The NSW Industrial Relations Commission has held that an employer was entitled to end the flexible working arrangements of two employees, despite the arrangements being in place for eight years.

Implications for employers

This case highlights that even where flexible working arrangements are long-standing and changes may cause inconvenience to employees, an employer’s right to make operational decisions and determine employees’ working arrangements will likely be upheld, unless the change imposes an unfair or unreasonable demand on employees.

Of course, employers should ensure that any changes to flexible arrangements practices comply with any applicable modern award and are for a reasonable purpose. They should also give appropriate notice to employees and articulate the reasons for the decision.

Background

Cameron and Craig Zammit (employees) had been employed as full-time painters at South Western Sydney Local Health District (employer) since 2000. For around eight years, the employees had a flexibility arrangement, established under the employer’s flexible work practices policy (policy), whereby they worked their standard hours from 6am until 2.30pm, to allow them to pick up their children from primary school and care for them in the afternoons. Other trade staff in their department worked standard hours from 7am to 3.30pm. The policy stated that approvals of flexible working hours are "for a maximum of 12 months".

In June 2015, the employees’ request for another extension of their flexible working arrangement was rejected. They were given five weeks’ notice of their return to standard 7am to 3.30pm working hours. In November 2015, the Construction, Forestry, Mining and Energy Union (CFMEU) brought the dispute to the NSW Industrial Relations Commission (Commission).

The CFMEU sought orders that for the period that the employees had one or more children attending primary school, they be permitted to work from 6am to 2.30pm. They made oral submissions that such orders fell within the scope of sections 136(1)(b), (c) or (d) of the Industrial Relations Act 1997 (NSW) which gave the Commission power to make or vary an award, make a dispute order under Part 2 of the Act, or "make any other kind of order it is authorised to make".

The CFMEU argued that flexible working hours were required for the employees to meet family responsibilities and did not impact on safety or productivity. They further submitted that a policy directive which stated that flexible work arrangements should "satisfy both employer and employee needs" was inconsistent with principles contained in the Anti-Discrimination Act 1977 (NSW), in particular section 49V.

The employer argued that ensuring all trade staff worked standard hours was part of a "whole of hospital" approach to improving coordination and efficiency. Aligning work hours would improve coordination and oversight of their work, including through team meetings in the afternoon and greater management control over job prioritisation in the morning. They further submitted that the Commission should not intervene unless the employer’s conduct was "unjust or unreasonable".

Legislation

Section 49V of the Anti-Discrimination Act 1977 (NSW) sets out that it is unlawful for an employer to discriminate against an employee on the grounds of that employee’s "responsibilities as a carer". This includes discrimination in the terms and conditions of employment or "by subjecting the employee to any other detriment", unless the arrangements that are required would "impose an unjustifiable hardship on the employer".

Sections 136(1)(a), (b), (c) and (d) of the Industrial Relations Act 1997 (NSW) sets out the actions the Commission may take in the conciliation and arbitration of a dispute. Under section 136(1)(a), the Commission may make a recommendation or give a direction to the parties and under section 136(1)(b), it may make or vary an award under Part 1, Chapter 2 of the Act. Pursuant to section 136(1)(c), the Commission may make a dispute order under Part 2 of the Act and under section 136(1)(d), they may "make any other kind of order it is authorised to make".

Section 137 of the Industrial Relations Act 1997 (NSW) contains the kinds of dispute orders the Commission may make when dealing with a dispute in arbitration proceedings. The types of orders include orders for parties to refrain from or cease industrial action, orders to reinstate or reemploy an employee and orders to dismiss an employee. In the present case, the Commission held that section 137 of the Act constrained the range of orders to which section 136(1)(c) applied.

Section 17(3) of the Industrial Relations Act 1997 (NSW) sets out the circumstances in which an award may be rescinded or varied. This includes where the Commission considers "it is not contrary to the public interest to do so and that there is a substantial reason to do so".

Decision

The Commission held that the employer was entitled to end the painters’ flexible working arrangement. In dismissing the CFMEU’s application, it explained that it was not within the scope of its powers under section 136(1)(b), (c) or (d) of the Act to make the orders sought.

First, the Commission held that, although not specifically argued by the CFMEU, flexible working hours would nevertheless be insufficient to meet the public interest requirement which is set out in section 17(3) of the Act and applies to the exercise of the Commission’s power to vary an award under section 136(1)(b).

Second, the Commission identified that section 136(1)(c) was referrable only to section 137 of the Act and therefore subject to the limitations it contained.

Third, section 136(1)(d) was held not to contain an independent basis by which the Commission could make an order, but instead was "facilitative" of other orders the Commission is authorised to make pursuant to the Act.

In the alternative, the Commission refused to make a recommendation or direction pursuant to section 136(1)(a) of the Act that the flexible working arrangements remain in place. The Commission described non-interference with management prerogative as the "overwhelming principle" in the case and outlined the general proposition that it does not interfere with an employer’s right to make management decisions "unless the employer is seeking something unreasonable or unlawful from employees".

The Commission accepted the employer’s evidence that the alignment of working hours was part of a "whole of hospital" approach to improve efficiency which was developed in the context of greater budget restriction. Liverpool hospital, where the painters primarily worked, is the largest hospital in the local health district and had recently experienced an increase in patient numbers. In 2014/15, it operated with a deficit of around $8.2 million. The Commission also noted that the employees had been on notice about possible changes to their flexible working arrangements since 2014 when the employer reminded them that every 12 months their applications for altered hours would be reassessed.

The Commission held that the CFMEU failed to establish that the changes to working hours would result in the painters’ being required to undertake work which is "unfair, unjust or unreasonable". The CFMEU had also argued the employees would be required to pay for childcare, causing financial hardship or strain, but no financial evidence was submitted to support this claim.

The Commission did not accept that it was required to take into account specific provisions (including s 49V) of the Anti-Discrimination Act 1977 (NSW)) when exercising its functions and therefore declined to find that the policy directive was inconsistent with anti-discrimination law.

Construction, Forestry, Mining and Energy Union (NSW branch) v South Western Sydney Local Health District [2016] NSWIRComm 1047