Alcoa of Australia Ltd v The Australian Workers' Union
[2012] FWA 9172
•30 OCTOBER 2012
[2012] FWA 9172 |
|
DECISION |
Fair Work Act 2009
s.739—Dispute resolution
Alcoa of Australia Ltd
v
The Australian Workers’ Union
(C2012/3751)
Aluminium industry | |
COMMISSIONER WILLIAMS | PERTH, 30 OCTOBER 2012 |
s.739 - Application to deal with a dispute.
[1] This application involves a dispute over the interpretation of the Alcoa World Alumina Australia WA Operations AWU Enterprise Agreement 2011 [AE883477](the 2011 Agreement). The applicant is Alcoa of Australia Ltd (the applicant or Alcoa) and the respondent is The Australian Workers’ Union (the respondent or the AWU).
[2] The matter comes before the Tribunal through the Dispute Settlement Procedure in clause 19 of the 2011 Agreement and there is no challenge to the Tribunal’s jurisdiction to determine this dispute.
[3] The dispute concerns Alcoa’s intention to implement a so called “pure” 4 panel shift it has developed for production employees at its Huntly mine site.
[4] The question for determination is whether the change from a 5 panel structure to a 4 panel structure for shift workers at the Huntley mine site:
a) requires agreement between the parties, or
b) merely requires Alcoa to consult affected employees and their representatives, and having done that and complied with clause 21.3(a) of the 2011 Agreement, Alcoa can implement the new panel structure, and
c) if the answer is (b) then has Alcoa met the requirements contained in clause 21.3 of the 2011 Agreement?
[5] The applicant’s case is that the correct interpretation of clause 10−Hours of Work and clause 21−Consultation Clause is that Alcoa only has to consult the affected employees and the AWU about the proposed changes, and satisfy the requirements in clause 21.3(a) regarding security of employment, safety and efficiency and the existence of a monitoring process and they are then entitled to introduce a new panel structure of their choosing.
[6] The AWU’s position is that the text and structure of the 2011 Agreement and the surrounding circumstances in which it was agreed lead to the conclusion that such a change requires “agreement between the parties” as provided for in clause 10.3(a)(iii).
Background
[7] In 2008 Alcoa undertook a review as to how it could improve profitability and efficiency to meet current and future challenges. That review identified significant cost savings could be achieved if Alcoa shifted its Huntly production workforce from a 5 panel shift roster to a 4 panel shift roster.
[8] The savings were associated with increased labour efficiency by not having production labour present when crushers are closed, by having extra production labour when the crushers are open and through reduced re-handling of ore. These were estimated at $3.3 million per annum.
[9] In 2009, Mr Ian Cardilini, the then Operations Manager at Huntly Mine, attempted to negotiate this change with the AWU site representatives pursuant to clause 2.29 of the then Alcoa World Alumina Australia, WA Operations – AWU Certified Agreement 2005 [AG845555] (the 2005 Agreement).
[10] In late 2009, the applicant commenced negotiations with the respondent to replace the 2005 Agreement. Both the 2005 and 2011 Agreements apply to the operations of Alcoa at a number of different operations at discreet locations, not just the Huntley mine site.
[11] When those negotiations for a new agreement commenced, the negotiations in relation to the proposed change to a 4 panel shift roster were continuing.
[12] Some time after the commencement of these new agreement negotiations the negotiations in respect of the proposed 4 panel shift roster ceased at the initiative of Alcoa.
[13] The AWU had continued to oppose the change at Huntley and no agreement had been reached on a 4 panel shift roster. Alcoa had decided that it preferred to attempt to negotiate changes of general application to the hours of work provisions for a new agreement which would facilitate broader workplace change as may be required in the future 1.
[14] Ultimately a new agreement was made (the 2011 Agreement) and was approved by Fair Work Australia on 13 January 2011, [[2011] FWAA 226].
[15] In March 2011 Alcoa began negotiations again at the Huntley mine site in order to introduce a 4 panel shift roster however this was not accepted by the affected employees and after numerous meetings and consultation processes in May 2012 Alcoa decided to refer the issue to Fair Work Australia under this application.
The 2011 Agreement
[16] The relevant clauses of the 2011 Agreement in the matter are as follows:
“10. HOURS OF WORK
10.1 Day Workers
Except in the case of employees working a 10.3 hour shift roster, the ordinary hours will be an average of 36 per week, to be worked on not more than five days in periods of eight hours continuously (except for meal breaks) between 7.00 am and 5.30 pm on Monday to Friday inclusive. However, day workers are expected and required to work additional time, as and when necessary, to fully and effectively carry out their whole job on a day to day basis. Such additional time will not attract any payment. It is anticipated that additional hours will not be a separate full shift.
10.2 General
Notwithstanding any other provision of this Agreement, the spread of hours and the start and finish times of such shifts may be altered as to some or all employees.
(a) Where such change will be temporary (i.e. for up to 14 days) to meet the planned operational needs of the business, and on the provision of at least 96 hours notice, implementation shall be as follows:
(i) By agreement with the affected employees in the relevant department;
(ii) In the event such agreement is not reached immediately, then the matter may be referred by either party to FWA for determination (or alternatively, to WAIRC for expedited mediation / arbitration);
(iii) In determining the matter, the parties agree that it shall be dealt with expeditiously and that, in determining the matter, FWA / WAIRC shall consider the direct financial impact, lifestyle impacts including but not limited to carer responsibilities and other personal impacts and reasonableness of the proposal;
(iv) The outcome of any such determination(s) relevant to the Department as mentioned or the operation shall form the status quo in relation to any future matters which are comparable, (e.g.: where the temporary change will have comparable impacts to those outlined in (iii) above or where the temporary change is comparable in terms of job scope and start/finish times).
(b) Where such changes will be permanent, such change will be:
(i) by agreement between the employer and affected employee(s); or
(ii) by agreement between the parties, as defined in clause 3; and
(iii) in the event such agreement is not reached, through the application of the relevant procedure prescribed by Clause 21, if necessary with the final outcome being determined by FWA.
In determining the matter, the parties expressly agree that FWA shall consider the following:
• The direct financial impact of the proposed change; and
• The lifestyle impacts, including, but not limited to, carer responsibilities and other personal obligations on the employee(s) directly affected by it.
10.3 Shift Workers
(a) Subject to the other provisions herein prescribed, the following shall apply;
(i) "Afternoon Shift" means any shift finishing after 8.00 pm and at or before midnight.
(ii) "Night Shift" means any shift finishing after midnight and at or before 8.00am.
(iii) Shifts will be worked by such method and at such times as the Operation requires. These may be varied as to some or all employees by agreement between the parties.
(iv) "Rostered Shift" means a shift of which the employee concerned has had at least 48 hours notice. This period may be reduced by agreement between the parties. For the purpose of this clause, "rostered shifts" means the shifts established by the roster for each particular system of shift work including, where applicable, rostered shifts on weekends and public holidays.
(v) "Continuous Shift Work" means work carried on with consecutive shifts of employees throughout the 24 hours of each of at least 6 consecutive days without interruption, except where due to breakdown or unavoidable causes beyond the Company's control. "Seven Day Shift Work" means work that is regularly rostered on Saturdays, Sundays and Public Holidays as part of the ordinary hours roster.
(b) Shift rosters will specify the normal commencing and finishing times of ordinary working hours of each shift. These times may be varied, as to some or all employees, in accordance sub-clause 10.2 above (Note: this sub-clause does not deal with circumstances where individual employees are transferred from one shift roster to another, as such circumstances are covered by sub-clause 10.3(a)(iv)).
(c) Whilst the definition of a "normal shift" may vary from site to site, it will consist of not more than twelve hours, except by agreement where a shift pattern may require a change over period, this would be by agreement between the parties. However, consistent with clause 7.2 of this Agreement, shift workers are expected and required to work additional time, as and when necessary, to fully and effectively carry out their job on a day to day basis. Such additional time will not attract any payment.
(d) Other than in exceptional circumstances, an employee will not be required to work more than one normal shift in each 24-hour period.
(e) The ordinary hours for shift workers will not exceed twelve in any one-day or an average of 36 per week over the shift cycle.
(f) The provisions of this clause do not apply to any employee working supplementary shifts in accordance with clause 11 of this Agreement or URO's worked in accordance with clause 12.
(g) Shift Patterns
Shift patterns shall be as set by management, in consultation with the workforce and its representatives, and shall be based on the SELL principle and business needs. Current shift patterns (continuous 12 hour shifts, day/afternoon 8 hour shifts, 10.3 hour shifts and permanent 8 hour day shifts) are expressly permissible under this agreement.
Where a permanent transition between shift patterns and/or panel structures is initiated by Alcoa and has a negative impact on an employee’s income, the parties have expressly agreed that, to ameliorate the adverse effect on the employee(s), implementation of the change will be in accordance with the following:
(i) General
A. The employee’s existing total annual income payment will be red-circled for a period of 12 months from the effective date of transfer;
B. In the second 12 month period, the annual shift premium payment will be reduced each quarter by an amount equating to 25% of the difference between the red-circled shift premium payment and the shift premium payment payable for the new shift arrangement; and
C. The employee may, at any time during the above mentioned two year period, elect to be paid a lump sum equivalent to the amount payable pursuant to this subclause, less the amount already paid to the employee at the time of the election.
D. Where;
• An employee has been transitioned in accordance with this clause; and
• Within 2 years of the transfer a position becomes vacant in the employees job description and the shift arrangements for that vacant position are the same as applicable to the employee immediately prior to the transition; and
• the employee worked for 12 months or more under those former shift arrangements; then
• the employee may nominate to transfer to the position and will have the first right of refusal for the vacant position.
E. Where two or more such employees elect to transfer under this clause, the successful appointment will be based on years of service with the site affected.
F. In circumstances where an employee has received a lump sum payment pursuant to clause 10.3(g)(i)C. above and that employee is transferred pursuant to clause D. or E. above the employee will be required to;
• repay that part of the lump sum attributable to the remaining part of the two year red-circling period (i.e. allowing the employee to be paid the applicable annual shift premium payment in full); or
• shall be paid the annual shift premium payment applicable to those shift arrangements less the amount which has already been paid as part of the lump sum (i.e. no double dipping).
(ii) Notwithstanding subclause 10.3(g)(i) above, where a permanent transition between shift patterns and/or panel structures is initiated by Alcoa, and has a negative impact on an employee’s income, and the number of employees required to transition is greater than 10% of the employees covered by this agreement at the site, such transition will be managed in accordance with the following:
A. A lump sum payment consisting of 2 components will be paid upon moving to the new shift arrangements. Those 2 lump sum components are as follows:
• 18 months (or 1.5 equiv years) payment of the difference between the former annual shift premium payment and the annual shift premium payment applicable for the new shift arrangements; and
• Payment for loss of accumulated benefit in annual and long service leave.
B. The employee's annual shift premium payment will be reduced to the new applicable rate immediately the employee commences on the new shift arrangements.
C. The transition payment is payable in the pay period after the employee commences the new shift arrangements.
(h) Shift patterns shall be as set by management, in consultation with the workforce and its representatives, and shall be based on the SELL (Safe, Efficient, Legal and Logical) principle and business needs. Current shift patterns (continuous 12 hour shifts, day/afternoon 8 hour shifts, 10.3 hour shifts and permanent 8 hour day shifts) are expressly permissible under this agreement. However, such patterns may be modified, or new patterns introduced, subject to the consultation process outlined in clause 21.”
“21. CONSULTATION CLAUSE
21.1 General
(a) From time to time, the company may wish to change aspects of its business and how it operates.
(b) Where change is considered and proposed by the Company, the Company will consult with the appropriate work groups affected by the change and their appropriate representative.
(c) Prior to making the decision to introduce a change, the Company will consult with the relevant employees regarding:
(i) The introduction of the change;
(ii) The effect the change is likely to have on the employees; and
(iii) Measures the employer will take to avert or mitigate the adverse effect of the change on the employees.
(d) Consultation on, and implementation of, change will be through;
(i) Clause 21.2, where the change will have an adverse impact on the job security and/or current income of employees; and
(ii) Clause 21.3, where the change will not have an adverse impact on the job security and/or current income of employees.
21.2 Implementation of change which does have an adverse affect on job security and/or current income of affected employees.
The parties agree that change which does have an adverse affect on job security and/or current income of affected employees will be progressed in accordance with the following:
(a) Consultation involves seeking acceptable solutions to problems through a genuine exchange of views and information. Consultation includes the following:
• the opportunity to be heard and considered;
• transparency and openness with direct feedback on all issues raised, except where privacy or confidentiality issues are concerned;
• The company will provide in writing all relevant information relating to the proposed change to employees as requested (however confidential or commercially sensitive information is not to be disclosed or provided);
• The Company providing information and employees taking on the responsibility of actively participating in the process, in an expeditious manner by all parties;
• Allowing for sufficient time to enable employees to contribute in a timely manner, and incorporate feedback (e.g. from meetings with employees and/or submissions from employees regarding ways in which the adverse effect of the change could be mitigated) as well as consideration of the interests of employees in the decision-making process;
(b) Consultation does not mean that there will be agreement with all views. It does not remove the right of managers to manage or the right for employees to put a decision into dispute for resolution via the agreed dispute resolution process.
(c) The fundamental principle for the implementation of change shall be the reasonableness of the proposed change (including the business case for such change), in the context of the Company’s right to manage the business and its obligation to not impose an unjust or unreasonable burden on the employees directly affected by the change.
(d) Where the parties are unable to agree on the implementation of change under this subclause, the matter may be referred through the dispute settlement procedure contained at clause 19 and, if referred to FWA, be resolved in accordance with the conciliation and arbitration powers of FWA. Any decision of Fair Work Australia shall be binding on the parties, subject only to the exercise of a right of appeal to the Full Bench of Fair Work Australia or to the Federal Court (e.g. on the grounds that Fair Work Australia erred at law or acted outside its jurisdiction).
21.3 Implementation of change which does not have an adverse impact on job security and current income of affected employees
The parties agree that change which does not have an adverse affect on job security and/or current income will be implemented in accordance with the following:
(a) If:
(i) Consultation has been undertaken in accordance with clause 21; and
(ii) There is security of employment and current income; and
[Notes: Everyone will have a job – but it may not be the same job; Shift transition arrangements to be as prescribed in this Agreement. Length of service will be used for transition when agreement can't be found in other ways (transition between shifts / roles etc)];
(iii) The change is safe and efficient; and
(iv) There is a monitoring process involving the Union Representatives;
[Notes: Metrics must be identified in the development of the business case for change & available to provide feedback on effectiveness of change; Regular review forums to ensure full involvement on key changes; Monitoring includes process / people through the change implementation as well as the outcomes; There is a clear, accepted and identified help chain that works]
Then the Union Representatives will participate in the change process through communication and expect that Management will implement it, in accordance with applicable agreements.
[Notes: Help deliver through communication where appropriate; Management will make sure it's right (as per previous items) and then go and do it; Management support from Union Representatives means that representatives will check that it's been done as agreed (i.e. the Process) - it doesn't mean that representatives are required to implement it;
(b) Should there be any dispute in relation to the application of the above process, such dispute will be dealt with in accordance with clause 19 – Dispute Resolution Procedure.”
Alcoa’s submissions
[17] Clause 10.3(g) of the 2011 Agreement provides the following:
“(g) Shift Patterns
Shift patterns shall be as set by management, in consultation with the workforce and its representatives, and shall be based on the SELL principle and business needs. Current shift patterns (continuous 12 hour shifts, day/afternoon 8 hour shifts, 10.3 hour shifts and permanent 8 hour day shifts) are expressly permissible under this agreement.
Where a permanent transition between shift patterns and/or panel structures is initiated by Alcoa and has a negative impact on an employee’s income, the parties have expressly agreed that, to ameliorate the adverse effect on the employee(s), implementation of the change will be in accordance with the following;…”
[18] That clause expressly provides that management shall set shift patterns in consultation with the workforce and its representatives and that those shift patterns will be based on business needs and the SELL principle.
[19] In respect of the proposed panel structure change:
- Overall nightshift hours will be far less than a standard 2:1 FIFO roster;
- The average hours required to be worked by employees per week will only be 36, allowing for adequate recovery time from nightshift; and
- Minimum recovery time between nightshift and dayshift remains at 4 days, but maximum recovery time moves from 5 days under the current 5 panel shift roster to 6 days under the proposed 4 panel roster.
a) The applicant has engaged in extensive consultation with the workforce and their representatives based on a business case for the change which has been articulated to the workforce and its representatives as part of those consultations;
b) The proposed change can be characterised as:
i. Safe, insofar as the roster will not involve the establishment of unsafe working conditions. The assessment of the applicant indicates that:
ii. Efficient, insofar as the proposed change will result in significant efficiency gains leading to a projected cost saving of $3.3 million per annum;
iii. Legal, insofar as the proposed change is not in breach of any aspect of the Agreement, the Fair Work Act 2009 (the Act)or any other applicable legislative obligation; and
iv. Logical, given the efficiency gains to be achieved through implementation of the roster.
c) This clause expressly contemplates the circumstances of this matter, that is, a
permanent transition of structures.
[20] Clause 10.3(h) of the 2011 Agreement supplements the process for management setting shift patterns by contemplating the modification of such patterns (and the introduction of new patterns) subject to the consultation process in clause 21.
[21] Clause 21 of the 2011 Agreement provides the processes for how change in the workplace is to be implemented.
[22] Relevantly, clause 21.1 provides that:
“21.1 General
(a) From time to time, the company may wish to change aspects of its business and how it operates.
(b) Where change is considered and proposed by the Company, the Company will consult with the appropriate work groups affected by the change and their appropriate representative. (c) Prior to making the decision to introduce a change, the Company will consult with the relevant employees regarding:
(i) The introduction of the change;
(ii) The effect the change is likely to have on the employees; and
(iii) Measures the employer will take to avert or mitigate the adverse effect of the change on the employees.
(d) Consultation on, and implementation of, change will be through:
(i) Clause 21.2, where the change will have an adverse impact on the job security and/or current income of employees; and
(ii) Clause 21.3, where the change will not have an adverse impact on the job security and/or current income of employees.”
[23] Clause 21.3 provides:
“The parties agree that change which does not have an adverse affect on job security and/or current income will be implemented in accordance with the following:
(a) If:
(i) Consultation has been undertaken in accordance with clause 21; and
(ii) There is security of employment and current income; and
[Notes: Everyone will have a job – but it may not be the same job; Shift transition arrangements to be as prescribed in this Agreement. Length of service will be used for transition when agreement can't be found in other ways (transition between shifts / roles etc)];
(iii) The change is safe and efficient; and
(iv) There is a monitoring process involving the Union Representatives;
[Notes: Metrics must be identified in the development of the business case for change & available to provide feedback on effectiveness of change; Regular review forums to ensure full involvement on key changes; Monitoring includes process / people through the change implementation as well as the outcomes; There is a clear, accepted and identified help chain that works]
Then the Union Representatives will participate in the change process through communication and expect that Management will implement it, in accordance with applicable agreements.
[Notes: Help deliver through communication where appropriate; Management will make sure it's right (as per previous items) and then go and do it; Management support from Union Representatives means that representatives will check that it's been done as agreed (i.e. the Process) - it doesn't mean that representatives are required to implement it;...”
[24] Clause 9.4(g) of the 2011 Agreement expressly contemplates a financial cost for the applicant in circumstances where a new roster is “implemented”.
[25] The applicant submits, the 2011 Agreement clearly establishes the right of Alcoa to implement various changes to rosters and the hours of work (including the implementation of a 4 panel shift roster), subject to Alcoa consulting with employees through the relevant consultation process either by:
a) the applicant simply relying on the processes contained in clause 21;
b) the operation of clause 10.3(g), which contemplates employees being moved to a new panel structure (which regardless of the provision not making reference to clause 21, must invoke such an obligation); or
c) the operation of clause 10.3(h), which expressly contemplates modifications to shift patterns or the introduction of new shift patterns.
[26] The AWU appears to be asserting that clause 10.3(a)(iii) impedes or prevents the applicant implementing the proposed change.
[27] Clause 10.3(a)(iii) relevantly provides:
“Subject to the other provisions herein prescribed, the following shall apply:
....
(iii) Shifts will be worked by such method and at such times as the Operation requires. These may be varied as to some or all employees by agreement between the parties.”
[28] The words “subject to”, at the commencement of clause 10.3(a) were newly inserted into the 2011 Agreement. Apart from that first line, the remainder of subclause (iii) is identical to its predecessor, clause 4.19(c) of the 2005 Agreement.
[29] This change demonstrates a clear intention that the limitations apparent in the wording of subclause (iii) were not intended by the parties to be an absolute limitation on the methods by which such a change could be made. The introduction of the words “subject to” need to be considered in light of both the insertion of clause 21 into the 2011 Agreement and also the insertion of clauses 9.4(g), 10.2, 10.3(g), 10.3(h) and 10.4.
[30] It is the applicant’s submission that clause 21 is one of the provisions which 10.3(a)(iii) became subject to following commencement of the 2011 Agreement and that any failure to reach agreement under clause 10.3(a)(iii) can be resolved by complying with the requirements of clause 21.
[31] Similarly, clause 10.3(a)(iii) must, in the submission of the applicant, also be subject to clause 10.3(g) and clause 10.3(h). Clause 10.3(g) provides for circumstances where changes are to be made to shift patterns and/or panel structures. It provides for these to be set by management and prescribes a detailed process in the event that the change has an adverse impact on employee’s income. Read in conjunction with clause 10.3(h), it then provides for changes to be made subject to the consultation process in clause 21.
[32] Clauses 10.3(g) and 10.3(h) should not only be considered, on a proper interpretation of clause 10.3, to represent an exception to any limitation contained in clause 10.3(a)(iii), they should also, in accordance with the general principles of interpretation, be considered to take precedence over 10.3(a)(iii) on the basis that they are provisions of specific intent, which therefore override the more generalised operation of 10.3(a)(iii).
[33] In the event that the proposed change to a 4 panel shift roster cannot be made without reliance on clauses 10.3(g) and 10.3(h), the only additional hurdles which are raised by such an interpretation are that the changes be safe, efficient, legal and logical and have a business need which have been addressed above.
[34] Clause 10.3(a)(iii) is not rendered meaningless by the interpretation advanced by the applicant, rather, it is restricted in its operation to those circumstances where clauses 10.2, 10.3(g), 10.3(h) and 10.4 do not apply.
[35] The applicant submits clause 10.3(a)(iii) permits, once the panel structure and shift pattern have been fixed by management, agreement between the parties, which of course includes each individual employee, on alternate arrangements for one or more employees from that standard structure.
[36] The applicant submits that its contentions in relation to the operation and interrelationship of subclause 10.3(a)(iii) with other provisions within the 2011 Agreement arises directly from the words of the 2011 Agreement, that is the clauses are clear and unambiguous.
[37] If however there is ambiguity then
[38] The High Court in the Royal Botanic Gardens and Domain Trust v South Sydney City Council 2 upheld the statement of Mason J in Codelfa Construction Pty Ltd v State Rail Authority of NSW3(Codelfa)at [103]:
‘…the position remains, in my view, that stated by Mason J in Codelfa Construction Pty Ltd v State Rail Authority of NSW:
“The true rule is that evidence of surrounding circumstances is admissible to assist in the interpretation of the contract if the language is ambiguous or susceptible of more than one meaning. But it is not admissible to contradict the language of the contract when it has a plain meaning. Generally speaking facts existing when the contract was made will not be receivable as part of the surrounding circumstances as an aid to construction, unless they were known to both parties...
It is here that a difficulty arises with respect to the evidence of prior negotiations. Obviously the prior negotiations will tend to establish objective background facts which were known to both parties and the subject matter of the contract. To the extent to which they have this tendency they are admissible. But in so far as they consist of statements and actions of the parties which are reflective of their actual intentions and expectations they are not receivable. The point is that such statements and actions reveal the terms of the contract which the parties intended or hoped to make. They are superseded by, and merged in, the contract itself.”’
[39] What the High Court in the Royal Botanic Garden’s case omitted in that case reference was the following paragraph from the decision of Mason J:
“Consequently when the issue is which of two or more possible meanings is to be given to a contractual provision we look, not to the actual intentions, aspirations or expectations of the parties before or at the time of the contract, except in so far as they are expressed in the contract, but to the objective framework of facts within which the contract came into existence, and to the parties' presumed intention in this setting. We do not take into account the actual intentions of the parties and for the very good reason that an investigation of those matters would not only be time consuming but it would also be unrewarding as it would tend to give too much weight to these factors at the expense of the actual language of the written contract.”
[40] The decision of the High Court in Western Export Services Inc v Jireh International Pty Ltd 4 leaves no doubt that all of the reasoning of Mason J in Codelfastands as binding authority in relation to the use of extrinsic material in resolvingambiguity.
[41] The facts, as contemplated by Mason J in Codelfa, in this matter are:
a) The applicant’s desire to negotiate changes into the 2011 Agreement to increase the ease with which it could make changes to its operations, particularly where there no adverse impacts in terms of job security or income for its employees; and
b) the respondent’s preference, to negotiate directly on the introduction of a 4 panel shift roster and to otherwise extract some additional compensation for its members in the event that such a change was made during the first 2 years of the 2011 Agreement.
[42] The contention advanced by the applicant with respect to the inter-relationship between clause 10.3(a)(iii) and the rest of the 2011 Agreement is consistent with the framework of facts and delivers a sensible industrial outcome by not giving rise to a circumstance where a dispute between the parties is incapable of resolution, which would be inconsistent with section 186(6) of the Act. Clause 21 is the consultation clause in the 2011 Agreement.
[43] It was specifically negotiated by Alcoa and the AWU as part of the negotiations for the 2011 Agreement.
[44] The clause provides for the applicant to comply with:
a) a general consultation obligation as prescribed by clause 21.1(c); and
b) additional consultation obligations as specified by clauses 21.2 and 21.3 which are applicable as follows:
i. Clause 21.2 applies where there the proposed change will have an adverse effect on the job security and/or current income of affected employees; and
ii. Clause 21.3 applies where the proposed change will not have an adverse impact on the on the job security and/or income of the affected employees.
[45] The proposal by Alcoa to move production employees at the Huntly mine site from a 5 panel shift roster to a 4 panel shift roster will not result in any of those employees losing their job. They will all continue to be employed at the Huntly mine site. The income of the vast majority of Alcoa’s mining production employees is comprised of 2 components:
a) A base salary, as prescribed in clause 9.2 of the 2011 Agreement; and
b) An annual shift premium payment, as prescribed in clause 9.4(a) of the 2011 Agreement.
[46] The base salary will not be affected by the proposed change to a 4 panel shift roster.
[47] The annual shift premium payment for each particular shift roster is calculated based on the average number of ordinary hours that are worked on a weekend or public holidays and the number of night shifts that are worked during the course of a year under that shift roster. If the annual shift premium payment payable under the proposed 4 panel shift roster were implemented now, it would increase by over $4 700.
[48] It is the submission of the applicant that, as a consequence of the change not having an adverse impact on:
a) the job security of the affected employees; or
b) the current income of the affected employees, clause 21.3 is the appropriate consultation process to be followed.
[49] The applicant submits clause 21.3 sets out 4 pre-requisites to the implementation of a change which does not have an adverse impact on job security or income. Those pre-requisites are:
a) Consultation being undertaken in accordance with clause 21;
b) Security of employment and current income;
c) The change being safe and efficient; and
d) There being a monitoring process involving the union representative.
[50] With regard to consultation being undertaken in accordance with clause 21 the applicant submits:
a) Clause 21.1(c) sets out the general obligations which are imposed on the applicant in relation to its consultations ahead of making a decision on any proposed change. Those obligations are the same regardless of whether the process under clause 21.2 or 21.3 is applicable.
b) The applicant was required to consult with the affected employees regarding:
i. The introduction of the change;
ii. The effect the change is likely to have on the employees; and
iii. Measures the employer will take to avert or mitigate the adverse effect of the change on the employees.
c) Between 13 March and 18 April 2012 the applicant conducted consultation meetings with each of the crews affected by the proposed implementation of a 4 panel shift roster.
d) At each of those sessions, Mr Ben Robinson, the Operations Manager at the Huntly Mine, spoke to a power point presentation which contained considerable detail regarding the proposed 4 panel shift roster, including:
i. what the change would involve;
ii. why it was necessary;
iii. the changes to the roster, including increased night and weekend shifts;
iv. changes to U days;
v. changes to work tasks;
vi. how best to transition to the new roster, including leave management;
vii. measures to deal with hardship (albeit that there was little if any feedback from employees during these consultation sessions of any adverse impact or hardship which would arise from the proposed change);
viii. the implementation timetable; and
ix. the proposed monitoring process.
e) These consultation sessions complied with the requirements of section 21.1(c) and that as result the first prerequisite of clause 21.3 has been met.
[51] The applicant submits the security of employment and current income pre requisite has been clearly met.
[52] With regard to the change being safe and efficient the applicant submits:
a) The proposed 4 panel shift roster will require employees to work 91 night shifts per annum. Whilst this is an increase from the 73 night shifts currently worked by the affected employee, it is still well below the number of night shifts which are worked by large numbers of employees employed on a 2:1 Fly In Fly Out roster in mining operations across Australia.
b) Improvements in efficiency, as outlined previously, form the basis of the applicant’s business case for change. As indicated, efficiencies from the proposed change will generate projected costs savings of $3.3 million per annum.
c) It is submitted that the change as proposed by the applicant is safe and efficient and that the consequences of the change have been raised, and discussed with, the AWU and affected employees.
d) This pre-requisite obligation is met.
[53] With regard to there being a monitoring process involving the union representative the applicant submits:
a) The applicant has notified affected employees that there will be a monitoring process which will include:
i. Meetings with AWU representatives;
ii. Consideration of the general impact of the change; and
iii. Consideration of any specific hardship concerns.
b) The monitoring process will also involve:
i. Reviewing the metrics included in the business case for change (i.e. projected cost savings of $3.3 million per annum) to allow feedback on the effectiveness of the change;
ii. Holding regular review forums as part of the usual scheduled discussions between the applicant and the AWU to discuss the change process and the impacts of the change on people and the business;
iii. Provision of a clear implementation process, including training and a timetable for change; and
iv. Establishment of a specific help chain for affected employees to provide assistance where required.
[54] The dispute is simply one relating to whether Alcoa can manage its business by implementing a change to require production employees at its Huntly mine site to work pursuant to a 4 panel shift structure (in lieu of the existing 5 panel shift structure), to maximise the efficiency of its labour and simultaneously achieve considerable cost savings.
[55] It is the applicant’s submission that the terms of the 2011 Agreement expressly contemplate, variously at clauses 9.4(f), 9.4(g), 10.3(g), 10.3(h) and clause 21.1(a), a capacity for Alcoa to:
a) set, modify or introduce shift patterns;
b) initiate a permanent transition between panel structures; and
c) change aspects of its business and how it operates;
[56] Such terms were expressly negotiated by the parties to provide that flexibility.
[57] Such terms were negotiated in the context of the applicant seeking to implement a 4 panel shift roster for production employees at the Huntly mine site.
[58] The applicable consultation process within the 2011 Agreement is clause 21.3 which provides that “change which does not have an adverse impact on job security and/or current income will be implemented” in accordance with that subclause.
[59] The applicant submits that it has met the consultation obligations which are to be met as part of the change process contemplated by clause 21.3.
[60] In conclusion, it is the submission of the applicant that:
a) there are no valid grounds for the AWU’s perpetual objection to the introduction of this change; and
b) the Tribunal should find that Alcoa is entitled, in all of the circumstances, to implement the proposed “pure” 4 panel shift structure in respect of production employees at Alcoa’s Huntly mine site.
The AWU’s submissions
Principles of interpretation of agreements
[61] In its original submissions Counsel for the AWU argued that in interpretation of agreements, it is not necessary that ambiguity be shown to exist before recourse can be had to extrinsic material, such as evidence of the history, surrounding documents and circumstances, and the negotiations leading to the agreement 5. The objective intention of the parties is to be determined with regard to this contextual extrinsic evidence.
[62] However in further submissions the AWU argues that after further consideration of the relevant authorities, and in particular the High Court case of Western Export Services Inc v Jireh International Pty Ltd 6(the Western Export Services Case), that this statement of law may be incorrect.
[63] The AWU submit that in the Western Export Services Case, Justices Gummow, Heydon and Bell refused a special leave application on the basis that Mason J’s “true rule” in Codelfa Construction Pty Ltd v State Rail Authority of NSW 7 prevailed, which has been interpreted to hold that ambiguity must be shown in the text before regard can be had to the surrounding circumstances of the transaction. Their Honours referred to Royal Botanic Gardens and Domain Trust v South Sydney City Council8.
[64] On that basis, it isnecessary that ambiguity in the language of an agreement be shown to exist before recourse can be had to extrinsic material.
[65] Counsel for the AWU submits that on the more recent authority of the High Court in the Western Export Services Case where an agreement is unambiguous on its face, no regard can be had to extrinsic material.
[66] It follows from the above the AWU submits that the parties agree on the following principles of construction of industrial agreements:
a) A narrow or pedantic approach to the construction of an agreement is misplaced. The construction of agreements should not be strict but should contribute to a sensible industrial outcome.
b) If the agreement is unambiguous in its meaning then evidence of surrounding circumstances is not admissible to assist in its interpretation.
c) Where the agreement itself is ambiguous, evidence may be considered of the objective background facts known to the parties at the time the contract was entered into.
[67] What might not be accepted by the applicant, but is the law, is that even where there is ambiguity, evidence of the actual intentions, aspirations or expectations may notbe considered when construing the agreement. Such statements and actions reveal the terms of the contract which the parties intended or hoped to make. They are superseded by and emerge in the agreement itself.
[68] A qualification on that appears at page 353 or paragraph [25] of Justice Mason’s decision in Codelfa:
“25. There may perhaps be one situation in which evidence of the actual intention of the parties should be allowed to prevail over their presumed intention. If it transpires that the parties have refused to include in the contract a provision which would give effect to the presumed intention of persons in their position it may be proper to receive evidence of that refusal...”
[69] In construing an industrial agreement, the court must bear in mind that the document is addressed to the readership consisting of members of the relevant industry. Madgwick J stated in Kucks v CSR Ltd 9that:
“The search is for the meaning intended by the framer(s) of the document, bearing in mind that such framer(s) were likely of a practical bent of mind: they may well have been more concerned with expressing an intention in ways likely to have been understood in the context of the relevant industry and industrial relations environment than with legal niceties or jargon...For reasons such as these, expressions which have been held in the case of other instruments to have been used to mean particular things may sensibly and properly be held to mean something else in the document at hand.”
The AWU’s view of construction
[70] The respondent’s view of the correct construction of the 2011 Agreement is summarised as:
a) Clause 10.3(a)(iii) requires that agreement be reached on any variation to the method and times of shifts.
b) Clause 10.3(a)(iii) is subject to the specific exceptions contained in clause 10.3(g) and 10.3(h).
c) Clause 10.3(g) is concerned with “transitions” between existing shift patterns and or existing panel structures. This matter does not involve a transition between existing shift patterns or panel structures; here the applicant wishes to introduce a new panel structure. Clause 10.3(g) is therefore not relevant to this matter.
d) Clause 10.3(h) is concerned with shift patterns alone. It is not concerned with shift patterns and is therefore not relevant to this matter.
e) In the absence of a specific exception, the general requirements of clause 10.3(a)(iii) apply to the imposition of a new panel structure. The applicant must therefore obtain the agreement of the respondent in order to implement a new panel structure.
f) The specific requirement of clause 10.3(a)(iii) for agreement in relation to the method and times of shifts excludes the general operation of clause 21 in relation to consultation on the implementation of change.
[71] In the view of the AWU, there is no ambiguity in the application of the 2011 Agreement. Clause 10.3(a)(iii) requires the applicant to obtain the agreement of the respondent in order to implement a new panel structure. There are no relevant limitations on this requirement.
The AWU’s alternative view of construction
[72] If however there is a relevant ambiguity in the use in clause 10.3(g) of the word “transition”, namely:
a) in its ordinary sense of “the passage from one position, state, stage, etc to another” 10; or
b) in the sense commonly given to it at the Huntly mine site by and between the applicant, respondent and the employees of the applicant at the time of the making of the 2011 Agreement; namely that of “the movement of a worker from one panel structure or shift pattern to another existingpanel structure or shift pattern”,
then regard may properly be had to extrinsic evidence to resolve the ambiguity.
[73] The correct meaning of words is to be found not by their derivation or literal analysis but by the meaning commonly attached to those words by the users of them.
[74] Therefore, applying the ordinary rules of construction the correct meaning of the word “transition” in clause 10.3(g) is that of “the movement of a worker from one panel structure or shift pattern to another existing panel structure or shift pattern.”
[75] Further and in any event, if clause 10.3(g) of the 2011 Agreement is ambiguous, the subjective intentions, aspirations or expectations of the parties cannot be taken into account in its construction, except to negative the construction the respondent contends for precisely because there is no provision in the 2011 Agreement providing that the applicant can introduce a new panel structure without the agreement of the other party to the Agreement: per Mason J in Codelfa at page 353, paragraph [25]. There can be no regard to the applicant’s “desire” and “preference”.
[76] There may be regard to the objective background of facts described by the respondent as follows.
[77] It is common ground between the applicant and respondent that the following surrounding circumstances were known to the parties at the time the 2011 Agreement was negotiated:
- the applicant has from 2009 expressed a wish to change from a 5 to a 4 panel roster for production crew;
- the employees through their union representatives have consistently opposed the proposal and maintained the position that the applicant is not able to introduce changes to panel rosters without agreement;
- the union offered to negotiate resolution of the 4 or 5 panel roster dispute within the 2011 Agreement negotiations;
- the respondent declined that offer;
- the respondent said it wished to agree on mechanisms in the 2011 Agreement to facilitate change; and
- certain changes were made in the new agreement.
[78] The applicant was well aware that the AWU did not agree to the imposition of the 4 panel roster and that there were lengthy ongoing negotiations for resolution of the issue, including several proposals by the AWU to introduce alternatives.
[79] It is therefore incorrect to assert, as the applicant does that the changes were generated by a desire on the part of the applicant to allow the implementation of change, such as the 4 panel shift roster, and remove any of the perceived impediments to change under the 2005 Agreement.
[80] There is nothing in the 2011 Agreement that provides for what the applicant asserts precisely because the employees refused to accept such a change.
[81] On the contrary, as it evidence from the surrounding circumstances in which the 2011 Agreement was reached, and the language and structure of clause 10, that such changes had to be agreed in accordance with clause 10.3(a)(iii).
[82] In the face of the history of the 2011 Agreement, the custom and usage, the objective intentions of the parties in negotiating the new agreement, it would be unreasonable to construe the 2011 Agreement to enable the applicant to unilaterally impose variations to panel rosters, subject only to the obligation consult and the requirements of clause 21.3. It would be contrary to the legal presumption of construction that the parties did not intend the terms of the contract to operate unreasonably.
[83] Having regard to the imposition on the employees that would be affected by the proposed panel roster change, including in terms of the increased number of nightshifts per year, the increased number of changes between day and night shifts, the increased number of weekend work per year; in terms of the impact on their health, lifestyles and family responsibilities, having regard to the consequential increase in risks to safety and the environment, such a construction is not reasonable.
[84] Moreover, the efficiencies that the applicant refers to, and the savings in costs cannot be accepted at face value.
[85] But if they are to be accepted as viable and incontrovertible, they are gains by the employer that it did not bargain for when offered that opportunity in the negotiations for the 2011 Agreement. It would be a gain at the considerable expense of the employees concerned in circumstance. The circumstances are therefore analogous to those in The Australian Workers’ Union - West Australian Branch v Co-Operative Bulk Handling Ltd 11. The employer here should likewise not be permitted to seek to impose additional duties on the employees.
[86] In the context of this objective background of facts, it is clear that the 2011 Agreement requires the applicant to obtain the agreement of the respondent in order to implement a new panel structure.
Consideration
Principles
[87] With respect to the principles to be applied to this task I accept that a narrow or pedantic approach to the construction of an agreement is misplaced. The construction of the agreement should not be strict but should contribute to a sensible industrial outcome.
[88] I accept as the AWU submits that on the authority of the High Court in the Western Export Services Case where an agreement is unambiguous on its face, no regard can be had to extrinsic material. This High Court decision post dates the decision of the Full Bench in The Australian Workers’ Union - West Australian Branch v Co-Operative Bulk Handling Ltd 12 which was authority for the approach that extrinsic evidence is admissible both to raise and resolve an ambiguity in the interpretation of an agreement.
Terms of the 2011 Agreement
[89] The starting point for the consideration of this matter is the fact that the change Alcoa seeks to make is to the panel structure.
[90] The 2011 Agreement has limited provisions that relevantly deal with, or mention panel structures at all.
[91] The first of these is 10.3(g):
“(g) Shift Patterns
Shift patterns shall be as set by management, in consultation with the workforce and its representatives, and shall be based on the SELL principle and business needs. Current shift patterns (continuous 12 hour shifts, day/afternoon 8 hour shifts, 10.3 hour shifts and permanent 8 hour day shifts) are expressly permissible under this agreement.
Where a permanent transition between shift patterns and/or panel structures is initiated by Alcoa and has a negative impact on anemployee’s income, the parties have expressly agreed that, to ameliorate the adverse effect on the employee(s), implementation ofthe change will be in accordance with the following: ...” (Underlining added)
[92] The words “panel structures” appear only twice in the Clause 10− Hours of Work. First they appear in the provision above and they are then repeated in the similar provision in 10.3(g)(ii) as below:
“(ii) Notwithstanding subclause 10.3(g)(i) above, where a permanent transition between shift patterns and/or panel structures is initiated by Alcoa, and has a negative impact on an employee’s income, and the number of employees required to transition is greater than 10% of the employees covered by this agreement at the site, such transition will be managed in accordance with the following: ...” (Underlining added)
[93] The words used in both of these provisions “shift patterns and/or panel structures” clearly means that shift patterns and panel structures are different, they are not the same concept.
[94] It is significant that 10.3(g) of the 2011 Agreement establishes a set of expressly agreed measures to ameliorate the impact on employees of a permanent transition between a shift pattern and/or panel structure but only where this is initiated by Alcoa and has a negative impact on employee’s income.
[95] The evidence here, which I accept and is not challenged by the AWU, is that the new 4 panel structure will not have a negative impact on any employees’ income. In fact their income will increase, so accordingly 10.3(g) of the 2011 Agreement has no application 13.
[96] The parties have referred to other terms of the 2011 Agreement such as 10.3(h) which deals with shift patterns but these simply are not relevant to the change proposed here which all agree is to introduce a new panel structure. I agree as the AWU submits that 10.3(h) does not apply to Alcoa’s proposal in this matter. This provision deals exclusively with shift patterns which are different from panel structures. Clause 10.3(h) merely clarifies the general position that where there are changes to shift patterns that don’t involve negative income impacts for employees the general consultation provision in clause 21 applies.
[97] That being the case there are no terms of the 2011 Agreement that expressly mention panel structures that are relevant to the change the applicant seeks to implement.
[98] The AWU argues that clause 10.3(a)(iii) is applicable to Alcoa’s proposal and requires that all new panel structures can only be implemented if the parties agree.
[99] Clause 10.3 Shift Workers opens as follows:
“10.3 Shift Workers
(a) Subject to the other provisions herein prescribed, the following shall apply;
(i) "Afternoon Shift" means any shift finishing after 8.00 pm and at or before midnight.
(ii) "Night Shift" means any shift finishing after midnight and at or before 8.00am.
(iii) Shifts will be worked by such method and at such times as the Operation requires. These may be varied as to some or all employees by agreement between the parties.
(iv) "Rostered Shift" means a shift of which the employee concerned has had at least 48 hours notice. This period may be reduced by agreement between the parties. For the purpose of this clause, "rostered shifts" means the shifts established by the roster for each particular system of shift work including, where applicable, rostered shifts on weekends and public holidays.
(v) "Continuous Shift Work" means work carried on with consecutive shifts of employees throughout the 24 hours of each of at least 6 consecutive days without interruption, except where due to breakdown or unavoidable causes beyond the Company's control. "Seven Day Shift Work" means work that is regularly rostered on Saturdays, Sundays and Public Holidays as part of the ordinary hours roster.
(b) Shift rosters will specify the normal...”
[100] It is not obvious, as is submitted by the AWU, that 10.3(a)(iii), which refers to the method shifts will be worked and their times, deals with panel structures at all.
[101] Method means “a way of doing something, especially in accordance with a definite plan.” 14
[102] It seems then that “Shifts will be worked by such method...” in 10.3(a)(iii) refers to the way shifts will be worked. Considering the context of the other paragraphs in clause 10 “method” means whether shifts are worked as days, afternoon or nights, whether they are worked as Continuous Shift Work or Seven Day Shift Work and their sequencing. Different “methods” by which shifts might be worked could be, 12 hour continuous shifts alternating day and night, 8 hour shifts day and afternoon only, or a permanent 8 hour day shift. The words “...and at such times...” in clause 10.3(a)(iii) then refers to a shifts start and finish times.
[103] Panel structures are not the same as the method by which shifts will be worked. Panel structures are developed from manning and rostering decisions which determine how many shifts employees will work, how many days off they have and in what sequence given a particular method of working shifts.
[104] Panel structures would commonly be formulated after the method and times of shifts are settled and after decisions are made to do with the manning of these shifts. Regardless of the process of designing a method of working shifts, their start and finish times and a panel structure 15the words of 10.3(a)(iii) do not on a proper construction on their plain meaning extend to requiring the agreement of the parties on new panel structures.
[105] Clause 10.3(a)(iii) does not have application to matters beyond the method by which shifts will be worked and the times shifts will be worked.
[106] In my view there is no ambiguity in the 2011 Agreement on these issues and so recourse to extrinsic material is not required.
[107] In summary there are no terms of the 2011 Agreement other than those in clause 21−Consultation Clause, that impose obligations on Alcoa in circumstances where they intend to implement a new panel structure which does not have any negative impact on an employee’s income.
[108] My determination is that the 2011 Agreement requires Alcoa to consult affected employees and their representatives, and having done that and having complied with clause 21.3(a), Alcoa can implement the new 4 panel structure at the Huntly mine site. This does not require the agreement of the parties.
[109] I will now consider whether Alcoa has met the requirements contained in clause 21.3.
[110] I accept the evidence of Alcoa’s witnesses that the implementation of this 4 panel structure is a change which does not have an adverse impact on job security nor does it have an adverse impact on the current income of the employees whom will be affected. Indeed the evidence is the employees affected moving on to a 4 panel structure will enjoy an increase in income.
[111] I am satisfied that the process carried out by Alcoa prior to the making of this application satisfies the requirement for consultation to be undertaken in accordance with clause 21 of the 2011 Agreement.
[112] I am satisfied that the change to panel structures in this instance is efficient and will offer some productivity benefits and savings to Alcoa.
[113] I am satisfied on the evidence, in particular thatof Mr Spadaccini who is Alcoa’s Director of Safety for the company’s Australian operations, that the change is safe.
[114] I am satisfied that Alcoa have put in place and notified affected employees that there will be a monitoring process including meetings with AWU representatives and that there will be a review of the metrics included in Alcoa’s business case on which feedback will be provided on the effectiveness of the change.
[115] In conclusion I am satisfied that Alcoa is now entitled to implement its proposed 4 panel structure at the Huntly mine site.
COMMISSIONER
Appearances:
A Heelan of Heelan & Co Industrial Relations and Management for the applicant.
M Cox of Counsel for the respondent.
Hearing details:
2012.
Perth:
August 14.
1 Exhibit A1 at paragraph 11.
2 (2002) 240 CLR 45.
3 (1982) 149 CLR 337.
4 [2011] HCA 45.
5 The Australian Workers’ Union - West Australian Branch v Co-Operative Bulk Handling Ltd [2010] FWAFB 4801.
6 [2011] HCA 45 (22 October 2011).
7 (1982) 149 CLR 337 at page 352.
8 (2002) 240 CLR 45 at pages 62-63, paragraph [39]
9 (1996) 66 IR 182 at page 184.
10 Macquarie Dictionary, 5th Edition.
11 [2010] FWAFB 4801.
12 Ibid.
13 Exhibit A1 at paragraphs 30-35, Exhibit A2 at paragraph 18 and Exhibit R1 at paragraph 23.
14 Macquarie Concise Dictionary, 4th Edition.
15 Transcript at PN227 - 234.
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