The opinion of the court was delivered by: Pollock, J.
On certification to the Superior Court, Appellate Division, whose opinion is reported at 296 N.J. Super. 223 (1997).
This appeal involves a dispute between the Communications Workers of America, AFL-CIO (CWA) and the State of New Jersey, Office of Employee Relations (OER or State) over the interpretation of Article 5, Section J of the parties' 1992-95 Collective Negotiations Agreement, which concerns the termination of employment of unclassified employees. The parties submitted their dispute to an arbitrator who decided, among other things, that when the State gave no reason for terminating certain unclassified employees, the employees could submit to arbitration the question whether they had been terminated for misconduct. Finding that the arbitrator's award "reflected a reasonably debatable interpretation of the contract," the Law Division upheld the award. The Appellate Division reversed. 296 N.J. Super. 223, 226 (1997). Although the Appellate Division did "not necessarily disagree" with the arbitrator's interpretation of the contract, id. at 225, the court decided on its own motion that disputes over the interpretation of Article 5, Section J were not arbitrable. Ibid. We granted the CWA's petition for certification, 150 N.J. 25 (1997), and now reverse.
Traditionally, the CWA and the OER negotiate a new labor agreement every three years.
The 1989-92 labor agreement included a clause stating that employees with at least eight years of service could arbitrate disagreements over "major discipline." Major disciplinary penalties included discharges. In the 1992-95 labor agreement, the parties reduced the required number of years of service from eight to six.
Accordingly, the parties revised Article V, Section J of the previous labor agreement to include a new section 5. As revised, Section J read:
J. Unclassified, Provisional and Special Services Employee Discipline Procedures
1. The following shall constitute the disciplinary appeal procedure rights for unclassified and provisional employees who have been employed in such a capacity for a minimum of six (6) months . . . .
In all disciplinary matters, except dismissal from service, such employees shall be entitled to utilize the provisions of this Article through the departmental hearing level.
2. In the event an unclassified or provisional employee is dismissed from State employment without receiving specific written reasons and such dismissal is not related to fiscal problems or programmatic changes and in the judgment of the State such dismissal is not of a nature whereby the employee must be immediately removed from the work location, the State shall provide the employee with at least ten (10) calendar days notice in advance of the dismissal.
Unless there are exceptional circumstances, when such employees are dismissed from State employment due to misconduct, management shall serve the employee with the specific reasons relating to the misconduct. The employee may request and shall be granted a hearing by the department or agency head or his designee, whose decision shall be final . . . . The burden of proof for unclassified employees shall be on the employee.
3. It is understood that nothing herein shall be construed as limiting the State from exercising its inherent discretion to terminate unclassified employees who serve at the pleasure of the department or agency head, without stating the reasons therefore. Dismissal related to job performance shall not fall within the purview of this article. Grievances concerning the interpretation of this article shall be processed in accordance with Article IV as non-contractual (A.2.) grievances.
5. Unclassified employees not covered by a statutory discipline procedure, who have served in unclassified titles for a minimum of six (6) consecutive years may appeal a Department level decision involving major discipline, for just cause, as defined under Section F.1. (a through d) of this article, to the Office of Employee Relations.
The Office of Employee Relations will meet with the Union to review the record of the discipline within 30 days of receipt of the appeal from the Union. If the discipline appeal is not resolved at that meeting it shall be so noted in writing. The Union, may elect to appeal the discipline to binding arbitration.
The arbitrators shall confine themselves to determinations of guilt or innocence and the appropriateness of penalties and shall neither add to, subtract from, nor modify any of the provisions of this Agreement by any award. The arbitrator's decision with respect to guilt, innocence or penalty shall be final and binding upon the parties.
Article IV, referenced in Section J, identified two types of grievance: a contractual grievance (A.1 grievance) and a non-contractual grievance (A.2 grievance). Depending on the type of grievance, Article IV, Section H provided for two or three grievance steps. "Step One" required a grievance meeting or hearing. "Step Two" permitted a grievant to appeal the "Disposition of the grievance at Step One" to the "Department Head or his designee." "Step Three," available only if "the grievance involve[d] an alleged violation of the Agreement as described in . . . A.1 above," authorized the CWA to appeal the Department Head's decision to an arbitrator. If the dispute proceeded to arbitration, Section H.5 provided in relevant part:
d. The arbitrator shall hold the hearing at a time and place convenient to the parties within thirty (30) calendar days of his acceptance to act as arbitrator and shall issue his decision within thirty (30) days after the close of the hearing. In the event a disagreement exists regarding the arbitrability of an issue, the arbitrator shall make a preliminary determination as to whether the issue is arbitrable under the express terms of this Agreement. Once a determination is made that such a dispute is arbitrable, the arbitrator shall then proceed to determine the merits of the dispute.
e. Whenever a grievance which is to be resolved at Step Three, Arbitration, is based on a provision of this Agreement in which the power or authority of the arbitrator is specifically limited to an advisory award, that limit shall be observed and all the provisions of paragraphs b, c and d above shall be operable except that the award and opinion shall be advisory and not binding on the parties. However, absent a particular exception the provisions of the grievance procedure above shall be operable.
Finally, Article V, Section D, provided, "The burden of proof in disciplinary procedures shall be upon the State, except as otherwise provided in J.2."
Soon after revising Article V, a dispute arose between the CWA and the OER concerning the scope of rights that Section J conferred on unclassified employees. The CWA complained that the State had terminated several unclassified employees with eight or more years of service without informing the employees of the reasons for their termination. According to CWA, the State had terminated the employees for misconduct. Consequently, under Section J.5, the employees were entitled to appeal their terminations for cause before an arbitrator. The OER disagreed. It maintained that the State terminated the employees for performance-related reasons, and, therefore, under Section J.3, the State retained the right to terminate for any reason or no reason.
The OER contends that if an unclassified employee believes the State terminated him or her for misconduct, the employee's only option is to file an A.2 non-contractual grievance within the department. The appointing authority's decision would be final, and the employee would have no right to binding arbitration.
To illustrate their dispute, the parties referred to the case of Audrey Bomse. Since March 1984, Bomse had held the unclassified position of Assistant Deputy Public Defender. See N.J.S.A. 2A:158A-6 (providing that assistant deputy public defenders "shall serve at the pleasure of the Public Defender."); N.J.A.C. 4A:3-1.3(a)(4) (providing that employees who serve at the pleasure of appointing authority shall be allocated to the unclassified service). Effective December 30, 1992, the State terminated Bomse's employment on ten days notice, but did not provide her with a reason for the termination. Bomse filed a grievance with the OER on January 5, 1993, alleging a violation of Article V, Section J.2 because the State had failed to provide her with specific written reasons for the dismissal. Later, through the CWA, Bomse alleged that she was fired for misconduct and therefore entitled to arbitrate the dispute.
Initially, the OER was unsure whether it should attempt to stay the Bomse arbitration and request a court to decide the matter. Melvin L. Gelade, Director of the OER, expressed the State's position in a letter to ...