APT Management Services Pty Limited and APA GasNet Australia (Operations) Pty Ltd v "Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union" known as the Australian Manufacturing Workers'..

[2015] FWC 699

[2015] FWC 699

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.238 - Application for a scope order

APT Management Services Pty Limited
and
APA GasNet Australia (Operations) Pty Ltd
v
"Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union" known as the Australian Manufacturing Workers' Union (AMWU);
and
The Australian Workers' Union
and
Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia
and
The Association of Professional Engineers, Scientists and Managers, Australia t/a Professionals Australia
(B2014/1461)

COMMISSIONER CAMBRIDGE SYDNEY, 30 JANUARY 2015

Application for a scope order.

[1] This Decision involves an application for a scope order made pursuant to s. 238 of the Fair Work Act 2009 (the Act). The application was made on 10 October 2014 by APT Management Services Pty Ltd (APT). The application was subsequently amended to include identification of a second applicant, APA GasNet Australia (Operations) Pty Ltd (APA GasNet). APT and APA GasNet, as the joint applicants, shall be referred to as the employer.

[2] The application identified the following respondents: "Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union" known as the Australian Manufacturing Workers' Union (AMWU) (the AMWU); The Australian Workers' Union (the AWU); Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (the CEPU); and Professionals Australia which is understood to be the Association of Professional Engineers, Scientists and Managers, Australia, (APESMA). The AMWU, the AWU, the CEPU and APESMA, as the respondents, are collectively referred to as the Unions.

[3] Proceedings in this matter commenced before the Fair Work Commission (the Commission) on 20 October 2014, at which time the Commission granted conditional permission for the employer to be represented by lawyers. Further proceedings involving conciliation were held on 12 November 2014. Conciliation was unsuccessful and the matter proceeded to a Hearing conducted in Sydney over two days, 17 and 18 December 2014.

[4] At the Hearing the Commission granted permission for the employer to be represented by lawyers and Mr N Harrington barrister, instructed by Mr M Dunphy solicitor from Hall & Wilcox appeared for the employer. The AMWU was represented by Ms L Saunders, the AWU was represented by Mr S Crawford, APESMA was represented by Ms M Jenner, and Mr G Borenstein appeared via telephone for the CEPU.

[5] During the Hearing the employer adduced evidence from three witnesses all of whom had made written statements in support of the application. The Unions also provided witness evidence which was supported by the respective statements of three individuals. At the conclusion of the Hearing on 18 December, the Commission reserved Decision and indicated to the Parties that because of the obvious implications for the progress of the enterprise bargaining, a Decision in this matter would be prioritised.

Background

[6] The employer is an energy infrastructure company which is primarily involved with the supply and transportation of gas to consumers. The employer operates throughout Australia and relevantly, its employees, who are engaged in its transmission business operations, are currently covered by either one of two Enterprise Agreements depending upon the geographic location in which the employment is based.

[7] Transmission operations employees who are based in Victoria, South Australia, Western Australia, the Northern Territory or Queensland are covered by the APA Transmission Pipelines (VIC, SA, WA, NT & QLD) Enterprise Agreement 2011 - 2014 (the National Agreement). Transmission operations employees who are based in New South Wales are covered by the APA NSW Enterprise Agreement 2011 -2014 which is also referred to as the APA NSW Transmission Pipelines Enterprise Agreement 2011 -2014 (the NSW Agreement).

[8] The National Agreement and the NSW Agreement have the same nominal expiry date of 1 November 2014. Negotiations for industrial instruments to replace the National and NSW Agreements commenced in August 2014. At the commencement of these negotiations the employer advised the Unions that it wished to negotiate replacement Agreements based upon geographical coverage different to that which applied for the National and NSW Agreements.

[9] The employer proposed to the Unions that two replacement Agreements be geographically realigned so that one broadly covered North West Australia (the North West Agreement) and the other broadly covered South East Australia (the South East Agreement). The North West Agreement would apply to employees whose employment was based in Queensland, the Northern Territory, Western Australia and Moomba in South Australia. The South East Agreement would apply to employees whose employment was based in New South Wales, Victoria and South Australia excluding Moomba. (It appears that the employer has no operations in Tasmania.)

[10] The negotiations for the North West Agreement have not been significantly troubled by its proposed scope. Understandably the North West Agreement negotiations have proceeded from a foundation which referenced the terms contained in the National Agreement and any practical impact of the scope alteration has been limited to the excising of Victoria and South Australia other than Moomba.

[11] The South East Agreement negotiations have been encumbered by concerns raised by the Unions about its proposed scope. The proposed scope of the South East Agreement introduces an area of coverage which overlaps that of both the National Agreement and the NSW Agreement. Consequently, difficulties have arisen in circumstances where the foundation for terms to be included in any new South East Agreement could be referenced from either the National or NSW Agreements. In addition, terms for the proposed South East Agreement might have no foundational reference to terms contained in either the National or NSW Agreements.

[12] There are a number of terms contained in the NSW Agreement which are considered to be more beneficial to employees when assessed against comparative terms contained in the National Agreement such that, overall, the NSW Agreement is seen as providing superior terms and conditions for employees. However, there are some terms contained in the National Agreement which are more beneficial for employees than comparative terms in the NSW Agreement. Consequently, the scope proposed for the South East Agreement has ramifications for the enterprise bargaining negotiations which introduce some inherent difficulties that simply do not exist for the bargaining for the North West Agreement.

[13] The employer and the Unions have engaged in negotiations for the proposed South East Agreement and have participated in various bargaining meetings held on 13 and 25 August, 25 September, and 25 and 26 November 2014. The employer initially proposed a South East Agreement document which contained terms that could not be clearly referenced from either the National or NSW Agreement. In addition, the employer also proposed that the scope of the proposed Agreements would exclude an existing senior professional officer classification referred to as “Band E”.

[14] There was immediate and strong objection particularly from APESMA, to any removal of the Band E classification. The Unions also raised serious concern about negotiations that involved a document which contained terms that could not be easily referenced to comparable terms contained in both the National and NSW Agreements. The concerns of the Unions impeded any progress with bargaining for the South East Agreement with, at times, one or more of the Unions requiring that “...the historical coverage of the current agreements to be preserved...in particular favouring a NSW-only agreement” and that a South East Agreement would only be negotiated “...on the proviso that it does not derogate from the terms of the current NSW agreement or otherwise disadvantage these workers.” 1

[15] The employer considered that the bargaining for the South East Agreement was not progressing efficiently because of the contested coverage questions and it made an application for a scope order as a means to resolve the difficulties with the bargaining.

The Case Advanced by the Employer

[16] The employer provided written submissions which were elaborated upon verbally by Mr Harrington during the Hearing on 18 December 2014. The employer confirmed that it no longer sought to exclude the Band E classification from the Agreements and an amended scope order was provided. The employer submitted that it had satisfied the various legislative prerequisites and notification requirements which apply for the making of a scope order.

[17] The employer submitted that the making of the scope order as sought would promote the fair and efficient conduct of bargaining. Mr Harrington said that there were not major issues of contested fact and in particular, he contended that the evidence of the bargaining for the South East Agreement demonstrated that an impasse had been reached such that the bargaining had become fundamentally dysfunctional.

[18] Mr Harrington submitted that a scope order was necessary so as to assist to make sure that the bargaining was fairer and more efficient. He said there was clear dispute and disagreement between the Parties on the question of scope. According to the submissions made by Mr Harrington, the disagreement on scope had operated as a fundamental impediment to the bargaining.

[19] Mr Harrington said that the employer had determined to make the alteration to the coverage of the Agreements as it more appropriately aligned with its asset and operational footprints. Mr Harrington emphasised the evidence of employees working in like classifications and performing similar duties who on occasions worked alongside each other at locations near the New South Wales/Victoria border, but were on different terms and conditions. It was submitted that this evidence demonstrated the type of factors which were relevant to the employer’s determination to alter the scope of the Agreements.

[20] The submissions made on behalf of the employer also noted that the application for a scope order had been made at an early stage of the bargaining process and it was asserted that the group of employees to be covered by the South East Agreement had been fairly chosen.

[21] Mr Harrington made extensive submissions which addressed the various requirements of s. 238 of the Act. These submissions focussed upon paragraphs (a) to (d) inclusive of sub-section (4) of s. 238. Mr Harrington referred to various Decisions of both Fair Work Australia (FWA) and the Commission which had examined these particular paragraphs and sub-section (4A) of s. 238. Mr Harrington submitted that the making of the scope order in the present circumstances would be consistent with the approach identified in the various Decisions to which he referred.

[22] In summary, it was submitted by Mr Harrington that: (a) the employer had met the good faith bargaining requirements of the Act; and, (b) that the making of the proposed scope order would promote the fair and efficient conduct of bargaining; and (c) the group of employees to be covered by the Agreement proposed in the scope order had been fairly chosen having regard for the provisions of sub-section (4A) of s. 238; and, (d) it was reasonable in all the circumstances to make the scope order sought by the employer.

[23] In conclusion, Mr Harrington said that the Commission should be satisfied that the legislative criteria had been met and further, the discretion to make a scope order should be exercised because the bargaining had reached an impasse. Mr Harrington urged that the Commission make the scope order to “shake” the stalled enterprise bargaining and bring about more efficient and fairer bargaining.

The Case Advanced for the Unions

[24] Ms Saunders who appeared for the AMWU opposed the application and submitted that the Commission should not make the scope order sought by the employer.

[25] Ms Saunders made extensive verbal submissions which supplemented a documentary outline of submissions which had been filed earlier. Ms Saunders commenced her submissions by suggesting that the scope order, if granted, would have the effect of removing a legitimate bargaining position from employees in New South Wales. Ms Saunders submitted that the scope order would deny New South Wales employees any opportunity to walk away from negotiations with the numerically superior Victoria and South Australian colleagues.

[26] The submissions made by Ms Saunders firstly challenged that the employer had standing to bring the application. It was acknowledged by Ms Saunders that the bargaining had not been going “terribly well” and that all Parties had concerns about the lack of progress that had been experienced. However, according to the submissions made by Ms Saunders, the fact that the bargaining had not been proceeding efficiently was not because of any perceived defect in the scope of any new Agreement that would or would not cover New South Wales employees.

[27] Consequently, Ms Saunders submitted that sub-section (1) (b) of s. 238 could not be satisfied because the impasse that had been reached in the bargaining was not because of scope, and therefore the application made by the employer was without standing. Ms Saunders asserted that the application had been taken for a fundamentally wrong purpose which was outside of the requirements of sub-section (1) of s. 238. Therefore, she submitted that the Commission did not have jurisdiction to hear the application and it should be dismissed.

[28] Ms Saunders made further submissions which asserted that the Commission could not be satisfied that the provisions of sub-sections (4) and (4A) of s. 238 of the Act had been met. Ms Saunders stressed that because of the use of the conjunctive word “and”, all of the factors contained in paragraphs (a) to (d) in subsection (4) had to be met before a scope order could be made.

[29] Ms Saunders said that the employer had not conducted itself during the bargaining in a manner that would satisfy the good faith bargaining requirements. Ms Saunders made strong criticism of the employer using a template document and reintroducing that document after it had agreed not to use the document. Ms Saunders was also critical of conduct that she said represented capricious action of the employer as it was not willing to give proper consideration to the Unions bargaining position.

[30] It was further submitted by Ms Saunders that the making of the scope order would not lead to fair and efficient conduct of the bargaining because the problem with the bargaining and the stalemate that had been reached, would not be rectified by the scope order. Ms Saunders submitted that the problems with the bargaining were connected with New South Wales employees retaining different interests to their Victoria colleagues. Ms Saunders said that the scope order could not compel the AMWU to form a united position. Ms Saunders explained this particular difficulty by stating that, “You would occasionally need UN peace keeping intervention to get the Victorian and New South Wales branch[es] of the AMWU to agree with each other.” 2

[31] In addition, Ms Saunders submitted that the Commission could not be satisfied that the group to be covered by the scope order was fairly chosen. In particular, Ms Saunders submitted that the scope order would have the effect of rolling New South Wales employees together with their Victoria counterparts. As the Victoria employees could outvote their New South Wales comrades, the [combined] group of employees was not fairly chosen according to the submissions made by Ms Saunders.

[32] Ms Saunders also submitted that it would not be reasonable to make the scope order sought by the employer because there was absolutely no utility in making such an order. Ms Saunders submitted that the order would not fix the problem that had emerged with the bargaining.

[33] In summary, Ms Saunders submitted that the employer did not have standing to bring the application and, in the alternative, the Commission could not be satisfied that the legislative prerequisites for the making of a scope order had been met. Ms Saunders urged the Commission to refuse the application.

[34] Mr Crawford, who appeared for the AWU, also submitted that the application for the scope order should be rejected. Mr Crawford submitted that the employer had manufactured a deadlock in the bargaining as an attempt to substantially reduce existing terms and conditions of employment. Mr Crawford submitted that if the scope order was granted it would have the effect of removing an opportunity for employees to use the issue of scope as part of the bargaining negotiations.

[35] It was submitted by Mr Crawford that the various reasons which had been advanced by the employer as justification for the proposed scope of the South East Agreement could not be substantiated. Mr Crawford made particular mention that the suggestion that the North West Agreement was designed to suit “fly in fly out” (FIFO) and or “drive in drive out” (DIDO) operations, was not supported by the fact that there would still be a substantial proportion of other than FIFO/DIDO work covered by the North West Agreement. Mr Crawford submitted that the employer was reconfiguring coverage of the existing Agreements in an attempt to slash and burn conditions.

[36] In further submissions, Mr Crawford adopted and supported the submissions that had been made on behalf of the AMWU and he stressed that the proposed scope order would not make bargaining more efficient nor would it promote efficiency.

[37] Ms Jenner who appeared for APESMA and Mr Borenstein who appeared for the CEPU both supported the submissions made by the AMWU and the AWU.

Consideration

[38] In this case the employer has sought a scope order which would enable it to reconfigure the geographical coverage applying to Agreements which prescribe terms and conditions of employment for its employees engaged in transmission operations in Australia.

[39] The most significant aspect of this reconfiguration is the removal of a separate Agreement which has historically applied to New South Wales alone. In broad terms, the NSW Agreement has provided terms and conditions which are considered to be superior to the rest of Australia, in particular Victoria, and therefore any “merging” of NSW with Victoria has been perceived as a threat to the superior terms and conditions prescribed by the NSW Agreement.

[40] The perceived threat to the NSW Agreement conditions has caused great difficulties for the progress of enterprise bargaining negotiations. The employer has made application for a scope order in an attempt to remove the issue of coverage for the South East Agreement as a perceived impediment to efficient bargaining. The Unions have resisted the making of the scope order sought by the employer. However, the Unions have not made an application for any alternative scope order or for any other order or other relief aimed at releasing the impasse which has been encountered in the bargaining.

[41] The making of scope orders is governed by the provisions of ss. 238 and 239 of the Act which are contained within Subdivision C of Division 8 of Part 2-4.

[42] Sections 238 and 239 of the Act are in the following terms:

“238 Scope orders

Bargaining representatives may apply for scope orders

(1) A bargaining representative for a proposed single-enterprise agreement may apply to the FWC for an order (a scope order) under this section if:

(a) the bargaining representative has concerns that bargaining for the agreement is not proceeding efficiently or fairly; and
(b) the reason for this is that the bargaining representative considers that the agreement will not cover appropriate employees, or will cover employees that it is not appropriate for the agreement to cover.

No scope order if a single interest employer authorisation is in operation

(2) Despite subsection (1), the bargaining representative must not apply for the scope order if a single interest employer authorisation is in operation in relation to the agreement.

Bargaining representative must have given notice of concerns

(3) The bargaining representative may only apply for the scope order if the bargaining representative:

(a) has given a written notice setting out the concerns referred to in subsection (1) to the relevant bargaining representatives for the agreement; and
(b) has given the relevant bargaining representatives a reasonable time within which to respond to those concerns; and
(c) considers that the relevant bargaining representatives have not responded appropriately.

When the FWC may make scope order

(4) The FWC may make the scope order if the FWC is satisfied:

(a) that the bargaining representative who made the application has met, or is meeting, the good faith bargaining requirements; and
(b) that making the order will promote the fair and efficient conduct of bargaining; and
(c) that the group of employees who will be covered by the agreement proposed to be specified in the scope order was fairly chosen; and
(d) it is reasonable in all the circumstances to make the order.

Matters which the FWC must take into account

(4A) If the agreement proposed to be specified in the scope order will not cover all of the employees of the employer or employers covered by the agreement, the FWC must, in deciding for the purposes of paragraph (4)(c) whether the group of employees who will be covered was fairly chosen, take into account whether the group is geographically, operationally or organisationally distinct.

Scope order must specify employer and employees to be covered

(5) The scope order must specify, in relation to a proposed single-enterprise agreement:

(a) the employer, or employers, that will be covered by the agreement; and
(b) the employees who will be covered by the agreement.

Scope order must be in accordance with this section etc.

(6) The scope order:

(a) must be in accordance with this section; and
(b) may relate to more than one proposed single-enterprise agreement.

Orders etc. that the FWC may make

(7) If the FWC makes the scope order, the FWC may also:

(a) amend any existing bargaining orders; and
(b) make or vary such other orders (such as protected action ballot orders), determinations or other instruments made by the FWC, or take such other actions, as the FWC considers appropriate.

239 Operation of a scope order

A scope order in relation to a proposed single-enterprise agreement:

(a) comes into operation on the day on which it is made; and

(b) ceases to be in operation at the earliest of the following:

(i) if the order is revoked—the time specified in the instrument of revocation;
(ii) when the agreement is approved by the FWC;
(iii) when a workplace determination that covers the employees that would have been covered by the agreement comes into operation;
(iv) when the bargaining representatives for the agreement agree that bargaining has ceased.”

[43] Sub-sections (4) and (4A) of s. 238 are the primary operative provisions in respect to the making of a scope order. In this instance, the opposition to the making of the scope order has relied upon an alleged absence of satisfaction of sub-sections (4) and (4A) and also upon an alleged lack of standing of the applicant arising for a failure to satisfy the terms of sub-section (1) (b) of s. 238.

The Alleged Absence of Standing - s. 238 (1) (b)

[44] It was contended by the Unions that the employer, being the bargaining representative that had made the application for a scope order, could not satisfy the terms of sub-section (1) (b) of s. 238 in so much as the employer did not consider that the Agreement would not cover appropriate employees, or would cover employees that it is not appropriate for the Agreement to cover. The employer had proposed the coverage of the South East Agreement and therefore according to the Unions, it could not be said that the employer considered that coverage to be inappropriate.

[45] This position was essentially a corollary of circumstances where the applicant for the scope order which, in this case, was the employer, was proposing the coverage of the Agreement and that was contested by the employee bargaining representatives. The terminology of sub-section (1) (b) seems to reflect what might be the usually anticipated circumstances where an employer proposes the scope of an Agreement and one or more employee bargaining representatives disapprove of the scope and assert that the coverage is inappropriate.

[46] If the interpretation of sub-section (1) (b) was as literal and as narrow as was advanced by the Unions, there would be very limited opportunity for any bargaining representative who was proposing the scope of an Agreement to make any scope order application. In the bargaining context, where a contest arose in respect to scope, a bargaining representative would have to maintain its proposed scope and, unless and until another bargaining representative who opposed that scope made an application for a scope order, it could not seek to have the contested question of scope determined by the Commission. This would represent an impractical and one sided construction for sub-section (1) (b) of s. 238 of the Act and such interpretation should be rejected.

[47] The terms of sub-section (1) (b) are intended to provide, (subject to the other legislative requirements), for any bargaining representative to seek to have a question of contested scope resolved by the Commission. Accordingly, I reject the proposition that the applicant, being the employer who in this instance was proposing the scope for the Agreement, did not have standing to make the application for a scope order.

The Discretionary Factors for a Scope Order - ss. 238 (4) and (4A)

[48] There are four factors which can be extracted from an examination of the terms of sub-sections (4) and (4A) of s. 238 all of which must be satisfied if any scope order is made.

[49] These four factors can be described as:

(1) Good Faith Bargaining; and
(2) Promote Fair and Efficient Bargaining, and
(3) Fairly Chosen, and
(4) Reasonable in the Circumstances.

Good Faith Bargaining - Paragraph (a) of Sub-Section 238 (4)

[50] The Unions asserted that the employer had not been bargaining in good faith. In particular it was said that there was conduct of the employer which breached the good faith bargaining requirements as set out in s. 228 of the Act.

[51] It is clear that if the Commission was satisfied that an applicant for a scope order had not met the good faith bargaining requirements of s. 228 then that applicant would not be entitled to have their application granted. The good faith bargaining requirements contained in s. 228 are as follows:

“228 Bargaining representatives must meet the good faith bargaining requirements

(1) The following are the good faith bargaining requirements that a bargaining representative for a proposed enterprise agreement must meet:

(a) attending, and participating in, meetings at reasonable times;
(b) disclosing relevant information (other than confidential or commercially sensitive information) in a timely manner;
(c) responding to proposals made by other bargaining representatives for the agreement in a timely manner;
(d) giving genuine consideration to the proposals of other bargaining representatives for the agreement, and giving reasons for the bargaining representative’s responses to those proposals;
(e) refraining from capricious or unfair conduct that undermines freedom of association or collective bargaining;
(f) recognising and bargaining with the other bargaining representatives for the agreement.

(2) The good faith bargaining requirements do not require:

(a) a bargaining representative to make concessions during bargaining for the agreement; or
(b) a bargaining representative to reach agreement on the terms that are to be included in the agreement.”

[52] The Unions complained of the employer’s conduct during the bargaining that had occurred both before and after the application for a scope order had been made. There were two particular aspects of the employer’s conduct which drew significant criticism from the Unions.

[53] The employer reintroduced a template document representing the terms of a proposed South East Agreement which it had earlier agreed to withdraw and it also terminated the last bargaining meeting on 26 November when disagreement arose over the issue of any inclusion of FIFO provisions in the South East Agreement. These actions of the employer were said to breach the good faith bargaining requirements and the Unions asserted such conduct was capricious and unfair.

[54] The totality of the evidence demonstrated that the bargaining has involved the usual cut and thrust of negotiation with respective positions advanced, withdrawn, returned, modified, conditionally conceded, etcetera. Further, I can see little basis for concern about the inclusion of FIFO terms in the South East Agreement if those terms are unlikely to have any practical application. However, I acknowledge that the pursuit of such terms is broadly reflective of the underlying contest regarding scope and the agitation for preservation of a standalone Agreement for NSW.

[55] Following a careful examination of all of the conduct of all of the Parties involved in the bargaining for Agreements to replace the NSW and National Agreements, I am not satisfied that the employer has breached the good faith bargaining requirements.

Promote Fair and Efficient Bargaining - Paragraph (b) of Sub-Section 238 (4)

[56] There was broad acceptance that the bargaining for the South East Agreement had not progressed with sufficient efficiency. The lack of progress with the bargaining was summarised by one of the witnesses who gave evidence for the Unions, Mr Stewart, when he said: “...we’ve been three or four months in and we still haven’t really got anywhere.” 3

[57] As is often the case, each side blamed the other for the lack of progress with the bargaining. In particular, the employer complained that the Unions could not formulate a coherent, unified position which embraced a merging of NSW and Victoria. The Unions asserted that the employer had undertaken “... a major attack on the conditions of the New South Wales employees.” 4

[58] The employer believed that the making of the scope order would remove the issue of scope which was the impediment to efficient bargaining. The employer considered that the scope order would “recalibrate” the bargaining and direct attention to negotiation of the terms of a South East Agreement as opposed to any continuation of a standalone NSW Agreement.

[59] The Unions argued that the scope issue was not the cause of the inefficient bargaining and that even if the scope order was made, the underlying problem of the potential loss of conditions for NSW employees would remain. Further, the Unions raised the issue of potential unfairness for NSW employees who were being merged with the numerically superior, but conditions inferior Victoria employees.

[60] In respect to the question of unfairness as may be perceived by NSW employees, it should be noted that enterprise bargaining often involves scope or coverage within which there are identifiable groups who may represent a minority or sectional interest. There are often dissatisfied minorities, indeed sometimes individuals, who have to reluctantly accept the outcome determined by a majority vote in support of an Enterprise Agreement.

[61] In addition, in the present circumstances where bargaining representatives are comprised by a number of Unions, and an approach has been adopted whereby a single bargaining unit, comprising the various Unions, appears to have determined to act with a degree of solidarity, there is considerable prospect that the reasonable claims of any minority would be properly addressed before any endorsement is provided for a proposed South East Agreement. Of course the level of realised solidarity may fluctuate and depend upon the broader perception of the reasonableness or otherwise of particular minority or sectional issues.

[62] On the issue of promoting efficient bargaining, it is important in this instance to recognise the difficulties that have been encountered by the Parties as they have attempted to negotiate a replacement Agreement which includes NSW. These difficulties can be contrasted with the reasonable progress of negotiations for the North West Agreement. Despite their acknowledgement of the failure of the bargaining to date, the Unions did not suggest any alternative means to resolve the bargaining deadlock reached in respect of the South East Agreement.

[63] Consequently, the Commission is faced with the proposition that to simply refuse the application for a scope order, in the absence of any other course of action, would open the prospect of entrenching the ongoing inefficient bargaining for the South East Agreement. Therefore, the option to do nothing could not, on any objective analysis, promote fair and efficient bargaining, while the scope order would have some probability to satisfy this particular factor contained in sub-section (4) (b) of s. 238.

Fairly Chosen - Paragraph (c) of Sub-Section 238 (4)

[64] The factor in sub-section (4) (c) regarding whether a group is fairly chosen is modified by sub-section (4A) which introduces some specific requirements that must be considered in order to establish that a group, other than a group comprising all employees, has been fairly chosen. Sub-section (4A) introduces into any assessment as to whether or not a group has been fairly chosen consideration of whether the group is geographically, operationally or organisationally distinct.

[65] There have been numerous Decisions which have examined the approach to an assessment as to whether a group of employees was geographically, operationally or organisationally distinct. It is instructive to refer to a Full Bench Decision of FWA in the case of Cimeco Pty Ltd v Construction, Forestry, Mining and Energy Union; The Australian Workers’ Union; “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU); Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (Cimeco). 5

[66] The following extract from the Full Bench Decision in Cimeco is relevant:

“[19] Given the context and the legislative history it can reasonably be assumed that if the group of employees covered by the agreement are geographically, operationally or organisationally distinct then that would be a factor telling in favour of a finding that the group of employees was fairly chosen. Conversely, if the group of employees covered by the agreement was not geographically, operationally or organisationally distinct then that would be a factor telling against a finding that the group was fairly chosen.

[20] It is important to appreciate that whether or not the group of employees covered by the agreement is geographically, operationally or organisationally distinct is not decisive, rather it is a matter to be given due weight, having regard to all other relevant considerations.

[21] It is not appropriate to seek to exhaustively identify what might be the other relevant considerations. They will vary from case to case and will need to be demonstrated to the satisfaction of the tribunal. The word ‘fairly’ suggests that the selection of the group was not arbitrary or discriminatory. For example, selection based upon employee characteristics such as date of employment, age or gender would be unlikely to be fair. Similarly, selection based on criteria which would have the effect of undermining collective bargaining or other legislative objectives would also be unlikely to be fair. It is also appropriate to have regard to the interests of the employer, such as enhancing productivity, and the interests of employees in determining whether the group of employees was fairly chosen. In this regard, it is not only the interests of the employees covered by the agreement that are relevant; the interests of those employees who are excluded from the coverage of the agreement are also relevant.” [Emphasis added]

[67] There was a clear, logical rationale for the employer’s desire to reconfigure the geographical coverage of the applicable industrial instruments. In addition to geographical separation, the reconfiguration to establish a North West Agreement and South East Agreement involved some broadly different operational requirements. Although there was not an exclusive operational distinction, there was a delineation which broadly involved both FIFO/DIDO operations and daily engagement operations under the North West Agreement, while the South East Agreement anticipated only daily engagement operations and no FIFO/DIDO.

[68] Significantly, the group chosen for the South East Agreement would remove the artificial delineation represented by the Murray River (NSW/Victoria boarder). Despite some of the Unions’ submissions, there could be little doubt as to the undesirability of having different terms and conditions applying to employees working alongside one another performing the same work. The benefits that could be envisaged by the reconfiguration that involved the South East Agreement were acknowledged by the witness for the Unions, Mr Stewart, when he said; “I’m always keen to try to work through the south-east agreement because there appear to be benefits for the company, ...”  6

[69] It was abundantly clear from the evidence that the group chosen to be covered by the South East Agreement was chosen for logical, business operational reasons. The group to be covered by the South East Agreement is geographically and in broad terms, operationally distinct from the remaining employees who are to be covered by the North West Agreement. Consequently, I am satisfied that the group of employees to be covered by the South East Agreement (and the North West Agreement) has been fairly chosen.

Reasonable in the Circumstances - Paragraph (d) of Sub-Section 238 (4)

[70] The final factor of the legislative requirements for a scope order is that it be reasonable in all the circumstances. This factor is directed towards an overall evaluation of the various aspects which have been identified as part of the examination of the other factors, namely: whether the applicant for the scope order has been bargaining in good faith; and, whether the scope order would promote fair and efficient bargaining; and, whether the scope order identifies a group that was fairly chosen. In addition, this factor provides for consideration of any other matter or particular circumstance which might be relevant and which should be given due consideration before any scope order is made or rejected.

[71] It should be noted that each of the paragraphs (a) to (d) of sub-section 238 (4) of the Act are separated by the word “and”. Therefore, these constituent elements are cumulative requirements for the making of any scope order. Consequently, even if I was to consider that some factor might establish that the scope order would be reasonable in all the circumstances, the order could not be made unless all the other factors were satisfied.

[72] In this instance I am most concerned that the impasse reached with the bargaining has been, in no small part, attributable to the apparent mistrust and friction between different Branches of one or more of the Unions. In some respects the historical State based Branch structure of the Unions has operated to impede and frustrate the employer’s legitimate and sensible reconfiguration for industrial instrument coverage.

[73] Although the concerns of the NSW employees are understandable, the best outcome for all the employees will be achieved if sensible change is embraced and not stymied by fear which is fostered by historical differences between Branches of one or another Union. As was identified during the Hearing, the NSW employees will be represented by competent and experienced Union Officials who are capable of ensuring that the bargaining for the South East Agreement does not lead to an outcome that leaves the NSW employees disadvantaged. For example, the prospect for the South East Agreement to include a NSW schedule with perhaps, certain time limited provisions is just one means by which some of the differences in conditions as between NSW and Victoria might be harmonised over time and without disadvantage to existing NSW employees.

Conclusion

[74] This application for a scope order has firstly involved consideration of a challenge to the standing of the applicant which in this instance was the employer. I have considered this challenge and conclude that it must be rejected. The employer has standing to make the application.

[75] Further, the application has been considered and determined by reference to the four factors which I have extracted from the relevant operative provisions of the Act, namely sub-sections 238(4) and 238(4A). These four factors require that any scope order must: (1) be made only if an applicant has been bargaining in good faith; and, (2) promote fair and efficient bargaining; and, (3) specify a group to be covered that was fairly chosen; and, (3) be reasonable in the circumstances.

[76] In this instance I have been satisfied that the applicant has met the good faith bargaining requirements, and, that the scope order sought would promote both fair and efficient bargaining, and, that the group specified in the scope order is a group that was fairly chosen, and, in the circumstances it would be reasonable to make the scope order.

[77] Consequently, the legislative requirements for the making of the scope order have been met and in view of the conclusions that I have reached I am of the view that the application should be granted. The appropriate Order as sought by the employer will be issued separately and the matter is concluded accordingly.

COMMISSIONER

Appearances:

Ms L Saunders appeared for the AMWU;

Mr S Crawford appeared for the AWU;

Ms M Jenner appeared for the APESMA;

Mr G Borenstein appeared for the CEPU via telephone;

Mr N Harrington, counsel, together with Mr M Dunphy, solicitor, from Hall & Wilcox appeared for the employer.

Hearing details:

2014.

Sydney:

December 17, 18.

 1   Exhibit 1 - Attachment “F”.

 2   Transcript of proceedings @ PN1962.

 3   Transcript of proceedings @ PN1321.

 4   Transcript of proceedings @ PN1483.

 5   Cimeco Pty Ltd v Construction, Forestry, Mining and Energy Union; The Australian Workers’ Union; “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU); Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia [2012] FWAFB 2206.

 6   Transcript of proceedings @ PN1350.

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