Nikolaus Beattie & Ors v Commonwealth Bank of Australia [2006] NSWIRComm 238 (21 July 2006)

Last Updated: 16 November 2006

NEW SOUTH WALES INDUSTRIAL RELATIONS COMMISSION

CITATION : Nikolaus Beattie & Ors v Commonwealth Bank of Australia [2006] NSWIRComm 238



FILE NUMBER(S): IRC 1605 and 2258

HEARING DATE(S): 04/07/2006

DECISION DATE: 21/07/2006
PARTIES:
FIRST APPLICANT
Nikolaus Beattie (Secretary)
Finance Sector Union of Australia, Commonwealth Bank Officers Section, NSW Branch

SECOND APPLICANT
David Robson

THIRD APPLICANT
Karen Harris

FOURTH APPLICANT
Wayne Purcell

FIFTH APPLICANT
Tony Sunderland

RESPONDENT
Commonwealth Bank of Australia

JUDGMENT OF: Boland J


LEGAL REPRESENTATIVES

APPLICANTS / RESPONDENTS ON NOTICE OF MOTION
Mr A Hatcher of counsel
Solicitor: Ms A McRobert
Jones Staff & Co
RESPONDENT/ APPLICANT ON NOTICE OF MOTION
Solicitor: Mr D Perry
Freehills


CASES CITED: Domanko v Chloer Pty Limited (In Liquidation) formerly Business Catalyst International Pty Limited and another [2005] NSWIRComm 384
Euphoric Pty Limited v Ryledar Pty Limited and Anor (2002) 117 IR 1
General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125
Majik Markets Pty Limited v Brake and Service Centre Drummoyne Pty Limited (1991) 28 NSWLR 443; 39 IR 169
Metal Trades Industry Association of Australia v Amalgamated Metal Workers' and Shipwrights Union (1983) 152 CLR 632
Nagle (T/as W D and J L Nagle & Sons) v Tilburg (1993) 51 IR 8
Unions NSW v Carter Holt Harvey Wood Products Australia Pty Ltd (2006) 149 IR 361
Virtue v New South Wales Department of Education and Training (1999) 92 IR 428

LEGISLATION CITED: Industrial Relations Act 1996
Long Service Leave Act 1955
Workplace Relations Act 1996 (Cth)



JUDGMENT:

- 1 -

INDUSTRIAL COURT OF NEW SOUTH WALES

CORAM: Boland J

Friday 21 July 2006

Matter No IRC 1605 of 2006

NIKOLAUS BEATTIE & ORS v COMMONWEALTH BANK OF AUSTRALIA

Application for declaratory relief under s 154 of the Industrial Relations Act 1996

Matter No IRC 2258 of 2006

NIKOLAUS BEATTIE & ORS v COMMONWEALTH BANK OF AUSTRALIA

Application for declaratory relief under s 154 of the Industrial Relations Act 1996

INTERLOCUTORY JUDGMENT
[2006] NSWIRComm 238

1 Nikolaus Beattie ("first applicant") is the secretary of the Finance Sector Union of Australia, Commonwealth Bank Officers' Section, NSW Branch. David Robson, Karen Harris, Wayne Purcell and Tony Sunderland (the second, third, fourth and fifth applicants respectively) are employees of the Commonwealth Bank of Australia ("the respondent").

2 Mr Robson and Ms Harris were employed by the Colonial State Bank until November/December 1997 at which time it was asserted by them that a transmission of business occurred from the Colonial State Bank to a franchise company or companies as part of a franchising arrangement ("the first transmission"). Mr Robson and Ms Harris continued their employment with the franchise company or companies.

3 In 2001 there was a further transmission from the franchise company or companies to the Commonwealth Bank and the employment of the second and third applicants continued with the respondent Bank ("the second transmission"). It was asserted the Bank accepted that continuity of service of the second and third applicants was maintained upon the occurrence of the second transmission. However, the respondent refused to accept that continuity of the service of the second and third applicants was maintained upon the occurrence of the first transmission for long service leave purposes.

4 In a second application (IRC 2258 of 2006) it was asserted that a similar situation to that applying to the second and third applicants also existed in relation to the fourth and fifth applicants, except that the first transmission affecting the fourth and fifth applicants occurred in February 1998.

5 The applicants have sought declaratory orders under s 154 of the Industrial Relations Act 1996 to the effect that the periods of service of the second to fifth applicants, for the purpose of long service leave entitlements owed to them by the respondent, commenced from a specified date (presumably the commencement of their employment with the Colonial State Bank). These dates ranged from September 1993 to June 1996.

6 The respondent, by two notices of motion dated 24 March 2006 (in respect of proceeding IRC 1605 of 2006) and 16 May 2006 (in respect of proceeding IRC 2258 of 2006), has sought orders that the proceedings be dismissed pursuant to r 82 of the Industrial Relations Commission Rules 1996. Further, and in the alternative, orders were sought that the proceedings be permanently stayed. The respondent also sought an order for costs.

7 The grounds and reasons in support of the respondent's motion in respect of the first, second and third applicants was as follows:

(a) The Second and Third Applicants’ terms and conditions of employment are relevantly governed by the Commonwealth Bank of Australia Employees Award 1999, a federal award made pursuant to the Workplace Relations Act 1996 (Cth).

(b) The Industrial Court of New South Wales is without jurisdiction to hear and determine the application made by the Applicants pursuant to s 154 of the Industrial Relations Act 1996 (NSW), such jurisdiction being excluded by the operation of s 109 of the Commonwealth of Australia Constitution.

(c) Alternatively, the Industrial Court of New South Wales is without jurisdiction to grant the relief sought by the Applicants pursuant to s 154 of the Industrial Relations Act 1996 (NSW), such jurisdiction being excluded by the operation of s 109 of the Commonwealth of Australia Constitution.

(d) The Industrial Court of New South Wales is without jurisdiction to hear and determine the application made by the Applicants pursuant to s 154 of the Industrial Relations Act 1996 (NSW), as the subject matter of the proceedings is not a matter in which the New South Wales Industrial Relations Commission has jurisdiction.

(e) The Industrial Court of New South Wales is an inappropriate forum to determine the application.

8 The grounds and reasons supporting the motion relating to the fourth and fifth applicants were in the same terms as those relating to the first, second and third applicants.

Case for the respondent


9 Mr D Perry, solicitor, appeared for the Commonwealth Bank. In helpful written submissions Mr Perry contended that it was appropriate the question of the jurisdiction of the Court be determined as a preliminary question. Mr Perry accepted that the applications must be taken at their highest at this interlocutory stage. He submitted that the applications identified the Commonwealth Bank of Australia Employees Award 1999 ("CBA Award") as the relevant award affected by the proceedings. The CBA Award is an award of the Australian Industrial Relations Commission. Beyond the application of the CBA Award, he submitted, there were no questions of fact that arose in respect of the motions. The issues raised, he submitted, were purely questions of law and, accordingly, that it would be wasteful of costs and the Court’s time for the questions to be dealt with at final hearing.

10 The Court notes that the CBA Award, a consent award, came into force on 13 August 1999. The Award was binding on the respondent Bank, the Finance Sector Union of Australia ("FSU") and certain classes of employees eligible for membership of the FSU. The CBA Award superseded the Commonwealth Bank of Australia Award 1990, which had commenced operation on 1 January 1991.

11 There were three main strands to Mr Perry's case seeking to have the applications dismissed:

(1) The applications did not disclose any "matter" in respect of which the Court had jurisdiction under s 154 of the Industrial Relations Act; the applications were defective on their face in not disclosing a cause of action.

(2) The CBA Award was a comprehensive terms and conditions award. Long service leave was one of a number of entitlements it dealt with. It was submitted that the terms of the award evinced an intention on the part of the parties to comprehensively deal with the question of long service leave in the CBA Award. It was submitted that the provisions were a freestanding code that did not depend on any other statute or industrial instrument for their existence. It was contended the provisions of the award covered the field with respect to long service leave.

(3) Section 17 of the Workplace Relations Act 1996 (Cth) provides that an award or workplace agreement prevails over a law of a State or Territory, or State award or State employment agreement, to the extent of any inconsistency. The applications do not identify any state law in respect of which it is claimed that the Court has jurisdiction. Conceivably, however, the applications could be said to be founded on:

(a) entitlements of employees in New South Wales to long service leave under the Long Service Leave Act 1955 (NSW); and/or

(b) an entitlement to have continuity of service recognised pursuant to section 102 of the Industrial Relations Act.

It was submitted that neither of these provisions could have operation in relation to the individual applicants in this case. The provisions were inconsistent with, and excluded by, the terms of the CBA Award (clause 49 in particular).

12 Mr Perry submitted that given the inconsistency outlined above:

(a) the terms of the CBA Award prevail;

(b) the Long Service Leave Act has no operation with respect to the individual named applicants; and

(c) there is, therefore, no relevant entitlement in respect of which section 102 of the Industrial Relations Act can have operation as there is no room for any “industrial relations legislation” to operate.

Accordingly, it was submitted, there was no basis upon which the Court could exercise jurisdiction pursuant to section 154 of the Industrial Relations Act.

Case for the applicants


13 Mr A Hatcher of counsel appeared for the applicants. Mr Hatcher did not concede that the relevant applicants were subject to the coverage of the CBA Award. However, for the purpose of the interlocutory proceedings he was prepared to proceed on the assumption the Award applied.

14 The case for the applicants may be summarised as follows:

(1) The respondent was provided with particulars of the jurisdictional basis of the applications in correspondence between the solicitors for the respective parties. In any event, the Court is not a court of strict pleading and the respondent is seized of the applicants' case and is not prejudiced by any lack of understanding of that case or its jurisdictional basis.

(2) The burden is on the applicant on the motions that no order could be made by the Court that would be within jurisdiction. The Bank has not discharged that onus.

(3) Taking the applicants' case at its highest the CBA Award could have had no application to the applicants' employment prior to 2001 because the applicants were not employees of the Bank prior to that time. In other words, regardless of whether there is any inconsistency between the CBA Award and relevant State laws, the award did not apply to the applicants' employment at the time of the first transmission. Accordingly, the relevant State laws applied at that time.

(4) The Court does have jurisdiction in respect of long service leave and to order recovery of any amount payable under an industrial instrument: see Long Service Leave Act and ss 364 and 365 of Industrial Relations Act. Section 102 of the Industrial Relations Act deals with continuity of employment for determining an employee's entitlements where there has been a transmission of business.

(5) The Workplace Relations Act does not evince an intention to cover the field in relation to long service leave: see s 16. Pursuant to s 17 of the Workplace Relations Act a federal award will only prevail over a State law to the extent of the inconsistency.

(6) The Court maintains its complete jurisdiction to deal with long service in relation to acts or omissions prior to 27 March 2006, that being the relevant date of reform commencement under the WR Act.

(7) The CBA Award does not deal exhaustively or exclusively with long service leave.

(8) This was not a case where it would be appropriate to award costs. Alternatively, costs should be reserved.

Whether applications disclose a matter within Court's jurisdiction

15 Section 154 of the Act is in the following terms:

154 Declaratory jurisdiction

(1) The Commission in Court Session may make binding declarations of right in relation to a matter in which the Commission (however constituted) has jurisdiction. The Commission in Court Session may do so, whether or not any consequential relief is or could be claimed.

(2) Proceedings before the Commission in Court Session are not open to objection on the ground that a declaration of right only is sought.

16 In responding to a request for particulars, the respondent was advised by the applicants' solicitors that:

The jurisdiction of the Industrial Court with respect to long service leave entitlements is clear: see section 12 of the Long Service Leave Act 1955 and Part 2 of Chapter 7 of the Industrial Relations Act 1996. This provides the foundation for the Court to grant declaratory orders in relation to such entitlements under section 154 of the Industrial Relations Act. The basis for the actual declaratory orders sought is to be found in section 4 (11) of the Long Service Leave Act and Part 8 of Chapter 2 of the Industrial Relations Act...

17 What the applicants are seeking are declarations that the periods of service for the purpose of long service leave entitlements owed to the applicants by the respondent commenced on specified dates. That is to say, the applicants are, in effect, seeking a binding declaration that they have a right to have their long service leave entitlement calculated from a specified date. The applications clearly raise questions as to whether long service leave, and any entitlement to it, are matters within the Court's jurisdiction.

18 The Court has jurisdiction in respect of industrial matters. Section 6(1) of the Industrial Relations Act provides for a general definition of industrial matter:

industrial matters means matters or things affecting or relating to work done or to be done in any industry, or the privileges, rights, duties or obligations of employers or employees in any industry.

19 Unquestionably, long service leave is an industrial matter. Further, s 365 of the Act provides:

An industrial court may, on application, order an employer to pay any amount payable under an industrial instrument that remains unpaid to the person to whom it is payable.

20 Section 364 of the Act provides that a reference to an industrial instrument and to an amount payable under the industrial instrument includes a reference to s 12 of the Long Service Leave Act 1955. Section 12(1) of that Act provides:

(1) Any worker may apply to a Local Court constituted by a Magistrate sitting alone, or to the Industrial Relations Commission in Court Session, for an order directing the employer to pay to the worker the full amount of any payment which has become due to the worker under this Act at any time during the period of 6 years immediately preceding the date of the application but not earlier than 2 years before the date of assent to the Long Service Leave (Amendment) Act 1980.

The Local Court or Industrial Relations Commission in Court Session may make any order it thinks just in the matter and may award costs to either party, and assess the amount of such costs.

21 Section 14 of the Long Service Leave Act provides:

14 Provisions as to enforcement of orders, appeals etc

The provisions of the Industrial Relations Act 1996, and of the regulations made under that Act, relating to:

(a) recovery of a penalty, and

(b) an application for, and enforcement of, an order for the payment of money, and

(c) an appeal from, or the stating of a case by, a Local Court to the Industrial Relations Commission in Court Session,

apply to proceedings under this Act for the recovery of a penalty or the payment of money.

22 It is clearly the case that the Court has jurisdiction in relation to long service leave and any entitlement to it; the Court may determine an entitlement to long service leave and may order an employer to pay any amount payable under an industrial instrument in respect of long service leave that remains unpaid to the person to whom it is payable.

23 The applications also raise an issue involving the question of continuity of service for the purpose of long service leave. Section 102 of the Industrial Relations Act provides:

102 Continuity of service for determining entitlements

(1) This section applies for the purpose of determining a transferred employee’s entitlements as an employee of the new employer under an industrial instrument or the industrial relations legislation.

(2) For the purpose of determining those entitlements:

(a) the continuity of the employee’s contract of employment is taken not to have been broken by the transfer of business, and

(b) a period of service with the former employer (including service before the commencement of this section) is taken to be a period of service with the new employer.

(3) Service with the former employer includes service that because of this section or a former Act is taken to be service with that employer as a result of a previous transfer of the business.

24 "Industrial relations legislation" is defined in the dictionary to the Act to include the Long Service Leave Act 1955.

25 Section 4(11)(c) of the Long Service Leave Act deals specifically with circumstances involving a transmission of business and the effect of that on the continuity of a period of service of a worker:

...

(c) where a business, undertaking or establishment or any part thereof has, whether before or after the commencement of this Act, been transmitted from an employer (in this paragraph called the transmittor) to another employer (in this paragraph called the transmittee) and a person who at the time of the transmission was a worker in the employ of the transmittor in that business, undertaking, establishment or part thereof becomes a worker in the employ of the transmittee:

(i) the continuity of the period of service of the worker shall be deemed not to have been broken by reason of the transmission, and

(ii) the period of service which the worker has had with the transmittor or any prior transmittor shall be deemed to be service of the worker with the transmittee.

In this paragraph transmission, without limiting its ordinary meaning, includes transfer, conveyance, assignment or succession, whether by agreement or operation of law, and transmitted has a corresponding meaning,

...

26 There can be no doubt, in my opinion, that the declarations sought are in relation to a matter in which the Court has jurisdiction.

27 Even if it were the case that the pleadings were defective in the sense they did not provide adequate particulars of the claims, Mr Hatcher was correct in contending the Court is not a court of strict pleading: Domanko v Chloer Pty Limited (In Liquidation) formerly Business Catalyst International Pty Limited and another [2005] NSWIRComm 384 at [8]-[10]. If a respondent is prejudiced or disadvantaged because of the manner in which the pleadings are framed it is a matter for the court to consider whether it will amend the pleadings "in such manner as the tribunal considers to be necessary in the interests of justice." I do not consider the respondent in these proceedings is prejudiced or disadvantaged or that the pleadings require amendment, given the particulars provided.

Principles governing strike out motions

28 The next issue for consideration is whether the Court should terminate the applicants' actions at this stage of the proceedings. A claim will be struck out or the proceedings dismissed on the grounds that the claim does not disclose a reasonable cause of action only in plain and obvious cases: General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 129 per Barwick CJ; Majik Markets Pty Limited v Brake and Service Centre Drummoyne Pty Limited (1991) 28 NSWLR 443; 39 IR 169 per Kirby P at 446; 170; Nagle (T/as W D and J L Nagle & Sons) v Tilburg (1993) 51 IR 8 at 10-11.

29 In Virtue v New South Wales Department of Education and Training (1999) 92 IR 428 at 447 - 448 Wright J, President conveniently summarised the principles guiding the Court in entertaining a challenge to jurisdiction in a preliminary or threshold way:

(1) The discretion of a court to determine a case at an early stage, when appropriate, has been repeatedly accepted.

(2) As a general rule it is desirable that an objection to jurisdiction be determined as early as circumstances will conveniently admit so that the tribunal does not embark on a hearing which it lacks authority to conduct. The course of a court entertaining a challenge to jurisdiction in a preliminary or threshold way is often a sensible one where a party has a substantial threshold argument which, if it succeeds, will knock out the claim and save the costs and inconvenience that attend a protracted hearing of proceedings on the merits.

(3) However, a further general proposition is that all issues arising should be dealt with in the substantive proceedings unless the basis for a challenge, either on jurisdictional grounds, or for lack of a reasonable cause of action, be clearly demonstrated.

(4) Threshold relief of the kind sought here must be conserved to a clear case where it is plain that the invocation of the jurisdiction impugned is wholly misconceived or, upon analysis, lacks an arguable legal foundation.


(5) Necessarily, refusal of relief at the threshold will not finally determine that jurisdiction exists for any order which the Court might make between the parties. This is because, to secure relief, the claimants must demonstrate that no order could be made which would be within jurisdiction. The resulting burden is a heavy one.

(6) Accordingly, whilst it is desirable for a case to be determined at an early stage it is only open to do so at the appropriate stage of the proceedings. That is, where the facts, either established by evidence or plainly agreed in terms, enable the Court to determine what the contract or arrangement is or, at least, the parameters of the contract or arrangement. In other words, unless the facts are sufficiently established to enable the Court to be satisfied it has the necessary material to reach a clear and final decision on the question then the appropriate stage has not been reached for such a determination to be made.

(7) Similarly, the jurisdiction to terminate an action summarily for want of a cause of action is to be sparingly employed and ought not to be used save where the lack of the cause of action was clearly demonstrated.

30 The foregoing principles were referred to with approval in Euphoric Pty Limited v Ryledar Pty Limited and Anor (2002) 117 IR 1 at [8]-[14] (per Wright J and Walton J, Vice President). At [11]-[14] their Honours stated:

11 In order to succeed in a motion to dismiss on a preliminary basis a summons for want of jurisdiction, a respondent must demonstrate that there is no power in the Commission to grant any relief sought in the application.

12 However, as indicated in the fifth proposition cited above from Virtue “refusal of relief at the threshold [that is on a basis of a preliminary point or motion] will not finally determine that jurisdiction exists for any order which the Court might make between the parties”. In other words, it remains open to a respondent unsuccessful on a preliminary motion to maintain its arguments as to lack of jurisdiction for the purposes of the final hearing.

13 Further, as observed in the seventh proposition and notwithstanding the public interest in having struck out at an early stage proceedings for which there is no jurisdiction, “the jurisdiction to terminate an action summarily for want of a cause of action is to be sparingly employed and ought not to be used save where the lack of the cause of action [is] clearly demonstrated”.

14 The jurisprudence of this Court represented by the judgment of the then Full Industrial Court in Nagle v Tilburg, and the cases which have followed it, has been important in controlling a practice which had developed in the jurisdiction of some respondents too readily raising jurisdictional arguments at an early stage, at times with at least the appearance of a forensic tactic or an attempt to place logistical difficulties in the way of a less well-resourced applicant. The decision in this matter should not be seen as, or become, a basis for the rigour which has hitherto been exercised in the jurisdiction to be lessened. These observations are made only to emphasise the decision in this matter has depended on the very particular and relatively rare set of circumstances raised by these proceedings. It should not be interpreted or considered by those who practice in the jurisdiction as signifying any lessening of the stringency with which the approach in Nagle v Tilburg will be adhered to.

31 Unless the respondent is able in these proceedings to clearly demonstrate that the Court has no jurisdiction in respect of the applications, the Court would not dismiss the applications at the threshold.

Whether CBA Award applied to first transmission

32 The respondent in these proceedings has contended the Court has no power to grant the relief sought because, by a combination of s 109 of the Constitution, s 17 of the Workplace Relations Act and the CBA Award, the Court's jurisdiction is ousted. In other words, the CBA Award covers the field in so far as long service leave is concerned and there is no room for the operation of any State law relating to long service leave.

33 Taking the applicants' cases at their highest, as the respondent has accepted I should in these interlocutory proceedings, it was asserted by the applicants that when they took up employment with the respondent Bank in 2001 the continuity of their service with the franchise company or companies for the purpose of determining long service leave entitlements under the CBA Award was not broken by the second transmission. That is, it was asserted that the respondent had accepted that continuity of the service of the applicants was maintained upon the occurrence of the second transmission.

34 It was further asserted, however, that the respondent had refused to accept that continuity of the service of the applicants was maintained upon the occurrence of the first transmission. That is the transmission from Colonial State Bank to the franchise company or companies in 1997 (for the second and third applicants) and in 1998 (for the fourth and fifth applicants).

35 The applicants contended that neither the CBA Award nor its predecessor had any application at the time of the first transmission; that the relevant transmission of business was from the Colonial State Bank to the franchise company or companies; that none of the applicants were employees of the respondent in 1997 or 1998 and nor were they employees of any employer whose business was transmitted to the respondent at those times.

36 Mr Hatcher for the applicants contended that whilst the CBA Award did not apply to the applicants' employment at the time of the first transmission, the provisions of s 4(11) of the Long Service Leave Act did apply. Whether that contention can be made out is a matter to be determined in the substantive proceedings.

37 What the respondent contended, however, was that the CBA Award currently applied to the applicants' employment (a contention the applicants resist) and, by virtue of cl 3.8 of the Award, the applicants were precluded from having any service prior to the first transmission counted for the purpose of determining an entitlement to long service leave. Clause 3.8 is in the following terms:

3.8 Continuous service

3.8.1 Continuous service means service under an unbroken contract of employment with the Bank and includes:

3.8.1(a) previous continuous service with SBV in respect of employees who transferred from SBV to the Bank on 1 January 1991;

3.8.1(b) paid leave of absence taken under the provisions of Part 6 of this Award;

3.8.1(c) absences on leave without pay authorised by the Bank or the Award, including unpaid parental leave and career breaks; and,

3.8.1(d) for long service leave purposes only, for employees employed in the Bank on 1 April 1998, service with:

 a Commonwealth employing authority, including Government Business Enterprises;

 a State Public Service;

 a State Authority; or

 a local government body.

provided it is continuous with Bank service.

3.8.2 The time on absences under 3.8.1(c) will not count as service for the purpose of calculating an employee’s total length of continuous service.

38 It was the respondent's submission that in order for an employee to be entitled to long service leave they had to have served the Bank under an unbroken contract of employment unless they came within one of the exceptions in cl 3.8.1. As the Bank did not employ the applicants at the time of the first transmission they could not have served under an unbroken contract of employment with the respondent and they did not fall within one of the exceptions in cl 3.8.1. Accordingly, it appears to be contended, the applicants were not entitled to any consideration in respect of any period of service with the Colonial State Bank.
39 Thus, what has been put in issue is whether the CBA Award applied to the circumstances of the first transmission notwithstanding that the applicants were not employees of the respondent at the time.

40 Expressing only a preliminary view at this stage, it is difficult to see how cl 3.8.1 of the CBA Award would have had application to the applicants' employment at the time of the first transmission. It is not a question of looking to see whether the contract of employment remained unbroken in respect of any period prior to 2001 because there was no contract before that time.

41 It does not seem to me that the respondent could successfully contend that, on the one hand, the applicants do not meet the requirements of cl 3.8.1 of the CBA Award in that that they did not serve the Bank under an unbroken contract of employment from a time prior to the first transmission because their contract of employment with the Bank did not commence until 2001 and, on the other hand, contend that the CBA Award applied to the applicants' employment (but not with the Bank) for the relevant period prior to 2001. Whilst cl 3.8.1 recognises service with specified predecessor employers for the purpose of calculating long service leave entitlements and, therefore, has application to periods of employment with other employers, it is not clear to me that one is able draw the inference that the Award, therefore, applies to periods of employment with other unspecified predecessor employers so as to negative any entitlement to have that period of employment count for the purpose of long service leave.

Unbroken contract of employment

42 Assuming, however, these preliminary views are wrong and the Award relevantly applied to the applicants, the question arises whether the applicants' period of employment prior to the second transmission in 2001 is to be regarded as part of the applicants' continuous service with the respondent for the purpose of calculating long service leave entitlements. That will depend on the meaning of "unbroken contract of employment with the Bank" in cl 3.8.1 of the CBA Award. The Court has not been taken to that phrase and how it is to be interpreted.

43 Moreover, taking the applicants' case at its highest, when the applicants took up employment with the respondent Bank in 2001 the continuity of their service with the franchise company or companies for the purpose of long service leave entitlements was not broken by the second transmission. Prima facie, recognition by the respondent Bank of service by the applicants with the franchise company or companies is inconsistent with the Award requirement for an "unbroken contract of employment with the Bank", thereby injecting some uncertainty into how the phrase may be interpreted. In the absence of further evidence to overcome that uncertainty it is not properly open to this Court to determine the question of the Award's application purely as a question of law in these interlocutory proceedings given the admonition in the authorities that a cause of action will only be dismissed at the threshold if it is demonstrated unequivocally that no order could be made that would be within jurisdiction.

Inconsistency

44 Assuming, however, for the purpose of these interlocutory proceedings the Award applies with full force and effect as the respondent has submitted, it becomes necessary to consider, having regard to the applicants' contentions, whether there is any inconsistency between the CBA Award and the relevant State laws relating to long service leave.

45 It was not fully debated before the Court but it would seem that s 16(1) of the Workplace Relations Act does not apply in respect of the issues before the Court. Section 16(1) provides:

(1) This Act is intended to apply to the exclusion of all the following laws of a State or Territory so far as they would otherwise apply in relation to an employee or employer:

(a) a State or Territory industrial law;

(b) a law that applies to employment generally and deals with leave other than long service leave;

(c) a law providing for a court or tribunal constituted by a law of the State or Territory to make an order in relation to equal remuneration for work of equal value (as defined in section 623);

(d) a law providing for the variation or setting aside of rights and obligations arising under a contract of employment, or another arrangement for employment, that a court or tribunal finds is unfair;

(e) a law that entitles a representative of a trade union to enter premises.

46 Subregulation 1.2(2) of Division 2 of Ch 2 of the Workplace Relations Regulations 2006 provides:

Rights and obligations — general

(2) Subsection 16 (1) does not apply to a law of a State or Territory (including a law relating to appeals) to the extent to which it relates to compliance with an obligation:

(a) under:

(i) that law; or
(ii) another law of a State or Territory;

which would otherwise be excluded by subsection 16 (1) of the Act; and

(b) in respect of an act or omission which occurred prior to the reform commencement.

47 Subregulation 1.2(6) of the Regulations provides:

Succession, transmission or assignment of business

(6) Subsection 16 (1) does not apply to a law of a State or Territory (including a law relating to appeals) to the extent to which it relates to a succession, transmission or assignment of a business, or a part of a business, that occurred before the reform commencement.

48 Section 17 of the Workplace Relations Act would appear to have application although I express no final view about this. It is apparent from the provisions of s 17 that it is intended a federal award will prevail over a State law to the extent of any inconsistency. Section 17(1) provides:

(1) An award or workplace agreement prevails over a law of a State or Territory, a State award or a State employment agreement, to the extent of any inconsistency.

A law of a State relating to long service leave is not one of the exceptions to s 17(1) referred to in s 17(2) of the Workplace Relations Act.

49 One effect of s 17(1) is that if a federal award or workplace agreement does not relevantly deal with the matter of long service leave, the State law will continue to apply. The State law will only cease to have application (but not be rendered invalid) where, by virtue of the operation of s 17(1) of the Workplace Relations Act and s 109 of the Constitution, it is inconsistent with the provisions of a federal award (or agreement).

50 Whether an inconsistency exists will depend on the tests that have been laid down by the High Court. Those tests were referred to in Unions NSW v Carter Holt Harvey Wood Products Australia Pty Ltd (2006) 149 IR 361 at [100]:

100 In relation to the tests regarding inconsistency, the Full Bench of the Commission in Court Session recently observed in East Coast Brokers Pty Limited v The Commonwealth of Australia (Department of Defence) and another [2005] NSWIRComm 371 at [28]-[30]:

28 The tests for inconsistency are well known and were identified in Barry v Australian Broadcasting Corporation (2002) 112 IR 33 at [20] and in Metrocall Inc v Electronic Tracking Systems Pty Ltd (2000) 52 NSWLR 1 (2000) 101 IR 66 at [39]-[40]. In Barry the Full Bench of the Commission in Court Session referred to the Victorian Court of Appeal's enunciation of the tests in Felman v Law Institute of Victoria (1997) 142 FLR 362 at 381 as drawn from High Court authorities and there is no reason to consider there has been any change to those tests since they were cited with approval in Barry.

29 Hence, a law of a State will be inconsistent with a law of the Commonwealth where:

(1) it is impossible to obey both laws (e.g., R v Licensing Court of Brisbane; Ex parte Daniell (1920) 28 CLR 23);

(2) the law of a State takes away or varies a right, privilege, duty, power or immunity conferred by a law of the Commonwealth or, conversely, a law of the Commonwealth takes away or varies a right, privilege, duty, power or immunity conferred by law of a State (e.g., Colvin v Bradley Brothers Pty Ltd (1943) 68 CLR 151; Australian Mutual Provident Society v Goulden (1986)160 CLR 330); or,

(3) the law of a State invades a field that the law of the Commonwealth was intended to cover exhaustively (e.g., Ex parte McLean (1930) 43 CLR 472; Viskauskas v Niland (1983) 153 CLR 280).

30 Inconsistency established by the first and second tests is known as direct inconsistency. But even where there is no direct contradiction between the two enactments, where the Commonwealth law evinces an intention to 'cover the field', s 109 may still apply because of an indirect inconsistency and this is encapsulated in the third test...

51 It was the respondent's submission that the CBA Award covered the field in respect of long service leave. Clause 49 - Long Service Leave (which needs to be read in conjunction with cl 3.8 of the Award, in particular) was in the following terms:

49. LONG SERVICE LEAVE

49.1 Entitlement

Full time five days per week employees will be entitled to 65 working days long service leave at the completion of ten years continuous service with the Bank after which long service leave will accrue as follows:

10-20 years of service - 6.5 working days for every completed year of service.

21-35 years of service - 8.7 working days for every completed year of service.

36-45 years of service - 6.5 working days for every completed year of service.

Where an employee’s ordinary hours are other than five days each week accrued long service leave will be adjusted by dividing the number of days accrued in accordance with the above table by five and multiplying by the average number of days worked as ordinary hours per week.

For example, an employee working a nine day fortnight with ten years service would be entitled to long service as follows:

65 days (thirteen weeks) 5 X 4.5 = 58.5 days (thirteen weeks).

49.2 Payment during long service leave

49.2.1 During long service leave an employee whose service with the Bank has been solely as a full-time employee will be paid salary and skill utilisation loading applying immediately before commencing long service leave. Performance payments under clause 18 will not be reduced as a result of taking long service leave. Payment of salary will be made at the commencement of long service leave if requested by the employee.

49.2.2 Where an employee’s service with the Bank includes one or more periods of part time employment, long service leave in respect of such periods will be based on average hours worked over each period

49.3 Taking of long service leave

49.3.1 Long service leave absences will be arranged in advance and subject to the convenience of the Bank. At least six months notice will be given of an intention to take more than four weeks long service leave. The minimum long service leave absence will be two weeks.

Long service leave may be with pay, half pay or a combination of both.

49.3.2 Except where otherwise agreed, where the long service leave absence is of twenty six weeks or less, an employee will return to his or her former position on resumption from long service leave.

49.3.3 Where the long service leave absence is more than twenty six weeks an employee will return to his or her former position on resumption from long service leave unless he or she has sought a change in duties or the Bank considers it necessary for the position to be permanently filled. In these latter circumstances an employee proceeding on leave will be informed prior to his or her departure.

49.4 Payment of long service leave on exit

49.4.1 On retirement, retrenchment or death in service, an employee with at least one year’s continuous service will be entitled to a lump sum payment equivalent to long service leave accrued less long service leave taken. In these circumstances only, a lump sum payment will be made for an employee with less than ten years service at the rate of 6.5 working days (or its equivalent) for every completed year of service.

49.4.2 On resignation, an employee with ten years or more continuous service will be entitled to a lump sum payment for long service accrued pursuant to clause 49.1.

49.4.3 Where an employee’s service with the Bank includes one or more periods of part-time work, the lump sum paid on exit will be calculated in accordance with clause 49.2.2.

49.4.4 Lump sum payments under this clause will be calculated on completed years and months of service.

49.5 Former SBV employees

[49.4 renumbered as 49.5 by SO294 ppc 13Aug99]

Former SBV employees with twenty years or more service as at 27 April 1990, which is continuous with Bank service, will continue to accrue long service leave at the rate of 1.733 weeks per annum between twenty and 35 years of service and 1.56 weeks per annum between 36 and 45 years of service.

52 Whilst cl 49 is reasonably comprehensive, it leaves the question of what is continuous service to a separate provision, namely, cl 3.8. That provides for a general definition of continuous service for all purposes of the Award, except that the clause has a specific provision in relation to long service leave and that is cl 3.8.1(d), which provides that for employees employed with the respondent Bank on 1 April 1998, service with certain Commonwealth and State government entities is to be regarded as service with the Bank.

53 The provision in cl 3.8.1(d) would appear to have been carried over from the 1990 Award. In that Award, long service leave was dealt with in cl 29. In cl 29(b) a definition of continuous service was provided in the following terms:

Continuous service

For the purposes of this clause, "continuous service" shall include:

(i) Service with:

a Commonwealth employing authority, including Government Business Enterprises;

a State Public Service;

a State Authority; or

a local government body.

provided it is continuous with Bank service.

54 Apart from the inclusive provision in cl 29(b), the 1990 Award did not spell out what was contemplated by continuous service. Presumably, the parties were content to rely on either relevant statutory provisions or the common law for that purpose.

55 In the CBA Award a more comprehensive definition of continuous service was provided as seen by cl 3.8.1 and it was defined to mean service under an unbroken contract of employment with the Bank, subject to certain exceptions, including the previous provisions in cl 29(b) of the 1990 Award.

56 What the respondent asks the Court to accept is that the CBA Award covers the field including as to any determination regarding an employee's entitlement to long service leave and that the State legislation is thereby ousted.

57 The CBA Award does not deal generally with the question of the effect on an employee's long service leave entitlements of a transmission of business. Specific provision is made in cl 3.8.1(d) but this says nothing about what is to be done in circumstances where employees of unspecified predecessor employers have their employment transferred to the respondent as a consequence of a transmission of business. This would appear to represent a gap in the coverage of the Award.

58 The respondent's answer to this is that cl 3.8 requires an employee to serve the Bank under an unbroken contract of employment in order for service to be regarded as continuous service for the purpose of long service leave. However, it is by no means certain that this requirement is inconsistent with the provisions of s 4(11)(c) of the Long Service Leave Act, which provides that continuity of the period of service of the worker shall be deemed not to have been broken by reason of the transmission of a business, and that the period of service which the worker has had with the transmittor, or any prior transmittor, shall be deemed to be service of the worker with the transmittee.

59 In other words, continuous service under the CBA Award is constituted by an unbroken contract of employment with the Bank but is this to be taken to mean, by negative implication, that service with a predecessor employer (other than those identified in cl 3.8.1(d)) is not to be taken into account notwithstanding the provisions of s 4(11)(c) of the Long Service Leave Act?

60 That the CBA Award identifies service with certain predecessor employers for the purpose of defining what constitutes an unbroken contract of employment with the Bank, does not lead inexorably to the conclusion that service with all other predecessor employers is excluded. It may have been that there were particular circumstances (of which the Court is presently unaware) that required service with those predecessor employers in cl 3.8.1(d) to be spelt out in the way that it was. But the existence of cl 3.8 read as a whole does not, on its face, evince an intention that service with unspecified predecessor employers is not to be taken into account for the purpose of determining long service leave entitlements under the CBA Award. Moreover, the exceptions in cl 3.8.1(d) are not expressed to be exclusive. In this respect, I note the use of the word "includes" in the preamble to cl 3.8.1.

61 In Metal Trades Industry Association of Australia v Amalgamated Metal Workers' and Shipwrights Union (1983) 152 CLR 632 at 642 Gibbs CJ, Wilson and Dawson JJ observed:

In the case of an award which deals with a dispute between parties whose relations apart from the award are ordinarily governed by State law, including the common law, the existence of the State law is for the most part assumed and this assumption will be relevant in discerning any inconsistency (cf. Wardley, per Wilson J. (1980) 142 CLR, at pp 287-288).

62 It may be safely assumed that the parties to the CBA Award were aware of the existence of the provisions of the Long Service Leave Act at the time they consented to the making of the Award. If it had been the intention of the parties that service with a predecessor employer subject to the terms of that Act would not be regarded as qualifying service with the Bank upon a transmission of business it may be reasonable to expect, having regard to the potentially significant impact on employees of the predecessor employer, that it would have been expressly spelt out in the Award rather than in the oblique and ambiguous way that it has.

63 I do not consider that on the material thus far presented, the Court is in a position to make a judgment about whether the CBA Award covers the field in so far as long service leave is concerned, and before doing so it would be appropriate for the Court to have before it any relevant evidence such as the intention of the parties in framing cl 3.8 and the log of claims giving rise to the making of the Award.

64 Having regard to the uncertainty I have expressed regarding the application of the CBA Award to the circumstances of the first transmission; the uncertainty regarding the interpretation to be placed on the phrase "unbroken contract of employment"; the doubt that exists regarding the inconsistency issue; and, the applicants' position that the CBA Award did not apply to their employment (a matter not yet proven by the respondent), I do not consider it is open to the Court to conclude that the applications in these proceedings are beyond the Court's jurisdiction.

65 Accordingly, the notices of motion are dismissed. Costs are reserved. I so order.

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LAST UPDATED: 21/07/2006