ASC Pty Ltd v Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia

[2017] FWC 5295

[2017] FWC 5295

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
Section 418 - Application for an order that industrial action by employees or employers stop etc.

Section 229 - Application for a bargaining order

Section 425 - Application to suspend protected industrial action, cooling off

ASC Pty Ltd
v
Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia
(C2017/5600)

ASC Pty Ltd
v
Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia
(B2017/953)

ASC Pty Ltd
v
Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia
(B2017/952)

DEPUTY PRESIDENT ANDERSON ADELAIDE, 13 OCTOBER 2017

Application to suspend or terminate protected action – application to stop unprotected action – application for bargaining orders – industrial action notified but not yet taken – construction of section 425 Fair Work Act 2009 – meaning of “being engaged in” – Commission power not yet enlivened – applications adjourned.

[1] On 11 October 2017 the ASC Pty Ltd (ASC) made three applications to the Commission under the Fair Work Act (FW Act) seeking orders against the Communications Electrical Electronic Energy Information Postal Plumbing and Allied Services Union of Australia - Electrical Energy and Services Division South Australian Branch (CEPU) and its members employed by ASC.

[2] The applications are as follows:

● An application for an order for suspension or termination of protected industrial action (section 425 FW Act);

● An application for an order to stop unprotected industrial action (section 418 FW Act); and

● An application for a bargaining order against the CEPU (section 229 FW Act).

[3] Each application involves a common subject matter. On 6 October 2017 the CEPU served on the employer a notice under section 414 of the FW Act of intention to take industrial action in the form of an unlimited number of stop work meetings of varying times and duration between 12 October and 8 November 2017 (inclusive). It is this industrial action which the ASC seeks to have suspended or terminated by order of the Commission.

The Industrial Context

[4] ASC is contracted, amongst other things, to build and maintain Collins Class submarines at Osborne in South Australia for the Department of Defence (Australian Navy). More particularly, ASC is currently contracted to deliver submarines out of maintenance in accordance with a scheduled programme in order to achieve a contracted delivery obligation to undock a submarine on 6 December 2017.¹

[5] ASC is a significant employer, particularly in Adelaide. Its operations are publicly funded and ultimately controlled by the Australian government and the policy, contractual, regulatory and legal framework established by the government for its purposes.

[6] These matters concern the operation of ASC at what is known as ‘ASC North’. ASC North is submarine build and maintenance operations. ‘ASC South’ is shipbuilding operations.

[7] Employees at ASC North are employed under the ASC Pty Ltd Enterprise Agreement 2012-2015 (the Agreement), an Agreement made and approved under the FW Act. The Agreement has passed its nominal expiry date. The evidence before me² is that since 23 February 2015, a period of over two years, ASC has been negotiating with three unions for a replacement Agreement. The three unions are the CEPU, the Australian Manufacturing Workers Union (AMWU) and the Australian Workers Union (AWU). Each union is a bargaining representative for its members employed by ASC.

[8] Negotiations for a replacement agreement at ASC North have been conducted in an orderly fashion through a joint ASC/union bargaining committee. They have been difficult and involved occasional periods of protected industrial action.³ The employer says it has been constrained in its wage offers by the Australian Government’s Workplace Bargaining Policy which it believes restrict wage increases to a maximum of 2% per year and prohibits retrospective arrangements.⁴ Unions submitted a workforce log of claims in 2016 but large elements of that claim were ‘parked’ or set to one side as they could not be accommodated within the Australian Government’s Workplace Bargaining Policy. This included a CEPU claim for an Electrical Licence Allowance.⁵

[9] Negotiations for a replacement Agreement at ASC North have now reached an advanced stage.

[10] On 26 September 2017 ASC agreed, at the request of the combined unions, to pay for two workplace meetings of union members on 3 October to consider a negotiated proposed replacement Agreement. ASC’s agreement to pay for these two meetings was expressed to be conditional on the following:

“These paid meetings are subject to the following caveat consistent with your verbal undertaking this morning. The combined unions agree that they will not notify ASC of any new industrial action effective today 26 September until after 13 October 2017.”6

[11] On the evidence before me, the bargaining representatives of each of the unions agreed to this condition, although it is in dispute whether that agreement was absolute or subject to the view of union members. The CEPU’s bargaining representative was its Assistant Branch Secretary Simon Pisoni. Mr Pisoni (who could not attend this hearing, but whose evidence was submitted through CEPU State Secretary John Adley) acknowledges that “the union officials at the meeting with Ms Kidman gave an undertaking that no rolling stoppages would be initiated by union delegates for a period of 2 weeks.”⁷

[12] At a meeting of the bargaining committee on 4 October 2017 the unions reported back on the paid meetings of members which had been held the previous day in accordance with the agreement. The minutes of that bargaining meeting record that the combined unions reported that “feedback was that the offer was generally accepted by the members and that the matter of wages and back-pay was the only outstanding issue” and that “the union reps explained that they advised the members that this offer was the best that could be negotiated under the circumstances.”⁸ ASC advised the unions that it was “unable to enhance the wage offer” and that it would be “seeking to put the document out for another vote, possibly opening the seven day Access Period as early as next week.”⁹

[13] Mr Pisoni then attended a meeting of CEPU members employed by ASC on 5 October. The evidence before me is that the members rejected the employer’s wage offer but also acknowledged their earlier (parked) claim of an Electrical Licence Allowance was lost. A majority of CEPU members voted to recommence protected industrial action. Mr Pisoni was instructed to notify ASC of the intention of CEPU members to take industrial action.

[14] On 6 October 2017 the CEPU served on the ASC a ‘Notice by Bargaining Representative of Employees of Intention to take Employee Claim Action’ under section 414 of the FW Act.¹⁰ The industrial action notified is expressed to be “an unlimited number of stop work meetings of varying time and duration” between 12 October and 8 November 2017 (inclusive). The Notice identifies the times on 18 days between 12 October and 8 November when on each of those days nine separate half hour stop work meetings are said to take place. That are a total of 162 foreshadowed stop work meetings.

[15] Only the CEPU notified ASC of its intention to take protected action following the 4 October bargaining meeting. Neither the AMWU nor the AWU have done so.

[16] Notwithstanding this development, the employer is proceeding to conduct a vote of the workforce on the proposed Agreement on 19 and 20 October. The statutory Access Period (in which employees receive material on the proposal and consider their position) commenced on 11 October.

ASC’s Position

[17] ASC has unsuccessfully tried to convince the CEPU to withdraw its intention to take industrial action during this Access Period. ASC claims that the CEPU is acting contrary to the ‘agreement’ reached on 26 September, not acting in good faith nor genuinely trying to reach an agreement by reactivating a parked claim at a very advanced stage of negotiations. By letter dated 10 October¹¹ the ASC gave the CEPU written Notice purported to be under section 229 of the FW Act outlining its concerns. It requested a response by 11am 11 October, and considered that (24 hour period) a reasonable time frame for a response having regard to the circumstances.

[18] ASC received a response from the CEPU dated 11 October. Mr Adley advised that he had attended meetings of CEPU members employed by ASC on 10 October and that a majority had voted to not revoke the notice.

[19] ASC responded by lodging these applications in the Commission.

CEPU position

[20] The CEPU contend that its members are exercising their lawful right to take protected industrial action in support of their bargaining position. The CEPU contend that at all times Mr Pisoni and its officials have acted in good faith, and that any agreements reached or to which they were a party were subject to the wishes of its members. The CEPU says that it has not reactivated a parked claim for an Electrical Licence Allowance, but simply put the employer on notice that it is disappointed that the claim is lost and that it may resurface in future bargaining rounds.

[21] In respect to the section 425 application, the CEPU raise a threshold point. It contends that the notified protected industrial action has not yet been “engaged in” and accordingly the Commission has no power to exercise its discretion to order a suspension. In any event, the CEPU contend that it is not appropriate for the Commission to do so having regard to the factors in section 425(1)(a) to (d). In particular it asserts that it would not be “beneficial” (within the meaning of subsection (1)(a)) to it as a bargaining representative for an order to be made.

Commission Proceedings

[22] Each of the three applications were filed in the Commission at approximately 1pm on 11 October. The FW Act requires proceedings to be conducted efficiently and, in respect to section 418 applications, to be dealt with as far as practicable within 48 hours.¹² I listed each matter for concurrent hearing at 2.15pm on 12 October.

[23] Although the ASC only seek orders against the CEPU, given that the section 229 application seeks bargaining orders and given the potential impact of bargaining orders on the collective unions, I required the AMWU and the AWU to be notified of these proceedings. Each were notified. Neither appeared on these applications.

[24] At the hearing I granted permission for the ASC to represented by a lawyer. This was opposed by the Mr Adley for the CEPU, who appeared on behalf of the union and with Mr Skeer an employee of ASC and member of the CEPU. I considered that having regard to the factors in section 596 of the FW Act and in particular the complexity of the multiple applications and the statutory scheme concerning industrial action that legal representation would assist the efficient conduct of proceedings. I granted permission on the condition that it would be withdrawn if I considered that efficiency or fairness would be compromised.

[25] Evidence in the form of witness statements was led from ASC’s Corporate HR Operations Manager Nicole Kidman and ASC’s General Manager Operations Mark Stephens. Mr Stephens gave further oral evidence at the hearing. For the CEPU, evidence in the form of a witness statement was led from Mr Adley. Neither Ms Kidman nor Mr Adley were required to be cross examined on their evidence.

[26] At the hearing, ASC indicated that it intended, for current purposes to pursue its application for an order for suspension or termination of protected industrial action under section 425 of the FW Act. It indicated that its application for an order to stop unprotected industrial action may be dependant on the outcome of the section 425 application and the Commission’s view of the character of the industrial action. It did not press that application at this stage. It indicated that its application for a bargaining order, and the form of the order, may also depend on the outcome of the section 425 application and also the CEPU position on whether it has or has not reactivated the Electrical Licence Allowance claim. It did not press that application at this stage.

[27] This decision concerns only the merits of the ASC application for an order for suspension or termination of protected industrial action under section 425 of the FW Act.

The Legal Framework

[28] Section 425 of the FW Act is a provision which gives the Commission power to order what is colloquially referred to as a ‘cooling off’ period during the taking of protected industrial action. It provides as follows:

“425 FWC must suspend protected industrial action--cooling off

(1) The FWC must make an order suspending protected industrial action for a proposed enterprise agreement that is being engaged in if the FWC is satisfied that the suspension is appropriate taking into account the following matters:

(a) whether the suspension would be beneficial to the bargaining representatives for the agreement because it would assist in resolving the matters at issue;

(b) the duration of the protected industrial action;

(c) whether the suspension would be contrary to the public interest or inconsistent with the objects of this Act;

(d) any other matters that the FWC considers relevant.

(2) The FWC may make the order only on application by:

(a) a bargaining representative for the agreement; or

(b) a person prescribed by the regulations.”

[29] ASC is a bargaining representative for the Agreement. It has standing to make an application under subsection (2)(a). However, it is apparent from the section that a number of prerequisites exist before the factors in paragraphs (1)(a) to (d) are to be considered in determining whether suspension is appropriate. These prerequisites are:

● That the action is industrial action;

● That the industrial action is protected industrial action; and

● That the industrial action “is being engaged in”.

[30] It is not in contention that stop work meetings of the kind notified by the CEPU in its Notice of 6 October is industrial action within the meaning of the FW Act.¹³ I agree. Stop work meetings involve a failure to attend for work and perform work during the relevant period. Mr Stephens evidence, which was uncontroverted, is to the effect that these stop work meetings, if held, would cause substantial compromise to the ASC being able to meet its contractual obligations including its obligation to deliver a submarine product to the Navy on 6 December, as well as risk damage to its commercial position and reputation.¹⁴

[31] For the purposes of its section 425 application, ASC acknowledges that protected action has been authorised by a vote of employees arising from a protected action ballot order issued by this Commission in 2016 and that protected action has been taken by the CEPU during the course of negotiations in a manner that enlivened the action as protected action within the meaning of section 459 of the FW Act. It was submitted by ASC that until the 6 October Notice by the CEPU, the most recent prior protected action had been collective protected action taken by the three unions in the form of stop work meetings on 26 to 28 September 2017.

[32] A substantive issue requiring decision in this matter is whether the threshold requirement that the industrial action “is being engaged in” within the meaning of section 425 has been met.

[33] The CEPU Notice of 6 October stated that stop work meetings are to commence from Thursday 12 October as follows:

“Thursday 12 October 2017

Nights – 12.45-1.15am; 3.45-4.15am; 6.45-7.15am

Dayshift – 8.45-9.15am; 11.15-11.45am; 3.15-3.45pm

Arvos – 5.45-6.15pm; 8.45-9.15pm; 11.45-12.15am (Friday)”

[34] The evidence before me is that at the time these proceedings commenced (2.15pm 12 October) no CEPU members employed by ASC have in fact stopped work at the designated times nor had the CEPU organised a stop work meeting for those times. In other words, a Notice of intention to take protected industrial action at these times had been issued by the CEPU but the Union and its members had not taken action to give effect to that intent.

[35] In response to questions from myself, Mr Adley for the CEPU said that it remained the intention of the CEPU members to take protected industrial action permitted by the Notice. He told the Commission that his members had not yet taken that action on advice from the CEPU and out of an abundance of caution given that ASC had issued these proceedings in the Commission which, in part, asserted that the industrial action was unprotected.

[36] Thus, the CEPU claims that the industrial action is not being “engaged in” and, accordingly, it submits that the Commission has no power to make an order under section 425 that the industrial action be suspended even if it were appropriate to do so (which it refutes).

[37] ASC concedes that, to date, the stop work meetings foreshadowed in the CEPU Notice of 6 October have not been held. However, it submits that industrial action is occurring because this is not a loose threat of industrial action but is notified industrial action in circumstances where that notification has commenced. It says the effect of the Notice has been to create uncertainty in production schedules and cause adjustment and readjustment to those schedules in order to manage quality, safety and operational risk. The oral evidence of Mr Stephens is to the effect that in the past 24 hours production schedules have been adjusted at cost and detriment to production. I accept this evidence. I find that the effect of the CEPU Notice has been to require changes to the ordinary scheduling of production and that this is likely to compound in the days to follow as the uncertainty of future foreshadowed industrial action arises even if the action is not taken.

[38] In the alternative, ASC argue that if the effect of the Notice on the business is not industrial action, then the Notice itself is industrial action, and on that basis it could be said that industrial action is occurring.

Consideration

[39] The language of section 425 must be given its ordinary meaning. Unlike other provisions of the FW Act which refer to industrial action which is “threatened, impending or probable”¹⁵, section 425 refers to industrial action “that is being engaged in”. The active present tense “being engaged in” is used by the legislature. I consider that these words require industrial action (within the meaning of section 19 of the FW Act) to be occurring or have occurred in fact for the Commission’s power to suspend to be enlivened.

[40] Section 19 of the FW Act provides:

“19 Meaning of industrial action

(1)  Industrial action means action of any of the following kinds:

(a)  the performance of work by an employee in a manner different from that in which it is customarily performed, or the adoption of a practice in relation to work by an employee, the result of which is a restriction or limitation on, or a delay in, the performance of the work;

(b)  a ban, limitation or restriction on the performance of work by an employee or on the acceptance of or offering for work by an employee;

(c)  a failure or refusal by employees to attend for work or a failure or refusal to perform any work at all by employees who attend for work;

(d)  the lockout of employees from their employment by the employer of the employees.

Note: In Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union v The Age Company Limited , PR946290, the Full Bench of the Australian Industrial Relations Commission considered the nature of industrial action and noted that action will not be industrial in character if it stands completely outside the area of disputation and bargaining.

(2)  However, industrial action does not include the following:

(a)  action by employees that is authorised or agreed to by the employer of the employees;

(b)  action by an employer that is authorised or agreed to by, or on behalf of, employees of the employer;

(c)  action by an employee if:

(i)  the action was based on a reasonable concern of the employee about an imminent risk to his or her health or safety; and

(ii)  the employee did not unreasonably fail to comply with a direction of his or her employer to perform other available work, whether at the same or another workplace, that was safe and appropriate for the employee to perform.

(3)  An employer locks out employees from their employment if the employer prevents the employees from performing work under their contracts of employment without terminating those contracts.

Note: In this section, employee and employer have their ordinary meanings (see section 11).”

[41] I do not accept the ASC submission that the mere notification of an intention to take employee claim industrial action within the meaning of section 414(1) and (2) of the FW Act means that industrial action is being engaged in. While I accept the ASC’s evidence that the uncertainty produced by the section 414 Notice has already had the effect of disrupting production schedules that is the effect of the Notice but cannot be said to be the effect of industrial action.

[42] Nor can it be said that the Notice is itself industrial action. It is a statement of intent to take industrial action. The FW Act does not compel a union to take any or all of the action specified in a section 414 Notice. To the extent that the intent is seen as a formal threat, the threat and the action are not one and the same, even if one follows the other. Section 425 does not empower the Commission to suspend a threat. It only empowers the Commission to suspend, if appropriate to do so, industrial action.

[43] In addition to the application of the ordinary meaning of the phrase “is being engaged in”, I consider that the statutory scheme and the evident purpose of section 425 supports this construction. Section 425 is a power to order a cooling off period from protected industrial action where the circumstances require. Those circumstances include where it would be beneficial to the bargaining representatives in that it would assist in resolving the matters at issue (subsection (1)(a)), or having regard to the duration of protected action (subsection (1)(b)). It is a provision aimed at enabling the parties to reflect and consider their positions without the pressure of continuing economic, operational and cost impacts of industrial action that has been occurring. It is a cooling off period intended to take some heat out of the dispute, and in particular the heat of industrial action.

[44] Given that stop work meetings have not been held as foreshadowed by the CEPU Notice, I find that the precondition in section 425 that industrial action is “being engaged in” has not been met by the ASC.

[45] In these circumstances I am not required to find whether the industrial action is or is not protected action. That remains an open question. I have not heard fully from the parties on the ASC’s section 418 application nor the basis upon which it claims that the action is or would be unprotected.

[46] A considerable amount of evidence is before me concerning the conduct of the CEPU, and in particular whether the section 414 Notice of 6 October is inconsistent with the agreement reached between the parties on 26 September. ASC submit that it is in the public interest for agreements reached to be adhered to, and that this is a relevant consideration under section 425(1)(c). ASC also submits that the cost and damage that would be caused by the multiple foreshadowed stop work meetings is a relevant consideration under section 425(1)(d). ASC further submit that in the context of the history of negotiation of the proposed replacement Agreement, it is likely to be beneficial to the bargaining representatives (which include all the unions, not just the CEPU) and assist the resolution of the matter if both the Access Period and the voting periods are conducted in an environment free from industrial action.

[47] I consider there to be substantial force in these contentions. On the evidence before me, were my jurisdiction invoked (for example by one or more of the stop work meetings having been held) I would be minded to suspend the industrial action in order to give the proposed Agreement the opportunity of being considered and voted on in an environment free from industrial action.

[48] In these circumstances, I will make no order with respect to the section 425 application. I will adjourn the application part heard to a date after 20 October 2017 for a further report back by the parties and provide liberty to both the ASC and the CEPU to call the matter on for further hearing at shorter notice should facts or circumstances arise which warrant that course.

[49] I will also adjourn the section 418 and section 229 applications part heard for the same reasons. In circumstances where the employer is not pressing the immediate determination of its section 418 application, and as a direct result the application has not been substantively heard, I consider it would be contrary to the public interest to make interim orders under section 420(2), and decline to do so.

DEPUTY PRESIDENT

Appearances:

Mr I. Colgrave, with permission, for the Applicant.

Mr J. Adley and Mr P. Skeer, for the Respondent.

Hearing details:

2017.

Adelaide.

12 October.

1 Exhibit A2 Statement of Mark Stephens paragraph 6(a)

2 Exhibit A1 Statement of Nicole Kidman paragraph 2

3 Negotiations between ASC and the same unions resulted in a replacement Agreement at ASC South (shipbuilding) in September 2017. That new Agreement was approved by the Commission on 20 September 2017

4 As referenced in Attachment NK5 to Exhibit A1 Statement of Nicole Kidman

5 Exhibit R3 Minutes of EBA Negotiations North 9 May 2016

6 NK1 Email Nicole Kidman 26 September 2017 1.34pm

7 Exhibit R1 Statement of John Adley paragraph 17

8 NK4

9 NK4

10 NK3

11 NK6

12 Section 420(1)

13 Section 19

14 Exhibit A2 Statement of Mark Stephens paragraphs 6(b) (c) (d) and 7

15 For example, section 418(1)(b)

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