IN THE EMPLOYMENT COURT WELLINGTON [2017] NZEmpC 78 EMPC 146/2016. CHIEF EXECUTIVE OF THE DEPARTMENT OF CORRECTIONS Plaintiff

Transcription

1 IN THE EMPLOYMENT COURT WELLINGTON IN THE MATTER OF BETWEEN AND [2017] NZEmpC 78 EMPC 146/2016 a challenge to a determination of the Employment Relations Authority CHIEF EXECUTIVE OF THE DEPARTMENT OF CORRECTIONS Plaintiff CORRECTIONS ASSOCIATION OF NEW ZEALAND INC Defendant Hearing: November 2016 (Heard at Wellington) Appearances: P Churchman QC and K Radich, counsel for plaintiff J Roberts and J Sharman, counsel for defendant Judgment: 21 June 2017 JUDGMENT OF JUDGE K G SMITH [1] In July 2015 the Chief Executive of the Department of Corrections restructured staff positions in prisons under his management. One result of this restructuring was that positions called Senior Case Managers were disestablished and replaced with positions called Case Managers. [2] Those employees who held Senior Case Manager positions before the restructuring was completed remained employed but were designated as Case Managers. Their terms and conditions of employment were protected by a process referred to as grandparenting. [3] When the restructuring occurred the Chief Executive was a party to a collective agreement with Corrections Association of New Zealand Inc (CANZ) CHIEF EXECUTIVE OF THE DEPARTMENT OF CORRECTIONS v CORRECTIONS ASSOCIATION OF NEW ZEALAND INC NZEmpC WELLINGTON [2017] NZEmpC 78 [21 June 2017]

2 called the Department of Corrections Frontline Staff (Prison Based) Collective Agreement That agreement covered staff in custodial and noncustodial positions as well as other positions which the parties agreed fell within its scope. Both the Senior Case Manager and Case Manager positions are referred to in that collective agreement. [4] CANZ did not accept that the Chief Executive could make these changes through the restructuring he had carried out without securing its agreement to a variation to the collective agreement. [5] CANZ issued proceedings in the Employment Relations Authority where it was successful. 1 The Authority accepted CANZ s submission that a variation to the collective agreement was required. [6] The Chief Executive has challenged that determination and says that the Authority erred in law. Issues [7] The issue raised by this challenge is whether a variation to the collective agreement is required before the changes the Chief Executive sought to implement in July 2015 can be carried out. The way the parties presented their cases means that there are two subsidiary issues to consider: (a) Does the method of providing for coverage in this collective agreement mean that disestablishing Senior Case Manager positions required a variation? (b) Does the balance of the collective agreement restrict the Chief Executive s ability to carry out this restructuring? 1 Corrections Association of New Zealand Inc v Chief Executive of the Department of Corrections [2016] NZERA Wellington 56 at [46].

3 Restructuring in 2015 [8] Some context is required before considering these issues. In early 2015 the Chief Executive began a restructuring project. A consultation document about that restructuring called Lifting Productivity & Performance in New Zealand s Prisons was released for comment on 9 April Amongst other changes this proposal affected case management work but did not reduce the overall number of positions for Case Managers. The proposal was explained this way: In addition to changes in reporting lines for case management teams, future focus on the longer term structure of case management teams is proposed. It is proposed that Senior Case Manager positions are replaced by Case Manager positions, so while the overall number of positions in case management will not be reduced, the structure will be less hierarchical. This will mean all Senior Case Manager positions would be retitled Case Managers however all current incumbents would retain their current terms and conditions including access to the Senior Case Manager progression criteria. [9] This proposal included a further salary progression step to be added to Case Manager competencies to recognise those with senior experience who would take on more complex cases and mentor others. The work required to deal with case management, including complex cases, still needed to be performed, but under this proposal the management structure became flatter. [10] Consultation closed on 30 April 2015 and the final decision was announced on 14 May The date of the transition to the new structure, if it was to proceed, was from 1 July [11] No changes were made to the proposal following consultation and the Chief Executive implemented the proposed changes to the Senior Case Manager positions without amendment. Those persons employed as Senior Case Managers as at 30 June 2015 retained their terms and conditions of employment by grandparenting. In the agreed statement of facts this situation was described as being ring fenced on an individual basis with any new appointments being to the role of Case Manager.

4 [12] The proposal to add a level to the salary scale for a Case Manager s role did not occur. The parties agreed that implementing that change required a variation and could not be unilaterally imposed by the Chief Executive. (a) Does the method of coverage require a variation? [13] Coverage in this collective agreement is provided by combining a statement about coverage in cl with positions in schedules to the agreement. [14] Coverage begins with Coverage and Classifications in cl 1.3. Clause reads: The agreement covers all staff of the Department who are employed in custodial positions listed in schedules A1 and A2 and non custodial positions in schedules A3-A4 and also to such staff of the Department in positions agreed by the parties as falling within the scope of the term "Frontline Staff" (Prison Based) who are employed by the Department in the employment classifications listed in the schedules to this agreement during the term of the agreement and who become members of CANZ. [15] The relevant cross-referenced schedule is A4.1: Salary Scales for Case Manager and Senior Case Manager. [16] Coverage is restricted by cl which reads: Coverage is restricted to any position listed in Schedules A1-A4 or any other similar agreed position which has a maximum salary equal to or below the maximum salary of the position of PCO. There may, however, be positions classified under Administration which the parties agree fall outside of coverage. Similarly if a union member is engaged in a position for which there is no appropriate classification provided in Schedules A1-A4 the parties may agree to vary the agreement to include such a role in accordance with 1.4 of this agreement. [17] The reference to cl 1.4 is to a general mechanism for variations to the collective agreement requiring them to be in writing signed by the parties. [18] The next relevant part of the collective agreement is cl 10 providing for a comprehensive process to deal with ongoing change in the operation of prisons.

5 Clause requires organisational change to be preceded by consultation where positions may no longer exist: Where organisational change is being considered that may result in positions no longer existing, consultation with CANZ shall take place in accordance with the Consultation provisions of this Agreement, prior to a decision being made. [19] A complementary provision is in cl Where a staff member s position no longer exists, or that staff member can no longer be employed in his or her current position, salary or work location, the clause provides for reconfirmation, reassignment, retraining, job search, part-time employment, temporary employment, special leave, and severance. These options are not listed in any order of priority other than for severance which is the last resort. [20] Each option is described in the agreement. For example, reconfirmation in cl (a) reads: Reconfirmation means placement to a position where the duties are the same (or very nearly the same), the salary is the same, the new position has terms of employment including career prospects which are no less favourable and the location is the same. [21] There is also a formal process to review the selection of those options where an employee is dissatisfied with the result. [22] The collective agreement states the Chief Executive s right to manage in cl which reads relevantly: The Department has the right to plan, manage, organise and finally decide on the operations and policies of the Department, subject to the provisions of this Agreement. [23] The last relevant part of this collective agreement is the introduction to the schedules: In accordance with Clause 1.3 of this agreement, the schedules in this part of the agreement (Schedule A) record the rates of pay and, where applicable, specific allowances and the specific terms and conditions of employment that apply to union members who work in specific occupational areas, and whose positions (other than the positions listed in the Schedule for Prisoner Employment and Training positions) are part of the organisational structure of one of the institutions listed in Schedule B1.

6 [24] Schedule B1 is a list of prisons. While the positions of Case Manager and Senior Case Manager are in schedule A4.1, the rest of the collective agreement does not describe the roles or their duties and responsibilities. [25] CANZ maintains that a variation was required to give effect to the changes in this proposal because of the way in which the collective agreement provides for coverage by including the positions listed in the schedules. It says the Senior Case Manager positions form part of the coverage clause. It says that disestablishing them is an attempt to alter unilaterally the coverage concluded by agreement when the collective agreement was settled. [26] A collective agreement must comply with s 54 of the Act which requires, among other things, that it contain a coverage clause. [27] The definition of coverage clause is in s 5 as follows: coverage clause, (a) in relation to a collective agreement, (i) means a provision in the agreement that specifies the work that the agreement covers, whether by reference to the work or type of work or employees or types of employees; and (ii) includes a provision in the agreement that refers to named employees, or to the work or type of work done by named employees, to whom the collective agreement applies: [28] Mr Roberts, counsel for the defendant, submitted that a coverage clause is the first of four essential elements that must be satisfied to create a collective agreement under the Act. The consequence of failing to provide for coverage is significant because of the possibility that the agreement could be without legal effect and unenforceable. 2 [29] Mr Roberts relied on Aviation and Marine Engineers Association Inc v Air New Zealand Ltd for a discussion of the legal requirements of a coverage clause to support his submission that, in this case, coverage is provided by a combination of cl 2 New Zealand Tramways & Public Passenger Transport Authorities Employees IUOW (Wellington Branch) v Cityline (NZ) Ltd t/a Cityline Hutt Valley [2007] ERNZ 667 (EmpC).

7 1.3.1 and the list of positions of schedule A Aviation and Marine broke down the constituent parts of the Act s definition of a coverage clause and said: 4 Broken down, those constituents are: a provision (not necessarily in the form of a separate clause); specifying the work that the agreement covers; that specification being by reference to the work, or the type of work, or to employees or types of employees; and that provision may include one that refers to named employees or to the work or type of work performed by named employees to whom the collective agreement applies. [30] Later in the decision the Court returned to that definition and said: 5 The Act s definition of coverage clause is a broad one. For example, a collective agreement is not required to have a separate clause entitled Coverage or the like or even which refers necessarily to coverage. Coverage may be addressed in another provision in the agreement but may, for the purposes of this case, specify the work that the agreement covers by reference to the type of employees. There is, therefore in my conclusion, no necessity as Mr Roberts argued for, that the provision in the agreement must refer expressly to the work or type of work covered by it. [31] In that case the Court considered whether several collective agreements contained coverage clauses provided for line maintenance work. There were three collective agreements known as the Blue Book, Green Book and Purple Book. The Court found that the Blue and Green Books, which were materially identical, identified several classifications by titles or roles. Those classifications included Lead Hand, 2 IC, Certifying Engineer QCA/RTS, Certifying Engineer QC, Aviation Engineer 3, Aviation Engineer 2, and Aviation Engineer 1. Schedules to the collective agreements listed work areas for some, but not all, of the classified positions. The Court concluded that all three collective agreements contained valid coverage clauses. [32] Relying on that judgment, Mr Roberts submitted that a question arose about the work covered by the collective agreement between the Chief Executive and Aviation and Marine Engineers Association Inc v Air New Zealand Ltd [2013] NZEmpC 172. At [74]. At [260].

8 CANZ. He submitted that, as a consequence of the decision in New Zealand Amalgamated Engineering Printing & Manufacturing Union Inc v APN New Zealand Ltd, the Chief Executive s case overlooked the fact that the reference to employees in a coverage clause must be directed at, and achieve, the purpose of specifying the work covered by the agreement. 6 [33] CANZ submitted that, for this collective agreement to comply with the Act by using a format which refers to types of employees as allowed for by s 5(a)(i) of the Act, the agreement must incorporate the work or positions. Mr Roberts submitted that for Case Managers and Senior Case Managers the work they perform is not described in the agreement and coverage must, therefore, rely on their job descriptions. Otherwise that agreement failed to specify the work. [34] CANZ s submissions about coverage are unpersuasive. While a coverage clause is essential to create a collective agreement, the submissions do not explain why the Chief Executive is unable to make organisational changes because of the way the parties to the agreement have provided for coverage. [35] The coverage clause refers to the positions listed in the schedules and that is sufficient to comply with both ss 5(a)(i) and 54(3)(a)(i) of the Act by referring to types of employee. In doing so the agreement recognises, and provides for, the work to be performed by Senior Case Managers and Case Managers but there is no reason to extend that inquiry or to evaluate the job descriptions of those positions. [36] On this basis the coverage clause is uncomplicated. The Chief Executive s employees who are members of CANZ, and who are employed in the positions listed in the schedules, are covered by the collective agreement. [37] However, that conclusion does not support CANZ s case that a variation is required. If that submission was correct the Chief Executive would not be able to carry out any restructuring of positions in the schedules to the agreement even though that agreement contemplates change being constant and contains a 6 New Zealand Amalgamated Engineering Printing & Manufacturing Union Inc v APN New Zealand Ltd [2003] 2 ERNZ 11 at [40] (EmpC).

9 mechanism to allow change to occur. Mr Roberts attempted to address this difficulty by submitting that restructuring leading to full or partial closures was what was contemplated by the agreement when referring to organisational change, but that approach is too narrow and is not supported by the plain words of this agreement. [38] Clause contemplates the possibility that an employee can no longer be employed in a current position by providing options including reconfirmation. Given that the agreement contemplates reorganisation, and provides a mechanism to allow that to happen, it is difficult to accept that disestablishing the Senior Case Manager position is not possible without a variation, even though the position was referred to as a part of the coverage clause. [39] I find that the coverage clause did not require a variation to the collective agreement to be concluded before the Chief Executive could implement and conclude the restructuring that took place in July (b) Does the balance of the collective agreement limit the Chief Executive? [40] The next issue is whether the restructuring was precluded by the proviso in cl 2.2.4, subject to the provisions of this Agreement. Mr Churchman QC, counsel for the Chief Executive, submitted that the collective agreement allows positions to be reorganised and that is apparent from the natural and ordinary language used in it. He relied on Vector Gas v Bay of Plenty Energy Ltd, 7 as discussed in New Zealand Meat Workers & Related Trades Union Inc v AFFCO New Zealand Ltd, 8 for the following propositions relating to interpreting the agreement: (a) the starting point is the natural and ordinary language of the parties; (b) if the language used is not on its face ambiguous then the Court should not readily accept that there is an error in a contractual text; 7 8 Vector Gas Ltd v Bay of Plenty Energy Ltd [2010] NZSC 5, [2010] 2 NZLR 444. New Zealand Meat Workers & Related Trades Union Inc v AFFCO New Zealand Ltd [2015] NZEmpC 233.

10 (c) it is valid for the Court to cross-check its provisional view of what the words mean against the contractual context; and (d) extrinsic evidence is admissible to identify contractual context if it tends to establish a fact or circumstance capable of demonstrating objectively what meaning the parties intended their words to bear. [41] There is nothing difficult or unusual about the language used in the collective agreement. The natural and ordinary meaning of cls 2.2.4, , and schedule A4.1 is that the Chief Executive can reorganise to be more efficient by making changes to positions. [42] Clauses and contemplate organisational change affecting positions and situations where positions no longer exist. The only reference to positions in the agreement is to those listed in the schedules including Case Managers and Senior Case Managers. It follows that organisational change affecting those positions is possible. Clause refers to changes that may result in positions no longer existing, which contemplates the possibility that some of the positions listed in the agreement may be removed by being disestablished. The result is no different if reorganisation leaves the work previously performed by an employee employed in one position to be performed in future by an employee in another position. [43] Clause (a) contemplates organisational change that may affect positions, including recognising reconfirmation where a new position that is introduced is essentially the same as a previous position but which, for operational reasons, is altered in some way. That is what the Chief Executive s 2015 restructuring proposed and carried out. It is difficult to see how, read in this light, the natural and ordinary meaning attributed to the ability to carry out change is anything other than what the Chief Executive claims. [44] There is no ambiguity in those clauses. Furthermore the evidence from Ms Fiona Fitzpatrick, the plaintiff s National HR Operations Manager, and Mr Vincent Arbuckle, the Deputy Chief Executive Corporate Services, is a useful cross-check

11 and illustrates how previously the parties have dealt with organisational changes affecting positions in a collective agreement. Previously positions have been established, and disestablished, during the term of a collective agreement between the parties without a variation first being agreed. Very significant changes have occurred in this way as is illustrated by restructuring in 2010 that affected 174 roles that were to be disestablished and 177 Case Manager roles that were to be established [T 51]. Those changes did not affect the underlying work that needed to be done in much the same way as the changes to Senior Case Manager did not affect the need to deal with prisoner rehabilitation. [45] There is nothing controversial in restricting by contract what one or other of the parties is otherwise able to do. 9 However, the restriction placed by cl on the ability to reorganise does not go so far as to prevent this restructuring. The provision that is being referred to, limiting the Chief Executive s ability to reorganise, is the obligation to consult, in cl All that means is that before the Chief Executive acts he must consult, but he is not prevented from acting. That interpretation is consistent with the balance of the collective agreement where mechanisms to facilitate change, and to deal with the consequences of change, are provided. [46] The Chief Executive s case is that the collective agreement preserves his ability to make changes to be more efficient and is, as a result, consistent with decisions such as GN Hale & Son Ltd v Wellington Caretakers IUOW, 10 Grace Team Accounting Ltd v Brake 11 and other similar cases which have recognised that an employer is entitled to reorganise to make its business more efficient. That submission correctly interprets the collective agreement. [47] There is no impediment in the collective agreement to the Chief Executive s restructuring in He was required to consult and, provided he did so, there was no other impediment to the changes taking place Spotless Services (NZ) Ltd v Service & Food Workers Union Inc [2000] 1 ERNZ 125 (EmpC). GN Hale & Son Ltd v Wellington Caretakers IUOW [1991] 1 NZLR 151. Grace Team Accounting Ltd v Brake [2014] NZCA 541, [2015] 2 NZLR 494 at [47].

12 Conclusion [48] I have reached the conclusion that the Authority erred in determining that the Chief Executive was unable to disestablish the position of Senior Case Manager and, consequently, breached cls 1.4.1, and schedule A4.1 in the collective agreement. 12 The Chief Executive was entitled to make changes in accordance with proposals to be more efficient without first securing the defendant s agreement by a variation. Pursuant to s 183(1) and (2) of the Act the Authority s determination is set aside and this judgment stands in its place. [49] Costs are reserved. In the absence of agreement, the plaintiff may file a memorandum within 20 working days, with the defendant having the same time to respond. KG Smith Judge Judgment signed at 2.15 pm on 21 June See Jerram v Franklin Veterinary Services (1977) Ltd [2001] ERNZ 157.