FEDERAL COURT OF AUSTRALIA

Finance Sector Union of Australia v

Commonwealth Bank of Australia [2001] FCA 1613

INDUSTRIAL LAW – position redundancy – whether work still required to be performed – whether work encompasses both the duties attached to a position and the organisational context in which they are performed – whether redundancy situation can arise when the duties of an employee will still be undertaken for the ultimate benefit of the original employer but for the immediate benefit of another employer – whether “directly comparable position” could include a position outside the organisational structure of the employer – whether employer required to terminate employment in a redundancy situation where offer of redeployment not made.

INDUSTRIAL LAW – indicia of employment – who is the employer where two putative employers - whether employee’s consent necessary for the transfer of employment.

Commonwealth Bank of Australia Officers’ Award 1990 cl 42

Workplace Relations Act 1996 (Cth)

Hawkins v Commonwealth Bank of Australia (1996) 66 IR 322 applied

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

Pitcher v Langford (1991) 23 NSWLR 142 referred to

Marrs Fabrics Pty Ltd & Nathan Wholesale Fabrics Pty Ltd v Whipps (1991) 33 AILR ¶167 referred to

Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 16 referred to

Romero v Auty (2001) 19 ACLC 206 referred to

Nokes v Doncaster Amalgamated Collieries Ltd [1940] AC 1014 referred to

Textile Footwear and Clothing Union of Australia v Bellechic and others (unreported, Ryan J, Federal Court of Australia, 19 November 1998) referred to

Termination, Change and Redundancy Case (1984) 8 IR 34 discussed

Termination, Change and Redundancy Case 1984) 9 IR 115 discussed

Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union v United Milk Tasmania Ltd (2000) 48 AILR ¶4-315 (Print S7351) referred to

Steppes Pty Ltd t/a The Beaufort Darwin v Australian Liquor, Hospitality and Miscellaneous Workers Union (1998) 86 IR 337 referred to

Trustee Officers’ Award Case (1983) 290 CAR 100 referred to

Trustee Officers’ Award Case (1983) 291 CAR 200 referred to

In re Bank Officers (State) Board (1921) 20 AR(NSW) 303 referred to

Re Government Cleaning Service (Privatisation) Award (No 2) (1994) 55 IR 199 followed

Australian Municipal, Administrative, Clerical and Services Union v Greater Dandenong City Council (2000) 101 IR 143 not followed

Greater Dandenong City Council v Australian Municipal, Administrative, Clerical and Services Union [2001] FCA 349 referred to

Capper Pass Ltd v Lawton (1977) 1 QB 852 referred to

Shields v E.Coomes (Holdings) Ltd (1978) ICR 1159 referred to

The King v Foster; Ex parte Crown Crystal Glass Co Pty Ltd (1944) 69 CLR 299 referred to

EPM Concrete Pty Ltd v Building and Construction Industry Long Service Leave Payments Corporation (1985) 23 IR 430 discussed

FINANCE SECTOR UNION OF AUSTRALIA AND KENNETH MACEY V COMMONWEALTH BANK OF AUSTRALIA

N262 OF 1999

MOORE J

16 NOVEMBER 2001

SYDNEY

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.

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

REASONS FOR JUDGMENT

Introduction

1                     These proceedings are representative proceedings brought under Part IVA of the Federal Court of Australia Act 1976 (Cth) by Mr Macey and the Finance Sector Union of Australia ("FSU") (collectively referred to as "the applicants") against the Commonwealth Bank of Australia ("the Bank").  This judgment concerns only a part of the proceedings brought under s 178 of the Workplace Relations Act 1996 (Cth) ("the Act").  The basis on which the proceedings can be maintained as representative proceedings was considered by a Full Court in Finance Sector Union of Australia v Commonwealth Bank of Australia [1999] FCA 1250, (1999) 94 FCR 179.  The applicants allege that the Bank breached the Commonwealth Bank of Australia Officers' Award (1990) ("the Award") by failing to terminate the employment of certain of its employees and pay them severance payments as a result of redundancy.

Background

2                     The employees in question were employed by the Bank in the area of its operations which provided the Bank's information technology services, the Information Services Department ("IS Department").  In October 1997 the functions of the IS Department were outsourced.  A company in which the Bank had a shareholding, EDS (Australia) Pty Ltd ("EDSA"), took over those operations (the corporate structure and contractual arrangements are more complex but the parties accepted that EDSA could be treated as the relevant company).  EDSA is part of a corporate group which provides information technology services to other corporations internationally.  At that time many, but not all, of the employees of the Bank working in the IS Department took up employment with EDSA.  These proceedings concern those Bank employees who did not take up employment with EDSA (though there is a legal issue in these proceedings about who was their employer from October 1997 onwards).  The representative group is described in the application as:

“… members of the (FSU) purportedly seconded by the (Bank) to perform work for the company known as (EDSA).  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.”

3                       Other representative proceedings have been commenced on behalf of Bank employees who did take up employment with EDSA (N1068 of 2000) but those proceedings have been adjourned pending judgment in this matter.

4                     Both the applicants and the Bank led extensive oral evidence and tendered a considerable number of documents.  Broadly it can be described as evidence concerning events leading up to and associated with EDSA taking over the Bank's information technology operations, the way in which EDSA conducted those operations and the relationship between EDSA and the Bank as well as the relationship between EDSA, the Bank and the employees involved in those operations.

5                     The background is best illustrated by referring to facts agreed between the applicants and the Bank.  The agreed 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.  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 applicable provisions of the Award

6                     The Award contains 58 clauses dealing with a range of industrial and employment issues.  Only a limited number are presently relevant.  Clause 8 deals with salaries and benefits.  It specifies rates of pay for various classifications but also contains a sub-clause which deals with the performance of work.  That sub-clause provides:

“(l)      Direction to carry out duties

The Bank may direct an officer to carry out such duties as are within the limits of the officer’s skill, competence and training.”

7                     Of central importance in these proceedings is clause 42 which deals with redundancy, redeployment and retrenchment.  Clause 42 is in almost identical terms to an unregistered industrial agreement which received detailed attention initially by me in the Industrial Relations Court of Australia in Hawkins v Commonwealth Bank of Australia (1996) 66 IR 322 ("Hawkins (No 1)") and then a Full Court of that Court in Hawkins v Commonwealth Bank of Australia (No 2) (1996) 70 IR 213 ("Hawkins (No 2)").

8                     Clause 42 commences by identifying its objects:

“42 – REDUNDANCY, REDEPLOYMENT AND RETRENCHMENT

(a)       Object

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 object of this clause is to minimise the potential for industrial disputation.”

9                     Sub-clause (b) contains several definitions.  The first of relevance is the definition of "directly comparable position" which affects the way the clause operates once there is a redundancy.  The definition provides:

”(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.”

10                  The next definition is, in these proceedings, of critical importance.  It defines the word "redundancy".  It is not in issue that the defined word concerns a position redundancy where the Bank no longer requires work performed by an employee (it is convenient to use the word "employee" throughout this judgment rather than the word "officer" used in the Award) in a particular position to be performed or done.  The controversy in these proceedings is whether the Bank no longer required the work of the employees, who did not take up employment with EDSA, to be done even though, as a matter of fact, generally they continued to perform the same or substantially the same duties after 10 October 1997.  The definition of "redundancy" is:

“(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.”

11                  The clause contemplates that when there is a redundancy the employee concerned may be retrenched.  "Retrenchment" is defined in the following way:

“(iv)    ‘Retrenchment’ means the termination of employment of an officer as the result of redundancy.”

The clause identifies a series of steps the Bank must follow in circumstances where a redundancy and/or redeployment situation might arise and also when it does arise.  The first step involves consultation with the unions (it appeared to be common ground that the reference to "Unions" can be treated as a reference to the FSU).  The initial obligation of the Bank in this respect is as follows:

(c)        Consultative processes

(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.”

12                  If, notwithstanding consultation, redundancy situations do arise then the Bank must explore whether the employees involved can be redeployed.  Clause 42 contemplates the following in relation to redeployment:

“(d)     Redeployment

(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 curtaining 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).”

13                  One of the entitlements referred to in par (d)(iii) is severance pay (subclause (g)).  It is to be recalled that what is comprehended by a "directly comparable position" is identified in par (b)(iii) set out earlier.  The scheme of redeployment in subcl (d) continues:

 “(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 (i.e. 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.”  (Emphasis added)

14                  If the employee is not redeployed then the next step in the process involves the employee's retrenchment.  This is dealt with by subcl (e) which provides:

“(e)     Selection for retrenchment

(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.

(f)        Notice

(i)        An officer shall be given four weeks written notice of retrenchment.

(ii)       Where an officer elects to terminate his/her employment at the commencement of the period of notice, or during the period of notice; or the Bank so directs, the Bank will pay out the outstanding notice.

…”

15                  The applicants contend that this sub-clause imposes an obligation on the Bank to terminate the employment of a redundant employee if the employee has not been redeployed.  The failure of the Bank to terminate the employment of the employees in the representative group in October 1997 involved, it is submitted, a breach of the Award. In the event that an employee's employment is terminated through retrenchment then severance payments are to be paid to the employee in accordance with subcl (g) which relevantly provides:

“(g)      Severance payments

(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: ….”

As I shortly explain, the applicants contend that 16 members of the group have not been paid severance payments in accordance with this sub-clause.

The nature of the case advanced by the applicants

16                  Because these are representative proceedings, they raise for consideration whether there has been a breach of the Award in relation to each member of the group.  As noted earlier, the applicants contend that the group was 70 Bank employees identified in a list annexed to an affidavit filed in the proceedings.  At a very early stage after the matter came into my docket, I was informed that of the 70 employees, 54 were made redundant by the Bank in 1999 and a further 13 were made redundant in 2000 (and paid severance pay) leaving a residue of six or seven (the figures were not entirely precise) who had not been paid severance pay.  When the substantive hearing of the matter commenced in May 2001, there appeared to be some confusion about which employees the proceedings concerned.  It became a material question because (and this is probably only one of several reasons why it is material) senior counsel for the Bank objected to evidence from witnesses who had been Bank employees but who had been made redundant and paid severance pay in either 1999 or 2000.

17                  The objection was based, in part, on a letter dated 20 March 2000 from the applicants' solicitors to the Bank's solicitors in which it was said "(t)here remains 16 members of the group with an outstanding claim".  The 16 group members were identified and fell into three sub-groups.  There were seven Bank employees who apparently took up employment with EDSA well after 10 October 1997.  There were seven who apparently ultimately resigned from employment with the Bank after working in the EDSA area of operation for a period. There were two who also worked in that area but subsequently obtained positions in other areas of the Bank's operations.  In explaining the letter and the basis on which the case was advanced, senior counsel for the applicants submitted that the Bank should have, but did not, terminate the employment of all 70 members of the group on 10 October 1997 because they had been made redundant.  The Bank thereby breached the Award.  Senior counsel for the applicants also submitted that the Bank failed to pay the identified sixteen their retrenchment or severance pay and thereby breached the Award in another respect.  As I understood the import of the submission, the Bank would have breached the Award by not paying all group members severance pay on or about 10 October 1997.  However, the application (as it related to non-payment) was not pursued on this basis in relation to the employees who ultimately were paid severance pay even though the payments were made several years later.

18                  None of the identified sixteen gave evidence in the proceedings and there was no specific evidence about the duties they performed before 10 October 1997 or at any later stage.  Evidence was given by eight former Bank employees who did not take up employment with EDSA though worked in its area of operation. However each of them was ultimately made redundant and paid retrenchment pay in either 1999 or 2000.

19                  During final submissions I sought to clarify one issue with senior counsel for the applicants.  That issue was how I should approach the matter given that the proceedings were representative proceedings and, apart from the general position to be inferred from documentary evidence and evidence from Mr Peter Kevin Presdee who was the NSW/ACT branch secretary of the FSU, there was no detailed evidence concerning the duties of each of the 70 employees in the group (apart from the eight just mentioned) before and after 10 October 1997.  The response was that the evidence of the individuals was intended to "set up a general picture".  The general thesis advanced on behalf of the applicants is that all positions in the IS Department were abolished (resulting in a position redundancy) in October 1997.  This happened as a result of the action of the Bank in abolishing the IS Department, entering an agreement with the effect that EDSA took over the operations of that department and effectively requiring those Bank employees working in that area to work for EDSA by either taking up employment with that company (encouraged by the Bank) or working under the direction and control of its employees and, as to that latter group, working in the area on the basis that there would be no promotions and the employees would not return to employment within the Bank.

20                  The significance of this approach is that the liability of the Bank is not said to depend on changes that may have occurred after 10 October 1997 to the duties performed by employees working in what had been the area of the Bank's operations undertaken by the IS Department.  That is, the case of the applicants does not depend on proof of changes to the duties of group members after 10 October 1997.  Rather, the applicants' case is based on the abolition of all positions in the IS Department on 10 October 1997.  As this is the way the applicants' case is put, it appears to be unnecessary to dwell unduly on the evidence about the circumstances of the eight Bank employees who did give evidence.  That is not to say, however, that evidence about their individual circumstances is unimportant if it is evidence from which inferences can be drawn about what happened to all members of the group.

The evidence

 (i) Generally

21                  Evidence was given by the following witnesses on behalf of the applicants:

(i)                  Mr Peter Kevin Presdee who was the NSW/ACT branch secretary of the FSU.

(ii)                Mr Kenneth Arthur Macey who was an employee of the Bank who had been employed in the IS Department before 10 October 1997.  He continued working in that area of operations when it was taken over by EDSA.  He did not take up employment with EDSA and was ultimately retrenched by the Bank effective 11 October 1999.

(iii)               Mr William Robert Lazarus whose position was generally the same as Mr Macey though he was retrenched in February 2000.

(iv)              Mr John William Dundas whose position was generally the same as Mr Macey and was retrenched in October 1999.

(v)                Mr James Edwards Rickeard whose position was generally the same as Mr Macey though he was retrenched on 22 September 1999.

(vi)              Ms Linda Kaye Tyne whose position was generally the same as Mr Macey and was retrenched in October 1999.

(vii)             Ms Athamandia Curtis whose position was generally the same as Mr Macey and was retrenched in October 1999.

(viii)           Ms Lisa Gaye Walker whose position was generally the same as Mr Macey though she was retrenched on 29 September 1999.

(ix)              Mr Gary David Dunbar whose position was generally the same as Mr Macey and was retrenched in October 1999.

22                 Evidence was given by the following witnesses on behalf of the Bank:

(i)                  Mr Robert John Hancock who had been employed in the human resources area of the Bank (and in human resources in the IS Department between March 1995 to July 1996) until he retired in 1996.  He returned to work for the Bank in 1997 to facilitate the transfer of staff from the Bank to EDSA.

(ii)                Mr William Smith who had been employed by the Bank but on 10 October 1997 took up employment with EDSA as a human resources manager.

(iii)                Mr Milano Pellegrini who was a human resources manager employed by the Bank and involved, in that capacity, in dealing with Bank employees in the area of EDSA's operations.

23                  In view of the way the applicants advanced their case, it is unnecessary to set out all of the evidence given by the various witnesses.  Nor is it necessary to make findings on various factual issues, many of which were, at best, of peripheral relevance.  However it is desirable to set out the evidence concerning some matters in a little detail and make some observations about it.  Unless I indicate to the contrary, I accept the evidence I refer to of the witness concerned.

24                  Some of the evidence concerns the conduct of the Bank well after 10 October 1997. However if the evidence casts light on the attitude of the Bank in October 1997, it is probative of the Bank’s intentions at that time: see Grove, In re; Vaucher v Solicitor to the Treasury (1888) 40 Ch D 216, Shekleton v Shekleton [1972] 2 NSWLR 675, Allied Pastoral Holdings Pty Ltd v Federal Commissioner of Taxation [1983] 1 NSWLR 1, Willarra Pty Ltd v Minister for Home Affairs & Environment (1984) 54 ALR 65.

25                  I note that the Bank did not call several individuals (including Messrs Moody, Mulcahy, Lane, Morris, Davidson and Hartigan) who, at the relevant time, were senior employees in the Bank and probably involved in developing and implementing the arrangements resulting in the transfer or secondment of staff to EDSA.  However, there were no issues where it has been necessary to have recourse to the rule, so described, in Jones v Dunkel (1959) 101 CLR 298: see the discussion of the rule by O’Loughlin J in Cubillo v Commonwealth (No.2) (2000) 103 FCR 1 at [353] to [362].

(ii) Evidence concerning the extent to which the Bank and EDSA sought to persuade seconded employees to take up employment with EDSA particularly after 10 October 1997.

26                  In paragraph 23 of the agreed statement of facts the Bank acknowledged that from about September 1997 and thereafter it encouraged employees in the IS Department ("IS employees") to take up employment with EDSA.  The level of encouragement is evident in the documents distributed to those employees both by the Bank and by EDSA, with the Bank’s cooperation, knowledge and consent.  It is also evident in the reports given of the various meetings which IS employees were encouraged to attend in the period leading up to 10 October 1997.  Hancock had a central role in this process but he was reluctant to accept that Bank employees were being encouraged to take up employment with EDSA.  However not only do the agreed facts accept there was encouragement, the general import of the evidence was to the same effect.  The message communicated to IS employees by the Bank and EDSA was that from both a financial and career perspective IS employees would benefit from taking up employment with EDSA. This encouragement was reinforced by the offer of a significant incentive payment and assurances that IS employees could not be worse off if they moved to EDSA because they would either continue to enjoy the same or better terms and conditions or would be compensated financially, or provided with alternative benefits, to make allowance for any changes.

27                  There is evidence which points to the Bank providing the funds for the “sign on” incentive payments offered to IS staff if they accepted the EDSA offer of employment within a specified time period. The human resources personnel from EDSA and the Bank who gave evidence all said that they were unaware of who provided the funds for the incentive payments. However, minutes were tendered of a meeting held on 29 July 1998 attended by EDSA and Technology, Operations and Property Department Human Resources (“TOP HR”) personnel (TOP HR was an administrative unit within the Bank responsible for human resources issues concerning the seconded employees) where the possibility of making second round offers to seconded employees with an incentive payment was discussed.  Mr Phil Davidson, the General Manager of EDS HR (this acronym is used to denote the human resources section of EDSA), is recorded as saying “seeing as though it is the CBA who pays the incentive (I will) be seeking sign off from SL” (this appears to be a reference to Simon Lane, Chief Manager of TOP HR). Although both Smith and Pellegrini attended the meeting, neither were able to say whether Davidson’s comment was intended to indicate that the Bank had provided the funds for the initial incentive payment. Also in evidence was an email dated July 1998 from Davidson which was copied to Smith.  In the email Davidson wrote:

 “…(I)t would be appropriate to open up the incentive payment again to the seconded staff (non-acceptors) again. They have missed the first 50%, however we could say that if they sign on by 9 October they will get the 2^nd 50%.

This is potentially at no cost to EDS as the Bank pays the first $20M and we are still a couple of million short of this figure.”

28                  In cross examination, Smith acknowledged that he must have received the email and acknowledged that it suggested the Bank was funding the incentives.  However, he said that he could not recall himself whether it was in fact the case that the Bank funded the incentive payment.  The preferable inference is that the Bank paid the incentive payments offered to IS employees to take up employment with EDSA in 1997.

29                  It was generally acknowledged by all the witnesses that after the commencement of the “strategic alliance” on 10 October 1997 the only opportunities for career advancement in the field of information technology lay within EDSA.  Likewise it appeared to be accepted by witnesses called by the Bank, that vacant positions within the EDSA area of operation were generally only available to EDSA employees.  This provided a further incentive for seconded employees to accept employment with EDSA.  Three seconded employees who gave evidence, Tyne, Walker and Curtis, recalled positions within EDSA's operations which they were informally offered or expressed interest in only to be told by EDSA that unless they resigned from the Bank and took up employment with EDSA, they would be unable to advance from the positions they were then occupying.

(iii) Evidence concerning whether the Bank intended to facilitate the transfer of the seconded employees to other employment within the Bank and the degree of success achieved in doing so

30                  Pellegrini gave evidence that the seconded employees were able to apply for positions advertised in the Bank’s jobs circular. However the evidence reveals that the Bank did very little to assist seconded employees obtaining employment in other areas of the Bank's operations and, I infer, was not particularly interested in doing so.  Moreover, as Pellegrini accepted in cross-examination, the only opportunity for employees with information technology skills to progress their careers after 10 October 1997 was within EDSA.

31                  The evidence of Smith indicates that from mid 1998, human resources personnel with EDSA went to considerable lengths to find positions for some of the seconded employees within the Bank.  The efforts of EDSA were relatively unsuccessful.  In addition, correspondence which was tendered by the applicants shows that Smith, and others at EDSA, were not always satisfied with the level of cooperation provided by the Bank.

32                  The minutes of a meeting on 24 March 1999 attended by EDSA and Bank human resources staff record the following:

 “GC Placements

BS (Smith) noted since January 1999, 40 positions have been identified as possible placement opportunities for seconded staff back with CBA. These opportunities had been raised with CBA with limited or no success. Consequently, BS enquired whether there was value in EDS continuing to refer opportunities to CBA. AC indicated that Milano had previously stated the CBA would only consider placing officers of a GC2 status – no higher. On the basis they preferred to promote their own.

In response, SL (Simon Lane) noted it was in the best interest of all parties concerned to transfer these seconded staff back within the business and it was only the unwilling actions of the third party that has impeded our attempts. …

Given SL’s comments BS suggested that CBA consider a change in approach away from the have they (sic) applied best candidate approach to an approach driven by potential redundancy and preferred placement as used for closure of OPC’s etc.”

33                  While Lane's comments suggest that the Bank supported, at least in principle, seconded employees obtaining other employment in the Bank, the comments were made at a meeting at which EDSA's representatives were complaining about the difficulties they were having in placing seconded employees in other employment with the Bank.  Lane did not give evidence and I am inclined to discount what he is recorded as saying as reflecting an intention on which the Bank had acted and would act, having regard the context in which he said it.

34                  In cross examination Smith was asked why EDSA was responsible for identifying suitable positions for seconded employees available within the Bank.  Smith said that EDSA was trying to assist the seconded employees where appropriate and, given that they had elected to remain with the Bank as their employer, it seemed appropriate to find roles within the Bank for them.  Smith acknowledged, however, that the seconded employees were not approached about positions before they were nominated for them.  He said that if, after a nomination from EDSA, the Bank considered the secondee was suitable for the position he would have expected the Bank to approach the secondee.  Smith also explained that he was not looking for positions in the Bank for all seconded employees, only those with a “GC” or general classification who were generally more junior with generalist skills and thus more mobile, particularly those with the grading GC1 or 2 rather than GC 3 or 4.

35                  In an email to Mr Marcus Hanmer at TOP HR dated 8 April 1999, Smith complained about the difficulty EDSA human resources staff were experiencing in getting position descriptions for vacant positions within the Bank in time to send nominations.  In the email Smith reminded Hanmer that it was a common objective to look for opportunities to transfer seconded employees back to the Bank.  In another email Smith sent on the same day internally to Davidson (from EDSA) he expressed what could reasonably be described as frustration at the apparent failure of the Bank to help place seconded employees back within the Bank.  In the email Smith wrote:

 “Phil some more information/facts I could or you could escalate with CBA as follows:

…

Since 1 January we have identified candidates for 54 vacancies in the CBA and successful placements have been en (sic) zero. Interviews with Line Managers have been very low (Less than 5).

My understanding is that several months ago CBA indicated that the 7 GC staff would be automatically included in all panels for vacancies.

At our meeting with CBA TOP HR (including Simon) on 2/12/98 I advised that three GC staff would be impacted by a restructure of the procurement function and asked that CBA pursue placement elsewhere. Since that time I have referred the three staff for vacancies as follows:

Jeanette Azzi – GC4     23 positions many of which were transfer on grade

Shane Parker – GC3    32 positions many of which were transfer on grade

Kevin Tran – GC3        33 positions many of which were transfer on grade

To date Azzi has been interviewed by Milano and no other feedback or progress has occurred.

At our last meeting with TOP HR (including Simon) we mentioned that Peter Drizos could be impacted by a restructure and asked that alternative placements be found. Since 1 January we have referred Peter for the following vacancies in CBA

Peter Drizos – GC3   32 positions many of which were transfer on grade.

…

As I understand the CBA Policy in a redeployment situation allows a staff member to be permanently moved to a comparable job one grade lower than their current role on a permanent basis This would give us the opportunity to move Tran; Drizos and Parker to entry level jobs in the CBA.”

36                  When asked, in cross examination, why he was concerned with letting the Bank know that certain seconded employees could be placed elsewhere, Smith responded:

 “What I was looking to do was indicate to the Bank that in addition to EDS exploring opportunities for individuals to join us … that we were keen also for the Bank to explore opportunities for their employees within the Bank … .”

37                  Also tendered by the applicants was an email from Davidson to Lane dated 9 April 1999.  In the email Davidson made the following inquiry:

 “Simon,

I attended the GT steering committee meeting this morning. During the meeting the topic of redeploying seconded staff into vacant Bank positions was discussed. Howard made a comment that surprised me. I thought it would be useful to ask you to comment on Howard’ s statement to ensure we are both working towards the same objectives.

Howard stated (this is my paraphrasing) –

“it had never been intended that seconded staff would be redeployed into other Bank positions. Their future careers with the Bank would be as seconded staff within IT. We should therefore stop trying to find alternative positions within the Bank.”

My objective (and that which my team has been working towards) has been to try and reduce the number of seconded staff by a variety of methods. Obviously our first course of action was to try and persuade them to join EDS, failing this we then attempted to identify redeployment opportunities in the Bank. I had believed this course of action would be viewed positively, as it clearly demonstrated that the FSU’s assertion that seconded staff are no longer employed by the Bank is false.

…

Regards,

Phil”

38                  "Howard" is a reference to Mr Howard Morris who at that time was the head of Group Technology within the Bank, though he was not directly involved in human resources issues.  While I do not view this email as establishing the Bank’s position was precisely as appears in the statement attributed to Morris, I nonetheless accept that what Davidson records as having been said is supportive of what emerges from other evidence. That is, the Bank was not particularly interested in assisting the seconded employees to obtain employment in areas of the Bank’s operation and did very little to assist.

39                  Some additional documentary evidence, tendered by the applicants, provides further support for the view that EDSA was not content with the secondment arrangement and, in the result, pro-actively sought to reduce the number of seconded employees.  In cross examination Smith was taken to an email he sent on 4 May 1999 to a number of EDSA staff in which he wrote the following:

“Highlight of the month is we are finally seeing some success from our pro-active referral of staff back to CBA for vacancies.

For almost a year now we have been suggesting to CBA that we needed to find opportunities to erode the middle ground for many seconded staff. As we saw it seconded staff felt that they had three choices they could make:

1.      join EDS

2.      not join EDS and return to the Bank

3.      not join EDS and stay exactly where they are doing what they do now.

The third option is where many staff were prepared to stay until the FSU action is resolved. During all of my interviews particularly with the non technical staff I keep reminding them that CBA could transfer them at any time but they did not see this as a reality.

…

In April CBA found a job for seconded staff member – Shane Parker – who is one of 4 seconded staff who work in TI Acquisitions. As a result of this placement opportunity and subsequent discussions we have seen Shane and his team mate Jeanette Azzi join EDS. We are also working with CBA to finalise arrangements for a third member of the Acquisitions team to now be transferred to the original vacancy.

This is a clear example of what happens when we remove the middle ground and is an excellent outcome seeing a reduction of 2 and hopefully 3 in seconded staff numbers.”

40                  In cross examination Smith explained that ‘eroding the middle ground’ meant reducing the number of seconded employees in the third category, that is those who had not joined EDSA but who remained working in EDSA's operations doing the same work in the same position.  Smith explained that the motivation for wanting to ‘erode the middle ground’ was essentially that he believed EDSA should help those seconded employees who had the right skills and who wanted to return to the Bank to explore that possibility.  He said that approach seemed appropriate given that the seconded employees had wanted to remain with the Bank as their employer.

41                  As the email from Smith set out at [37] above suggests, attempts to place seconded employees back within the Bank were not entirely unsuccessful.  In an email, dated 12 April 1999, from Hanmer of TOP HR, Smith was informed that the Bank had selected a secondee, Mr Shane Parker, to a position within the Bank for which Smith had nominated him. The email to Smith ended: "I hope this pleases you!!!".  Smith’s reply commenced "Marcus that sounds great."  In fact when Smith gave Parker the letter directing him to transfer to the Town Hall Branch, a move which Parker had not been consulted about and did not in fact want, he resigned from the Bank and took up employment with EDSA.  Before Parker resigned, but after he had been informed of the transfer and noted his objection, Pellegrini wrote the following email to one of his human resources team:

“We knew this would be challenging – that’s why I wanted to do Parker first (as he is the most volatile of the three). I expect that, whilst they will make all sorts of industrial noises, it is a medical route they will take. I would anticipate a medical report/certificate very soon as I believe it is the only way they can attempt to stop it happening. When this transpires, we will give similar directions to Tran and Drizos and see whether they have the same illness. An employer can use its resources (people skill sets etc) as it sees fit.

The FSU are harping on about staffing levels at branches and we are assisting to fill this need.”

42                  Pellegrini noted two other seconded employees were transferred, namely Mr Peter Drizos and Mr Richard Ellis.  Drizos was transferred in April 1999.  In September 1997, he had written to the Bank requesting a transfer.  In my opinion, it is likely that these transfers were not proposed as a bona fide attempt to find other employment for these seconded employees.  Rather they were proposed so as to precipitate a reaction from the employees including leaving the Bank and taking up employment with EDSA.

(iv) Evidence concerning the extent to which EDSA or the Bank had the right and exercised the right to control the employment of the seconded employees

43                  The Human Resources Agreement between the Bank and EDSAset out, inter alia, the terms on which Bank staff who did not accept an offer of employment from EDSA, might be “seconded” to EDSA and the responsibilities of EDSA in respect of any seconded employees.  The agreement relevantly provided as follows:

“Clause 2.1(c): The Bank may, at the Suppliers risk, second available Listed Personnel to the Employer on the terms of clause 2.2 for the purposes of assisting in providing the Services. (“Listed Personnel” essentially refers to all persons working for the Bank in the IS Department prior to 10 October 1997. And “Employer” is defined as an employer responsible for providing labour to the supplier, EDS (Australia) Pty Ltd)”

“Clause 2.2(a): This clause 2.2 applies in relation to Seconded Personnel, being those Listed Personnel who have been seconded by the Bank to the Employer.

            2.2(b) The Supplier will ensure that the Employer will supervise, train and direct the Seconded Personnel, provided that the Employer:

(1) does not use the Seconded Personnel for purposes other than performance of the Services without the consent of the Bank;

(2) accepts full responsibility for the performance (or any perceived non-performance) of Seconded Personnel;

(3) accepts full responsibility for the acts and omissions of Seconded Personnel and indemnifies the Bank against any claim, action, loss, damage, liability, cost, charge, expense, outgoing or payment suffered, paid or incurred by the Bank in relation to the Seconded Personnel;

(4) co-operates with the Bank, if so required by the Bank, in assisting the Bank to assess the performance of the Seconded Personnel for human resources appraisal purposes;

(5) complies with all Applicable Awards, Bank policies and agreements applicable to the Seconded Personnel;

(6) does not declare the position of any Seconded Personnel redundant without the agreement of the Bank; and

(7) adheres to any other conditions notified by the Bank from time to time concerning the appropriate treatment of Seconded Personnel.

            2.2(c) The Supplier must ensure that the Employer indemnifies the Bank, for the duration of the IT Services Agreement, for:

(1) the salary and associated employment costs including any future termination and redundancy costs of Seconded Personnel who are employees; and

(2) the contract fee and associated costs for Seconded Personnel who are contractors.

            2.2(d) If at any time the Employer reasonably considers that any Seconded Personnel should be subject to disciplinary action, or their contract or engagement terminated, then the Supplier must ensure that the Employer notifies the Bank of the relevant circumstances before action is taken. If the Bank agrees with the Employer’s opinion , the Bank will carry out any disciplinary action deemed by the Bank to be appropriate.

            2.2(e) In relation to Seconded Personnel (if any) who have been seconded by the Bank to the Employer after the Offer Period:

(1) prior to the Final Offer Date, the Employer is permitted to make offers of employment or engagement to any of the Seconded Personnel on the same terms and conditions as described in the clause 2.1, and the Bank will co-operate to a reasonable extent in finalising the resignation or termination of any such Seconded Personnel who accept employment or engagement with the Employer; and

(2) the parties acknowledge that the Bank may from time to time in the ordinary course of the Bank’s management of its personnel, change the Seconded Personnel, however there is no obligation on the Bank to replace individual Seconded Personnel if they leave, transfer, retire or become otherwise unavailable to be seconded.

            2.2(f) The Bank makes no representation as to the availability of any Listed Personnel for secondment to the Employer. The Bank is not liable in any way if Listed Personnel are not available for secondment to the Employer for any reason.”

On 19 December 1997, Lane wrote to the seconded employees working at EDSA to explain to them the terms of their secondment and in particular to outline the parameters of EDSA control over their work and work environment.  He wrote:

“The management of all employees attached to the arrangement (the Bank-EDS information services arrangement), whether the Bank or EDS employees are the responsibility of EDS in total. That is, all elements normally required to run the employment contract of a Bank employee will be managed by EDS, including payroll issues, leave issues, PDR issues, the Bank policy issues, new Certified Agreement applications etc. Seconded Bank employees will therefore be able to deal directly with EDS management on all of their issues or concerns. The Bank will continue to provide direct support on issues such as career development and opportunities in the Bank.

The Bank will ensure that EDS has every possible piece of information and training necessary to fulfil this obligation, and will continue to meet regularly with EDS to ensure that any issues or changes in either Company are fully understood and managed appropriately. The instructions, requests or directions of your EDS manager are lawful and actioned on behalf of the Bank.

I know this period has raised many questions. We have tried to answer many of these questions in the attached guidelines. Some questions remain outstanding and these need to be thought through and communicated. Both EDS and the Bank are committed to this process so that you can quickly settle in to your new role ….”

Attached to the letter was an EDSA document entitled "CBA Seconded Staff – Guidelines". It provided:

“General

CBA and EDS acknowledge that some staff had sound personal reasons for not accepting the employment offer from EDS, at this time. In these circumstances staff will continue in their current roles, working with EDS staff, to provide IT services to the CBA.

Management Arrangements

EDS is responsible for supervising, training and providing direction to all staff involved in the provision of IT Services to CBA. The instructions, requests, or directions of your EDS Manager are lawful and actioned on behalf of CBA.

Employment Terms and Conditions

Standard CBA Terms and Conditions will apply to all staff who have not accepted an offer of employment from EDS. In carrying out its management responsibilities for these staff EDS will comply with all applicable awards, bank policies and agreements.

Employment Benefits

Staff who have not accepted an offer of employment from EDS will continue to enjoy access to benefits provided by the CBA such as staff housing loans; Health Society; staff study support etc.

Roles and Responsibilities

Staff who have not accepted the offer of employment with EDS will continue to perform the same duties at their current work location. Where a change in current arrangements is proposed, this will be carried out in compliance with normal CBA policies and procedures. In completing their duties staff may be required to take instructions from an EDS Manager.

Performance Management

EDS is responsible for the performance of all staff involved in the provision of IT Services to CBA. Staff who have not accepted the offer of employment with EDS will continue to have their performance and development reviewed in accordance with CBA policy. EDS will cooperate with CBA to ensure adherence to this policy. This may mean that Performance and Development Reviews are completed by EDS Managers.

EDS Management and Human Resources and CBA TOP Human Resources will work with individual staff on career development issues.

Professional Standards and Customer Service

Staff who have not accepted the offer of employment with EDS will continue to be required to abide by the CBA’s Statement of Professional Practice. In complying with the Statement of Professional Practice staff will be expected to follow reasonable instructions and directions given by EDS management.

Remuneration

EBA wage increases will continue to apply for Award Staff who have not accepted the offer of employment with EDS. Similarly, EA/EB and IS8/IS9 performance positioning; service agreement reviews and technical skills reviews will continue to take place in the normal fashion. EDS will cooperate with CBA in ensuring timely and accurate completion of these activities.

Confidentiality

To the full extent necessary for EDS to carry out its work for the Bank, staff who have not accepted the offer of employment with EDS, are authorised to disclose within EDS all information relating to the Bank’s operations which is relevant to their duties.

Administrative Procedure

Staff who have not accepted the offer of employment with EDS will be required to submit leave, payroll, overtime, meal money and other expense returns in accordance with normal CBA policies and practices.”

44                  In the agreed statement of facts, it was agreed that, after 10 October 1997, seconded employees worked to the day to day directions of managers employed by EDSA and were required to comply with EDSA workplace protocols, such as dress codes and rules about alcohol consumption. The evidence also demonstrates that EDSA managers completed the seconded employees’ performance development reviews (PDRs) which helped determine the size of seconded employees’ annual performance payment. EDSA also made recommendations in relation to the annual salary review of executive level seconded Bank employees. Allowance claims were submitted on EDSA forms and requests for leave were submitted to EDSA managers. However, according to the agreed statement of facts, even after 10 October 1997, all disciplinary matters concerning the seconded employees were referred to the Bank; applications for leave, although made to EDSA managers, were forwarded to the Bank for approval; and any matter raised by the FSU in relation to a seconded employee was dealt with by the Bank.

45                  Pellegrini gave evidence that after 10 October 1997, EDSA became the “interface” between the Bank (and in particular TOP HR) and the seconded employees.  Pellegrini explained that EDS HR and TOP HR employees participated in monthly meetings where issues relating to the management of the seconded employees were discussed.  Pellegrini said the discussion would generally involve Smith identifying an issue concerning a secondee and asking what the Bank’s position and decision was; what the Bank would like EDSA to do; and how the Bank would like EDSA to progress the issue.  Pellegrini said that in most cases he would generally answer Smith’s queries at the meeting but with more complicated matters, the Bank would consider its position and then advise EDS of the outcome.

46                  Pellegrini said issues relating to the employment of seconded employees would generally be dealt with in one of three ways. The issue would be dealt with directly by the secondee’s EDSA manager or EDSA HR. Alternatively, EDSA would communicate an outcome to the secondee after referring the issue to TOP HR for consideration and decision. Finally, the issue might be dealt with by the Bank communicating directly with the secondee.

47                  Pellegrini gave evidence about the Bank’s management of the following employment issues concerning seconded employees:

·        Mr Martin, of TOP HR, responded directly to a letter from Mr Reynolds, a secondee, in which he had raised concerns about his prospects for promotion within the strategic alliance.  Reynolds was advised that he was eligible, and encouraged, to apply for any suitable position advertised in the Bank’s job circular.  Reynolds was advised that jobs within EDSA were a matter for EDSA.

·        Mr John Mathews, of Group Human Resources within the Bank, responded directly to an email from Mr Ron Petterson, a secondee, in which he had raised concerns about the Bank providing confidential and private information about its employees to EDSA. Mathews wrote in reply that he regarded the complaint as serious but that after investigation he was satisfied that information was only released to EDSA when necessary and only on a limited and controlled basis.

·        In August 1998 Lazarus wrote to the Managing Director of the Bank, as a customer rather than a member of staff, requesting that the release of information to EDSA in relation to his housing loan be investigated. Lane wrote in reply to Lazarus that information had been supplied to EDSA on a strictly controlled basis in order to ensure that EDSA job offers were made to IS staff on an equal to or better than basis.

·        On a number of occasions Pellegrini met with seconded employees at the EDSA premises in Burwood.  Meeting notes from two meeting attended by Mr Edward Mackay, a secondee, and EDSA and Bank human resources staff show that a wide variety of issues were canvassed at the meetings, including discrimination against seconded employees, confidentiality of employee information and job opportunities.

·        On three occasions, the Bank directed different seconded employees to attend for a medical assessment: Mr Edward Mackay in September 1998; Ms Helen Goddard in May 1998; and Mr Richard Ellis in May 1999.

·        When two seconded employees were found to have been accessing inappropriate material from the internet, Pellegrini, after first meeting with EDSA staff to discuss the details of the allegations, interviewed the staff concerned himself. EDSA had no further involvement in the matter.

·        On another occasion in March 1999, Mr Reynolds, a secondee sent an email which was regarded as inappropriate to the other seconded employees.. The matter was referred directly to TOP HR who interviewed Reynolds and decided on an appropriate course.

·        A request from Lazarus to have his RDO’s paid out by the Bank was referred to and ultimately dealt with by the Bank.

48                  Other evidence led by the applicants, suggests that, while the Bank was involved in ongoing consultation with the EDSA about aspects of the seconded employees’ employment, Bank approval for matters concerning the seconded employees was sought largely as a formality.  For example, Petterson’s email to Group Human Resources (the unit, it seems, within the Bank with general responsibility for human resources matters) raising concerns about confidentiality, (the response to which was referred to by Pellegrini above as an example of the Bank dealing with seconded employees directly), commenced as follows:

“I am addressing this memorandum to Group Human Resources because I have not been able to get acknowledgment of correspondence from TOP HR. TOP HR redirect correspondence to EDS HR at Burwood, a situation I cannot abide by because my employer is the CBA not EDS. I would hope that by sending this complaint to Group HR that it will be acted upon, unlike the last nine months of correspondence with TOP HR.”

49                  Other evidence indicates that decisions made by the Bank in relation to the seconded employees were taken subject to advice from EDSA. For example, the Bank refused to reimburse Lazarus for his Securities Institute membership fees for 1998 on advice from his EDSA manager who regarded membership of the Institute as irrelevant to his position. The Bank had paid the fees every year from 1993.

50                  When Rickeard, another secondee, sought a job re-evaluation after changes to his duties flowing from an EDSA restructure, his application was not sent to the job evaluation committee.  Instead he received a letter from EDSA HR on EDSA letterhead stating that TOP HR were satisfied that his position should continue under the senior project manager position description and that a re-evaluation was not considered warranted.  Rickeard then wrote directly to Group Human Resources within the Bank.  Mathews, of Group Human Resources, wrote to him directly in response.  In his letter, Mathews confirmed that in the circumstances TOP HR was justified in refusing Rickeard’s request for a job re-evaluation.  Before replying to Rickeard, Mathews had received a memorandum from Mr Ian Hemmings of EDSA HR explaining what Rickeard’s new role and responsibilities entailed.  EDSA's view of Rickeard’s request is revealed in an internal EDSA memorandum tendered by the applicants.  In the memorandum, Rickeard’s request is essentially described as another ploy to get redundancy.  The memorandum advises that EDSA proceed with caution and with appropriate Bank involvement/sign off.

51                  When changes were made to the role of another secondee, Mr Ray Dobrota, a new position description was first prepared and approved by EDSA HR before being sent to TOP HR for review and approval. On receiving the new position description. Pellegrini at TOP HR wrote the following to Smith at EDSA HR:

“Thanks Bill – normal drill/risks apply. If officer is to be transferred or role is to be changed it must be linked to a CBA position number; same classification; same geographics; with duties and skills required to be reasonable in terms of comparability. …”

52                  Dobrota did not accept the new position description and argued that the changes in his role meant that his previous job grade was now inappropriate.  It was explained to him by EDSA HR that the matter had been discussed with TOP HR but that it was still open to him to pursue the matter directly with the Bank.  Dobrota wrote to Mathews at Group Human Resources.  In his letter, Dobrota referred to a meeting with his EDSA Manager and Smith where he was informed that his new position did not require his job grade to be re-evaluated. In relation to the meeting, Dobrota wrote:

“We all agreed that it seemed pointless going to TOP HR as they supported the view held by Bill (Smith) and John (Dobrota’s EDS Manager) and the issue had been referred to them. Bill has provided a memorandum stating this, as well as copies of my old and new PD (position description).”

53                  In cross examination, Smith was asked whether, in his experience, if he and an EDSA manager reached a certain decision, TOP HR were unlikely to disagree with it.  Smith did not agree with that proposition. He explained that there was a procedure in place which meant that, as day to day managers of the seconded employees, EDSA was often the first point of reference for issues and concerns.  Depending on the nature of the concern raised, Smith said that EDSA would generally collect as much relevant information as it could and then refer the matter to the Bank, with or without a recommendation as to the appropriate response, for the Bank to make any decision required.

(v) Evidence concerning the right of the Bank to direct employees to work for another employer

54                  Part of the Bank's case was that it had a right to direct the seconded employees to work for EDSA and it was not unusual for a Bank employee to work, on secondment, for another employer.  According to Pellegrini, the size and diversity of the Bank’s operations required a flexible and mobile work force.  Pellegrini noted that the agreement signed by employees of the Bank, or application forms completed by applicants for employment with the Bank, contained, depending on when it was signed, one of the following clauses:

 “I fully understand that in the course of my service with the Corporation I may be assigned for duty with the Trading Bank, the Savings Bank or the Development Bank and that I may be transferred at any time and from time to time to any branch or agency of those Banks and I agree, subject to the Commonwealth Banks Act 1959 as amended from time to time and Regulations thereunder in force from time to time, to comply promptly at all times with any directions given by the Corporation in this respect.” (Emphasis added)

or:

 “I fully understand that in the course of my service with the Corporation I may be assigned for duty with the Trading Bank, the Savings Bank or the Development Bank or any Associated Body Corporate and that I may be transferred at any time and from time to time to any branch or agency of them and I agree, subject to the Commonwealth Banks Act 1959 as amended from time to time and Regulations thereunder in force from time to time, to comply promptly at all times with any directions given by the Corporation in this respect.” (Emphasis added) (In the declaration “any Associated Body Corporate” is defined as “any body corporate wholly owned or controlled directly or indirectly by the Corporation, the Trading Bank, The Savings Bank, or the Development Bank or by any two or more of them.”)

or:

“I fully understand that in the course of my service with the Corporation I may be assigned for duty with any of the Banks or associated bodies corporate  and that I may be transferred at any time and from time to time to any branch or agency of them and I agree, subject to the Commonwealth Banks Act 1959 as amended from time to time and Regulations thereunder in force from time to time, to comply promptly at all times with any directions given by the Corporation in this respect.” (Emphasis added) (In the declaration “any associated bodies corporate” is defined as “any body corporate  owned or controlled by the Corporation or any of the Banks or by any two or more of them.”)

or:

“While all efforts will be made to arrange placement in the metropolitan areas, it is a condition of service with the Corporation that any staff member may be assigned at any time and from time to time to any branch or agency of the Bank.”

or:

 “It is a condition of service with the Commonwealth Banking Corporation that any staff member may be assigned at any time and from time to time to any areas and/or location of the Bank’s operations (eg branches, customer service centres, operations centres, loan processing centres and administrations in metropolitan or country locations). Staff members will be consulted where a changes of domicile is involved.”

55                  These clauses span several years. Some might not have been signed by any members of the group. In cross examination Pellegrini was asked whether he regarded EDSA as a branch, customer service centre, operations centre, loan processing centre or administrations. He accepted that EDSA did not fall into any of those categories.

56                  Pellegrini referred to previous occasions on which the Bank seconded staff to work for external organisations including wholly owned subsidiary of the Bank such as Commonwealth Insurance Limited and Travelstrength; a merchant bank of which the Bank owned one third; the Papua New Guinea Banking Corporation and the National Bank of the Solomon Islands; and IBM with which the Bank had an interchange program.  He also referred to his own secondment to Keycorp.  When Pellegrini was asked about his secondment in cross examination he said that he did not apply for the secondment but “was happy to get that opportunity.”  Both Smith and Hancock during their time at the Bank were seconded to other organisations.  Smith was seconded to AEFC, a merchant Bank in which the Bank was a shareholder.  In cross examination Smith stated that he applied for the position within AEFC.  Hancock was seconded several times during the course of his employment with the Bank.  In cross examination Hancock agreed that on each occasion he was seconded it was with his consent. On his return to the Bank he said that he was not directly promoted but was subsequently promoted.

57                  In cross examination Pellegrini was asked how the EDSA secondment took place.  He replied that he believed IS employees were informed about it in the IS Special Updates and, at any rate, they knew from the lunchtime meetings that they had two options: join EDSA or be seconded to EDSA.  This is consistent with the evidence more generally which is to the effect that secondment to EDSA was involuntary in the sense that any employee in the IS Department who did not elect to take up employment with EDSA, would have to continue to work in that area under the control and direction of EDSA while remaining an employee of the Bank (unless they resigned from the employ of the Bank entirely).

58                  Moreover the secondment to EDSA was not, in my opinion, an assignment of the type comprehended by the various provisions in the employment documents signed or adopted by Bank employees when they initially took up employment with the Bank.  These various provisions were directed to assignment of a temporary character as part of a career progression in employment with the Bank.  So much is apparent not only from the clauses as a whole and their apparent purpose but also, specifically, from the use of the expression "in the course of my service".  These provisions were not, in my opinion, directed to employment with another employer in a context where it was probable that there would be no future and further reassignment to employment within the Bank's subsisting or future areas of operation or business activity.

Did the seconded employees remain employees of the Bank after 10 October 1997?

59                  It is convenient, at this point, to deal with an issue raised by the applicants though it was raised as part of a subsidiary or alternative argument.  It was contended that from 10 October 1997 the seconded employees were employed by EDSA and not the Bank.  If this is correct, it may have a material bearing on the operation of the Award.  If the employment of the seconded employees with the Bank was terminated on 10 October 1997, the only (or at least principal) question that would then arise concerning the operation of the Award would be whether the terminations occurred in circumstances that constituted "retrenchment" for the purposes of the Award.

60                  The issue of who is the employer of an employee, when there might be two (or more) possible employers, can arise in various legal contexts including who is liable to pay workers compensation benefits: see Pitcher v Langford (1991) 23 NSWLR 142 and Dalgety Farmers Ltd t/a Grazcos v Bruce (1996) 39 AILR 5-069; who is liable to pay redundancy payments: see Marrs Fabrics Pty Ltd & Nathan Wholesale Fabrics Pty Ltd v Whipps (1991) 33 AILR ¶167; whether a proof of debt can be maintained: see Romero v Auty (2001) 19 ACLC 206; and whether a person is liable under occupational health and safety legislation: see WorkCover Authority of New South Wales v Swift Placements Pty Ltd (1999) 88 IR 53.

61                  In many of the recent Australian cases in which this issue has arisen, the Court has adopted the approach of determining which of two possible employers is the employer by applying the principles developed for determining whether a person was an employer at all.  That is, the principles applied to determine whether there was an employment relationship between an individual and a putative employer could also be applied to determine which of two putative employers employed an individual.  A comparatively recent decision of the NSW Court of Appeal, Pitcher v Langford (supra), is often cited in support of this approach.  In that matter the various members of the Court of Appeal proceeded on the basis that the analysis of Mason J in Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 16 at 24 concerning when an employment relationship existed, was apt to apply in ascertaining which of two possible employers, was the employer.  In Stevens v Brodribb Sawmilling Co Pty Ltd (supra), Mason J accepted that the right of control over the work of a person (together with the exercise of that right) was an important indicia of the existence of an employment relationship.  However his Honour indicated that other indicia can also be relevant such as mode of remuneration, the provision and maintenance of equipment, the obligation to work, the hours of work and provision for holidays, the deduction of income tax and the delegation of work by the putative employee.

62                  In the present matter, it is clear that the day-to-day control of the work of the seconded employees was exercised by EDSA.  It is an agreed fact (see 33(e) and (f) above at [5]) that the seconded employees worked at the direction of EDSA though it is also an agreed fact that they did so at the direction of the Bank.  I consider that the better view of the evidence as a whole is that while the Bank purported to reserve to itself the ultimate right to control the work of the seconded employees it effectively relinquished that right to EDSA.  It must be accepted that there was some evidence of the Bank actually exercising control over the seconded employees by directing them to relocate and through involvement some other employment issues concerning the seconded employees. . However this evidence can be contrasted with the more general position concerning the control exercised by EDSA.  Nonetheless regard must be had to the fact that the seconded employees continued to be paid by the Bank, retained their staff number, grade and classification level and were afforded benefits available to Bank employees but not available to employees of EDSA.

63                  These various matters do not provide a clear answer one way or the other to the question of whether the seconded employees became employees of EDSA.  Ultimately, however, the answer emerges, in my opinion, from a consideration of the intentions of the parties and, in particular, the position adopted by the seconded employees themselves.  It was neither the Bank's nor EDSA's intention that the seconded employees would cease to be employees of the Bank and become employees of EDSA.  In addition each of the seconded employees rejected the offer of EDSA, which the Bank encouraged them to accept, to become employees of EDSA.  While the employees who rejected the offer were in the difficult position of not knowing whether they were, in the circumstances, entitled to severance payments and also of not knowing whether they would prejudice any such entitlement by accepting employment with EDSA, they nonetheless elected to reject employment with EDSA.

64                  It is a settled principle that there cannot be an assignment of a contract of employment without the consent of the employee; see Nokes v Doncaster Amalgamated Collieries Ltd [1940] AC 1014 .  This principle was applied by Ryan J in Textile Footwear and Clothing Union of Australia v Bellechic and others (unreported, Federal Court of Australia, 19 November 1998) and by Warren J in Romero v Auty (supra) in determining whether there had been a transfer of employment (or an assignment of the contract of employment) from one company to another.  In each instance the Court concluded there had been no transfer or assignment because the employees had not consented.  It is difficult to avoid, in my opinion, the conclusion that the seconded employees did not become employees of EDSA having regard to the explicit rejection of the offer of employment with that company by each of them.  Not only did each not consent to the transfer but each consciously elected not to take up employment with EDSA.  Accordingly I approach the question of how clause 42 might operate on the footing that the seconded employees remained employees of the Bank after 10 October 1997.

The operation of clause 42 on the seconded employees

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?

66                  The starting point in considering those questions is what is meant by the definition of "redundancy" in cl 42 to the extent that it has already received judicial consideration.  It is to be recalled that a clause in substantially the same terms as cl 42 was considered in proceedings in the Industrial Relations Court of Australia.

67                  In Hawkins (No 1) I said of the definition of “redundancy” (at 333-4):

“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.”

68                  In the present case the position would appear to be that the work, in the sense of duties, continued to be done though, on at least one view, the position was abolished.  I also said in Hawkins (No 1) (at 337):

“A literal reading of the definition might, as the applicants submit, indicate that if this was so (the position of head of institutional banking was abolished), 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.”

69                  These observations were endorsed by the Full Court in Hawkins (No 2) at 226.  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.

70                  Before further considering the terms of cl 42, it is convenient to refer to several judgments and decisions where the notion of redundancy and the payment of severance payments were considered in the context of the outsourcing of a business activity.

71                  An appropriate starting point is the decision of the Full Bench of the Australian Conciliation and Arbitration Commission in the Termination, Change and Redundancy Case (1984) 8 IR 34 at 74-75 and also (1984) 9 IR 115 at 129.  The Full Bench decided, effectively, that redundancy pay should not be payable when there is a transmission of a business.  It cannot be doubted, in my opinion, that the decision of the Full Bench in that matter determined the general principles governing the circumstances in which employees employed under Federal awards were to be paid redundancy or severance pay on the grounds of redundancy.  It was, at the time, treated as a "test case".  While the decision of the Full Bench cannot be viewed as determinative of the meaning and scope of any particular Federal award provision dealing with redundancy and severance pay (particularly if the clause does not follow the form of the standard clause determined by the Full Bench), nonetheless the decision of the Full Bench is likely to have informed any subsequent decision of either the Commission or the parties when adopting a clause dealing with redundancy and severance pay.  The approach of the Full Bench that redundancy pay should not be payable when there is a transmission of a business has been affirmed by the Australian Industrial Relations Commission in Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union v United Milk Tasmania Ltd (2000) 48 AILR 4-315 (Print S7351) and Steppes Pty Ltd t/a The Beaufort Darwin v Australian Liquor, Hospitality and Miscellaneous Workers Union (1998) 86 IR 337.  It should be noted, however, that in the Termination, Change and Redundancy Case the Full Bench decided it was appropriate, if not necessary, to include in the standard clause an express provision excluding an entitlement to redundancy pay when there was a transmission of the business.  On one view, this was necessary because without the exclusion there might be an entitlement to redundancy pay under the standard clause on the footing that there could be a redundancy situation when work was no longer done for an employer (on transmission of all or part of a business) even though the work was to be done for the transmittee.

72                  In the Termination, Change and Redundancy Case the Full Bench referred to a decision of Commissioner Neyland in the Trustee Officers’ Award Case (1983) 290 CAR 100 and the decision of the Full Bench on appeal in (1983) 291 CAR 200.  In that matter the Commissioner had been asked to make an award providing for retrenchment or redundancy pay for employees of The Trustees Executors and Agency Company Ltd ("the Trustee company") which was in liquidation.  The Commissioner viewed employment with that company as employment in a "career industry" and varied the applicable award to create an entitlement to severance pay upon termination on account of redundancy.  At least historically, the banking industry has also been treated as a "career industry": see In re Bank Officers (State) Board (1921) 20 AR(NSW) 303.  By the time the appeal from the Commissioner's determination was heard by a Full Bench, the circumstances had altered in some respects.  The Victorian Parliament had passed legislation facilitating the acquisition of the business of the Trustee company by a second company with the result that employees of the Trustee company were offered employment with the second company.  The majority of the Full Bench noted in their decision that the parties had agreed that the benefit of the Commissioner's order would not extend to employees who were transferred to the second company.

73                  In the decision of the Full Bench in the Termination, Change and Redundancy Case, it was noted (8 IR at 74-75) that the Commissioner's decision in the Trustee Officers Award Case and the decision of the Full Bench on appeal, did not provide severance pay for employees whose employment was transferred to another trustee company.  It was noted in a context in which the first mentioned Full Bench was discussing, apparently with approval, various decisions in which some limitation had been placed on the circumstances in which severance payments would be paid.  The apparent approval of the Full Bench was consistent with its approach of saying severance payments were not payable when a business had been transmitted.  However it is probable that the Full Bench had in contemplation a situation where the transmitted business would be taken over by the transmittee on the footing that the employees would remain employed in essentially the same business and on the terms on which they had formerly been employed by the transmittor.

74                  Also it must be remembered that the decision of the Full Bench was made against a statutory background whereby an award in which a clause dealing with redundancy might be included, would continue to operate, in terms, on the transmittee of a business: see s 61(d) of the Conciliation and Arbitration Act 1904 (Cth).  At that time an award was likely to contain a comprehensive set of terms and conditions regulating the employment of the employees to whom it applied and often dealing with matters such as seniority and accrued entitlements.  Accordingly, a transmittee of a business might well assume, by operation of law, the pre-existing obligations of the transmittor.  In my opinion, the views of the Full Bench about the appropriateness of providing for redundancy or severance pay to employees when a business was transmitted must be considered with these matters in mind.

75                  The issue of whether there is a redundancy situation entitling an employee to severance payments when an undertaking outsources some of its activities arose in Re Government Cleaning Service (Privatisation) Award (No 2) (1994) 55 IR 199.  In 1994 the Government Cleaning Services of New South Wales ("GCS") was privatised.  One issue in proceedings in the Industrial Relations Commission of New South Wales was whether employees in the GCS were made redundant when their employment was terminated even though they could take up employment with the successful tenderers providing the cleaning services formerly provided by GCS.  Schmidt J concluded (at 217-219) the employees dismissed as a result of the privatisation had been made redundant and dealt with various applications before the Commission on that footing.  Her Honour said:

“One question which fell to be decided was whether the former GCS staff dismissed as a result of the decision to privatise the GCS were thereby made redundant.  I have come to the conclusion that they were.  That conclusion has ramifications both for the s 246 applications and the award applications, but of itself is not conclusive of any of them.

Whether an employee has been made redundant or not is a different question to whether the decision to dismiss was harsh, unreasonable or unjust or to the question of whether an award providing for redundancy pay should be made.

One feature of redundancy is that termination of employment must result from a decision of the employer and not the employee.  Even in the case of ‘voluntary’ redundancies it is the employer which decides that a number of employees must be dismissed and then accepts volunteers – often reserving the right to reject any such volunteer and if there are insufficient volunteers, selecting those to be made redundant from amongst those employees who have not put themselves forward.  Here dismissal was certainly not sought by the employees, it was strenuously resisted.

The employer’s reason for dismissal is also relevant to the conclusion that redundancy has arisen.  That reason must be unrelated to the work performance of the individual employee.  A well known explanation is that stated by Bray CJ in R v The Industrial Commission of South Australia; Ex parte Adelaide Milk Supply Co-operative Ltd (1977) 16 SASR 6 at 8:

            ‘…the concept of redundancy in the context we are discussing seems to be simply this, that a job becomes redundant when the employer no longer desires to have it performed by anyone.  A dismissal for redundancy seems to be a dismissal, not on account of any personal act or default of the employee dismissed or any consideration peculiar to him, but because the employer no longer wishes the job the employee has been doing to be done by anyone.’

As Mr Menzies pointed out, Chief Justice Bray’s statement was made in the context of dismissal resulting in unemployment, not dismissal as an inevitable consequence of the sale or transmission of a business – or the privatisation of a governmental undertaking – where employment may be available with a new employer.

When a business is sold, or a governmental undertaking privatised, the original employment comes to an end.  Employees do not always obtain work with the new employer.  The fact that the old employer assists the employees to obtain work with the new employer, does not alter the consequence, that the termination of the original employment arose as a result of the employer’s decision, that it no longer wished any of its employees to perform the jobs they were performing and not through any fault on the employee’s part.  It seems to me that employees in that situation have been made redundant, whether or not they are assisted in obtaining alternate employment.

Support for this conclusion can be found in authority.  For example in Re Clerks (State) Award (Redundancy Case) (Clerks’ Redundancy case) [1976] AR 417, it was said by the Industrial Commission in Court Session at 431 that:

            ‘It can be fairly said that in industrial circles the term redundancy payment had come to mean compensation for losses of various kinds suffered by employees who have given substantial service to an employer and whose services are terminated because, for one reason or another, the employer no longer needs them.’

In the TCR case the Australian Conciliation and Arbitration Commission in dealing with the question of redundancy pay held at 75:

            ‘We do not wish to prevent an employer making an application to be exempted from the general prescription pursuant to this decision in cases where an employer obtains acceptable alternative employment for an employee but we would point out that, in our decision, severance payments are not made for the purpose of assisting employees to find alternative employment.  Where such an application was made it would be important to consider whether previous service with the previous employer was recognised as service with the new employer.  However, we would make it clear that we do not envisage severance payments being made in cases of succession, assignment or transmission of a business.  We intend to provide for transmission of employment in terms similar to cl 5(5) of the Metal Industry (Long Service Leave) Award (1976) 183 CAR 67.’

Both these decisions illustrate that loss of employment in circumstances involving the sale or transmission of a business and ongoing employment for the employees with the purchaser, can give rise to redundancy of their former employment for the employees affected.  Whether in such circumstances an industrial tribunal should exercise its discretion to make an award of redundancy pay is a different question, the answer to which will depend upon the particular circumstances involved.  In the TCR case and under the EP Regs it is clear that no such payments are to be made in cases of succession, assignment or transmission of business.  What the outcome in terms of redundancy pay should be in circumstances where a Governmental undertaking is privatised must be decided on the facts and circumstances peculiar to the privatisation.”

76                  An appeal against this judgment was unsuccessful: see Re Government Cleaning Service (Privatisation) Award (No 3) (1995) 59 IR 348.

77                  A broadly similar issue of arose in Australian Municipal, Administrative, Clerical and Services Union v Greater Dandenong City Council (2000) 101 IR 143.  In that matter a local council outsourced the provision of home and community care services though its employees were able to take up employment with the successful tenderer.  Some did.  The applicants in the proceedings alleged contravention of s 298K of the Act.  An issue arose about whether that and a related section had legal efficacy having regard to the immunity discussed in Re Australian Education Union; Ex parte Victoria (1995) 184 CLR 188 at 232.  That involved a consideration of whether there had been dismissals on the grounds of redundancy.  On this question Madgwick J said (at 173):

“Further, in this case, the prohibited reason preceded and caused the supposed redundancy; but for the impugned decision there would have been no such redundancies.  The Council cannot be protected against engaging in prohibited conduct merely because it declared “redundancy” to be the reason for dismissal.  The real reason for dismissal was the Council’s decision (made in part for a proscribed reason) to outsource the [home and community care] services, not because of an absence of work.  A declaration of redundancy premised upon a prohibited reason will not attract the immunity.  In this case, the Council, by its statutory representative for the purpose, dismissed the employees for reasons including a reason proscribed by s 298L.  That reason also partly motivated the decision of the Council which necessitated the dismissals.  These actions of the Council do not attract the immunity.  The plea that “redundancy” was the real reason for the dismissals is disingenuous.  The constitutional immunity does not protect euphemism.

In this regard, the use of the term “redundancy” in the respondent’s submissions evinces a degree of confusion.  In Australia, the term “redundancy”, in the context of employment, has had a settled meaning at least since 1984.  Burchett J recorded how this came about in Short v Hercus (1993) 40 FCR 511 at 520 - 522.  As explained in that case:

‘…a job becomes redundant when the employer no longer desires to have it performed by anyone. A dismissal for redundancy seems to be a dismissal, not on account of any personal act or default of the employee dismissed or any consideration peculiar to him, but because the employer no longer wishes the job the employee has been doing to be done by anyone.

This definition:

            (a)refers to a job becoming redundant and not to a worker becoming redundant;

            (b)recognizes that redundancy situations may not necessarily involve dismissals; and

            (c)emphasizes that the job or work has disappeared through no fault on the part of the employee. A key element in that definition is that the employer no longer requires to have the work done by anyone.’

See also Quality Bakers v Goulding (1995) 60 IR 327, per Beazley J, and Hawkins v Commonwealth Bank of Australia (1996) 70 IR 213.  It is inconceivable that in AEU the Justices of the High Court were using the term redundancy in any other sense.  No employer may dismiss an employee for a legally proscribed reason and escape liability by citing redundancy as the reason.”

78                  It appears that Madgwick J adopted a somewhat narrow view, in my respectful opinion, of when a redundancy situation might arise as a step in the reasoning process leading to the conclusion that the constitutional immunity would itself have a limited operation.  I also consider, with respect, that his Honour overstated the effect of the judgment of the Full Court in Short v Hercus if his Honour was saying that there could never be a redundancy situation (or the word "redundancy" used to describe it) if the work of the employee continued to be done whatever the circumstances may be.

79                  An appeal from that judgment was heard by a Full Court: see Greater Dandenong City Council v Australian Municipal, Administrative, Clerical and Services Union [2001] FCA 349. On the question of whether there had been a redundancy situation, Wilcox J said:

“His Honour noted the description of redundancy given by the Australian Conciliation and Arbitration Commission in the Termination, Change and Redundancy Case (1984) 8 IR 34 (cited by Burchett J in Short v Hercus (1993) 40 FCR 511 at 521).  The Commission referred to a definition given by Bray CJ in The Queen v Industrial Commission (SA); Ex parte Adelaide Milk Supply Co-operative Ltd [1977] SAIR 1202 at 1205.  A key element of that definition, the Commission said, was “that the employer no longer requires to have the work done by anyone”.  Madgwick J commented that, having regard to the fact that the word “redundancy” has had a well-settled meaning in Australia since at least 1984, it “is inconceivable that in AEU the Justices of the High Court were using the term redundancy in any other sense”.  The same observation may be made about Victoria v Commonwealth where, it must be assumed, their Honours used the word “redundancy” to refer to a situation where the employer no longer required the work to be done by anyone.  That, of course, was not the situation in the present case.

In relation to government employment, it may be necessary to add a gloss to these remarks.  In Konrad North J spoke of recent “fundamental restructuring of the work of the public service”, with the result that “State governments no longer require many jobs to be done which had previously been done”.  He may not necessarily have meant the governments no longer required the work to be done by anyone.  A State, or an emanation of a State, may make a policy decision to outsource a function, previously undertaken by its own employees, and then to terminate the employment of those employees.  Although the State still wants the work to be done, so in one sense there is not a redundancy situation, as a matter of policy it no longer wants it to be done by its own employees.  In such a situation, it seems to me, the AEU principle may apply.”

80                  It can be seen that Wilcox J did not discount the possibility that there could be a redundancy situation, which would enliven the immunity, even if the work continued to be done for the benefit of the State or an emanation of the State by a third party.  It is relatively clear that Wilcox J also thought that the approach of Madgwick J to the question of when a redundancy situation arose was an unduly narrow one. The other members of the Full Court did not address the issue of what was comprehended by redundancy in the context of the immunity.

81                  These decisions and judgments concern factual circumstances and legal issues which are not on all fours with those in the present proceedings.  However what they serve to illustrate is that the notion of an employee becoming redundant can arise when there is, in prospect, the termination of an employee's employment event 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.  The present case is not completely analogous. While in this matter the seconded employees remained employees of the Bank (for the reasons earlier discussed), their employment was, in most practical respects, with EDSA and undertaken for the immediate benefit of EDSA, although for the ultimate benefit of the Bank.  The analogy is imperfect because there was no termination of the seconded employees employment with the Bank.  That came about because the Bank elected to follow the course of encouraging the IS employees to take up employment with EDSA (rather than terminating employment with the Bank) but on the basis that if they did not, they would then be in a position where their future employment options were limited (unless they later took up employment with EDSA) and also on the basis they could be utilised by EDSA as if they were employees of EDSA. It is to be recalled that part of the case of the applicants is that the Bank was obliged, under the Award, to terminate the employment of the employees who became seconded employees because they were in a redundancy situation.  If their employment had been terminated by the Bank, then their duties would have been performed either by them as EDSA employees or other individuals as EDSA employees.

82                  I return to consider the question left unanswered by the decisions in Hawkins (No 1) and Hawkins (No 2), namely 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. The answer lies in the apparent purpose and scope of cl 42 to be gleaned from its terms.

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.

84                  The operative part of the definition of "redundancy" contains, for present purposes, two elements.  The first is found in the phrase immediately following the word "means", namely "a position redundancy".  This phrase fairly clearly implies that a redundancy situation arises when something happens to the position occupied by a person on whom clause 42 might operate.  The second element identifies what that something is.  It is that the work (or a major portion of it) is no longer required to be performed or is to be performed at a new location requiring a change in residence.  It is to be recalled that cl 42 (d) speaks of positions being declared redundant and also speaks of certain consequences for an employee of his or her position being declared redundant.  While this paragraph focuses on a particular position and the occupant of it, par (e) appears to contemplate a wider operation of cl 42.

85                  That latter paragraph speaks of "a redundancy situation affecting a number of officers" and creates a mechanism which enables the Bank to select particular employees who will be retrenched.  The paragraph appears to contemplate that in a work area there may be several positions and in relation to only some of them, the work (or a major portion of it) is no longer required to be performed (or probably more remotely, the work is to be performed at another location requiring a change in residence).  If the work area is one in which the employees are engaged in the same work at about the same classification level, the Bank is able to select which employees are to be retrenched.  Thus the occupant of a particular position might not be retrenched even though the work (or a major portion of it) of the particular position was no longer required to be performed.  That would come about because the Bank decided to retrench another employee in the same work area who might have been in a position that was unaffected by change of the type to which clause 42 is directed.  However par (e) appears to be an exception or extension to the general position, namely that the employee who is in a redundancy situation is the employee occupying the position in respect of which the work (or a major portion of it) is no longer required to be performed.

86                  Does the word "work", as it appears in the definition of "redundancy", comprehend not only the daily duties of the employee but also the organisational context within which the duties are performed?  It may be accepted that the duties of an employee gain colour from the context in which they are performed.  For example, an employee might be engaged for the majority of his or her time in typing correspondence that has been dictated onto tape.  A person performing those tasks for the managing director of a large corporation such as the Bank could not reasonably be described, in my opinion, as performing the same work as a person undertaking the same tasks but typing correspondence for an employee engaged in routine debt collection for the Bank.  However, any such assessment could well depend on the particular facts of the case and the legal context in which the comparison arises, including the language and purpose of the instrument calling for the comparison.  This can be illustrated by the decision of the Employment Appeal Tribunal of the United Kingdom in Capper Pass Ltd v Lawton (1977) 1 QB 852.  The Tribunal accepted that a cook preparing a small number of meals for the directors of a company was engaged in "like work" for the purposes of the Equal Pay Act 1970 (UK) when compared to an assistant chef preparing meals in a canteen for a large number of employees of the same company: see also Shields v E.Coomes (Holdings) Ltd (1978) ICR 1159.

87                  The word "work" can signify the specific duties undertaken: see The King v Foster; Ex parte Crown Crystal Glass Co Pty Ltd (1944) 69 CLR 299 at 308 and 314 as well as the context in which they are undertaken: EPM Concrete Pty Ltd v Building and Construction Industry Long Service Leave Payments Corporation (1985) 23 IR 430 at 437.  In the former case Williams J said (at 314) "(t)he word [work] in its ordinary and natural grammatical signification refers to what a person is doing…". In the latter case, Lusher J had to consider the definition of "building and construction work" in s 4 of the Building and Construction Industry Long Service Leave Payments Act 1974 (NSW).  In issue was whether the work of employees manufacturing pre-cast concrete products was work of the defined type.  His Honour concluded it was not because it was not work in the building and construction industry which was an element in the definition.  However an additional issue was whether the work satisfied the definition in another respect, namely whether it was "work of the kind" usually performed by a builders' or construction labourer.  In relation to the meaning of the expression "work of the kind", his Honour said:

“Looking at ‘work of the kind’, I accept that is not be limited to an examination of the mere basic mechanics of the particular tasks being compared whereby the work itself is performed.  Considerations of the place where and the conditions and requirement under which the work is performed and the standards and end to be achieved are not altogether irrelevant although in the last analysis, it may be a question of degree.”

88                  What then is the meaning of the word "work" in the definition of "redundancy" in cl 42?  Is it intended to refer only to the duties of the employee or is it intended to comprehend, in addition, the organisational context in which those duties are performed which effectively define or give substance to the position?  The word "duties" is used elsewhere in cl 42.  The fact that the word "work" and not "duties" was used in the definition of "redundancy" suggests that the word "work" has a wider, or at least different, meaning than "duties".  The word "duties" first appears in the definition of "directly comparable position".  In that context it is fairly clearly a reference to the tasks undertaken by the employee.  It also appears in cl 42 (c)(ix) and has the same meaning.  The word "work" is also found in the phrase "work area" in cl 42 (c)(ii) and (e) (ii) though its use in this context says little about its meaning in the definition of "redundancy".  On one approach to that definition, the context in which the word "work" appears suggests it may be intended to be a reference to duties only.  The word "it" in the expression "a major portion of it … is no longer required to be performed" (emphasis added) in that definition is a reference to "work".  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.

89                  Ultimately, however, the meaning of the word "work" and what is intended by the definition of "redundancy" is to be gleaned from the apparent purpose of the entire clause informed by established notions of what is redundancy.  The clause is intended to have effect where changes may occur impacting upon "working arrangements" which precipitate a process of consultation which involves the Bank revealing to the FSU the effect of change on staffing structures.  The focus of that process of consultation is not simply potential changes in duties but changes to the organisational structures in which duties are and will be performed.  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".

90                  That is not to say, however, that a substantial change in duties would not constitute a redundancy situation.  It would because either all of the duties or most of them were no longer required to be done.  Such situations would mean that the work or a substantial part of it was no longer required to be done as well.

91                  Plainly, however, it is not intended that the Bank would be faced with terminating the employment of any employee subject to such change, that is a change in the organisational context, and paying severance pay because the clause contains a mechanism enabling the Bank to offer a directly comparable position or otherwise redeploy the employee.  For a position to be a directly comparable position it must, having regard to the definition, have certain characteristics.  That is, the classification must be the same, the duties must be broadly the same and it must be at the same workplace or a workplace to which the employee can readily travel.  Thus if an employee was performing certain duties in a particular position but the position was abolished and, in addition, the opportunity existed to continue to perform the duties in another position within the Bank, there would be likely to be a directly comparable position the Bank could offer the employee.

92                  If the employee was to be redeployed to a position which was not a directly comparable position then there is a mechanism for the maintenance of benefits and the opportunity for both the Bank and the employee to determine whether alternative employment is suitable.  However this scheme fairly clearly contemplates that the alternative employment (whether a directly comparable position or not) is employment within the organisational structure of the Bank.  Express reference to this aspect of the scheme is found in paras (iv) and (x) of subcl (d).  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. This would be so even if the employee continued to perform the duties that had attached to the position which had existed within the Bank's organisational structure prior to changes of the type referred to in sub-par (3) of the definition of "redundancy" and changes of the type about which consultation is intended under subcl (c).

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.

94                  In its final submissions the Bank relied on the many statements it made at the time (both before and after 10 October 1997) that it was not a redundancy situation and no employee would be made redundant.  There can be no doubt that this was the constant and oft repeated position of the Bank at the time.  However the statements made by the Bank may have been simply a manifestation of its understanding at that time of how clause 42 might operate. However, I cannot discount entirely the possibility that the statements were made in circumstances where the Bank was not entirely sure how cl 42 might operate and in order to minimise the expectations of the IS employees and facilitate their transition into employment with EDSA.  But the operation of cl 42 does not depend on whether the Bank believes there is or is not a redundancy situation, but rather operates when the Bank no longer requires work (or major portion of it) to be performed.  That latter question is to be answered by reference to the facts and inferences to be drawn from the facts about what the Bank required.

95                  This leads to a consideration of the question of whether cl 42 obliged the Bank to terminate the employment of the seconded employees.  It was not an issue I had to consider in Hawkins (No 1).  It was, however, an issue considered by the Full Court.  While I am, sitting as a judge of the Federal Court, probably not bound (as a strict matter of precedent) by the judgment of the Full Court of the Industrial Relations Court of Australia, no submission has been made that I should not follow it. I consider I should follow the decision of the Full Court in Hawkins(No.2) given that it is a judgment of a Full Court of a Commonwealth superior court of record constituted by judges who are also judges of the Federal Court.  While the judgment involved the construction of an industrial instrument and not a statute, the approach of the Full Court in Qantas Airways Ltd v Cornwall (1998) 84 FCR 483 at 489-490 seems apposite.  Moreover, both the applicants and the Bank relied on the Full Court's judgment in Hawkins (No 2) as if I was bound by it.

96                  It is clear that the Full Court in Hawkins (No 2) viewed the clause then under consideration as requiring the Bank to retrench an employee who was in a redundancy situation if no offer of alternative employment was made.  The Full Court said (at 219):

“As already stated, cl (e) contemplates that the Bank, in pursuit of its obligation to make reasonable efforts to redeploy an officer in a redundancy situation, may offer alternative employment of two types.  However if no offer at all is made, clearly the officer cannot be redeployed and shall be retrenched: cl (f)(i).  The consequence of the redundancy is thereupon crystallised.”

and later (at 222):

“It follows from the construction that the Agreement permits only one offer of alternative employment, that when redeployment subject to the trial period fails because the officer finds the employment is unsuitable, that upon such a failure the officer ‘cannot be redeployed’ within the meaning of cl (f)(i).  Accordingly the Bank comes under an obligation under that clause to retrench the officer.”

97                  It appears to follow from these conclusions of the Full Court that the Bank is under an obligation to retrench an employee in a redundancy situation if the employee is not redeployed.  It appears to be immaterial whether this results from their being no offer of alternative employment (whether to a directly comparable position or other employment) or results from the employee taking up an offer of alternative employment but the alternative employment proving to be unsuitable as was the case with Mr Hawkins.  Accordingly, I accept the submission of the applicants that the Bank was obliged to terminate the employment of the seconded employees because on 10 October 1997 they were in a redundancy situation and no offer had been made of the type contemplated by subcl (d) and, in particular, par (iv).  The Bank was also then under an obligation to pay severance pay as contemplated by subcl (g).

98                  The Bank submitted that even if the members of the group had been in a redundancy situation and the Bank had been, at the time, obliged to terminate their employment, there had been no terminations.  Accordingly the Bank's obligation to pay severance pay did not arise.  It only arose if there was, and was conditional upon, termination by the Bank.  However in Hawkins (No 2) the Full Court determined that Mr Hawkins was entitled to severance pay even though his employment had not been terminated by the Bank.  It is true his employment had been terminated, though by him.  However, the Full Court took the view that the provision required the Bank to terminate the employment and pay the severance pay. The Full Court accepted (at 222) that the word “retrenchment” meant termination by the employer.  The Full Court concluded (at 224) that when Mr Hawkins could not be redeployed:

“The Bank thereupon came under an obligation to retrench him under cl (f)(i) and to pay retrenchments payments under the Agreement.”

The entitlement to payment was not treated as conditional on termination, as a matter of fact, by the Bank.  It follows, in my opinion, that the Bank’s obligation to pay severance payments did not depend on the Bank terminating the employment of the members of the group.

99                  The 70 employees who constitute the representative group were in a redundancy situation on 10 October 1997 but each was not then redeployed as contemplated by cl 42, even though each continued in employment for varying periods after that date.  In those circumstances, the Bank would have been, on 10 October 1997, obliged to retrench each of the employees.  It failed to do so and was in breach of the Award.  To the extent that the Bank failed to pay some of the members of the group severance pay, it also breached the Award.  In reaching this conclusion I am conscious that two of the sixteen group members who were not paid severance pay appear to have taken up employment after 10 October 1997 with the Bank in other areas of its operations (that is, outside the information technology area taken over by EDSA).  However having regard to the conclusion of the Full Court in Hawkins (No 2) the obligation of the Bank to retrench and pay severance pay arose when the redundancy situation arose, namely 10 October 1997.

100               These reasons and the order I will make do not conclude these proceedings.  Accordingly I propose to adjourn them for further directions.  It may well be, however, that the appropriate course is for the Bank and the applicants to agree on amounts payable to the sixteen employees and orders made in relation to them, subject, of course, to the right the Bank has to appeal.

Associate:

Dated:              16 November 2001