Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Telstra Corporation Limited (ACN 051 775 556)

• Jurisdiction: Australia Federal only
• Judgment Date: 02 October 2007
• Neutral Citation: [2007] FCA 1515
• Court: Federal Court

FEDERAL COURT OF AUSTRALIA

Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Telstra Corporation Limited (ACN 051 775 556) [2007] FCA 1515

INDUSTRIAL LAW – Employee entitlements under certified agreement – where employee was transferred to alternative position before employment relationship terminated – where new position at a lower rate of pay – construction of salary maintenance provision in relevant certified agreement – relevance of salary maintenance provisions in earlier redundancy agreement between unions and employer

Federal Court of Australia Act 1976 (Cth) s 51A

Industrial Relations Act 1988 (Cth)

Penalty Interest Rates Act 1983 (Vic)

Workplace Relations Act 1996 (Cth)

Amcor Limited v Construction, Forestry, Mining and Energy Union(2005) 222 CLR 241applied

Ansett Australia Ltd (Subject to Deed of Company Arrangement) v Australian Licenced Aircraft Engineers’ Association [2003] FCAFC 209cited

Australasian Meat Industry Employees’ Union v Coles Supermarkets Australia Pty Ltd (1998) 80 IR 208cited

Automotive, Food, Metals, Engineering, Printing & Kindred Industries Union v Ardmona Foods Ltd (2006) 155 IR 211 cited

GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd (2003) 201 ALR 55 cited

Hawkins v Commonwealth Bank of Australia (No 2) (1996) 70 IR 213cited

Kucks v CSR Limited (1996) 66 IR 182referred to

Liquor, Hospitality and Miscellaneous Union v Prestige Property Services Pty Ltd (2005) 141 IR 105cited

Paramount Pictures Corporation v Hasluck (2006) 70 IPR 293 cited

Vision Super Pty Ltd v Poulter (2006) 154 FCR 185cited

Walker v Citigroup Global Market Pty Ltd [2005] FCA 1866 cited

COMMUNICATIONS, ELECTRICAL, ELECTRONIC, ENERGY, INFORMATION, POSTAL, PLUMBING AND ALLIED SERVICES UNION OF AUSTRALIA v TELSTRA CORPORATION LIMITED (ACN 051 775 556)

VID 312 OF 2007

GORDON J

2 OCTOBER 2007

MELBOURNE

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VID 312 OF 2007

BETWEEN:	COMMUNICATIONS, ELECTRICAL, ELECTRONIC, ENERGY, INFORMATION, POSTAL, PLUMBING AND ALLIED SERVICES UNION OF AUSTRALIA Applicant
AND:	TELSTRA CORPORATION LIMITED (ACN 051 775 556) Respondent

JUDGE:	GORDON J
DATE OF ORDER:	2 OCTOBER 2007
WHERE MADE:	MELBOURNE

THE COURT ORDERS THAT:

1. The respondent pay William Mc Donald $18,194.16 together with interest under s 51A(1)(a) of the Federal Court of Australia Act 1976 (Cth) calculated at the rate fixed from time to time in accordance with the Penalty Interest Rates Act 1983 (Vic).

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VID 312 OF 2007

BETWEEN:	COMMUNICATIONS, ELECTRICAL, ELECTRONIC, ENERGY, INFORMATION, POSTAL, PLUMBING AND ALLIED SERVICES UNION OF AUSTRALIA Applicant
AND:	TELSTRA CORPORATION LIMITED (ACN 051 775 556) Respondent

JUDGE:	GORDON J
DATE:	2 OCTOBER 2007
PLACE:	MELBOURNE

REASONS FOR JUDGMENT

Introduction

1 This proceeding concerns the Telstra Enterprise Agreement 2005 – 2008 between Telstra Corporation Limited (“Telstra”), the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (“the CEPU”), the Community and Public Section Union (“the CPSU”) and others (“the 2005 Enterprise Agreement”) and its relationship with the Telstra Redundancy Agreement 2002 (“the TRA”).

2 The principal issue is whether Telstra breached the 2005 Enterprise Agreement by failing to pay an employee, William McDonald, a member of the CEPU (“Mr McDonald”), his previous rate of salary after he was redeployed to, and later accepted a redundancy package from, a lower paying position. The answer turns on the proper construction of cl 17.4 of the 2005 Enterprise Agreement and, in particular whether cl 17.4 of the 2005 Enterprise Agreement permits the application of cl 15.3 of the TRA to Mr McDonald.

Background facts

3 Mr McDonald was an employee of Telstra from 17 July 1989 until 16 October 2006. At the relevant time, Mr McDonald’s employment was governed by the 2005 Enterprise Agreement and the TRA.

4 Prior to 2 February 2006, Mr McDonald was employed by Telstra as a Contract Liaison Officer. The job was classified as a band 7 position in the “Customer Field Workstream” (“CFW7”) under the pay and classification scales of the 2005 Enterprise Agreement. Mr McDonald worked in Telstra’s offices at Seymour, Victoria. His actual rate of pay was $61,676 per annum.

5 On 2 February 2006, Telstra issued Mr McDonald with a “Form A Notification of Redundancy and Proposed Retrenchment” under cl 6.1 of the TRA. This had the effect of notifying Mr McDonald of proposed retrenchments of a number of staff employed in CFW7 positions. On 28 February 2006, Telstra issued Mr McDonald with a “Form B Advice of Selection for Retrenchment” under cll 5.4 and 6.6 of the TRA. This had the effect of confirming Mr McDonald’s retrenchment. Upon receipt of the “Form B” notice, cl 8 of the TRA gave Mr McDonald the option of remaining in paid employment with Telstra for at least another 6 weeks pending attempts at redeployment under the Telstra Jobs Program. Mr McDonald took that option.

6 On 1 April 2006, Mr McDonald requested he be redeployed to a communications technician job “in the field” at Seymour. On 11 April 2006, Telstra accepted Mr McDonald’s request by notifying him that he was redeployed as a Field Joiner. This job was classified as a band 4 position in the Customer Field Workstream (“CFW4”) under the pay and classification scales of the 2005 Enterprise Agreement. Mr McDonald commenced in the CFW4 position on 13 April 2006. His actual rate of pay was $49,991 per annum at the time of redeployment. On 7 September 2006, that amount was raised to $51,241.

7 On 27 September 2006, Mr McDonald wrote to Telstra to confirm that he was volunteering for redundancy and that he wished to leave on 16 October 2006. On 16 October 2006, Mr McDonald ceased employment with Telstra in accordance with the TRA.

8 From the time of his redeployment on 13 April 2006, Mr McDonald was paid only the lower salary (and, later, redundancy benefits) applicable to the new position.

9 Mr McDonald seeks to recover the following amounts:

(1) Underpayment of wages for 21 weeks for the period from 13 April 2006 to 7 September 2006 in the sum of $4,718.94;

(2) Underpayment of wages for 5 weeks and 2 days for the period from 7 September 2006 to 16 October 2006 in the sum of $1,083.65;

(3) Redundancy underpayment of wages for a period of 56.75 weeks in the sum of $11,388.20; and

(4) Payment of 5 weeks pay in lieu of notice in the sum of $1,003.37.

The total amount sought is $18,194.16.

The 2005 Enterprise Agreement and the TRA The 2005 Enterprise Agreement

10 The 2005 Enterprise Agreement was certified pursuant to s 170LT of the Workplace Relations Act 1996 (Cth) (the “WR Act”). It came into force on 6 September 2005 and remains in force until 5 September 2008.

11 Clause 17.4 of the 2005 Enterprise Agreement is headed “Telstra transfers and redeployees” and provides:

“If an employee is transferred by Telstra to a new job covered by [the 2005 Enterprise Agreement], where the work is substantially the same, or they are redeployed under the TRA, the following provisions will apply and the salary maintenance provisions of the TRA (clause 15.2) will not apply:

(a) if the employee’s Actual Salary for their old job is less than the Company Rate for their new job, they will be paid the Company Rate for the new job; or

(b) if the employee’s Actual Salary for their old job is greater than the Company Rate for their new job, they will be paid the Company Rate for the new job plus a Grandfathered Allowance equal to the difference between their old Actual Salary and the Company Rate for the new job … ”

(Emphasis added.)

12 The 2005 Enterprise Agreement is to be read in conjunction with the TRA and Relevant Awards, as varied from time to time: cl 5.3 of the 2005 Enterprise Agreement. However, the 2005 Enterprise Agreement overrides the operation of the TRA and the Relevant Awards to the extent of any inconsistency: cl 5.3 of the 2005 Enterprise Agreement.

13 As cl 17.4 of the 2005 Enterprise Agreement provides, where an employee moves to a new job covered by the 2005 Enterprise Agreement at a lower rate of pay, there are two circumstances in which an employee is entitled to maintain his salary at the old, higher rate: (1) where the work undertaken by the employee in the new position is substantially the same as the work undertaken in the old position (“the First Limb”); or (2) where the employee was redeployed under the TRA (“the Second Limb”). Only the Second Limb is relevant to the issue in dispute.

The TRA

14 The TRA was an agreement negotiated between Telstra and various unions including the CEPU and the CPSU.

15 The TRA was initially the AOTC Redundancy Agreement 1993 between the Australian and Overseas Telecommunications Corporation Limited and various employee associations. That agreement was certified under the Industrial Relations Act 1988 (Cth) (“the IR Act”) and had the status of an Award. On 29 August 2002, the AOTC Redundancy Agreement 1993 was substantially varied by consent pursuant to s 113 of the IR Act to become the TRA.

16 The objectives of the parties entering into the TRA were stated in cl 2.1 to be:

“(a) where redundancies occur, processes for separation are fair, and based on respect for the individual;

(b) whilst recognising that long term job security cannot be guaranteed, providing access to...