DECISION

Fair Work Act 2009
s.217—Enterprise agreement

The University of Melbourne
(AG2020/2746)

UNIVERSITY OF MELBOURNE ENTERPRISE AGREEMENT 2018

Application for variation of clause 1.41.6 of the University of Melbourne Enterprise Agreement 2018.

[1] On 14 September 2020 the University of Melbourne made this application pursuant to s.217 of the Fair Work Act (the Act), to vary the University of Melbourne Enterprise Agreement 2018 (the Agreement) on the grounds that there was ambiguity or uncertainty in the Agreement.

[2] The University of Melbourne submitted there was some urgency to the application. The University of Melbourne is faced with financial pressure arising from the effects of the COVID-19 pandemic requiring it to make significant cost and structural savings. Among the measures to achieve the required savings, the University of Melbourne intends to offer expressions of interest for voluntary redundancies before the need for substantial involuntary redundancies. While considering a University-wide voluntary redundancy arrangement, it became aware of a potential ambiguity arising in respect of clause 1.41.6 of the Agreement.

[3] The University of Melbourne makes this application following discussions with the National Tertiary Education Union (NTEU). The NTEU, a bargaining representative at the time of making of the Agreement, supports the application.

[4] I listed the matter for hearing on 23 September 2020. Mr Sean Hogan, Director of Workplace Relations at the University of Melbourne and Sarah Roberts, Assistant Secretary of the NTEU appeared.

Jurisdiction

[5] Section 217 of the Act provides:

“217 Variation of an enterprise agreement to remove an ambiguity or uncertainty

(1) The FWC may vary an enterprise agreement to remove an ambiguity or uncertainty on application by any of the following:

(a) one or more of the employers covered by the agreement;

(b) an employee covered by the agreement;

(c) an employee organisation covered by the agreement.

(2) If the FWC varies the enterprise agreement, the variation operates from the day specified in the decision to vary the agreement.”

[6] I am satisfied that the application was made by the employer covered by the Agreement and that it has capacity to make the application.

[7] Decisions of this Commission concerning discretion to vary agreements on the grounds of ambiguity or uncertainty have traditionally required the determination if there is an ambiguity or uncertainty having regard to principles concerning the interpretation of agreements.

[8] The University of Melbourne relied on the decision of Bianco Walling Pty Ltd v CFMMEU [2020] FCAFC 50 (24 March 2020) (Bianco) which determined that the decision of a senior single member and a full bench of this Commission had fallen into jurisdictional error in applying s.217 of the Act. Consequently, in matters relating to s.217 it is not necessary to interpret the Agreement to reach a conclusion that there is ambiguity or uncertainty, and there is no need to be constrained by the principles concerning the construction of agreements.

[9] In summary, Bianco found that it is not necessary to interpret an agreement to reach the conclusion that there is ambiguity or uncertainty.¹ Although, practical consequences for the ascertainment of ambiguity or uncertainty for the purposes of s.217 means that:

i. The Commission need not be “constrained in the matters to which it may have regard by the principles developed for the interpretation of enterprise agreements”;

ii. The Commission is “obliged” to take into account “equity, good conscience and the merits of the matter”;

iii. The Commission “is not bound by the rules of evidence and procedure”;

iv. “The consequence is that, the Commission is far from being precluded from having regard to evidence of the parties’ common intention and to the history “of the agreement,²

v. Ambiguity or uncertainty is to be considered objectively, and

vi. As noted in Tenix,³ the Commission will err on the side of finding an ambiguity or uncertainty where rival contentions are advanced, and an arguable case is made out for more than one contention.⁴

The alleged ambiguity or uncertainty

[10] University of Melbourne and the NTEU have identified an ambiguity or uncertainty in the application of clause 1.41.6 of the Agreement and propose additional wording to remove the ambiguity or uncertainty. Clause 1.41.6 provides as follows and the proposed new words to the clause are in bold:

1.41.6 In circumstances where redundancy occurs due to a reduction of like positions contemplated at clause 1.40.1.3 resulting in an internal competitive process for selection to one of the remaining Suitable Alternative Positions, the Employee may elect Early Separation in place of Redeployment in circumstances where Early Separation mitigates the occurrence of involuntary separation. In all other cases of Redundancy in circumstances contemplated by clause 1.40.1, the University may invite Employees to lodge an expression of interest for Early Separation (also commonly referred to by the Parties as voluntary redundancy), on occasion where it will mitigate the need for involuntary redundancies. The University will accept an Employee’s expression of interest where the University deems the Employee’s position to be redundant in circumstances contemplated by clause 1.40.1.

[11] The Redundancy clause 1.40 defines redundancy, makes provision for consultation and genuine consideration of mitigation actions. Clause 1.41 relates to redeployment and alternative options which includes the option for Early Separation. The clause allows for Early Separation when an Employee is given notice that their position is redundant (clause 1.41.5) and where redundancy occurs due to a reduction of like positions, which results in an internal competitive process for the remaining Suitable Alternative Positions, an Early Separation mitigates the occurrence of an involuntary separation (clause 1.41.6).

[12] The University of Melbourne and the NTEU submit the ambiguity or uncertainty arises because clause 1.41.6 allows for Early Separation but its reference to clause 1.40.1.3 raises uncertainty regarding whether clause 1.41.6 is limited only to circumstances set out under clause 1.40.1.3, and not circumstances captured by clauses 1.40.1.1 and 1.40.1.2.

[13] Early Separation is the term used to describe voluntary separation due to redundancy in the Agreement. It is not contended, and it is not the case, that there is ambiguity or uncertainty in the Agreement when an Employee is given notice that their position is redundant (clause 1.41.5), but the same cannot be said for situations where redundancy occurs because of a reduction in aggregate numbers in like positions (clause 1.41.6). The distinction between the clauses is that clause 1.41.5, which is the consolidated clause from the predecessor agreement, allows for the election of Early Separation when an employee is given notice that their position is redundant; while clause 1.41.6 allows for voluntary redundancy, as this can be seen from the reference to mitigation of involuntary redundancy.

[14] The University of Melbourne intends to call for expressions of interest for Early Separation to mitigate involuntary redundancy, which is contemplated by the clause in question. The same clause recognises that such redundancy results in a competitive process for selection into the remaining alternative positions.

[15] An expression of interest for voluntary redundancy is contemplated by the Agreement and was front of mind of the parties when bargaining for the current Agreement. Both Mr Hogan and Ms Roberts submit they were bargaining representatives and discussed and agreed to the inclusion of voluntary redundancy options in the Agreement. This can be seen from the difference between this Agreement and its predecessor.

[16] The University of Melbourne Enterprise Agreement 2013 (2013 Agreement) provides for Early Separation for both academic and professional staff in similar terms to the consolidated clause 1.41.5. The relevant clauses in the 2013 Agreement are clauses 74.4, 74.15, 75.4 and 75.7.

[17] During bargaining for the 2018 Agreement, the NTEU expressed concern about the traditional spill and fill arrangements for organisational restructure, before an individual could access the Early Separation option. This concern is reflected in the new clause 1.41.6 and its reference to subclause 1.40.1.3, which is a departure from the 2013 Agreement.

[18] The Agreement further recognises that voluntary redundancy is a permitted option by clause 1.40.2.2 which requires the University of Melbourne to consider all reasonable alternative options in clause 1.41 are to be exhausted before involuntary separation (which includes the clause in question). Clause 1.40.2.2 is not limited by subclause 1.40.1.3 and is also a departure from the 2013 Agreement. The 2013 Agreement does not use the language of involuntary separation, yet this Agreement does in key clauses.

[19] The challenges arising from the COVID-19 pandemic raises the uncertainty that the scale of restructure, and particularly the option to enable voluntary separation through expressions of interest across the University is captured by the Agreement. The ambiguity creates uncertainty in terms of the connection between clauses 1.41.6 and 1.40.2.2, but also between clause 1.41.6 and the subclauses within clause 1.40.1.

[20] The ambiguity or uncertainty arising in the subclauses of 1.40.1 concerns the difference in expression between clauses 1.40.1.1, 1.40.1.2 and 1.40.1.3. The relevant clause is:

1.40 REDUNDANCY

1.40.1. Redundancy occurs where the University decides that it no longer requires the

Continuing position an Employee has been performing to be done by anyone and

this is not due to the ordinary and customary turnover of labour. Including (but not

limited to) circumstances where:

1.40.1.1. the substantive work performed in the position is no longer required by

the University;

1.40.1.2. the University changes the position with the effect of substantially

changing the skills, competencies, experience or hours of work required; or

1.40.1.3. the University decides to reduce the aggregate number of like positions

that are surplus to requirements

[21] Clause 1.40.1 does not limit the circumstances captured by redundancy to the three subclauses, yet when the parties drafted clause 1.41.6, it was directly linked to subclause 1.40.1.3. While a large scale restructure was contemplated by clause 1.40.1.3, due to the severe impact of the COVID-19 pandemic, the practical situation is likely to arise where decisions to accept expressions of interest will be based on operational needs, which may include taking into account skills, competencies, the Universities’ strategic operational direction or other valid considerations. Subclauses 1.40.1.1 and 1.40.1.2 encapsulate some, but not all, of these considerations.

[22] Subclauses 1.40.1.1 and 1.40.1.2 raises uncertainty that voluntary separation may be permitted when the process turns to assessment of the expressions of interest. Further, this uncertainty is inconsistent with clause 1.40.2.2.

[23] I am satisfied that the parties had intended to introduce into the Agreement voluntary separation prior to involuntary redundancy, and this includes the process of expressions of interest, without limiting volunteers to certain circumstances. The ambiguity from the reading of related clauses creates uncertainty, which both parties intend to resolve by way of this application, for the benefit of employees that will be affected by the impending restructure.

[24] In the context of the circumstances confronting the University of Melbourne, it is nonsensical to interpret the relevant clauses with a narrow literal approach, even though it is possible to do so. Also, to do so, does not address the efforts taken by the NTEU and the University of Melbourne, at the time of bargaining, to avert the consequences on staff affected by the old spill and fill approach. Further, a narrow interpretative approach does not properly recognise the new clauses and their practical intent compared to the 2013 Agreement. Removal of the ambiguity will enable certainty and is necessary prior to the impending restructure required as a result of the COVID-19 pandemic.

[25] Taking into account the industrial context and the whole purpose of the redundancy clause, it is sensible and consistent with the powers of the Commission as expressed in s.578 of the Act to approve the proposed variation.

[26] By granting the application, to vary the clause as proposed and agreed between the parties, will create certainty and fairness for employees that will be impacted by the restructure.

[27] I am satisfied that both the University of Melbourne and the NTEU have demonstrated an arguable case for uncertainty or ambiguity in relation to clause 1.41.6 and its relevance to clauses 1.40.1 and 1.40.2.2, I have considered the history of the redundancy clause in question, and I have taken into account my obligations of equity, good conscience and merits of the matter.

[28] I am satisfied that the variation sought removes the ambiguity and uncertainty posed by clause 1.41.6, and reflects the intention of the parties when the Agreement was made.

[29] Accordingly, I will issue an Order varying the 2018 Agreement in terms proposed by the University of Melbourne which will operate from the date of this decision.

COMMISSIONER

1 Bianco Walling Pty Ltd v CFMMEU [2020] FCAFC 50 (24 March 2020) at [67].

2 Ibid at [68].

3 Tenix Defence Systems Pty Limited Certified Agreement 2001-2004 [2002] AIRC 531 at [49].

4 Ibid at [70].

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