Commonwealth Bank of Australia v Finance Sector Union of Australia [2002] FCAFC 193

FEDERAL COURT OF AUSTRALIA

Commonwealth Bank of Australia v Finance Sector Union of Australia

[2002] FCAFC 193

WORKPLACE RELATIONS – leave to appeal from interlocutory order – where employer discontinued the provision of technology services by way of internal department and contracted services to external company – where a number of employees remained employed by the Bank on Award terms but seconded to external company – whether redundancy occurred within meaning of cl 42 of the Commonwealth Bank of Australia Officers Award 1990 WORDS AND PHRASES – "redundancy", "work" Workplace Relations Act 1996 (Cth) s 178 Warramunda Village Inc v Pryde (2001) 105 FCR 437 referred to Warramunda Village Inc v Pryde [2002] FCA cited Hawkins v Commonwealth Bank of Australia (1996) 66 IR 322 referred to Hawkins v Commonwealth Bank of Australia (No 2) (1996) 70 IR 213 applied Termination, Change and Redundancy Case (1984) 8 IR 34, (1984) 9 IR 115 cited Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union v United Milk Tasmania Ltd (2000) 48 AILR 4-315 (Print S7351) cited Steppes Pty Ltd (t/a The Beaufort Darwin) v Australian Liquor, Hospitality and Miscellaneous Workers Union (1998) 86 IR 337 cited Trustee Officers' Award Case (1983) 290 CAR 100 and on appeal (1983) 291 CAR 200 cited In re Bank Officers (State) Board (1921) 20 AR (NSW) 303 cited Re Government Cleaning Service (Privatisation) Award (No 2) (1994) 55 IR 199 cited Re Government Cleaning Service (Privatisation) Award (No 3) (1995) 59 IR 348 cited Re Australian Education Union; Ex parte Victoria (1995) 184 CLR 188 at 232 cited Australian Municipal, Administrative, Clerical & Services Union v Greater Dandenong City Council (2000) 101 IR 143 cited Greater Dandenong City Council v Australian Municipal, Administrative, Clerical & Services Union (2001) 112 FCR 232 cited Construction, Forestry, Mining & Energy Union v Amcor Ltd [2002] FCA 610 cited

COMMONWEALTH BANK OF AUSTRALIA v FINANCE SECTOR UNION OF AUSTRALIA and KENNETH MACEY N 262 OF 1999 GRAY, NORTH and GYLES JJ SYDNEY 18 JUNE 2002

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY N 262 OF 1999

ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN: COMMONWEALTH BANK OF AUSTRALIA

ACN 123 123 124

APPLICANT

AND: FINANCE SECTOR UNION OF AUSTRALIA

FIRST RESPONDENT

KENNETH MACEY

SECOND RESPONDENT

COURT: GRAY, NORTH and GYLES JJ

DATE OF ORDER: 18 JUNE 2002

WHERE MADE: SYDNEY

THE COURT ORDERS THAT: 1. Leave to appeal is granted. 2. The appeal is allowed. 3. The orders below are set aside and, in lieu thereof, order that the claims for relief in paragraphs 1, 2 and 3 of the application are dismissed and the proceeding otherwise be remitted to the primary judge. 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 N 262 OF 1999

ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN: COMMONWEALTH BANK OF AUSTRALIA

ACN 123 123 124

APPLICANT

AND: FINANCE SECTOR UNION OF AUSTRALIA

FIRST RESPONDENT

KENNETH MACEY

SECOND RESPONDENT

COURT: GRAY, NORTH and GYLES JJ

DATE: 18 JUNE 2002

PLACE: SYDNEY

REASONS FOR JUDGMENT THE COURT: 1 This is an application by the Commonwealth Bank of Australia ("the Bank") for leave to appeal from an interlocutory judgment of a judge of the Court answering a separate question ordered to be decided pursuant to O 29 of the Federal Court Rules in representative proceedings pursuant to Pt IVA of the Federal Court Of Australia Act 1976 (Cth). The group members were identified as follows: "The group members to whom this proceeding relates are the members of the First Applicant purportedly seconded by the Respondent to perform work for the company known as EDS (Australia) Pty Ltd. That group numbers approximately 70 such employees, and they are identified in annexure "L" to the accompanying affidavit of Peter Kevin Presdee sworn 1 April 1999 and filed herein." 2 The applicants in the proceeding at first instance were the Finance Sector Union of Australia ("the FSU") and Kenneth Macey. The respondent in the proceeding at first instance was the Bank. There were effectively two strands to the application. The first was a claim under s 178 of the Workplace Relations Act 1996 (Cth) ("the Act"), which was in the following terms (omitting particulars): "1. Pursuant to s 178 of the Workplace Relations Act 1996 ("the Act") the imposition of a penalty on the Commonwealth Bank of Australia ("the Respondent") for breach of clause 42 of the Commonwealth Bank of Australia Officers Award 1990 ("the 1990 Award"). 2. Pursuant to s 356 of the Workplace Relations Act 1996 an order that the penalty imposed under order 1 above be paid to the First Applicant. 3. Pursuant to s 178(6) of the Act an order that the Respondent pay to each of the employees including the Second Applicant the amount which is owing to them under clause 42(g) of the Award." 3 The second strand of the proceeding was a claim for damages for breach of contract, based upon an agreement between the FSU and the Bank known as the Redundancy Redeployment and Retrenchment Agreement 1990 ("the 1990 Agreement") which, it was alleged, was incorporated into the contracts of employment of each of the group members. The 1990 Agreement contained provisions in relation to redundancy, redeployment and retrenchment which were identical with those of the Commonwealth Bank of Australia Officers' Award 1990 ("the 1990 Award") insofar as redundancy and redeployment were concerned, but which, it is said, provided greater benefits upon retrenchment. It is accepted on behalf of the respondents to this application that, in a practical sense, a decision upon the separate question relating to the 1990 Award is likely to resolve all of, or at least the significant, issues in that part of the proceeding which relates to the 1990 Agreement. 4 The form of the separate question was: "The question of the application of and alleged breach of Clause 42 of the Commonwealth Bank of Australia Officers Award 1990 be tried separately from any other question arising in the proceedings." It is common ground that this refers to that part of the pleading in the proceeding which claims relief under s 178 of the Act. 5 The judge found for the applicants at first instance on the separate question and the order made was as follows: "The Court orders and declares that: 1. The Commonwealth Bank of Australia breached clause 42 of the Commonwealth Bank of Australia Officers' Award 1990 by failing to terminate the employment of each member of the group on 10 October 1997 and failing then to pay each member a severance payment in accordance with cl 42(g) of the said Award. 2. The matter be stood over until 29 November 2001 at 9:30am for further directions." 6 Questions of penalty and orders as to underpayment were left for further determination. It is for that reason that the order is interlocutory and it follows that leave to appeal is required. The power in O 29 r 1 of the Federal Court Rules was exercised, to identify (albeit not with great precision) an issue for separate determination. The determination of the separate issue was by means of a declaration that answers the description of a declaration of right. It identifies: the obligation of which the appellant was found to be in breach (cl 42 of the 1990 Award); the persons in respect of whom the breach occurred (the members of the group); the nature of the breach (failing to terminate employment and failure to pay severance pay); and the date of the breach (10 October 1997). Ascertainable rights and liabilities flow from the matters so declared. These features distinguish the case from Warramunda Village Inc v Pryde [2001] FCA 61, (2001) 105 FCR 437. When the appeal came on for hearing, it was decided that the Court would hear full argument on all issues before determining the procedural questions. There was no objection by the respondents to this application to leave to appeal being granted. 7 At all relevant times the Bank was bound to comply with the provisions of the 1990 Award in relation to members of the FSU. The most relevant parts of cl 42 of the 1990 Award are as follows: "42 – REDUNDANCY, REDEPLOYMENT AND RETRENCHMENT Object (a) This clause has effect in situations where the Bank is considering or implementing change that impacts upon working arrangements and could give rise to potential redundancy and/or redeployment situations. A key objective of this clause is to minimise the potential for industrial disputation. Definitions (b) For the purpose of this clause: … (ii) "Directly comparable position" means a position which is at the same classification within the Bank, which does not entail a change in duties significant enough as to be unreasonable in the circumstances of the skills or potential skills (after training in terms of paragraph (d)(viii)) and abilities of the officer concerned and which is at the same location or at another location which is within reasonable commuting distance. (iii) "Redundancy" means a position redundancy – where work (or a major portion of it): (1) is no longer required to be performed; (2) is to be performed at a new location which requires a change in residence of the officer concerned; or (3) results from re-organisation; changed business practice; technological change; downturn in business; a decision to reduce the number of officers; or a general reduction in classification levels or positions. (iv) "Retrenchment" means the termination of employment of an officer as the result of redundancy. … Consultative processes (c) (i) When the Bank commences to review a work area, practice or function that could give rise to redundancy or redeployment situations, the Bank will inform the Unions and make its representatives available for discussions on the proposals. (ii) Recommendations resulting from the review in terms of paragraph (c)(i) and details of any proposed changes to the work area, functions or practices shall be conveyed to the Unions prior to any final decisions being taken. At this stage, the Bank shall supply to the Unions, details of the staffing structure applicable immediately prior to the commencement of the review and an explanation of the expected impact on that structure of the review findings. (iii) The Unions shall have the opportunity to comment on the review recommendations within a reasonable time (generally within two working weeks) of the explanation given in terms of paragraph (c)(ii). (iv) Once the initial review findings and any comments by the Unions have been examined by the Bank, the Unions shall be informed of the Bank's final decision, redeployment prospects and the potential for retrenchments in terms of subclauses (d) and (e). (v) The Unions accept the confidentiality of information provided by the Bank in terms of this clause and will not divulge any detail which relates to individual officers until after the Bank has notified the officers concerned. Redeployment (d) (i) Where redundancy situations occur, the Bank will make reasonable efforts to redeploy the officers concerned. These efforts will be assisted by taking maximum advantage of normal staff attrition and curtailing recruitment wherever practicable. (ii) All due consideration will be given by the Bank to filling vacant positions with suitably qualified officers whose current positions have been declared redundant. (iii) An officer whose position is declared redundant shall not be entitled to the provisions in subclauses (f), (g), (h), (j) and (k) of this clause if he/she declines an offer of a directly comparable position as defined by paragraph (b)(ii). (iv) Where alternative employment within the Bank is offered: (1) to a directly comparable position, the Bank's normal transfer conditions will apply; (2) in all other cases, at least two weeks will be allowed for the officer to decide whether or not to accept the offer. (v) Where an officer is offered a directly comparable position his/her actual salary and allowances shall not be reduced. (vi) If an officer accepts redeployment to an alternative position which is at lower level/classification, he/she will retain his/her existing salary/status and associated benefits. (vii) An officer who has accepted redeployment will continue to be paid allowances related to his/her former position which thereafter will be of fixed quantum (ie not subject to any further adjustment), less the amount of any allowances related to the position newly occupied, unless/until allowances related to the position newly occupied exceeds allowances related to the officer's former position, in which case only those allowances related to the position newly occupied shall be paid. (viii) The Bank will undertake where appropriate to train an officer whose position is declared redundant, in new skills to enable him/her to fill an alternative position. (ix) An offer of redeployment to other than a directly comparable position, shall be in writing with the following information about the proposed job option: (1) location; (2) level/classification; (3) salary; (4) principal duties. (x) An officer accepting alternative employment within the Bank, other than to a directly comparable position, will be given a trial period of three months in his/her new position. Should either the Bank or the officer find that the employment is unsuitable, the officer's services may be terminated without loss of entitlement to retrenchment payments calculated to the date service actually ends. Selection for retrenchment (e) (i) Where an officer cannot be redeployed he/she shall be retrenched. (ii) In a redundancy situation affecting a number of officers engaged in the same work at or about the same classification level and in the same work area, the Bank may call for applicants for retrenchment and determine which officers are to be retrenched. (iii) Nothing in this clause shall prevent the Bank from inviting an officer to apply for retrenchment or an officer applying to be retrenched. (iv) The Bank's right to select officers for retrenchment will be final. … Severance payments (g) (i) Upon termination through retrenchment, in addition to any payment in lieu of notice as specified in paragraph (f)(ii), an officer shall be paid a special lump sum severance payment in full settlement of all claims for additional notice, retrenchment pay, etc, calculated as follows: (1) Two weeks salary for the first full year of service, or pro rata for officers with less than one full year of service. (2) Two weeks salary for each subsequent year of continuous service. (3) Plus a pro-rated payment for each completed month of service in the final part year of service. (4) The minimum payment under this subclause shall be four weeks salary and the maximum payment under this subclause shall be 48 weeks salary. (ii) (1) The sum payable under paragraphs (f)(ii) and (g)(i) shall not exceed the sum of pay that the officer would have earned if employment with the Bank had proceeded to the officer's 65th birthday. (2) An officer who has transferred from full-time to part-time employment will have his/her severance payments for part-time work based on hours being worked at the conclusion of each period of part-time employment. Calculation will be pro-rata on the full time salary applicable to the level/classification of the officer immediately prior to retrenchment. Severance payments related to periods of full time employment will be based on the full time salary applicable to the level/classification of the officer immediately prior to retrenchment. …" (emphasis added) 8 At the primary hearing the parties agreed upon a set of facts, although the Bank did not accept that all of the agreed facts were relevant or admissible, particularly those relating to the period after 10 October 1997. Those facts were as follows: "1. The Commonwealth Bank of Australia (the Bank) was, at all material times, a corporation able to be sued. 2. The Commonwealth Bank of Australia Officers' Award (1990) (the Award) is an award of the Australian Industrial Relations Commission. 3. The Bank was, at all material times, and in particular on 10 October 1997, bound to conform to the provisions of the Award. 4. The Finance Sector Union of Australia (the FSU) was, at all relevant times, an organisation registered in accordance with the provisions of the Workplace Relations Act 1996 (Cth) (the Act). 5. Both the Bank and the FSU were, at all material times, parties to the Award. 6. Mr Kenneth Macey was, at all material times, a member of the FSU and a person whose employment with the Bank was subject to the provisions of the Award. 7. Prior to 10 October 1997 the Bank employed approximately 1,400 employees in its Information Services Department. Included in these were the persons whose names are set out in Exhibit L to the affidavit of Peter Kevin Presdee sworn on 1 April 1999 (the group members). 8. At all material times prior to 10 October 1997, the Bank employed members of the FSU (including all of the group members in these proceedings) in the Information Services Department. 9. At all relevant times prior to 10 October 1997, the Information Services Department of the Bank was in and formed part of the organisational structure of the Bank. 10. Prior to 10 October 1997 the Information Services Department of the Bank covered the whole range of technology services and included communication services, computer (hardware and software, mainframe, desktop and laptop) services, internal email and telephone network services, ATM support services and other services. 11. The Information Services Department included the following sections: (a) Communications/network; (b) Business Solutions; (c) Infrastructure Management; (d) Accounting Management & Consulting; (e) Production Delivery/Operations; and (f) Business Management. 12. In November 1994, the Bank advised the FSU that it was commencing a review of the Information Services function, with that review to be conducted by the consultancy group KPMG. On 26 March 1995, the Bank and the FSU met to discuss the outcome of that review. At a further meeting between the Bank and the FSU on 3 May 1996, the Bank indicated that it was considering a range of options for the future of the Information Services function, including the establishment of a joint venture, insourcing and outsourcing. Options being canvassed at that time included the provision of Information Services by international entities such as a company known as "Computer Sciences Corporation" or EDS (Australia) Pty Ltd (EDSA). 13. In the period leading to October 1997, the Bank decided to discontinue the provision of technology services by way of the Information Services Department, and in future to acquire technology services from EDSA. 14. EDSA is 35% owned by the Bank. EDS (Services) Pty Ltd (EDSS) is a wholly owned subsidiary of EDSA. For present purposes it is not necessary to make a distinction between EDSA and EDSS, and these companies together, or either of them, as the case required (sic), will be referred to as 'EDS'. 15. On or about 11 October 1996 the FSU wrote to the Bank in the terms of the document which is Annexure H to the affidavit of Peter Presdee sworn 1 April 1999 (the Presdee Affidavit). 16. On or about 13 August 1997 the Bank announced that it had formed a "Strategic Technology Partnership" with EDS which announcement was in the terms of Annexure J to the Presdee Affidavit. 17. On or about 20 August 1997, at a meeting between officers of the FSU and Mr Simon Lane who represented the Bank, Mr Lane told officers of the FSU that all employees in the Bank's Information Services Department would be made an offer to resign their employment with the Bank and to take up employment with EDS. Those employees who did not accept an offer with EDS would continue to be employed by the Bank and would work in the organisation and at the direction of EDS. 18. On or about 25 August 1997 employees of the Bank working in its Information Services Department were given a proposed contract of employment between the employee and EDS, a pro-forma letter of resignation from the employee's position with the Bank, and details of employment entitlements if the offer of a contract of employment between the employee of the Bank and EDS was accepted. 19. Employees of the Bank who were on leave on 25 August 1997 were made offers of employment by EDS upon their return to work. 20. It was a condition of the offer of employment made by EDS that Information Services employees resign from the Bank before being able to take up their offered positions with EDS. Besides an incentive payment and an ability to buy EDS shares at a preferential price, the salary offered by EDS grossed up the total entitlements paid by the Bank to each employee, especially in areas where certain conditions (e.g. cheaper home loans and Rostered Days Off) were not available at EDS. The Bank and EDS stated that the EDS offer would 'be equal to or better than' the total package available to Information Services Department employees as employees of the Bank. 21. The Bank was aware of the EDS offers of employment and the conditions attached to those offers. 22. During September 1997 EDS distributed to the employees, with the Bank's cooperation, knowledge and consent, documents entitled 'Q&A' which dealt with issues raised by employees in the Bank's Information Services Department concerning their proposed employment with EDS. 23. During about September 1997 and thereafter the Bank encouraged employees in its Information Services Department to take up employment with EDS. 24. On or about 16 September 1997 a document was published in the terms of Annexure K to the Presdee Affidavit which document included advice that: 'The reality is that no person will be made redundant. The Bank still has a requirement for the positions to be filled. No-one will lose their job.' 25. On or about 10 October 1997, the Bank advised those employees of the Bank who did not accept employment with EDS in the terms of Exhibit WS3 to the affidavit of William Smith sworn 4 February 2000 [set out later]. These employees (the seconded employees) were directed by the Bank to work in the organisation and at the direction of EDS. 26. By 10 October 1997 over 1,200 employees of the Bank had resigned their employment with the Bank and thereafter commenced employment with EDS. 27. There were 201 Bank employees in the Information Services Department who did not accept the offers of employment made by EDS on or before 10 October 1997. They included 76 employees then on extended leave of absence and 35 employees the detail of whose offers required reconsideration and/or adjustment for various reasons peculiar to those employees. 28. By 31 January 1998 the position was as follows: (a) the individual circumstances of the 35 employees referred to in paragraph 27 above had been resolved; (b) the seconded employees numbered 81; (c) the seconded employees included all the group members save 3 who were on extended leave of absence; and (d) there were 63 (of the original group of 201) on extended leave of absence, including the 3 group members referred to in sub-paragraph (c) above. 29. The seconded employees did not resign from their employment by (sic) the Bank. 30. The positions of the employees referred to in paragraph 26 above who commenced employment with EDS were not filled or otherwise occupied by anyone else within the Bank's employ on or after 10 October 1997. 31. Prior to 10 October 1997, the majority of persons engaged in the Information Services Department of the Bank were employees of the Bank. 32. Prior to 10 October 1997, persons employed in the Information Services Department of the Bank: (a) were able to apply for a promotion in any area of the Bank if the person met prescribed conditions of the position available; (b) were subject to Performance Development Reviews, which were undertaken by other Bank employees and were conducted for purposes that included ascertaining the person's entitlement to a performance payment and promotional opportunities; (c) were part of an organisational structure in which the Information Services Department of the Bank was but a part of the entire Bank organisation; (d) used stationery and similar items which bore the name the Bank; (e) provided services and performed roles and work which was directly for the benefit of the Bank; (f) had access to promotional opportunities and career progression within the Bank's Information Services Department and elsewhere within the Bank but did not require them, in order to obtain such promotion, to resign their employment with the Bank and accept employment with any other employers; and (g) had their wages paid directly by the Bank. 33. On and after 10 October 1997, those employees who had not resigned their employment from the Bank: (a) worked at premises which they had formerly worked at but which were now leased by the Bank to EDS or a related entity; (b) worked at premises which bore the signage and logos of a company known by the name of EDS; (c) used stationery and business cards which were not the Bank's but rather were those of EDS; (d) used the name EDS in dealing with telephone and other enquiries; (e) were directed by the Bank to work in the organisation, and at the direction of EDS; (f) worked to the day to day directions of managers employed by EDS; and (g) were required to comply with EDS workplace protocols, such as dress codes and rules about alcohol consumption. 34. After 10 October 1997, EDS corresponded with seconded employees at their home addresses. 35. After 10 October 1997, seconded employees applied for leave to the managers employed by EDS, and such applications were forwarded to the Bank for approval. 36. On and after 10 October 1997: (a) any matter raised by the FSU in relation to a seconded employee was dealt with by the Bank; and (b) all disciplinary matters concerning the seconded employees were referred to the Bank. 37. On and from 10 October 1997, the Bank did not have an Information Services Department. 38. On and since 10 October 1997, technology services have been provided to the Bank by EDS. The work in connection with the provision of these services has been performed by employees of EDS, (including those previously employed by the Bank), and by the seconded employees. 39. Immediately prior to or shortly after 10 October 1997 the Bank created a new department which was known as Group Technology which monitored the performance of the information technology contract performed by EDS and which had previously been the work undertaken by employees of the Bank in its Information Services Department. 40. Group Technology was a small department of some 30 people consisting of a significant number of executive and manager level employees of the Bank, including some previously employed in the Information Services Department. The role of Group Technology included the provision of advice to the Bank as to future technology needs, which was a function which had previously been undertaken by Bank employees in the Information Services Department. 41. Group Technology was given the internal branch number previously used by the Information Services Department, namely, 2059. 42. On and from 10 October 1997, the seconded employees were allocated for administrative purposes (there was an unresolved issue about what this meant) within the internal structure of the Bank to Group Technology, with their employment carrying the branch number 2059-333. The numbers '333' were used by the Bank to identify those employees who were seconded to EDS. 43. Immediately prior to 10 October 1997, Mr Moody was the acting head of the Information Services Department. From 10 October 1997, Mr Moody was the Acting General Manager of Group Technology in the Bank." The document referred to in par 25 of the agreed facts was in the following terms: "Dear Colleague, For those of you who elected to stay with the Commonwealth Bank Today is an important day for you and your EDS Australia colleagues. Most of IS start with EDS Australia today and around 100 or so colleagues have elected to stay with the Bank. I would like to take the opportunity to assure those of you who decided not to take up offers with EDS today, that you remain with the Bank on a no disadvantage basis. Let me outline the following important factors for you: · The concept of career and promotion has undergone significant change across the finance sector. The Bank has not been immune from this change. · Career development is now about employability. Career paths are increasingly provided through expansion of roles and access to wider developmental opportunities than necessarily hierarchical progression. · Employees who decide to stay with the Bank will have the benefit of working with EDS staff – staff that have available leading edge systems and information, which will thereby benefit everyone working on the provision of IT services to the Bank. These opportunities will expose Bank employees to an environment of knowledge and development far in excess of what has traditionally been the case. · Employees who remain can seek wider career opportunities within the Bank. Coupled with a generous staff study scheme, you can access enhanced qualifications to equip yourselves with further skills to enhance your employability. · The EDS offer will remain open for up to a period of 10 years. If you wish to further your careers, you can still join this leading edge organisation. A job will be available. · You will continue to be covered by the relevant Bank award, EBA and all present and future Bank terms and conditions of employment and any other benefits attached. You will receive all future salary increases negotiated between the Bank and FSU. · You will continue to maintain and enjoy current fringe benefits eg staff housing loans, health society subsidies and fee free banking. · You will also continue to work at the same location and perform the same duties. · You will be predominantly supervised by EDS employees, but it will be the Bank which assesses your performance, decides what performance payments you are to receive, and takes the responsibility for employment and maintenance of conditions. · IT professionals within the Bank have for some time worked along side contractors and in many instances contractors have supervised the work of the Bank staff. EDS staff will prove to be more permanent additions to the workplace and thereby less transient colleagues than has traditionally been the case. In this way you will continue to be an important part of the work team in the Bank. I would also like to extent you my invitation to join us at the Big Splash on 17 October at the International Aquatic Centre in Homebush when we will thank all the Bank staff who are transitioning to EDS Australia for their contributions. The notices on this event are issuing today. I look forward to seeing you there. Best regards, "John Mulcahy" John F Mulcahy" 9 The primary judge made some other findings of fact which further exemplify or elucidate the agreed facts. Objection was taken by the Bank to the relevance of most, if not all, of these findings and there was a challenge to some of them. We do not understand counsel for the FSU to contend that any of those findings are critical to the issues which arise on the appeal, although he defends both the making of the findings and their relevance. In our opinion, the issues on the appeal can be determined upon the agreed facts, without the necessity to resort to the additional facts found by the judge.

Primary Decision 10 One of the alternative arguments raised by the FSU was that from 10 October 1997 the seconded employees were employed by EDSA and not the Bank. His Honour held that the seconded employees remained employees of the Bank after 10 October 1997 and there is no notice of contention filed to suggest that his Honour was wrong in that respect. The respondents to this application did not at any stage of these proceedings contend that the retention and secondment of the relevant employees was a sham. These reasons therefore do not address questions which would arise if it had been found that the employment and secondment of such employees was not a real transaction at all. 11 The primary judge commenced his consideration of the operation of cl 42 in relation to the seconded employees as follows (at [65]): "While there were limited areas of dispute about the facts, the central question raised in these proceedings is whether clause 42 of the Award is enlivened in a situation such as the present and if so, with what effect. I am satisfied that in the months leading up to 10 October 1997, the Bank proposed that the duties of the employees employed in the IS Department would still be undertaken by them if they elected not to take up employment with EDSA. The proposal that EDSA would take over the operations of the IS Department using, as its personnel, the individuals who had been employed by the Bank in that department was conditional on a sufficient number of the employees agreeing to take up employment with EDSA. On the other hand, the proposal contemplated that employees not taking up such employment would continue, at least in form and at law, to be employed by the Bank and perform the duties they had formerly performed at least in the short term. However does this lead to there being a "position redundancy" in relation to the employees who did not take up employment with EDSA?" 12 After referring to the decision in Hawkins v Commonwealth Bank of Australia (1996) 66 IR 322 ("Hawkins") and the decision of the Full Court in Hawkins v Commonwealth Bank of Australia (No 2) (1996) 70 IR 213 ("Hawkins (No 2)"), his Honour said (at [69]): "However what these observations leave unanswered is the question of whether the definition is satisfied and there is a "redundancy" if there has been a fundamental and radical change in the organisational context in which the position existed though the duties attaching to the position continue to be performed." 13 His Honour then considered a line of authority consisting of Termination, Change and Redundancy Case (1984) 8 IR 34 at 74-75 and also (1984) 9 IR 115 at 129; Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union v United Milk Tasmania Ltd (2000) 48 AILR 4-315 (Print S7351); Steppes Pty Ltd (t/a The Beaufort Darwin) v Australian Liquor, Hospitality and Miscellaneous Workers Union (1998) 86 IR 337; Trustee Officers' Award Case (1983) 290 CAR 100 and the decision of the Full Bench on appeal in (1983) 291 CAR 200; In re Bank Officers (State) Board (1921) 20 AR (NSW) 303; Re Government Cleaning Service (Privatisation) Award (No 2) (1994) 55 IR 199; Re Government Cleaning Service (Privatisation) Award (No 3) (1995) 59 IR 348; Re Australian Education Union; Ex parte Victoria (1995) 184 CLR 188 at 232; Australian Municipal, Administrative, Clerical & Services Union v Greater Dandenong City Council (2000) 101 IR 143; and, on appeal, Greater Dandenong City Council v Australian Municipal, Administrative, Clerical & Services Union (2001) 112 FCR 232. His Honour deduced from these authorities the proposition that the notion of an employee becoming redundant can arise when there is, in prospect, the termination of the employee's employment even though the duties of the employee will still be undertaken (either by that employee or another employee) for the ultimate benefit of the original employer but in employment with another employer and for the immediate benefit of that other employer. His Honour recognised that that case was not analogous with the present. The question to be answered was reformulated by his Honour as follows (at [82]): "…whether there can be a "redundancy", as defined, if there has been a fundamental and radical change in the organisational context in which the position existed, with the result that the position has effectively been abolished though the duties attaching to the position continue to be performed." His Honour's immediate answer was as follows (at [83]): "At one level, the question can be simply answered, as the applicants submitted. The Bank no longer required the work to be done because it was no longer done for the Bank. It was done for EDSA. That is why the Bank's IS Department ceased to exist after 10 October 1997; why those IS employees who resigned from the Bank and moved to EDSA were not replaced; and why, when EDSA underwent a global restructure and no longer required many of the seconded IS employees, they were ultimately retrenched. On this approach, which I accept at this level of abstraction, there was a redundancy situation. In one sense, this conclusion disposes of the issue raised at this point in the proceedings in favour of the applicants. However, it is nonetheless desirable to consider, in a more detailed way, the language actually used in cl 42 though the ultimate result is, in my opinion, the same in the context of this case. Indeed it is appropriate to consider the language actually used because the approach of the Bank in defending the application was effectively to say that, consistent with the observations in Hawkins (No 1) (set out at [67] above), "work" means "duties" and the duties continued to be performed."

14 His Honour gave attention to some authorities as to the meaning of the word "work" and said (at [88]):

"… The entire expression has a clear meaning if "work" is intended to mean only duties. That is, a redundancy arises when a major portion of an employee's duties is no longer required to be performed. However the definition is no less comprehensible if "work" means not only duties but the organisational context in which they are performed and the terms and conditions under which they are performed which effectively define and create the position to which the duties attach. A change, particularly if it was a significant one, in the organisational context in which an employee performed his or her duties where the duties remained the same but the position was abolished, could aptly be described as a situation where a major portion of the work was no longer required to be done. … It can be seen from sub-par (2) of the definition of "redundancy" that the clause is intended to comprehend a situation where it is proposed the employee's work is to be performed at a different location requiring a change of residence. This suggests that the entire clause is directed to situations where there is a significant and material change in the context in which the work reflected in the pre-existing position is to be performed as well as circumstances where the work is not done at all. It is tolerably clear, in my opinion, that the word "work" is not intended to be a reference simply to "duties"." 15 In relation to redeployment, his Honour concluded (at [92]) that: "It would, in my opinion, be inconsistent with the purpose of the clause viewed as a whole to treat an employee as not being in a redundancy situation when, for virtually all practical purposes, the employee ceased working for the Bank within its organisational structure." 16 His Honour's ultimate conclusion was as follows (at [93]): "While it has by no means been an easy issue to resolve, I am satisfied that each member of the representative group on whose behalf these proceedings are brought was, at 10 October 1997, in a redundancy situation. The Bank proposed that each group member would continue to perform generally the duties they had, to that point, been doing. However the context in which those duties were performed was to be changed profoundly. The pre-existing duties continued, in substance, to be performed, but the position in which they had previously been performed had disappeared. They were performed in an entirely different context. While the Bank continued to play a role in the supervision of their employment at a general level, so did EDSA. The changed context was a fundamental one and it was only in a nominal sense that the position each employee occupied continued to exist. In a real and substantial sense each position had been abolished. Each seconded employee no longer worked in the IS Department of the Bank but rather each performed their duties at the direction and for the benefit of EDSA. While it might be said that the positions they held continued, such an approach gives pre-eminence to form over substance. In my opinion, the positions they occupied before 10 October 1997 were, in substance, abolished as soon as EDSA took over the activities formerly undertaken by the IS Department of the Bank. At that time the Bank no longer required the work they had formerly done to be done in the future. Each of the group members was at that time, in a redundancy situation. It follows from what I have just said that the continuation of the performance of the duties by the seconded employees did not constitute, as the Bank submitted as a subsidiary or alternative submission, redeployment either to a directly comparable position or another alternative position as contemplated by subcl (d). That is because the continued employment of the seconded employees by the Bank was not employment "within" the Bank as contemplated by cl 42."

Argument for the Bank 17 Counsel for the Bank drew attention to the fact that in Hawkins it had been pointed out that the literal wording of the definition of "redundancy" makes little apparent sense because of the terms of par 3 of it. The decision in that case was as to the identical clause in the 1990 Agreement. It was concluded (at 333): "It [redundancy] has an accepted meaning as describing a situation which might lead to termination of an employee's employment because the duties of the job or position are no longer to be performed by an employee as the occupant of that job or position and often as a result of technological or organisational change. It is consistent with the ordinary meaning of redundancy to treat par (1) as reflecting that meaning, par (2) as an extension of it, and par (3) as identifying the circumstances in which a redundancy arises which attracts the operation of the Agreement. So construed, this par (3) limits the general operation both of pars (1) and (2) … In my opinion par (3) of the definition of "redundancy" is intended to identify the circumstances in which either of the two events referred to in pars (1) and (2) would constitute a redundancy." That construction of the clause in the 1990 Agreement was approved by the Full Court in Hawkins (No 2) and it is common ground that cl 42 should be so construed. 18 The submission of counsel for the Bank was that it followed from the decision of the Full Court in Hawkins (No 2) that there was no redundancy on the present facts. No position had been abolished. The work of the position, in the sense of the duties of the position, remained the same as it had been. The holder of the position continued to be employed by the Bank, with all of the normal benefits and allowances provided for by the 1990 Award, the 1990 Agreement and other benefits available to bank employees. It was submitted that the approach of the primary judge introduced uncertainty and indefiniteness to a straightforward situation, and that this was likely to detract from, rather than assist, the object of cl 42, which was to minimise the potential for industrial disputation. It was said that there was no warrant in any of the authorities considered by the primary judge for the notion of constructive or situational redundancy where the same duties continued to be performed, for the same employer, on the same basis. Indeed, it was submitted that these authorities were against the application of redundancy provisions on transmission of a business. If this were so, then the present case was obvious. It was submitted that once it was recognised that the employees continued to be employees of the Bank there was not room for any concept of real or deemed employment by EDS. It was submitted that the argument based upon substance rather than form was misconceived. There was no case of sham made at any stage. 19 It was further submitted for the Bank that if there were such a deemed redundancy, then the position which continued to be occupied should be regarded as a "directly comparable position" within the redeployment provisions. If it is appropriate to deem redundancy where none had occurred, it was appropriate to deem there to have been offers of a directly comparable position.

Argument for the Respondents to the Application for Leave 20 Counsel for the respondents defended and adopted the reasons of the primary judge. They submitted that the agreed facts made it clear that the intention of the Bank was to outsource the whole of the information technology function and that the secondment of employees who did not transfer was a device to avoid the payment of severance pay. The fact that real employment was continued and there was no sham was no answer to that conclusion. The position of an employee in a large in-house information technology group, with the career path that that entailed, was quite different from that of one of a few permanent secondees with no information technology career path in the Bank. Defining work by reference only to actual day-to-day duties was too narrow. 21 Counsel submitted that much of the criticism of the primary judge's reasoning related to what was, in reality, an alternative basis for decision. The Bank did not "require" the work to be done within the meaning of cl 42 – it is clear that the Bank would have much preferred the work to be completely done by EDS and its direct employees, and only tolerated the work being done in part by secondees because of the effect of cl 42. It was submitted that although it was correct that none of the cases dealt with facts like the present, this is explicable because permanent secondment is an unusual (and anomalous) situation. It was submitted that neither Hawkins nor Hawkins (No 2) governed this case. In that case, the position had been abolished and the Court had been dealing with the Bank's argument that it had been abolished in name but not in substance. It was submitted that a purposive approach to the construction of cl 42 should be adopted. 22 So far as redeployment is concerned, it was submitted that construing the words "within the Bank" as being automatically satisfied if employment is by the Bank is a triumph of form over substance. It was submitted that the phrase "a position which is at the same classification within the Bank" means that the employees should be employed for practical purposes within the Bank's organisational structure and seconded employees do not fall within that category.

Decision on Appeal 23 Hawkins (No 2) is of critical significance to the resolution of the present problem. It was decided by a Full Court of the Industrial Relations Court of Australia. From 30 March 1994 that Court took over the jurisdiction previously exercised by this Court (Industrial Relations Reform Act 1993 (Cth) Pt 7). From 25 May 1997 the jurisdiction of that Court was transferred back to this Court (Workplace Relations and Other Legislation Amendment Act 1996 (Cth) s 2 and Schedule 16). At all times, the judges of the Industrial Relations Court of Australia were also judges of this Court. We note that the original application in Hawkins was filed in this Court prior to the transfer of this Court's jurisdiction to the Industrial Relations Court of Australia. In the circumstances, although not technically binding on this Court, a judgment of a Full Court of the Industrial Relations Court of Australia is entitled to great weight. We are of the view that Hawkins (No 2) should be followed in the present case. Indeed, as the FSU and the Bank were each parties to the decision in Hawkins (No 2), it would not be appropriate for a different construction to be accorded to the same clause (albeit in different instruments) in a later decision without a compelling reason. Whilst counsel for the FSU is correct in submitting that the decision in Hawkins (No 2) does not directly decide the present case, it does construe a clause identical with that with which we are concerned in a manner difficult to reconcile with the judgment under appeal, in that "work" in the definition of redundancy was judged by the duties actually performed by the officer of the Bank concerned. As the primary judge acknowledged, if that view of "work" is taken then the application of the clause to the present circumstances is straightforward and the applicants must fail. We should, therefore, take a closer look at Hawkins and Hawkins (No 2). 24 In Hawkins it was said (at 333-334): "Thus, in the present case, it is necessary to consider whether the work of Hawkins, or a major portion of it, was no longer required to be performed and whether that arose relevantly, as a result of reorganisation. I should add that the definition speaks of a position redundancy. That is a reference, in my opinion, to a situation where the work done by an occupant of an identified position is no longer done by the occupant of that position and the position is abolished. That might be because the work is not done at all or the work is allocated to a range of other identified positions in which some of the reallocated work is done but is done in conjunction with other work. As Ryan J said in Jones: "It has generally been accepted that a dismissal is not unfair if it results from genuine redundancy, in the sense that an employee is no longer required to perform his or her job because of changes in operational requirements. In R v Industrial Commission of South Australia; Ex parte Adelaide Milk Co-Operative Ltd (1977) 44 SAIR 1202, Bray CJ defined redundancy at 1205, where he stated: 'a job becomes redundant when an employer no longer desires to have it performed by anyone.' That definition was endorsed by a Full Bench of the Australian Conciliation and Arbitration Commission in the Termination, Change and Redundancy Case (1984) 8 IR 34 at 55-56. On Mr Jones' evidence, this case would not satisfy that narrow definition of genuine redundancy, as some of his former duties were still being performed. However, it should be noted that Bray CJ's description of what can constitute a redundancy is not expressed to be exclusive. His Honour's description was cast in terms of a 'job' in the sense of a collection of functions, duties and responsibilities entrusted, as part of the scheme of the employer's organisation, to a particular employee. However, it is within the employer's prerogative to rearrange the organisational structure by breaking up the collection of functions, duties and responsibilities attached to a single position and distributing them among the holders of other positions, including newly-created positions. It is inappropriate now to attempt an exhaustive description of the methods by which a reorganisation of that kind may be achieved. One illustration of it occurs when the duties of a single, full-time, employee are redistributed to several part-time employees. What is critical for the purpose of identifying a redundancy is whether the holder of the former position has, after the reorganisation, any duties left to discharge. If there is no longer any function or duty to be performed by that person, his or her position becomes redundant in the sense in which the word was used in the Adelaide Milk Co-Operative case." What then were the changes in the duties of the position occupied by Hawkins? That involves an analysis of the work done by Hawkins in his capacity as head of institutional banking, South Australia and as relationship executive under the new structure." (emphasis added) Later it was said (at 337): It is plain from the evidence that the position of head of institutional banking was abolished. A literal reading of the definition might, as the applicants submit, indicate that if this was so, the former position did not exist at all and thus Hawkins was involved in a position redundancy. However, the definition operates, not on names or titles, but on the aggregation of duties that constitute the position. It is thus necessary to consider whether "a major portion" of the work of the position formerly held by Hawkins was to be performed by the occupant of the position to which he was to be appointed, it being the only position identified by the Bank as substantially reflecting the work of the old position." (emphasis added) The conclusion in that case on that question was (at 337): "In the present case, the position assumed by Hawkins had very few of the managerial functions that constituted a significant part of the duties of the position he formerly occupied. It involved a significant change in the duties that were, in my opinion, material. They constituted the loss of a major portion of the work performed by Hawkins in the position of head of institutional banking, South Australia. He was thus involved in a position redundancy." (emphasis added) 25 The Full Court in Hawkins (No 2) said (at 220): "The purpose of the Agreement is to give a measure of flexibility to the Bank in redeploying staff on the one hand and, on the other hand, to give a measure of certainty to those whose positions have been abolished." Later (at 226) the Full Court said: "Earlier in the jugment [sic] his Honour posed the question … namely, whether the work of Mr Hawkins, or a major portion of it, was no longer required to be performed and whether that arose relevantly as a result of reorganisation." Later (at 226-227) the Full Court said: "Under the definition of redundancy in cl (iii) the question was not whether Mr Hawkins personally had become redundant to the requirements of the Bank, but whether the position which he formerly occupied had become redundant. The new position was to have none of the personnel functions of the old position. He would no longer be responsible for managing a large group of employees of the Bank. He would have no direct managerial role in relation to the Treasury Department and International Trade. His role in credit assessment was to become indirect and collaborative rather than direct. … In our opinion his Honour posed the correct question to determine if Mr Hawkins was in a position redundancy for the purpose of the Agreement, and that the conclusion which he reached on the facts was justified." 26 Counsel for the FSU was unable to refer to any authority which gave the special meaning to "work" for which he contended. No doubt there can be debate as to whether particular activities may be regarded as "work" for various purposes (eg, Warramunda Village Inc v Pryde [2002] FCA 250). There are, however, features of cl 42 which, taken in context, lead us to the same conclusion as appears from Hawkins (No 2). 27 One is that redundancy within cl 42 means a position redundancy, not an employee redundancy. The usual meaning of "redundancy" in an employment context is "denoting or relating to an employee who is or becomes superfluous to the needs of the employer" (Macquarie Dictionary, 3rd ed). There are numerous indications, both within cl 42 and in other parts of the Award, which indicate that an officer of the Bank is appointed to an actual nominated position with nominated duties. The primary application of cl 42 is where, as a result of reorganisation, the nominated position becomes redundant and is abolished. That was the case in Hawkins. There is no finding that that occurred here, and the evidence indicates to the contrary. We accept that there may be circumstances where leaving the nominal position in place, but substantially altering the duties, could amount to making a position redundant. To hold otherwise would be to prefer form over substance. There is no room for application of that principle where the duties remain, in substance, the same. Indeed, it follows from Hawkins (No 2) that the formal abolition of a position will not amount to a position redundancy unless the change in duties is substantial enough to amount to a change of position. The test for position redundancy which cl 42 chooses is that the work to be done by the holder of the position is no longer required to be done, and it is common ground that that means no longer required by the Bank. We do not agree that (leaving aside any question of sham) the requirement by the Bank can be second-guessed. "Require" is used in the sense of demanded or called upon or enjoined. The agreed facts make it clear that the Bank did continue to require that the work be performed. 28 A significant indicator internal to cl 42 that "work" is used in the sense of duties to be performed is the definition of "directly comparable position" which appears in juxtaposition with the definition of "redundancy" and which has, what appears to us to be, a symmetrical relationship with it. Read as Hawkins (No 2) decides, the definition of "redundancy" has two alternative criteria or gateways and a third which limits each alternative. The third has no relevance to the concept of a directly comparable position. The words in the definition of "directly comparable position": "a position … which does not entail a change of duties significant enough as to be unreasonable in the circumstances of the skills or potential skills … and abilities of the officer concerned and which is at the same location or at another location which is within reasonable commuting distance" (emphasis added) illuminate the definition of position redundancy where: "… work" (or a major portion of it): 1. is no longer required to be performed (or) 2. is to be performed at a new location which requires a change in residence of the officer concerned." The first limb of "redundancy" is that "work is no longer required to be performed". The equivalent in relation to "directly comparable position" is "does not entail a change of duties significant enough as to be unreasonable …". The second limb of redundancy is that "work is to be performed at a new location which requires a change in residence …". The equivalent in relation to "directly comparable position" is "which is at the same location or at another location which is within reasonable commuting distance". Whilst the language of the definitions is not identical, the concepts are the same. This reading of the clause (particularly the first limb) provides support for the contention that "work" in respect of position redundancy relates to the actual duties to be performed by the holder of the position. 29 It may be accepted that the career path for an employee of the Bank who is seconded to work with EDS will be different to the career path which would have existed if the Bank's information technology division remained as it was, and that, in particular, there will be less opportunity for promotion or advancement in the field of information technology. Counsel for the FSU was not able to refer to any authority which establishes that this consideration is relevant to redundancy as it has been understood before now, whether in relation to redundancy in general or position redundancy. Severance pay is primarily designed to deal with situations in which either the person or the position is redundant in the usual sense of the word and retrenchment follows. Clause 42 extends that notion so that if there is a substantial enough change in duties, or if the location of the job is sufficiently changed, then there is, effectively, a constructive redundancy and if retrenchment follows severance pay becomes payable. Loss of a collateral advantage by virtue of reorganisation is not within the ordinary concept of redundancy, and cl 42 has not been drafted so as to pick up that circumstance. 30 The appeal to purposive construction is misplaced. The 1990 Award was a consent award, negotiated between a union and an employer. Such an award, as with all industrial agreements, is necessarily a compromise between various interests. Purposive construction does not mean that an award, or a clause in an award, of this character should be construed favourably to one side or the other. In the present case cl 42 itself states the purpose of the clause and the Full Court in Hawkins (No 2) (in relation to the identical clause in the 1990 Agreement) expanded upon that by describing it as: "… to give a measure of flexibility to the Bank in redeploying staff on the one hand and, on the other hand, to give a measure of certainty to those whose positions have been abolished." As Finkelstein J recently pointed out in dealing with a not dissimilar issue: "… there comes a point when a court of construction must resist the temptation of forcing a meaning to a bargain which the parties did not intend and to substitute for the arrangements actually made, an arrangement which the court believes is a better one." (Construction, Forestry, Mining & Energy Union v Amcor Ltd [2002] FCA 610 at [18]). Even if such an approach were open, it would not be possible for the Court to decide what would be a better bargain having regard to the interests of both parties, or to decide what other consequences that might have for other parts of the industrial award or agreement. 31 Our opinion as to the substance of that matter would not alter if the additional facts found by the primary judge were taken into account. It is unnecessary to consider the arguments as to redeployment or the relevance or admissibility of events after 11 October 1997. Our conclusion that the appeal should be allowed makes it unnecessary to consider any procedural question which might otherwise have arisen.

Conclusion 32 Leave to appeal is granted and the appeal is allowed; the orders below should be set aside, and, in lieu thereof, the separate question should be dealt with by an order that the claims for relief sought in paragraphs 1, 2 and 3 of the application be dismissed. The proceeding otherwise should be remitted to the primary judge. No order for costs should be made because of the terms of the Act. I certify that the preceding thirty-two (32) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Gray, North and Gyles.

Associate: Dated: 18 June 2002

Counsel for the Applicant: RJ Ellicott QC and J Fernon

Solicitor for the Applicant: Freehills

Counsel for the Respondents: R Kenzie QC and P Ginters

Solicitor for the Respondents: Geoffrey Edwards & Co

Date of Hearing: 13 and 14 May 2002

Date of Judgment: 18 June 2002