[2010] FWA 4558

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FAIR WORK AUSTRALIA

DECISION



Fair Work Act 2009
s.472 – Application for an order relating to certain partial work bans

Transport Workers Union
v
Department of Territory and Municipal Services (ACTION)
(B2010/3008)

COMMISSIONER DEEGAN

CANBERRA, 18 JUNE 2010

Application for order relating to certain partial work bans.

[1] This matter arises from an application for orders relating to certain partial work bans, pursuant to s.472 of the Fair Work Act 2009 (“the Act”), filed in Fair Work Australia (“FWA”) on 21 May 2010 by the Transport Workers Union (“the TWU” or “the applicant”) in relation to protected industrial action being organised by employees of ACTION (“the respondent”).

[2] On 18 May 2010 the TWU gave notice to ACTION that it was intended to impose a partial work ban on the collection of cash fares for one week from Monday 24 May 2010. On 19 May 2010 the respondent issued notices pursuant to s. 471 of the Act informing employees that their payments for each day that they took part in the partial work ban would be reduced by two thirds.

[3] On 21 May 2010 the TWU made an application under s. 472 of the Act for an order varying the amount by which payments made to the employees taking part in the protected industrial action would be reduced.

[4] The matter was heard on 24 May 2010 and the decision reserved. On 25 May 2010 the parties jointly requested that they be allowed to make further written submissions in relation to the matter. Directions for the filing and serving of the submissions were issued by consent. Submissions were filed and served by the TWU on 2 June 2010 and by ACTION on 8 June 2010.

Legislation

[5] Section 471 and 472 of the Act relevantly state:

[6] Regulation 3.21 of the Fair Work Regulations 2009 also has application:

The TWU case

[7] It was the TWU’s position that the collection of fares by drivers would account for no more than five or six minutes of a driver’s time on an average shift 1. It was put that this estimation was supported by evidence2 given, during the hearing, by Mr James Roncon, Acting General Manager of ACTION.

[8] The TWU argued that the formula set out in the Regulations is clear. It provides that the employer, having estimated the amount of time usually spent performing the work that is to be banned (the collection of cash fares), must then work out the proportion that period represents of the total hours of work of the employee each day and reduce the employee’s wages for each day of the ban by the same proportion.

[9] It was put by the TWU that the respondent’s interpretation of the applicable legislative provisions was perverse and if accepted would mean that any partial work ban would result in an 100% reduction in the payment for the hours worked, as virtually any task performed by a worker could be characterised as being part of a “continuum of actions” .

[10] The TWU noted that in applying s. 472 of the Act FWA is required to consider the reasonableness of the employer’s notified reduction “having regard to the nature and extent of the partial work ban”. It was put that the respondent’s proposed reduction was not reasonable given that it did not give effect to the requirements of Regulation 3.21. It was the TWU’s submission that FWA should have primary regard to the terms of Regulation 3.21 when determining the proportion by which an employee’s payments are to be reduced. The TWU contended that, although s. 472 does not “explicitly refer the tribunal to the Regulation 3.21 formula, its inclusion indicates Parliament’s view that the formula is fair and that proportionate reduction should, prima facie, be calculated on that basis”. According to the TWU if s.472 is not interpreted in a manner which gives full effect to Regulation 3.21 then both the Regulation and s. 372(3) of the Act would be rendered ineffective.

[11] It was the TWU’s submission that, in relation to whether the proportion specified in the notice was “reasonable” 3, FWA should have regard to the following factors:

[12] The TWU also argued that an appropriate reduction for the failure to collect cash fares could be determined by reference to the Transport Industry – Motor Bus Drivers and Conductors Award (NSW) which provides for a fare collection allowance of $11.63 per day. This award is a NAPSA under the Act. If it was not accepted as an appropriate figure on which to base any reduction in wages consequential on the fare collection ban, it was put that the figure was also additional support for the conclusion that a minimal reduction was all that was reasonable in respect of a ban on the collection of cash fares.

The ACTION case

[13] By way of background the respondent stated that, on average, ACTION collects around $85,000 each weekday and $30,000 each day of a weekend in fares of all types, including cash and prepaid tickets. The respondent acknowledged that it now understood the proposed ban to be in relation to the collection of cash fares only, but noted that the TWU had conceded 4 that passengers who would normally use pre-paid tickets would be likely to attempt to pay by cash if they were aware that a ban had been placed on the collection of cash fares. It was also put that cash fares alone accounted for one third of ACTION’s revenue.

[14] The respondent took issue with the TWU claim that drivers were notified that their pay would be reduced by two-thirds as a consequence of the ban. It was acknowledged that in some cases drivers had been notified that their pay would be reduced by 67% but the proportion was dependent upon the amount of time a driver spent in actually driving the bus on each shift and this would differ from shift to shift.

[15] It was the respondent’s contention that in order to apply the provisions of Regulation 3.21 it was necessary to identify the “work” that drivers were refusing to perform. It was put that it was not possible to separate the task of collecting fares from the work of driving a public passenger bus. The respondent noted that ACTION is accredited under the Road Transport (Public Passenger Services) Act 2001 (the Road Transport Act) and referred to the definition of “public passenger service “ contained in that Act:

“…a service for the transport of passengers for a fare or other consideration by public passenger vehicles along a road or road related area”

[16] It was put for the respondent that, as a driver is the authorised agent of ACTION for the collection of fares and the drivers’ duty statements recognise the importance of that task, where a driver drives a bus but does not collect fares he or she is not performing the “work” of the driver of a public passenger bus. For this reason ACTION had applied the provisions of Regulation 3.21 and notified the drivers that their pay would be reduced for the amount of time they were driving a bus without collecting the fares.

[17] Relying on the legislative provisions 5 which require passengers on ACTION buses to hold valid tickets for the duration of their journey the respondent also argued that the obligation on the driver to collect the fare from a passenger continues for the duration of the passenger’s journey on the bus. It was put that “… while collecting a fare takes a moment, refusing to collect the fare takes the duration of the bus trip.”

[18] The respondent dismissed the applicant’s contention that if ticket collection was to be considered part of a “continuum”, the concept of partial work bans would be rendered meaningless. It was argued that it is the very specific definition of public passenger services in the Road Transport legislation that brings about the “inseparable meld of driving and collecting fares” and that this could not have application to bans in other forms of work.

[19] Paragraph 28 of the respondent’s written submissions contends as follows:

“The respondent notes that the purpose of the partial work ban provisions is to provide employers with more discretion and flexibility on how to best manage the impact of industrial action, and specifically to provide an alternative to standing down workers entirely. It could not be the purpose of the provision to encourage the breaking down of various components of an employee’s work duties into smaller and smaller parts, until a crucial but time-minimal element is identified and stopped. If this interpretation were taken, then as a practical matter employers would again be left with the all or nothing choice that existed under the previous legislation, rather than the more flexible approach suggested by the FW Act.”

[20] The respondent also argued that, contrary to the assertion of the TWU, ACTION’s primary objective of providing an “affordable bus service“ was interfered with by the ban as the service was to be affordable to the entire community, not just commuters, and if fares were not collected it would interfere with ACTION’s capacity to provide an affordable service.

[21] The respondent put that it was “common ground” between the parties that s.472(3) affords the tribunal greater discretion than is available to the employer under s.471 of the Act and Regulation 3.21. It was contended that while the employer was restricted to a consideration of time, FWA was required to consider whether the proportion specified in the employer’s notice was reasonable having regard to the “nature and extent” of the partial work ban concerned, and to take into account fairness as between the parties.

[22] The respondent argued that FWA should be satisfied that the proportion nominated in the notice by the respondent was reasonable and fair and should not reduce it. This was so having regard to the nature and extent of the ban and the central importance of the collection of fares as part of the work of an ACTION bus driver and the loss of revenue and resultant cost to the community of the ban.

[23] So far as fairness between the parties was concerned, the respondent noted that terms of the Explanatory Memorandum to the Fair Work Bill where the explanation for the partial work ban provisions includes at r.308 the following:

This measure will provide employers with more discretion and flexibility on how to best manage the impact of the situation when action of this nature is taken. This may assist in resolving disputes more efficiently and may prevent the escalation of some disputes.

[24] In light of this provision it was argued that FWA should give great weight to the impact of the bans on ACTION when determining the proportion by which the payments should be reduced, given that the bans are directed to causing the maximum financial loss to ACTION while minimising the detriment to employees engaging in the ban.

[25] The respondent argued that if a decision were taken to reduce the proportion of pay to be deducted there were three alternatives available for determining the appropriate amount by which wages should be reduced as a consequence of the ban:

[26] Finally, it was put by the respondent that the fare collection allowance 6 that was suggested by the TWU was not an appropriate reference by which the proportion of payment to be withheld from ACTION bus drivers should be calculated as there was no evidence before FWA as to the basis for the calculation of that allowance. It was also argued that the minimal amount of that allowance was not a reasonable reduction having regard to the significant cost of the ban to ACTION and the community, and the fact that the drivers were not performing an important aspect of the work of driving a public passenger bus.

Consideration

[27] As can be seen from the parties’ arguments, the facts in this matter are not in dispute. What is in dispute is the proper application of Regulation 3.21 and the manner in which FWA should exercise the power provided in s.472 of the Act.

[28] While Regulation 3.21 appears to suggest that the only factor that should be considered by an employer, when determining the amount of payment that should be withheld from an employee implementing a partial work ban, is the “time” that employee would normally spend carrying out the work that is the subject of the ban, the matter is not so straightforward.

[29] The Act provides for an employer, in response to notice being given of a partial work ban, to give to the employee concerned “a written notice stating that because of the partial work ban , the employee’s payment will be reduced by the proportion specified in the notice” 7.

[30] The employee’s payments can be reduced in accordance with the notice for the period of any ban unless, on application made under s.472, FWA orders that a proportion different to that specified in the notice be applied.

[31] Section 471 of the Act does not provide for the manner in which an employer determines the proportion by which payment should be reduced but states that “(t)he regulations may prescribe how the proportion …is to be worked out”.

[32] Regulation 3.21 provides the steps for working out the proportion. In applying Step 1 of that formula ACTION has identified “the work that [the employees are] proposing to fail or refuse to perform” as being the work of “driving a passenger vehicle for consideration” and has notified each driver that his or her payment will be reduced by an amount equal to the amount of time that the driver fails to perform that work. The TWU contends that it is the physical task of fare collection that is the “work” that the drivers are proposing not to perform, and that their payments should be reduced by only a proportion equal to the amount of time the driver would spend each shift performing that specific task.

[33] While the strict application of Regulation 3.21 preferred by the TWU might have some merit when the words of the regulation are considered in isolation, the provisions of s.472 of the Act militate against such an interpretation being applied to the application of that section. When determining an application for an order to vary the proportion by which an employee’s payments are to be reduced, FWA is required to take into account “whether the proportion specified in the notice was reasonable… having regard to the nature and extent of the partial work ban…” and also to take account of “fairness between the parties taking into consideration all the circumstances of the case”. If all that were to be considered, as was argued by the TWU, was whether the employer had properly estimated the time involved in physically performing the banned task, the matters to be taken into account by FWA would have little relevance, particularly the “nature” of the ban and “fairness between the parties” in light of “all the circumstances of the case”.

[34] According to the Explanatory Memorandum which accompanied the Fair Work Bill 2008, the purpose of sections 471 and 472 of the Act is to provide employers with flexibility and discretion in managing partial work bans 8. While the Explanatory Memorandum also noted that the amount to be deducted “would not be damages suffered by the business, but will relate to the proportion of the employee‘s work not performed and his or her normal wages”9, I am nevertheless inclined to accept that “work” in this context is capable of meaning something more than just the physical task that is banned and that is the impact of that task on the “work” of the employee.

[35] Clearly, s.472 of the Act gives a wide discretion to FWA to deal with disputes concerning the amount of reduction an employer proposes to make and the section does not require, or allow, FWA to determine such a dispute merely by applying the “formula” set out in Regulation 3.21.

[36] It is apparent from the terms of the Explanatory Memorandum that sections 470 and 471 were introduced to allow employers to make a judgment about the effect of a partial work ban and decide how to respond to the ban, that is whether to refuse to pay the employee at all for the period of the ban, refuse to accept the performance of any work by the employee or pay the employee proportionally for the work performed. Under the previous legislation the employer had no discretion in this regard and was required by the legislation to deduct at least four hours’ pay from any employee implementing protected action, no matter how minimal the effect of that action. According to the Explanatory Memorandum the new provisions might “assist in resolving disputes more efficiently and may prevent the escalation of some disputes”.

[37] Under the provisions of the Division, the employer has the discretion to decide that a task that an employee proposes to ban is not so critical that it is preferable that the employee perform no work at all and receive no payment. In such a circumstance the employer can determine what proportion of the employee’s wage should be paid for the performance of the work not banned and notify the employee of the proposed reduction in payment. The employee can then determine whether to accept that proportion of payment which will be made or take some other form of protected action, such as performing no work at all. It is also open to an employee, if it is considered that the proportion by which the payment has been reduced is too high, to make an application such as the present one under s.472 of the Act and have FWA determine the amount by which the payment should be reduced.

Conclusion

[38] In this matter the employees, having notified an intention to institute a partial work ban, were given written notices by their employer stating the proportion by which their wages would be reduced if the ban were implemented. An application was made that FWA vary the proportions that had been notified, and a decision was taken by the employees not to institute the partial work ban until the application was determined.

[39] I am required by the legislation to determine that the proportion notified was “reasonable” having regard to the “nature and extent of the partial work ban” and also to take into account “fairness between the parties taking into account all the circumstances of the case”.

[40] ACTION wishes to reduce the payments of employees by that proportion which represents an employee’s total driving time in each shift, for the reasons set out above. The TWU argues that a reduction equal to payment for five or six minutes per shift would give proper effect to Regulation 3.21, as the ban relates only to collection of cash fares.

[41] In considering the “nature” of the ban, it is clearly designed to have the greatest impact on the employer while (if the TWU proposal for reduction in the proportion is accepted) having the least possible impact on the wages of drivers. While a bus strike might cause great inconvenience to the commuting public, a ban on the collection of fares will impact on the entire community as ACTION is taxpayer funded and the lost revenue is likely to result in an additional government subsidy being required.

[42] So far as the extent of the ban is concerned it will have a much greater impact than merely loss of cash fare revenue, which it is agreed represents only a percentage of the total revenue collected by ACTION (pre-paid fares representing a significant amount).

[43] Fairness as between the parties is a difficult concept to apply in this context. The drivers are prepared to continue to provide the bus service and will be performing the task of driving buses, but not the work of driving buses for consideration. All the operating costs of ACTION will remain the same while the revenue will be substantially diminished. Drivers are intent on applying the greatest fiscal pressure on their employer at little cost to themselves. The fact that the ban did not proceed when ACTION notified the reduction to payments it intended to apply in respect of the ban is some indication that the drivers are not prepared to institute the ban if the monetary loss to them is greater than anticipated.

[44] Having considered those factors set out in s.472(3) I have concluded that that I should make an order varying the proportion by which the relevant employees’ payment are to be reduced if the partial work bans are implemented.

[45] It is my view that, having regard to the nature and extent of the ban, the proportion specified by ACTION in the notices (which represents a reduction in payment for the entire period each shift that the driver spends driving the bus) is not reasonable.

[46] I do not, however, accept the TWU submission that the proportion by which the payment should be reduced should be the equivalent of payment for the “five or six minutes” a driver would other than for the ban have spent physically collecting cash fares. The extent of the ban goes further than loss of cash fare revenue alone. I am satisfied that a failure by the drivers to collect cash fares will result in a large proportion of passengers who would normally use other ticketing methods instead proffering cash which they are confident will not be accepted.

[47] I am not persuaded by the TWU argument that an appropriate reduction would be the amount of the fares collection allowance in another industrial instrument that has no application to the current matter. There is no connection between that instrument and the current matter.

[48] In exercising the discretion available to me under s.472 of the Act I have taken into account all the circumstances of the case which have been brought to my attention by the parties. It is my view that fairness between the parties requires me to determine a reduction in payments that more reasonably represents the “extent” of the partial work ban proposed.

[49] I have taken into account that:

[50] It is my determination that the most appropriate factor in determining this proportion is the percentage that fare collection contributes to the overall cost of providing the bus service. Thus, the payments to drivers implementing the partial work ban should be decreased by an amount which reasonably approximates to the percentage that fare collection revenue represents of ACTION’s total expenses. According to the submissions of ACTION this formula would result in the total payment made to each driver for each shift in which the ban is imposed being reduced by 20.1%.

[51] An order varying, to 20.1%, the proportion by which each employee’s payments are to be reduced is attached to this decision.

COMMISSIONER



Appearances:

K. Pinkas, industrial officer for the TWU

H. Robinson, ACT Government Solicitor for ACTION.

Hearing details:

24 May 2010.

Canberra.

Written submissions filed:

TWU 2 June 2008

ACTION 8 June 2010

 1   TWU submissions paragraph 4.

 2   Transcript PN130

 3   S. 472(3)(a)

 4   Transcript PN17

 5   Road Transport (Public Passenger Services) Regulation 2002 Regulations 47 and 53

 6   Transport Industry – Motor Bus Drivers and Conductors Award (NSW) Clause 4(ii)(a)

 7   Fair work Act 2009 s. 471(1)( c )

 8   Fair Work Bill Explanatory Memorandum r. 301

 9   Ibid. r.309



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