency Placement Arrangement. Centrelink was an agency administered by the Department of Family and Community Services providing services to both DEETYA and other government departments and which registered unemployed people and referred them to employment placement agencies.
44 On about 1 April 1998 Burns received a letter dated 31 March 1998 which, in terms, was an offer of appointment to the staff of ENA. It contained the April 1998 condition. That is, a condition of the offer of employment was that Burns sign an AWA and an agreement to terminate it when a certified agreement was certified by the Commission. The letter was accompanied by an information kit which contained a copy of both agreements. The letter (as a standard form letter) is important in these proceedings and it is desirable to set out its terms:
"Dear JimThis is an offer of appointment to the staff of Employment National (Administration) Pty Limited as Employment Consultant. A detailed job description covering this position is attached to this letter.
The initial salary applying to the position will be $36408 per annum.
The position is currently located within the Ballarat area which is part of the Victoria Country and Tasmania region of the Company's operations.
It is a condition of this offer of employment that you and the company enter into two Agreements: firstly, an Employment Relationship Agreement which is an Australian Workplace Agreement (AWA) made under the provisions of the Workplace Relations Act 1996 and secondly, an Agreement to terminate that AWA when a Certified Agreement is made and certified by the Australian Industrial Relations Commission. Copies of both Agreements are included in the Information Kit that accompanies this letter.
The Workplace Relations Act 1996 requires that you be given at least 5 days to consider the proposed AWA before signing it. This 5-day period commences from the day of receipt of the proposed AWA with this letter.
Shortly and during the 5-day period, you will receive a second letter from the company which explains the effect of the proposed AWA. You should read and consider that second letter prior to signing the AWA.
If you have any questions relating to the proposed AWA, the letter explaining its effect, the Information Kit or any other relevant matter please contact Neil Foster Interim General Manager Human Resources on (02) 9200-6814 or on email at neil.foster@employment.gov.au.
If you wish, you may appoint a person to be your bargaining agent in relation to the making of the proposed AWA.
In the event that you decide to sign the AWA you should sign and date it in the space provided. Your signature must be witnessed and the witness should also sign and date the AWA.
As has already been explained the AWA is accompanied by an Agreement that allows the termination of the AWA in certain circumstances. It is also a condition of your employment that you enter into this Agreement.
The Agreement allowing for termination of the AWA is designed to bring an end to the AWA so as to permit effect to be given to a collective Certified Agreement between Employment National (Administration) Pty Limited and its operational and support staff when such an agreement is made. It has always been our expressed intention that the initial operational and support staff group would be employed on AWAs and as employment appointments increase these would be replaced by a Certified Agreement.
In addition to the AWA the Company has a Personnel Policies and Procedures Manual which sets down other matters relating to the regulation of your employment with the Company. A copy of the manual is included in the Information Kit. You will be required to comply with the policies and procedures contained in this manual.
Your employment with the Company as Employment Consultant will be full-time and ongoing. It can be terminated by you or the Company giving a minimum of one month's notice. If the Company is required by legislation to give more than the notice specified above, additional notice will be given by it or it will make payment to you of a corresponding amount of salary in lieu of the additional notice.
Should your employment be terminated for any reason other than serious misconduct, the Company's redundancy arrangements if they are applicable and your mobility rights to return to the APS will apply.
As a public servant you are to benefit from commitments given to public servants by the Commonwealth Government. These are fully detailed in clause 4 of the proposed AWA. An important commitment relates to the recognition of service with the APS. Your service history and leave entitlements will be transferred from DEETYA's Nomad system to the Employment National SAP system at the end of April. You should take the time now to review your Nomad records and raise any queries with your DEETYA personnel section. Your previous service in the APS will be recognised by the Company for all service related benefits as well as the calculation of redundancy benefits should this ever arise.
Superannuation arrangements included in this offer of employment provide for your continued membership of either of the two currently operating APS schemes ie (a) the Commonwealth Superannuation Scheme or (b) the Public Sector Superannuation Scheme. The Company will make contributions to the relevant scheme at the rate specified from time to time by the Scheme's actuaries as being the rate necessary to provide the benefits promised by the Scheme.
We would like you to commence employment on May 1, 1998. If for any reason you are unable to commence on this day please contact me as soon as possible.
If you decide to accept the offer you should sign and return the necessary documents by no later than 10 days from the day you receive this letter. This time frame is necessary to ensure that we comply with all of the deadlines involved in commencing your employment with the Company, including your pay arrangements. If the document is not signed and returned in that time frame, the Company will deem the offer to have lapsed.
I look forward to receiving your acceptance of this offer of employment and welcoming you to the foundation team at Employment National. The company's future will draw from the best of the past and add the excitement and challenge that comes with flexibility and new market opportunities.
Yours sincerely
Cheryl Harman
Regional Manager
Victoria Country and Tasmania
I accept the offer of employment detailed in this letter of appointment, on the conditions outlined therein:
Signed: .....................................
Date: ....................................."
45 Burns did not respond to this letter until 15 April 1998 when he e-mailed his rejection of the offer of employment to, amongst others, the regional manager. However the e-mail did not constitute an outright rejection of employment. Burns indicated he accepted employment but wished to be transferred under the offer of employment made prior to the AWA, that is transferred under what Burns described as "SECTION 81C(3) OF THE PUBLIC SERVICE ACT". It is to be recalled that in a memorandum dated 26 March 1998 (but actually sent on 20 March 1998) to all CES employees, the managing director of ENA indicated that employees taking up employment with the ENA could work under an AWA or work on identical terms which had been determined by a resolution of the board in exercise of the prescription of conditions power (s 81C(3)) on 20 March 1998. While Burns indicated a preparedness to be transferred under the board's determination, he nonetheless criticised various of the conditions in the AWA in the e-mail. He also indicated that he wished to be transferred on this basis and would wait and see what the certified agreement brought.
46 Burns' e-mail resulted in a letter from the regional manager dated 17 April 1998. Burns received this letter on about 20 April 1998. The regional manager indicated that as the CPSU had threatened ENA with legal action over the use of s 81C seeking injunctive relief, employment was now being offered only on the basis of what was described as "an employment relationship agreement". I take this to mean an AWA. From other evidence, it appears this letter from the regional manager was a standard form letter sent to all people who had not then accepted the offer of employment and signed an AWA. The regional manager offered Burns a further two days to consider his options. Burns immediately replied by e-mail. He indicated he declined the offer of employment under an AWA but indicated he still accepted the original offer of employment which he formally accepted on 27 February 1998. Burns went on to say that he had sought legal advice and had been advised that he could not be forced to sign an AWA and it was an offence to apply duress. He noted that were he to sign the AWA it would be void in those circumstances.
47 Shortly after sending these e-mails, Burns received a note to ring Foster. He did so on 24 April 1998. Burns made a note of this conversation and he was cross-examined about it. Foster and Burns discussed the concerns Burns had about the AWA. They included Burns' concerns that clauses in the AWA were disadvantageous compared to existing conditions. Foster indicated that there was no room for further negotiation. Burns said the whole concept of an AWA was to establish an individual, negotiated relationship between the employer and the employee and indicated that the approach of ENA had been completely uncompromising and had not involved negotiation. Foster said that ENA was not going down the road that DEETYA went down where the network was effectively being managed through the CPSU. Burns said that he had already accepted an offer of employment in good faith which ENA was effectively reneging on. Burns said that ENA was applying duress. Foster said the earlier letter had not been an offer of employment but a survey. Burns said that it was an offer and had been believed to be by those that had received it. Burns said that he had missed out on other opportunities because he had accepted the offer and ENA was effectively holding a gun to his head to sign the AWA. Foster said that if that was how Burns felt then he could not accept his "workplace agreement" because that would be duress and therefore the agreement would not be valid.
48 A significant part of the cross-examination of Burns was directed to this last matter, namely Foster's response to the contention that ENA was holding a gun to Burns' head and the conversation which had preceded it. While Burns generally accepted that Foster was indicating that the offer of employment involving an AWA was being withdrawn, his evidence was that he then held out some hope that he might be employed on a different basis as a result of CPSU negotiations. On 27 April 1998, Burns completed another version of the questionnaire he had earlier completed on 12 March 1998. In that latter survey he indicated (from most preferred to least preferred) his preferences as being other APS redeployment, voluntary retrenchment, redeployment to Centrelink and a position in ENA. He explained that at the time he had financial obligations to meet and he did not have an indication that he would go across to be ENA on 1 May 1998. He said, effectively, that if he did not alter his response to the survey he would not be paid by anybody and would be in employment limbo on 1 May 1998. He was advised to return the survey so he would remain with DEETYA. The import of his evidence was that he hoped, at that time, the position concerning ENA would be resolved quickly. On 27 April 1998 Burns received two letters from a human resources manager at DEETYA, one concerning long service leave credits on transfer to ENA and the other concerning redeployment or redundancy. The letters appear to have been written on the mistaken belief that Burns would transfer to ENA.
49 On 29 April 1998 Burns spoke to another person in the DEETYA human resources section. He then faxed her a note. Burns expressed the view that ENA had applied duress to get him to sign an AWA, it had not honoured an offer of a position but that he should not be transferred under s 81C. He stated he was not "excess" because there were positions available to him in ENA. After sending this note, Burns asked the manager of the Ballarat branch of ENA whether he could work in its office until the matter was sorted out. It was not and on 24 August 1998 he spoke by phone to Mr Keith Redgen who was a senior manager at DEETYA. Redgen told Burns he could no longer be employed on an informal "retention" arrangement and he was being declared excess to the department's requirements.
50 On 25 August 1998, Redgen wrote to Burns recounting that in the survey he had expressed a preference for redeployment within the APS and noted that DEETYA had not yet found a suitable permanent placement for him. Redgen noted that if Burns had not been found a permanent position by 25 August 1998 (the date of the letter) he would become excess. There would then be a retention period commencing on the date and continuing for a maximum of 7 or 13 months depending on his length of service. During that period DEETYA would take reasonable steps to transfer him to a suitable vacancy in the Department or elsewhere in the APS but that Burns also had to take steps to secure permanent redeployment including undergoing training. Redgen noted that he would be considered in isolation for vacancies in his substantive or lower classifications within DEETYA and that if he was transferred to a lower classification there would be a period of income maintenance until the end of the retention period. Redgen also noted benefits were available to facilitate redeployment (including $1500 for external redeployment services or training). Burns was informed that two months after he became excess he would be made an offer of voluntary retrenchment and if he declined the offer his retention period would continue. As events transpired, Burns was involuntarily retired under s 76W(1) of the PS Act on 24 April 1999.
51 From the time Burns was declared excess he unsuccessfully applied for 21 positions in the employment services industry and other sectors. He did so both before and after his involuntary retirement.
52 I turn now to consider the position of Brushe. I accept her evidence. At the time Brushe expressed interest in employment with ENA in late 1997, she was employed at the Coffs Harbour office of the CES as a case manager. She commenced that employment in about 1995. The work was similar to that performed by Burns. Having expressed interest, Brushe underwent a selection process and in February 1998 she was sent an e-mail advising her she had obtained a position with ENA. She responded and accepted the position. Like Burns, Brushe received a February 1998 invitation letter and a survey asking her to indicate her employment preferences which she did. Shortly after she was advised she had obtained a position, she received an e-mail from Mr Kevin Bird who was the ENA regional manager for country New South Wales. It appears to be a standard form letter congratulating people who had been offered and accepted employment with ENA. At some stage, when is not clear, Brushe attempted, unsuccessfully, to obtain other employment in the APS through a job swap.
53 On 9 April 1998, Brushe received a letter from Bird dated 6 April 1998. The letter was in substantially the same terms as the letter sent to Burns (set out above) and contained the April 1998 condition. After receiving the letter, Brushe spoke with her office manager, Mr David Gillings. She said he did not want to sign an AWA and wanted her employment to be covered by a certified agreement. She was then aware that an AWA prevented awards applying and was also aware that the CPSU was involved in legal proceedings to try to have, I infer, the applicable Awards apply to employees of ENA. Gillings told Brushe the letter was not binding, it was just a letter of intent and she should sign it anyway. She did so and thereby indicated that she accepted employment with ENA on the conditions in the letter though she did not sign either the AWA or the agreement to terminate the AWA. On 20 April 1998 Brushe received a letter in substantially the same terms as the letter received by Burns on 20 April 1998 (see par 46 above).
54 On 21 April 1998, Brushe received an e-mail from Gillings repeating that it was necessary for her to sign an AWA. Gillings also indicated that the option of employees being transferred under s 81C was no longer available because the issue was being litigated and he appears also to have been suggesting that, for the same reason, the option of taking up employment on terms determined by the board under s 81C(3) was no longer available. However, like many of the documents created at about this time by ENA, there was a blurring of the distinction between the exercise of the automatic transfer power and the exercise of the prescription of conditions power. In the e-mail, Gillings also indicated that staff who did not "take up the AWA option" would return to DEETYA "for redeployment and redundancy provisions". After noting that the company was keen to attract and keep that their staff and was conscious of having a reputation as a good corporate citizen, he said:
"Security of tenure cannot be guaranteed with ANY employer these days Eg Centrelink had to find 15 % efficiency gains this coming financial year This can only mean a contraction of their staffing hence the very low numbers of jobs swaps numbers I understood there was going to be 1800 I was advised recently only 800 eventuated nationally"
55 The e-mail sent by Gillings came with another e-mail (perhaps inadvertently) dated 20 April 1998 from Foster to various managers including Bird giving a brief summary of proceedings in the Commission. Reference was made to the order sought under s 149 and the progress of the s 89A award. The e-mail concluded:
"I will keep you informed on both issues-key thing for us is to get our people signed up on AWAs, little else will matter then."
It is clear that by this time ENA was firmly committed to employing its employees on AWAs and on no other basis. Reference will be later made to other documents which support this conclusion.
56 When Brushe received this e-mail from Gillings, she understood that unless she signed an AWA she could not take up employment with ENA. She signed the AWA and returned it with a letter seeking clarification of her position. It was a standard form letter that had been prepared by the CPSU and, in substance, indicated that the employee's understanding was the employment would not be under an AWA and it sought confirmation that the conditions in the AWA would be subject to any decision that the applicable Awards applied to ENA and also confirmation that her position would be covered by a certified agreement when it had been developed. On 22 April 1998 Brushe signed a letter appointing the CPSU as her bargaining agent in relation to an AWA. On 23 April 1998 Gillings sent Brushe an e-mail saying that Bird had advised him he could not accept the AWA with the attachment. Gillings said that apparently formal job offers could not be accepted conditionally as that implied duress. He requested authorisation to be given within four days to detach the letter. Brushe did not receive the e-mail for several days as she was on leave. After being informed on 27 April 1998 that the AWA would not be accepted with the attachment, Brushe sent a facsimile to a person acting on Bird's behalf authorising its removal. She also spoke to Bird about the matter at this time. On the same day she was requested by the person to sign the agreement to terminate the AWA which she did on 29 April 1998. The implementation of that agreement was premised on the certification of an agreement made under s 170LK, that is an agreement between ENA and its employees and not the CPSU (at least in the absence of an order under s 170M(3)). Brushe said that she signed the AWA because she believed it was the only way she could have her employment transferred to ENA. Her belief at the time was that she would not have a job with DEETYA once the CES had closed as there had been a large number of redundancies of CES staff who did not want to transfer to ENA. She was also aware that there had been cut backs in the APS generally and that there were limited job opportunities in Coffs Harbour.
57 As a result of the exercise of the automatic transfer power by the Prime Minister (under s 81C), Brushe took up employment with ENA on 1 May 1998. The declaration was published in the Commonwealth Gazette on 4 May 1998. On 12 May 1998 Brushe received a letter from a human resources manager at DEETYA informing her of the mobility rights she had notwithstanding their transfer to the ENA. In substance, she was able to seek reappointment to the APS subject to certain conditions. At some stage after 1 May 1998, Brushe's AWA was approved by the Employment Advocate. Brushe gave evidence, which was not challenged, that the work she was doing on 26 May 1998 (and, I infer, had been doing since her transfer) was at least substantially the same as the work she had been doing before her transfer. She was working at the same office and at the same desk.
58 I turn now to consider the position of Walden. I accept his evidence. Like Brushe, Walden took up employment with ENA on 1 May 1998. Before then Walden was employed at the Marrickville office of the CES but immediately before his transfer, he was employed at the Central Business District office of the CES. He had been employed in the CES for approximately four years performing duties including interviewing and registering job seekers, matching job seekers to vacancies, speaking to employers about vacancies and developing strategies with long-term unemployed job seekers to improve their job seeking skills.
59 Walden expressed interest in employment with ENA in late 1997 because he thought that once the CES was closed, his job would no longer exist and that if he worked for ENA he would do substantially the same work as he had done with CES. He subsequently underwent a selection process and on 25 February 1998 received an e-mail from the business manager of the Sydney Central Business District office of CES. The e-mail enclosed what was described as a letter of offer for a position. The enclosure was the February 1998 invitation letter (from Hall, the regional manager, Sydney metropolitan region). Walden e-mailed Hall on 3 March 1998 accepting the offered position subject to finalisation of a satisfactory employment framework. He was then aware that there had been negotiations between CPSU and ENA about the terms and conditions he would work under. He was also aware the Commonwealth had given certain guarantees about some terms and conditions and that his understanding was that the rest of his terms and conditions were going to be covered by a certified agreement.
60 In early April 1998 he received a draft AWA from ENA. He had seen the memorandum dated 26 March 1998 from Storey, saying that employees could elect to be employed under an AWA or under identical terms determined by the board under s 81C. The memorandum also said that a certified agreement would be offered to all staff in due course. Walden signed the AWA. He was aware that an AWA prevented an award applying but he felt he had no option but to sign the AWA if he wanted to remain in employment. He thought he would have no job in DEETYA once the CES was closed. And he was then aware that there had already been a large number of redundancies with respect to CES staff who did not want to transfer to ENA. He was also aware of cut backs in the public service generally. He believed he would ultimately be unemployed if he did not transfer to ENA which was something he did not want. It is not entirely clear when Walden signed the AWA but it was probably shortly after 23 April 1998. On that day he had a conversation with Schanka who told him that he had spoken to Foster and that Foster had said ENA had altered its position and AWAs had to be signed. Walden was told that Foster's position was that Walden's offer of employment would be withdrawn if he had not signed and returned an AWA by the close of business on 24 April 1998. Walden had earlier been told (in early April 1998) by Schanka that ENA's position (as recounted by Redgen) was that no-one would have to sign an AWA if they did not want to.
61 On 23 April 1998 Walden signed a letter appointing the CPSU as his bargaining agent for the purpose of making, approving, varying or terminating an AWA with ENA. After taking up employment with ENA on 1 May 1998 he continued to do substantially the same work as he had done when employed with CES. After these proceedings were commenced he received a letter from Storey (dated 25 May 1998) asking him whether Storey should try to facilitate his transfer back to the APS.
62 Schanka's position was much the same as that of Walden and Brushe. I accept his evidence. At the time of commencing employment with ENA on 1 May 1998, he had been employed by the CES and Employment Assistance Australia ("EAA") (October 1994 to April 1996) for five years, having commenced employment in March 1993. Schanka's duties had been broadly the same as those of Walden, Brushe and Burns though he had been involved in staff supervision as well. After taking up employment with ENA his duties remained the same except he had no formal supervisory role. Schanka was offered a position with ENA and accepted the offer in February 1998. His understanding, at the time, about the basis on which he might be employed, was the same as Walden's. Schanka received the memorandum from Storey dated 26 March 1998 offering a choice (AWA or board determination) and the electronic notice from Storey dated 25 March 1998.
63 When Schanka received the AWA and related material in early April 1998 he spoke to Redgen who told him he did not have to sign the AWA and could be employed under the terms and conditions determined by the board. No complaint was made by Schanka about the prospect of employment on this basis. On 14 April 1998 he received a letter from DEETYA informing him that because he had nominated ENA as a first employment preference the department was not pursuing further redeployment or redundancy action for him. He was also informed in that letter that he would be transferred to ENA on 1 May 1998 under s 81C. On 22 April 1998 he read a CPSU Bulletin which prompted him to ring Foster on 23 April 1998. He was then informed by Foster he had to sign an AWA and return it the following day and the board determination was no longer an option. Schanka asked about the certified agreement and Foster told him the question of the certified agreement was still before the Court. He then signed an AWA and did so for substantially the same reasons as Walden. On the same day, 23 April 1998, Schanka appointed CPSU as his bargaining agent.
64 It is, at this point, appropriate to refer to the evidence of Mr Robert Ashfield who was originally one of the applicants but was later removed as an applicant. It is not suggested, however, that he does not remain a member of the group on whose behalf the representative proceeding is maintained. He swore an affidavit in July 1998 which counsel for ENA read but was not required for cross-examination. He was then employed by ENA as an employment consultant. In early 1998 he underwent a process of selection for employment with ENA similar to that discussed earlier. However his evidence was that when he was offered a position as an employment consultant with ENA on the condition that he sign an AWA he said he had three weeks notice during which to consider the proposed AWA, was never pushed to sign it and did not consider that any time he was placed under pressure or duress in connection with his AWA. He said he was happy to sign it and he continued to be happy to remain in the situation with which he had agreed.
65 It is necessary to say something about what ENA and DEETYA were telling staff generally in early 1998 about the terms and conditions on which they would be employed by ENA and the legal framework in which those terms and conditions would be prescribed. On 20 February 1998 Storey told staff that ENA was still working towards meeting the deadline for a certified agreement at the end of March 1998.
66 On 25 February 1998 a kit was sent to all DEETYA employees by the departmental secretary providing detailed information about the options available to them including employment with ENA, though in relation to such employment, it did not deal with terms and conditions other than identifying the minimum guaranteed provisions. It did not deal with the legal framework. It is to be recalled that the February 1998 invitation letter (see paras 7 and 8 above) explained that ENA was developing "an employment framework" with existing employees which, when finalized, would be reflected in a certified agreement.
67 On 10 March 1998 Storey sent a bulletin to all staff suggesting that it might be difficult to achieve the objective of having a certified agreement in place in time.
68 However, the question of how terms and conditions of ENA employees would be regulated was made clear in the memorandum of 20 March 1998 which has already been mentioned. It is to be recalled that on 20 March 1998 the board of ENA exercised the prescription of conditions power and that Storey informed staff of the choice they had (employment on an AWA or under the board's determination) in his memorandum dated 26 March 1998 (though sent on 20 March 1998) which was repeated in a more detailed notice (posted electronically) dated 25 March 1998. In the memorandum sent on 20 March 1998, Storey indicated that in due course a certified agreement would be offered to staff. In the electronic notice of 25 March 1998, Storey said the terms determined by the board, found also in the AWAs, were identical to those in the "proposed Certified Agreement". At this time, while the offer of employment under the board's determination was on foot, the departmental secretary of DEETYA sent a circular to all staff noting that ENA had "set its terms and conditions of employment", "encourag(ing) CES staff who had received an offer (from ENA) to consider positively their options for employment with (ENA)" and in effect, advising staff to weigh up the short term benefits of redundancy packages compared to "the opportunity to establish a new career in a new organisation in a new market."
69 Returning to the board's decision of 20 March 1998, it is necessary to consider why it was made. Plainly, the board believed a certified agreement of the type ENA was aspiring to create would not be in place by 1 May 1998. One course open to the board was to simply offer AWAs to all employees. However, it is comparatively clear, in my opinion, that the reason why the board adopted the strategy it did was because it was then concerned it would not be able to recruit sufficient numbers by simply offering AWAs until a certified agreement was put in place. It is to be recalled that the earlier strategy of ENA was set out by Storey in his letter to the Minister of 6 March 1998. It involved initial recruitment under AWAs, the creation of a minimum rates award and the ultimate adoption of a certified agreement based on that award. However, as is apparent in the letter of 16 March 1998 Storey sent to the Minister, ENA was not attracting the numbers it had hoped and was looking at a potential shortfall. This led to the question posed by the Minister in his letter of 18 March 1998 about how ENA would attract volunteers. Two days later the board exercised the prescription of conditions power which was publicly offered by Storey that day and this occurred for the reasons just discussed.
70 Why then was the offer of employment under the board's determination later withdrawn? It is to be recalled that in a letter dated 2 April 1998, the CPSU threatened legal action challenging the validity of the board's determination of 20 March 1998. It appears that the threatened proceedings were never commenced nor any undertaking given though, as is already apparent, ENA did subsequently indicate that the option of employment under the determination was not available to employees taking up employment with ENA.
71 However it is clear from a memorandum from Foster to regional managers (a copy of which was sent to Storey) dated 9 April 1998, that the threat of litigation by CPSU was not then viewed as a reason to withdraw the offer of employment under the board's determination. In the memorandum Foster said:
"Earlier this week the union also threatened us with an injunction over our use of section 81C(3) to establish Board determined employment conditions for staff transferring to us on 1 May. Without going into detail the reality is, the cleanest, simplest and best option for us long-term is to sign up all staff, to be employed on ongoing basis, on an AWA. You should encourage potential employees to this option, pointing out that we now have over 300 employed under that arrangement and I, for one, have no complaints from anyone who has joined us in this way. In cases where you have an individual that insists on employment under the Board terms and conditions, refer them to me and I will arrange the necessary paperwork."
72 I infer from this memorandum that Foster remained prepared, at this time, to facilitate the transfer of an employee whose employment would be regulated by the board's determination and not an AWA, if the employee insisted on such an arrangement even in the face of the threat of litigation by the CPSU. This was the position being adopted even after the time had passed (4pm on 6 April 1998) for ENA to give the undertaking demanded by the CPSU. It was clear from other parts of this memorandum that at this time Foster was, on behalf of ENA, moving towards using the automatic transfer power in s 81C to transfer staff from DEETYA to ENA.
73 Notwithstanding what CPSU said in its letter of 2 April 1998, it issued a bulletin to DEETYA members on about 6 April 1998 telling them they did not have to sign an AWA and effectively telling on they could take up employment with ENA under the board determination. It is unlikely that this bulletin would not have come to the attention of ENA's management responsible for making decisions about recruitment. Another CPSU bulletin was sent on 21 April 1998 telling members that the CPSU's view was that transfer under the board's determination was the best option for transferring to ENA. It is clear that by then the CPSU was aware of the position taken by ENA that the option of employment under the board's determination was being withdrawn. It must be accepted that the position then being adopted by CPSU was somewhat disingenuous given the terms of the letter of 2 April 1998. However what is important is that the message conveyed by the CPSU to its members was that at that time it did not oppose, and actually supported, transfer under the board's determination.
74 Indeed in a briefing minute to the Minister dated 28 April 1998 prepared after a meeting between departmental staff and representatives of ENA on 27 April 1998, reference was made to an offer by the CPSU (through its solicitors) on 23 April 1998. The offer was that the CPSU would withdraw its threat of Federal Court action regarding what was described as "the s 81C transfers" if ENA returned to its position of offering a choice between transfer after signing an AWA and under the board's determination. The minute noted that by 6pm on 24 April 1998, ENA had not responded to this offer and was awaiting advice from its lawyers. The minute also noted that CPSU was advising members to sign an AWA on the basis that it would argue that there was no genuine consent.
75 On 18 April 1998 Foster sent an e-mail to a number of senior managers and Redgen advising them of the decision to withdraw the option of transfer on the basis that the employee's conditions of employment were set by the board's determination and not an AWA. The reason for this decision was stated in the e-mail this way:
"In light of the union's threat and following legal advice it was decided that we should not proceed with this option. Given this, the only option for staff being offered ongoing employment is to sign an employment relationship agreement."
76 Foster had no particular reason to misstate to this limited audience why the decision had been taken. However what he meant, in the circumstances, is another matter. In the e-mail he spoke of the union's threat as at least a factor, if not the reason, for withdrawing the option of transfer under the board's determination. However what the legal advice was and what it concerned is unclear. It may have related to, and perhaps only to, the legal issues raised by the CPSU's letter of 2 April 1998. However I doubt this is so given that the overall strategy of ENA had a legal component that was probably the subject of ongoing legal advice coloured by matters such as the attitude taken by the CPSU from time to time, the response of staff and whether ENA was or was not meeting its staffing and other related objectives. No witness was called by ENA explaining in detail who made the decision to withdraw the option of transfer under the board's determination and why it was made. Nor was any witness called to explain why the CPSU offer made on 23 April 1998 was either not acted on or rejected. One inference from the limited material before the Court is that the threat of legal action from the CPSU focused attention on the continuation of the offer of transfer under the board's determination. The decision was ultimately made to withdraw it in a context where ENA was no longer concerned about meeting its employment targets and believed those people offered employment who had not, by then, signed AWAs would do so in the face of ENA's insistence and the need to make a decision within very short compass. The fact that within days of the decision having been made by ENA to withdraw the option of transfer under the board's determination, ENA did not take up the CPSU offer which could have revived that option rather suggests that this inference should be drawn. What, however, cannot be inferred, in my opinion, is that the threat in the CPSU letter of 2 April 1998 was the principal and operative reason for the withdrawal of the option of employment under the board's determination.
77 Even though by as late as 7 April 1998 concerns were being expressed in briefing notes to the Minister from a deputy secretary of DEETYA about ENA meeting recruitment targets even having regard to the decision of the board of 20 March 1998, it nonetheless appears that within about a fortnight of offering employment under the board's determination ENA believed it was going to meet its target number of employees. So much is apparent from the letter of 8 April 1998 from Storey to the Minister referred to in par 40 above.
78 I should mention that the Minister expressed concern to Swan in a letter dated 23 April 1998 about what the Minister described as the "backdown" on ENA's commitment to enable staff to transfer under the board's determination and not an AWA. In that letter the Minister noted that the advice of the CPSU was three weeks old and had not been acted on. The Minister also noted that the concerns of the CPSU "related most strongly to the prospect of staff being involuntarily transferred". One response (the Minister and Swan met on 27 April 1998) came in a letter dated 4 May 1998 in which Swan acknowledged that the CPSU took no action after the deadline it set for ENA to act had passed. However he indicated that the CPSU could proceed with the action once the Prime Minister exercised the automatic transfer power. Swan then said that in recognition of the CPSU's intentions, ENA withdrew its offer under the determination. Swan had an obvious interest in placating the Minister and I am not prepared to accept that the explanation of possible court action after the formal transfer was decisive in the thinking of the individuals in positions of authority within ENA.
79 I should also deal with why the letter offering employment was sent in the terms it was. It is curious that after the board made its decision on 20 March 1998 to offer employment on an alternative basis (under its determination and not an AWA) the letter containing the April 1998 condition was sent in unequivocal terms. That is, the letter did not suggest there was any alternative to employment under an AWA and no reference was made to the board's decision. It is not entirely clear when kits containing these letters were first despatched though the letter to Burns was dated 31 March 1998. Redgen's explanation was that in the circumstances it was impracticable to alter the letter. His evidence was that the letters were produced in an office in Melbourne possibly a week or so prior to regional managers getting the letters (and, I infer, the kits of which they formed part). It appears that it was intended that the kits containing the letters would be personally delivered to each employee and the latter dated the day it was actually given. Redgen said that it would have been necessary to redo the kits and the import of his evidence was that this could not have been achieved within the timeframe available. He believed, at the time, that the letters would be read by the recipient who would be aware of the notice from Storey. I accept his evidence.
(iii) The employment environment during the period of transition and the options available to employees who might obtain employment with EN
80 In the preceding discussion, some of the options available to members of the APS affected by the creation of the competitive employment services market have been touched on. One option was to take up employment with ENA, if offered. The second was voluntary retrenchment though that depended on an offer of voluntary retrenchment being made by DEETYA. The third was redeployment within the APS including job swaps with other employees in the APS. In addition to the documentary and oral evidence already referred to, evidence was given about the options available to affected APS employees by Ms Vivienne Colmer. At the time ENA was created, she held a full-time elected position with CPSU and was responsible for representing the industrial interests of CPSU members at DEETYA. Redgen also gave evidence about this matter.
81 Colmer said that the total number of staff ENA needed was 1100. Between January and March 1998 about 250 staff were employed by ENA though they were predominantly still formally employed by the Commonwealth. At the time the CES and EAA ceased operations on 30 April 1998, the total number employed as permanent employees under the PS Act in what was generally known as the DEETYA Network (CES, EEA and the Transitional Services Unit) was 4400. There were also employees employed in the DEETYA Network as fixed term or temporary employees under the PS Act. About 712 permanent DEETYA Network employees were offered and accepted employment with ENA and later a further 400 temporary DEETYA Network employees were offered and accepted employment with that company. On about 1 May 1998 approximately 2000 of the permanent DEETYA Network employees accepted offers of voluntary retrenchment. A further 250 remained with DEETYA performing "winding up" duties and some of these later took voluntary redundancy. Almost all the DEETYA permanent employees who had not accepted employment with ENA or were not required for "winding up" duties, were declared excess to requirements on or about 1 May 1998 (this included those who accepted offers of voluntary redundancy and those who applied for redeployment).
82 The circumstances in which DEETYA employees were making decisions about their future included arrangements embodied in the Network Agreement. It is to be recalled it was certified by the Commission on 30 March 1998 and operated from that day. It provided for an additional payment of $3000 for any permanent employee who was voluntarily retrenched and for any permanent employee who sought to be retrained and redeployed, access to an additional $3000 for retraining. An employee who was declared excess was entitled to be retained in employment in the APS for periods between 7 months and 13 months depending on age and years of service during which time they could seek employment outside the APS and undergo retraining. The Network Agreement also provided for job swaps with other employees employed in Centrelink or elsewhere in the APS. The job swaps scheme permitted an employee with DEETYA who otherwise might be made redundant (voluntarily) to take up the position of another employee where the other employee wanted to be made redundant (voluntarily). This was subject to the agreement of the relevant departments.
83 The position confronting staff in DEETYA in early 1998 was against a background in which there had been a substantial reduction in the size of the APS generally. The APS had reduced in size from a peak of 178,000 in June 1987 to 121,000 in June 1998. In addition to the reductions in staff numbers because of functions being transferred from the APS, some 25,000 positions had been lost (17 percent) between 1989 and June 1998 with the reductions accelerating markedly from June 1995. In relation to DEETYA specifically, its 1997-1998 annual report records that staffing had fallen from a peak of 16,000 (when is not specified) to 4000 by 30 June 1998. From May 1995 to 1 July 1998 there were about 5400 voluntary retrenchments, with 2254 voluntary retrenchments in 1997-1998 (though this plainly includes losses arising from the creation of ENA and the privatisation of Commonwealth job placement services). It is also apparent from that report that there had been a high level of uncertainty among staff in DEETYA about issues concerning their ongoing employment and employment with ENA until very late. I infer this meant until ENA staffing levels had been settled and positions filled. The circumstances in which DEETYA staff were considering offers of employment with ENA were described by Bird (it is to be recalled he was the regional manager who dealt with Brushe) in a memorandum to some staff as "the valve on the pressure cooker that had been simmering for the past 18 months has finally been released". This statement implies that there was a level of high tension among staff as to whether they would be offered employment with ENA or not.
84 Colmer gave evidence that, in her opinion, the chances of redeployment to other positions in the APS were, in May 1998, poor because the number of employees in the APS was declining dramatically due to government spending cutbacks, privatisation, contracting out and restructuring. She also expressed the opinion that employment opportunities in the APS in rural and regional Australia were even more restricted than in the capital cities, and many DEETYA Network employees worked in locations where few, if any, other APS positions were located. Colmer was cross-examined about these opinions.
85 The focus of the cross-examination was a bulletin issued by Colmer on 6 April 1998 to CPSU members in DEETYA. In that bulletin she said:
"APS RedeploymentIn most locations good progress is being made in finding other ASP(sic) job opportunities for those opting for redeployment. Again more information will be available from your CPSU branch as well as from the DEETYA Transition Units"
Her ultimate explanation (at one stage her explanation appeared to be that the passage related to progress towards obtaining jobs rather than actually obtaining jobs) of this passage, as I understood it, was that it concerned DEETYA employees being placed in employment elsewhere in the APS through the job swap program prior to 1 May 1998. Before 1 May 1998 there had been some success in placing DEETYA employees in other positions through job swaps though there were regional variations as to how successful it was. She indicated it had been more successful, for example, in Melbourne and the Victorian region than some other areas. Before 1 May 1998 a job swap was cost neutral for the Commonwealth but it was not thereafter though there were some job swaps after that date. In re-examination Colmer said that for a person to effectively gain a job swap the arrangements had been in place before 1 May 1998 because that was when the affected staff at DEETYA were going to be declared excess. No evidence was led by ENA specifically challenging this evidence and I generally accept it. Colmer's evidence about limited employment prospects is consistent with the observations of Gillings in the e-mail referred to in par 54 above concerning the more limited number of job swaps with Centrelink available than originally expected. Some of the evidence of Redgen might be viewed as qualifying this evidence of Colmer.
86 Redgen gave evidence about some of these matters. I earlier described him as a senior manager. He was, in late 1997, the human resources manager for DEETYA in Victoria. In December 1997 and January 1998 he worked for both DEETYA and ENA and for ENA until 1 May 1998. From December 1997 he was involved in determining the staffing for ENA. He gave evidence (in an affidavit sworn in July 1998) about the numbers of employees in DEETYA (at 30 April 1998 and numbering 4400 in the Network) who followed the various courses. Two thousand accepted voluntary retrenchment (it is clear from his cross-examination that this figure is very approximate), 450 transferred to Centrelink, 450 performed winding up duties in the context of having indicated they accepted voluntary retrenchment, 150 performed winding up duties even though they had wanted to be redeployed but were not declared excess and 600 were declared excess. That meant approximately 750 former CES staff were seeking redeployment. Redgen also said that at the time he swore his affidavit (July 1998) 55 of the 150 were still performing winding up functions, 95 of the 150 had completed this task and been declared excess to requirements, 311 declared excess to requirements on 1 May 1998 or later were actively seeking redeployment, 210 of the 450 wanting voluntary redundancy were still performing winding up duties but would later be voluntarily retrenched and the balance had either been redeployed or had accepted a voluntary retrenchment package. He expressed the view that only a dozen or so of the 80 former Victorian DEETYA employees who had been declared excess to requirements and who had not been redeployed, would be compulsorily retrenched. He believed this would have represented the pattern nationally.
87 Redgen also expressed the opinion that a voluntary retrenchment package would have been available to the applicants (at that time this included Ashfield) and Brushe and Burns and that had they decided to remain in the APS they could have transferred to Centrelink or otherwise been redeployed in the APS. I do not place much weight on this opinion of Redgen as, to the extent that it can be tested, it is contrary to what transpired in relation to Burns.
88 However I am satisfied that employees in DEETYA who accepted employment with ENA in February 1998 did so against a background of many months of uncertainty about their future employment and that by mid-April 1998 the effective choice they had earlier had about redundancy or redeployment was narrowing and the basis upon which they could make an informed decision about employment with ENA was altering and remained uncertain until a little over a week before the effective start-up day of ENA, namely 1 May 1998.
89 The starting point in considering the issues raised in the submissions of both the applicants and ENA is the judgment of the Full Court of 3 March 2000 concerning the scope of s 170WG: see [2000] FCA 202; (2000) 97 FCR 186. The Full Court concluded that the section concerns the conduct of the person alleged to have applied duress and that duress involves the application of pressure in an endeavour to induce an existing or prospecting employee to enter an AWA containing particular terms when the pressure is, in the circumstances, illegitimate. The Full Court did not disapprove of (and perhaps can be taken to have accepted as correct) the following observations in my judgment of 24 September 1999 (166 ALR 663) at par [38]-[39]:
Part VID creates a class of industrial instrument which depends upon the agreement of an employer and an employee. Such an agreement is intended ordinarily to displace the effect of an award made under the WR Act, a state award or agreement, or state law dealing with the same, and may displace certain Commonwealth laws dealing with the same subject matter as the agreement: see s 170VQ(2), s 170VQ(4) s 170VR(1) and s 170VR(4). This process of individual agreement making is plainly intended to supplement if not displace, in appropriate circumstances, the determination of working conditions on a collective basis and a basis involving the intervention of an industrial tribunal including the potential exercise of arbitral powers. Evident in this scheme is a policy that any agreement reached between an employer and an employee (or their agents) is reached through a process of real and not illusory negotiation and general agreement. An aspect of that negotiation can include industrial action on the part of the employer or employee: see generally Div 8 of Pt VID, but constraints are placed on the nature of that action. Apart from that element of coercive influence, the process is otherwise intended to be free bargaining. So much is manifest by the provisions in Div 9 and other provisions: see s 170VR(4) which proscribe conduct which might otherwise militate against free bargaining. Not only is conduct proscribed and provision made for the imposition of penalties, but provision is also made for the granting of injunctive relief preventing or restraining proscribed conduct: see s 170VZ.It is consistent with this scheme, in my opinion, to give s 170WG(1) a broad and not narrow meaning. That is, to view it as proscribing conduct occurring during the process of negotiation which could be prevented or restrained by injunction or in respect of which a penalty could be sought. To treat s 170WG(1) as proscribing conduct which has, in fact, lead to an AWA being made by one party (or perhaps both) who has been overborne by another person would limit the utility of the provision as a means of ensuring free bargaining. Effective injunctive relief would not be available to avoid an agreement being made which was the result of free bargaining if it was necessary to ascertain the quality of the consent as a condition precedent to establishing that the conduct was proscribed conduct. Moreover it would only, after the event, expose a person to a penalty for engaging in conduct which has resulted in a process of bargaining at odds with the type of bargaining contemplated by Pt VID. There is no compelling reason, in my opinion, apparent from the language of s 170WG(1) or the legislative scheme in which it appears to treat s 170WG(1) as limited in the way contended by ENA.
90 I later said at [42]-[43]:
In my opinion s 170WG(1), properly construed, applies to the conduct of a person applying duress irrespective of whether that conduct actually results in the making of an AWA and irrespective of whether, as a matter of fact, the party subjected to that conduct did not freely make the AWA if one was made.That is not to say that in ascertaining whether conduct contravened s 170WG(1), the potential effect of the conduct on the exercise of free will by the person to whom it is applied is irrelevant. It plainly is in this way. The conduct of the contravening party must involve illegitimate pressure. I doubt that the mere fact that an employer offers employment on the basis that an AWA in certain terms must be made, is illegitimate pressure. It would do no more than place the potential employee in the position of either declining or accepting the employment on those terms and regulated that way, that is by an AWA. Something more is probably necessary and whether pressure is illegitimate will ultimately depend on the factual context in which the allegation of duress arises. But it must be pressure that is likely to have the effect of denying the exercise of free will if an AWA was made. It also must be intended to have that effect.
91 The case of the applicants was ultimately reflected in a statement of claim. While these are proceedings for a penalty, they are also representative proceedings. Pleadings provided a convenient means of identifying the issues. Pleadings were first ordered in November 1999. As noted earlier in those reasons, the original form of the statement of claim was challenged by ENA and the statement of claim in its final form emerged after the hearing in November 2000. The third further amended statement of claim was filed on 5 December 2000.
92 The critical paragraphs of the statement of claim are paragraphs 64, 65, 66 and 69. They provide:
Breach of Section 170WG(1)64. ENA in about March or April of 1998, having the knowledge referred to in paragraphs 53 to 55 above, wrote to group members notifying them that in order to obtain employment with ENA they were required to enter into AWAs.
Particulars
Standard form letters bearing dates in March 1998 or April 1998 under letterhead of Employment National Ltd.
65. ENA at all material times maintained its insistence that in order to obtain employment with ENA group members were required to enter into AWAs.
66. In engaging in the conduct referred to in paragraphs 64 and 65 above, ENA applied pressure to group members.
...
69. The pressure applied by ENA to group members was illegitimate pressure for the purpose of s170WG(1) of the Act.
(a) the pressure had, to ENA's knowledge, the effect that in order to obtain employment with ENA group members had no choice but to enter into an AWA
(there follows 16 paragraphs containing further particulars)
93 In the defence, paragraph 66 and 69 are denied. In relation to paragraphs 64 and 65, the defence asserts that from about 18 April 1998, ENA made offers of employment to persons, conditional upon them entering into AWAs containing their respective terms and conditions of employment, but otherwise denies the paragraphs.
94 There were a number of letters seeking and providing further particulars. One particular sought by ENA was the "usual details" said to establish the insistence alleged in paragraph 65. This required the applicants to specify material dates and places. The applicants responded by referring to paragraph 64 (this can be reasonably taken to be a reference to the period in March and April 1998 when the letters were sent out) and saying that ENA did not thereafter alter the position set out in the letters. As the statement of claim was refined, one particular of the illegitimate pressure was an allegation that at the time the pressure was applied there was, in substance, a dispute between the CPSU and ENA about whether the applicable Awards would apply and ENA was requiring group members to sign AWAs which contained terms of conditions of employment which differed in significant respects from the applicable Awards. In response to a question (by way of a request for further and better particulars) of when the pressure was alleged to have been applied, the applicant's response was "at that time that ENA forwarded to group members the letters" which bore dates in March or April 1998.
95 I have referred to these matters not because the case of the applicants should be determined on some narrow pleading point. To the contrary, it is important to bear in mind the comments of the High Court in Water Board v Moustakas [1988] HCA 12; (1988) 180 CLR 491 concerning the function of pleadings. Mason CJ, Wilson, Brennan and Dawson JJ said at 497:
"In deciding whether or not a point was raised at trial no narrow or technical view should be taken. Ordinarily the pleadings will be of assistance for it is one of their functions to define the issues so that each party knows the case which he is to meet. In cases where the breach of duty of care is alleged, the particulars should mark out the area of dispute. The particulars may not be decisive if the evidence has been allowed to travel beyond them, although where this happens and fresh issues are raised, the particulars should be amended to reflect the actual conduct of the proceedings. Nevertheless, failure to amend will not necessarily preclude a verdict upon the facts as they have emerged....It is necessary to look at the actual conduct of the proceedings to see whether a point was or was not taken at the trial, especially where a particular is equivocal."
96 See also the decision of the Full Federal Court as to the role of pleadings in Nescor Industries Group Pty Limited v Miba Pty Limited (1997) 150 ALR 633 at 638-644 per Davies J and at 647-648 per R D Nicholson J.
97 It was of central importance to the applicants' case that the letter containing the April 1998 condition required the recipient enter into an AWA as a condition of obtaining employment with ENA. It is almost self-evident, in my opinion, that this letter can be viewed, in the circumstances, as constituting pressure on each recipient to enter an AWA. It was effectively a direction to do so to gain employment with ENA having regard to the terms of the fourth paragraph. The more difficult question raised by the evidence is whether illegitimate pressure was applied, at the time the letter was sent, particularly given that it probably would then have been known by each recipient of the letter that employment could be obtained on the basis that the terms and conditions of employment had been determined, for the time being, by the board under s 81C(3). That is, it was unnecessary to enter an AWA to secure employment with ENA. A further question clearly raised by the evidence is whether, later in April 1998 when the April 1998 condition became fully operative because the option of employment under the board's determination was withdrawn, illegitimate pressure was applied or maintained.
Consideration of issues
98 In the following discussion I focus on matters raised by the submissions and evidence which I view as significant. It is convenient to commence by discussing the position after about 20 April 1998. That is, after ENA withdrew the option of employment under the board's determination. At that time a letter containing the April 1998 condition had been sent to a number of employees because they had indicated a preference for employment with ENA and later accepted the conditional written offer made earlier in 1998 subject to the establishment of an acceptable employment framework. The group on whose behalf these proceedings are brought are the employees who received that letter.
99 Notwithstanding the terms of the letter, the employees had a choice of employment under the board's determination, and not an AWA, until about 20 April 1998 when that option was withdrawn. It was then that an employee seeking employment with ENA clearly had no alternative but to sign both an AWA and an agreement to terminate the AWA before they could take up employment with that company. At this stage the insistence on acceptance of employment on the terms in the letter containing the April 1998 condition was pressure to enter an AWA. It is also clear that ENA intended this to be the case. That is, consistent with the objective senior officers of the company had articulated from time to time during the preceding months, ENA was intent on ensuring that any employee who took up employment with it did so after signing an AWA.
100 However the question raised by s 170WG is not answered, in my opinion, by first asking whether the prospective employer (as alleged in this case) applied pressure as a discrete question and then asking whether the pressure was illegitimate. The question raised by the section is whether duress was applied which can be answered by considering whether illegitimate pressure was applied to secure, at the very least, ostensible agreement to enter an AWA and thereby to secure, again at the very least, ostensible agreement to the terms and conditions of employment embodied in the AWA. That is, to repeat what I said in the judgment of 24 September 1999, whether illegitimate pressure was applied, and conduct was engaged in, by a person (in this case the prospective employer, ENA) that might result in illusory and not real negotiation or bargaining and general agreement about the terms and conditions of employment embodied in an AWA and about an AWA being the means of prescribing those terms and conditions. It is important to recognise, in my opinion, that the section is concerned with negotiation or bargaining by or on behalf of an individual employee or prospective employee with an employer or prospective employer. That is, it concerns negotiation or bargaining at an individual level.
101 At the time the option of employment under the board's determination was withdrawn the group to which the April 1998 condition applied were those employed in the APS who wanted to take up employment with ENA and had not, by then, signified acceptance of employment with ENA on the terms offered and signified agreement to enter into an AWA. Brushe, Walden, Schanka and Burns were in this group. Before considering the circumstances of the group more generally, it is convenient to consider the position of these four individuals. They were then seeking employment with ENA to do, effectively, the same or substantially the same work as they had done as an employee in the APS as part of the CES. That is, they were seeking employment with ENA to do the same job as they were then doing though with a different employer and in a different context in the sense that there was no longer to be an effective monopoly on the provision of employment placement services on behalf of the Commonwealth. As already discussed, the evidence establishes this was the position Brushe, Walden, Schanka and Burns were in after 20 April 1998 and before 1 May 1998. Burns did not take up employment with ENA (so there is no evidence enabling a comparison between work done before and after taking up such employment (a comparison which can be made in relation to Brushe, Walden and Schanka)). However it can be inferred from the letter he was sent which made reference to the position on offer being located in the Ballarat area and the enclosed duty statement, that he was being offered the position he held with the CES before being declared excess shortly before 1 May 1998.
102 I refer to this matter because the offer of employment in the same job is, in my opinion, the singularly most important of the matters particularised in par 69 of the statement of claim as evidencing illegitimate pressure. What effectively happened with Brushe, Walden, Schanka and Burns was that they were offered employment with ENA to perform the same or substantially the same work in the same position and location as they had done as employees in the APS employed in the CES. The offer was by a company associated with the Commonwealth. However each was, in substance, rendered impotent in negotiating or bargaining about the terms and conditions on which they would perform the work which differed from the terms and conditions they had, to that point, enjoyed and whether the employment would be regulated by an AWA (with, potentially, significant ramifications on their capacity to bargain collectively) by ENA's insistence on enforcing the April 1998 condition as a precondition to employment.
103 ENA knew in late April 1998 that Brushe, Walden, Schanka and Burns wanted to take up employment with it in preference to voluntary retrenchment, other APS redeployment and redeployment to Centrelink under a DEETYA/Agency Placement Arrangement. ENA would then have known that each of them securing other employment in the APS at that time was not assured.
104 As to the terms and conditions of employment in the AWA, ENA knew that Burns was prepared to work under those terms and conditions at least temporarily. That was because he had indicated he would take up employment with ENA under the board's determination which embodied the same terms and conditions. However Burns made it clear that the acceptance of those terms prescribed by board determination was on the basis that they might be altered (and from his perspective potentially improved) by a certified agreement between the CPSU and ENA and before a certified agreement was made, the terms and conditions in the applicable Awards would prevail by operation of s 149 of the WR Act. Thus Burns was prepared to accept the employment terms and conditions in the AWA (though reluctantly) but was not prepared to accept an AWA as the means of regulating his employment. It was clear from the position Burns took that he was anxious that there be further negotiation about the terms and conditions of his employment though he was content for this to happen collectively. It was also clear that he wanted to negotiate the means by which the terms and conditions of his employment would be regulated. However he was effectively placed in a position where there was to be no negotiation or bargaining. He was presented with the options of employment on the terms proposed by ENA or no employment. The approach taken by ENA to Burns involved, in my opinion, the application of duress. It is true that when this issue of duress was raised with Foster, he effectively indicated to Burns that he would not accept him as an employee. However the fact that Foster took that approach does not alter the position Burns was put in as a result of the conduct of ENA. It simply meant that because Burns was not prepared to yield to the pressure brought to bear by ENA he did not take up employment with ENA.
105 The position of Schanka is not greatly different. He made no complaint when informed by Redgen that if he did not sign an AWA he would be employed on the terms and conditions the board had determined. Thus it cannot be said that Schanka was constrained by ENA's conduct in negotiating or bargaining about the terms and conditions themselves at least as they might apply for the time being. However it would have been clear to both Redgen and Foster that Schanka did not want to sign an AWA and his interest was in the terms and conditions of employment being regulated by a certified agreement with the CPSU negotiated collectively. The conduct of ENA meant that Schanka was effectively given no opportunity to negotiate whether the terms and conditions of his employment would be regulated by an AWA or by some other means such as a certified agreement with the CPSU.
106 The position of Brushe is also similar. It would not have been apparent to ENA from Brushe's initial discussions with Gillings and her subsequent return of the signed AWA with the standard form letter that Brushe took issue with the terms and conditions embodied in the AWA at least as an interim measure. However it would have been clear to Gillings that Brushe opposed the use of an AWA as the means of prescribing those terms and conditions and wanted her employment regulated by a certified agreement negotiated with the CPSU. The effect of an AWA is to displace other industrial prescription in the way discussed in the passage set out in par 89 above. She was given no effective opportunity to negotiate an outcome other than that ENA was insisting on, namely prescription by means of an AWA.
107 Walden's position is a little different. Having regard to his evidence, he was, in April 1998, concerned at least about the use of an AWA as a means of determining his terms and conditions of employment. There is no evidence that Walden spoke to anyone in a position of authority in ENA about his concerns at the time. There was, however, the conversation that Schanka had with Foster on 23 April 1998 concerning employees at the Sydney office which included Walden. It is probable that Foster knew Walden was one of the employees who, by 23 April 1998, had not signed an AWA. It is also probable that Foster then believed that Walden (and the other employees at that office) had not signed an AWA because his preference had been for the regulation of his employment under the board's determination. It was in this context that Foster gave the ultimatum to Schanka that AWAs had to be signed within the day or the offer of employment would be withdrawn. Foster would have then expected that ultimatum to be conveyed to Walden which it was.
108 ENA would have known that by entering an AWA each of Brushe, Walden, Schanka and Burns would have, if later employed by ENA, forgone the right to take protected industrial action in pursuit of particular terms and conditions of employment which might ultimately be agreed to by ENA and reflected in a certified agreement and particularly an agreement with CPSU: see s 170VU(1), and any existing award prescription would be displaced by the AWA. It cannot be assumed, as ENA effectively invited in submissions, that because it did not want to enter an agreement with CPSU, there never would be such an agreement which might then be certified.
109 In these circumstances ENA insisted on Brushe, Walden, Schanka and Burns entering AWAs if they were to take up employment with the company and it was not, from about 20 April 1998, prepared to countenance the prescription of terms and conditions of employment by means other than an AWA. It was a deliberate policy which denied Brushe, Walden, Schanka and Burns any opportunity to negotiate or bargain about either the terms and conditions on which they would be employed or the means by which the terms and conditions would be prescribed. They were effectively forced to enter an AWA if they were to take up employment with ENA, and were given, after the withdrawal of the offer of employment under the board's determination, only days to make up their minds. While each was asked to (and all except Burns did) sign an agreement facilitating the termination of the AWA, it was to be effective only in the circumstances ENA aspired to achieve, namely a certified agreement under s 170LK.
110 It might be thought that unless ENA had taken the position it did, it would have effectively been precluded from negotiating with any particular employee transferring from the APS (and Brushe, Walden, Schanka and Burns in particular), terms and conditions of employment acceptable to both the employee and ENA and reaching agreement that the terms and conditions be regulated by an AWA. However ENA elected in late 1997 to embark on a sophisticated and potentially unfair stratagy of using the PEPE 100 to create a certified agreement of general application with the effect of both prescribing terms and conditions of employment of a significant number of employees precluding involvement of the CPSU and displacing the operation of the applicable Awards if, as a matter of law, they applied. The use of a small number of employees to create a certified agreement of subsequent general application has since been critically discussed by a Full Court in Mine Management Pty Ltd v Construction, Forestry, Mining and Energy Union [1999] FCA 847 and [1999] FCA 847; (1999) 164 ALR 73 at [121]- [127]. As events transpired, CPSU did have some involvement. However, ENA did not, in late 1997, simply embrace a strategy of negotiating AWAs, if that was ENA's preferred method of industrial prescription, with all employees it wished to take on from the APS when the time arose to do so. It is true that the ministerial announcement of 10 December 1996 tended to circumscribe what PEPE (and later as ENA) could do when it spoke of terms and conditions being determined by an "initial certified agreement negotiated by the PEPE and its staff organisations". However, ultimately, the approach of ENA and the evaluation of its conduct must be seen in the context of it having made the decision that, to the extent that it was at all possible, employees would be employed on AWAs. Having embarked upon this course, it was required to conduct itself in a way that was not proscribed by the WR Act. In relation to Brushe, Walden, Schanka and Burns it failed to do so and applied to them illegitimate pressure constituting duress.
111 It is, in my opinion, no answer to say, as suggested by ENA in its submissions, that the course ENA adopted was a defensive one necessary for its commercial viability and a response to the manoeuvrings of the CPSU. ENA wanted to employ the people to whom it made offers, both in a qualified way in February 1998 and an unqualified way in April 1998 (subject to signing an AWA), which included Brushe, Walden, Schanka and Burns. ENA wanted to employ them on the terms and conditions of employment it proposed and only in an industrial context where the applicable Awards could not apply and the CPSU was to have no role, or at least no role of negotiating on a collective basis. Moreover there is no evidence establishing what the commercial consequences were (or were believed to be) in a concrete sense to ENA in not taking the course it did, namely requiring employees to take up employment under an AWA on the terms it contained.
112 The operation of s 170WG was recently considered by Ryan J in Maritime Union of Australia v Burnie Port Corporation Pty Ltd [2000] FCA 1189; (2000) 101 IR 435 ("Burnie"). A number of other authorities were referred to by the parties but they are, in my opinion, of peripheral relevance and it is unnecessary to refer to them. The relevant circumstances in Burnie were as follows. In August 1999, Burnie Port Corporation ("the Corporation") had two vacancies in its workforce. The Corporation decided that the employment of the person engaged to fill each of those vacancies should be governed by an AWA. The employment of the Corporation's workforce had previously been governed by an enterprise bargaining agreement ("the existing EBA"). From December 1998, there had been negotiations between the Corporation and the Maritime Union of Australia ("the MUA") for a new EBA. In April 1999, the Corporation offered its workforce employment pursuant to an AWA rather than an EBA. By August 1999, agreement had not yet been reached between the Corporation and the MUA on a new EBA. During interviews for the two vacancies, the Corporation informed applicants that if they were successful, employment would be offered on condition that they enter an AWA. One applicant, Mr Rolls, a member of the MUA but not an employee of the Corporation, objected to such a condition. He was not offered employment. At the time, employment opportunities in the Burnie region were comparatively limited. The MUA brought proceedings alleging the Corporation had contravened ss 298K(1) and 170WG(1) of the WR Act in its conduct in filling the two vacancies. Ryan J held that the Corporation had contravened s 298K(1) by refusing to employ Mr Rolls for the prohibited reason that Mr Rolls was entitled to the benefit of an industrial instrument, namely the existing EBA. However, his Honour held that the Corporation had not applied duress within the meaning of s 170WG(1). The Corporation appealed against the finding of a contravention of s 298K(1). A Full Court upheld the appeal on the basis that Ryan J had erred in finding Mr Rolls was entitled to the benefit of an industrial instrument: see Burnie Port Corporation Pty Ltd v Maritime Union of Australia [2000] FCA 1768. The Union did not put in issue in the appeal Ryan J's finding that there was no duress within the meaning of s 170WG(1).
113 Ryan J summarised the case of the Union under s 170WG(1) as follows (at par 63):
"The Union contends that the Corporation's conduct in this case went beyond merely requiring successful applicants to enter into AWAs as a condition of engagement and amounted to "duress". That contention relied on the combination of two circumstances surrounding that requirement. First, employment opportunities in the Burnie region were, to the Corporation's knowledge, abnormally restricted, and, secondly, it was said, the Corporation's motive in requiring the new employees to enter into AWAs, which revealed by the evidence to be the Corporation's pursuit of increased productivity. Those circumstances, it was submitted, combined to support the conclusion that the Corporation had taken unfair advantage of the situation of prospective employees in its pursuit of increased productivity (and presumably, profit). To exploit an unfair bargaining advantage of that kind, it was said, was to apply duress in connection with an AWA in contravention of s 170WG."
114 His Honour dealt with the Union's submission as follows (at pars 65 to 72):
"It must be acknowledged that the WR Act is generally concerned to regulate the conduct of industrial relations which it governs. The need for regulation is born of the competing interests of employers and employees to achieve the most favourable terms on which work is respectively utilized and provided. Employers are often (though not always) motivated by a desire to achieve an advantage over, or at least maintain parity with, their competitors through increased productivity and profit. Regulation under the WR Act is a means by which the effect of this instinct on employees is mitigated in the public interest, as determined by Parliament.There is discernible in many provisions of the WR Act, including s 170WG, a policy that wages and working conditions are to be determined by a process of bargaining at arm's length using weapons, including protected industrial action, which the legislation impliedly regards as fair, but without resort to proscribed tactics or techniques which are to be characterised as unfair.
It can readily be envisaged that an employer in pursuit of its own economic advantage will seek from the bargaining process contemplated by the WR Act, to restructure its workforce or to achieve economies through greater flexibility without endeavouring to reduce in real, or even relative, terms, the remuneration of the employees concerned.
If accepted in its entirety, the Union's submission would preclude an employer from utilising the legislatively-sanctioned employment instrument of an AWA (within other limitations set out by the WR Act) to achieve the object to which I have just referred, solely because entry into an AWA, whatever its terms, was insisted on as a term of engagement of new employees.
I cannot agree that Parliament in enacting s 170WG intended that the concept of duress should be capable of an application as wide as that. The WR Act expressly limits the advantage to an employer which might be gained by requiring an AWA as a condition of entry into an employment contract. That limitation somewhat diminishes the force of the Union's submission so far as it is directed to showing that the Corporation's object was to increase productivity whatever the cost to its employees. The WR Act conditions the operation of each AWA on its passing the "no disadvantage" test prescribed by s 170XA. The result is to narrow considerably the detriment that can be imposed on an employee and the advantage that can accrue to the employer when the latter successfully insists that their relationship be regulated in future by an AWA.
It may be that, in future, if the designated award that provides the criteria for application of the "no disadvantage" test is not adjusted to reflect market trends evidenced by relevant certified agreements and AWAs, the utility of the "no disadvantage" test in ensuring minimum standards will gradually diminish. However, that circumstance is not said to have arisen here and it is unnecessary therefore to consider its impact in bringing the conduct of the Corporation in relation to its AWAs within the concept of duress.
This is not a case in which those alleged to have been subjected to duress were in any relationship with the Corporation, other than that of applicants for the vacant positions. If such a relationship, from pre-existing employment or otherwise, had existed, it would have been relevant to examine the circumstances of the employer's conduct to determine whether there were features which rendered illegitimate or unconscionable a threat or inducement offered to procure entry into an AWA and thereby amounted to duress.
The terms of the proposed AWA in relation to those available to the rest of the employer's workforce and the relevant labour market as a whole will also have a bearing on this question of duress. In the present case, the Corporation has sought to compel prospective employees to enter into AWAs which are not markedly disadvantageous in their terms. Having regard to those considerations, what is left of the alleged duress in the present case is that entry into the AWAs was made a condition of appointment to vacancies in circumstances where the prevailing scarcity of employment made it more likely that the condition would be accepted by those interviewed. I have been unable to discern any positive conduct by the Corporation beyond its decision to offer employment under the AWAs, albeit with some knowledge of that circumstance. This, I consider, does not amount to illegitimate pressure of the kind needed to establish duress under s 170WG."
115 In my opinion, the circumstances in Burnie are materially different from the present case. There, the conduct alleged to constitute duress was, in essence, the making of offers of employment to strangers, who had no pre-existing relationship with the employer, conditional on the entering of an AWA, in circumstances where the employer knew that the regional labour market was unfavourable to job applicants. In this case, the impugned conduct occurred against a background in which a government employment agency was effectively being abolished and its functions transferred to private employment agencies working under contract with the Commonwealth which included a company which had an association with the Commonwealth, ENA. The applicants in this case were employees of the agency and were being offered employment with a Commonwealth authority, ENA. The applicants' circumstances raise a range of matters which were not present in the circumstances considered by Ryan J. Indeed, his Honour expressly adverted to a situation, different from that in Burnie, in which the persons alleging duress stood in a pre-existing relationship with the employer alleged to have applied duress. While the applicants in this case had no prior legal relationship with ENA, they were, in substance, being invited to continue to do the jobs they had formerly done by a company associated with their existing employer, the Commonwealth.
116 Several of the matters that point to the application of duress to Brushe, Walden, Schanka and Burns are not directly addressed in the evidence as they may have arisen in relation to the other members of the group presently under discussion. That is, the evidence does not directly address what the individual position was in relation to all other employees who took up employment with ENA (or, indeed, were simply offered employment with ENA). For example, it is not apparent whether all other members of the group were being offered the same or substantially the same position they held prior to 1 May 1998 as a member of the APS. While it may be that all the employees in the APS wanting to take up employment with ENA, or at least very many of them, were being offered, in substance, the positions they held in the CES immediately before 1 May 1998. However I cannot infer, as I was invited by the applicants to do, that as a matter of fact this was so of each and every member of the group on whose behalf these proceedings are brought. These are proceedings for a penalty and it is thus appropriate to apply the Briginshaw standard of proof: see Briginshaw v Briginshaw [1938] HCA 34; (1938) 60 CLR 336 at 362; Maritime Union of Australia v Geraldton Port Authority [1999] FCA 899; (1999) 93 FCR 34 at [200]- [201], Employment Advocate v National Union of Workers [2000] FCA 710; (2000) 100 FCR 454 at [25]- [29] and Seven Network (Operations) Ltd v Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia [2001] FCA 456 at [48] and the evidence in this matter falls short of establishing, to that standard, that each and every member of the group was being offered the position they held before 1 May 1998. There was one portion of a paragraph of an affidavit of Colmer (the last sentence of par 4(a) of an affidavit of 10 August 1998) that might have provided some direct evidence tending to prove the position generally. However the portion of the affidavit was objected to and not read. Paragraph 43 of the statement of claim appears to involve an assertion (though it is ambiguously expressed) that employees recruited by ENA would do the same or substantially the same work as they had done prior to 1 May 1998 in the APS. However, this is not admitted in the defence.
117 Nor does the evidence address directly whether any other employee who had not signed an AWA by 20 April 1998 had made known to ENA that he or she did not want to be employed under the terms and conditions embodied in the proposed AWA, did not want the prescription of those terms by an AWA or both. While an inference might be drawn from the evidence as a whole that there were employees in addition to Brushe, Walden, Schanka and Burns whose position was the same, their identities and precise number is unknown. This is an important matter as these are representative proceedings in which the applicants seek the imposition of penalties on the footing that ENA applied duress to each member of the group. Moreover the applicants ultimately sought a declaratory order that ENA had applied duress to each and every member of the group. In my opinion, the question of whether duress was applied as alleged turns fundamentally on the question of whether ENA, in conducting itself in the way it did, was requiring each member of the group to sign an AWA when it knew that the individual wanted to negotiate or bargain about the terms and conditions contained in the standard AWA or about whether the terms and conditions of his or her employment should be prescribed by an AWA. Or, at the least, it was known to ENA this was the likely position. In the absence of evidence that would support a finding that any particular individual wanted to negotiate or bargain about these matters, (or it was likely the individual wanted to), it cannot be said, in my opinion, that the conduct of ENA did, or probably would, deny or tend to deny the individual the opportunity to negotiate or bargain freely. One is left not knowing whether the conduct of ENA involved the application of duress nor knowing whether the pressure was being applied to an individual who wanted to negotiate or bargain.
118 This can be illustrated by the position of Ashfield about which there is some evidence. He is a member of the group on whose behalf these proceedings are brought. He gave evidence that he willingly signed an AWA. It is plain he did not wish to negotiate or bargain with ENA about the terms and conditions of employment in the AWA nor to negotiate or bargain with ENA about whether an AWA should be the means of prescribing those terms and conditions. In the absence of evidence of an expressed desire to negotiate or bargain on one or both of these matters (or even an unstated desire to be inferred from the circumstances) or evidence that this was likely to be the position, it cannot be said, in my opinion, that ENA applied duress to him. No question of negotiation or bargaining, whether free or illusory, arose. I do not accept that the imposition of the April 1998 condition, viewed in isolation and without regard to the circumstances of each of the individuals on whom the imposition of the condition might operate, was conduct intended to be proscribed by s 170WG having regard to what I view as the purpose of the section discussed earlier.
119 For these reasons, the evidence only establishes that in the period after 20 April 1998 ENA applied duress to Brushe, Walden, Schanka and Burns and not other members of the group. The absence of evidence about the circumstances of any particular individual for the period prior to 20 April 1998 would lead to a similar conclusion. That is, the evidence does not establish that in this earlier period duress was applied to any person in the group.
120 Moreover, I am not satisfied duress was applied to any person before about 20 April 1998. No person was then being required to sign an AWA because, at that time, the option of employment under the board's determination was available (even in relation to people who before 25 March 1998 may have signed an AWA). It is probable this option was known to be available by each of the recipients of the letter containing the April 1998 condition. It follows that each person who received the letter knew he or she was able, before 20 April 1998, to refrain from entering an AWA (notwithstanding the terms of the letter) and free to take up employment with ENA under the determination. While the evidence suggests that any person who had wanted to follow this course (and if the option had not been withdrawn) would have had to have been persistent, there was nonetheless scope, in a real sense, to negotiate or bargain about entering an AWA or not.
121 It is true that the board's determination reflected the terms and conditions of employment in the AWA and accordingly a person could not avoid those terms and conditions by taking up employment under the determination. However the lack of choice about the terms and conditions arose because of the unusual circumstances in which ENA was commencing operations including the existence of the prescription of conditions power which was quite unusual. Whether, more generally, the position the individuals being offered employment were in before 20 April 1998 was unfair and inequitable, or the behaviour of ENA was unconscionable, is presently irrelevant. Any employee who did not want to accept the terms and conditions offered by ENA which were contained in the proposed AWA could reject them by rejecting employment under an AWA. The fact that a person who was free to reject the terms and conditions (as they were proposed in the AWA) by rejecting the AWA, would (if the AWA was rejected) nonetheless be bound by the same terms and conditions because of the board's determination if he or she took up employment with ENA, does not gainsay the freedom the person had to reject the terms and conditions in the AWA as enlivened by the making of an AWA. What is unusual about this case is that the board of ENA had available, at least arguably, a legal means of insisting on the terms and conditions it desired by imposing them by exercising the prescription of conditions power even in the face of rejection of an AWA. It purported to do so by making the determination and it thereby effectively frustrated or rendered ineffective any rejection of the terms and conditions by the rejection of the AWA. Nonetheless each person offered employment with ENA was in a position where they could reject the AWA, (and, by operation of the AWA, the terms it contained) until about 20 April 1998.
Conclusion
122 Having regard to the various conclusions expressed in the preceding reasons, my present view is that the appropriate orders are orders declaring that ENA applied duress to Brushe, Walden, Schanka and Burns only, adjourning the proceedings for the purposes of determining what penalty, if any, should be imposed and what other orders should be made concerning Brushe, Walden, Schanka and Burns. However it will also be necessary to consider whether an order should be made otherwise dismissing the application (which is a vexed question given that any such order will or may bind all members of the group: see s 33ZB of the FC Act), or whether an order should be made under s 33N. Accordingly, I propose only to make an order standing the matter over to a specified day to enable the parties to make submissions about the form of orders that should be made to give effect to these reasons and requiring the parties to prepare short minutes. I intend that any submissions on penalty would be made at some later date.
I certify that the preceding one hundred and twenty two (122) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Moore. |
Associate:
Dated: 18 May 2001
Counsel for the Applicants: |
R Kenzie QC with C Howell |
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Solicitor for the Applicants: |
Steve Ramsey, CPSU |
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Counsel for the Respondent: |
J Trew QC with L Kaufman and A Gelbart |
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Solicitor for the Respondent: |
Andersen Legal |
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Date of Hearing: |
27, 29 November 2000 29, 30, 31 January, 1, 2, 8 February 2001 |
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Date of Judgment: |
18 May 2001 |
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URL: http://www.austlii.edu.au/au/cases/cth/FCA/2001/579.html