Australasian Meat Industry Employees Union, The v Coles Supermarkets Australia Pty Ltd T/A Coles Supermarket

[2014] FWC 8871

[2014] FWC 8871

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.437 - Application for a protected action ballot order

Australasian Meat Industry Employees Union, The
v
Coles Supermarkets Australia Pty Ltd T/A Coles Supermarket
(B2014/1659)

COMMISSIONER SPENCER BRISBANE, 12 DECEMBER 2014

Proposed protected action ballot of employees employed in Coles Supermarket meat departments in the State of Queensland - application to extend minimum period of notice - exceptional circumstances.

[1] This decision relates to an application made pursuant to s.437 of the Fair Work Act 2009 (the Act) for a protected action ballot order of members of the Australasian Meat Industry Employees Union (the Union/Applicant) employed by Coles Supermarkets Australia Pty Ltd T/A Coles Supermarket (the Respondent).

[2] Directions were set, in line with the requirements in s.441 of the Act, for the Respondent to confirm in writing whether they objected to the application, and if so, on what grounds.

[3] The Respondent objected to the order as sought, on the ground that they sought an amendment requiring more than three days notice of any protected industrial action to be given by the Applicant.

[4] The Respondent argued that there are ‘exceptional circumstances’ to justify the extension (pursuant to s.443(5) of the Act) and argued that seven working days notice was reasonable.

[5] The Respondent pursued an amended notice period of seven working days on the basis that there were exceptional circumstances related to the nature of the Respondent’s business which justified the order of an extension of time, with particular reference to economic harm and wastage of product.

[6] All of the other statutory pre-requisites for the making of the order were met. There was no dispute that the parties were genuinely trying to reach an agreement. The only objection to the order sought was made in relation to the extended notice period. The parties’ submissions on that issue are further considered in this Decision.

Legislation

[7] Section 414 of the Act provides, in relation to the period of notice, as follows:

“414 Notice requirements for industrial action

Notice requirements—employee claim action

(1) Before a person engages in employee claim action for a proposed enterprise agreement, a bargaining representative of an employee who will be covered by the agreement must give written notice of the action to the employer of the employee.

(2) The period of notice must be at least:

(a) 3 working days; or

(b) if a protected action ballot order for the employee claim action specifies a longer period of notice for the purposes of this paragraph—that period of notice.

....”

[8] Section 443 of the Act provides for when the FWC must make a protected action ballot order as follows:

“443 When the FWC must make a protected action ballot order

(1) The FWC must make a protected action ballot order in relation to a proposed enterprise agreement if:

(a) an application has been made under section 437; and

(b) the FWC is satisfied that each applicant has been, and is, genuinely trying to reach an agreement with the employer of the employees who are to be balloted.

(2) The FWC must not make a protected action ballot order in relation to a proposed enterprise agreement except in the circumstances referred to in subsection (1).

(3) A protected action ballot order must specify the following:

(a) the name of each applicant for the order;

(b) the group or groups of employees who are to be balloted;

(c) the date by which voting in the protected action ballot closes;

(d) the question or questions to be put to the employees who are to be balloted, including the nature of the proposed industrial action.

(3A) For the purposes of paragraph (3)(c), the FWC must specify a date that will enable the protected action ballot to be conducted as expeditiously as practicable.

(4) If the FWC decides that a person other than the Australian Electoral Commission is to be the protected action ballot agent for the protected action ballot, the protected action ballot order must also specify:

(a) the person that the FWC decides, under subsection 444(1), is to be the protected action ballot agent; and

(b) the person (if any) that the FWC decides, under subsection 444(3), is to be the independent advisor for the ballot.

(5) If the FWC is satisfied, in relation to the proposed industrial action that is the subject of the protected action ballot, that there are exceptional circumstances justifying the period of written notice referred to in paragraph 414(2)(a) being longer than 3 working days, the protected action ballot order may specify a longer period of up to 7 working days.

Note: Under subsection 414(1), before a person engages in employee claim action for a proposed enterprise agreement, a bargaining representative of an employee who will be covered by the agreement must give written notice of the action to the employer of the employee.”

[9] The matter for determination is whether there are exceptional circumstances justifying the period of written notice being longer than three working days, pursuant to s.443(5) of the Act.

Submissions

[10] The Respondent relied on exceptional circumstances in arguing for an extended period of notice and referred to the case authority of Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Australian Postal Corporation (CEPU v Australia Post)  1. In that decision, Vice President Lawler, referring to the Decision of Rares J in Ho v Professional Services Review Committee No 2952, stated the following:

“[10] In this passage his Honour was concerned with the ordinary meaning of the expression “exceptional circumstances” and the approach identified is, in my view, equally applicable to the use of that expression in s.465(3). In summary, the expression “exceptional circumstances” requires consideration of all the circumstances. To be exceptional, circumstances must be out of the ordinary course, or unusual, or special, or uncommon but need not be unique, or unprecedented, or very rare. Circumstances will not be exceptional if they are regularly, or routinely, or normally encountered. Exceptional circumstances can include a single exceptional matter, a combination of exceptional factors or a combination of ordinary factors which, although individually of no particular significance, when taken together are seen as exceptional. It is not correct to construe “exceptional circumstances” as being only some unexpected occurrence, although frequently it will be. Nor is it correct to construe the plural “circumstances” as if it were only a singular occurrence, even though it can be a one off situation. The ordinary and natural meaning of “exceptional circumstances” includes a combination of factors which, when viewed together, may reasonably be seen as producing a situation which is out of the ordinary course, unusual, special or uncommon.

[11] However, it is important to note that when considering whether to make an order pursuant to s.463(5) the Commission is not simply concerned with determining whether there are exceptional circumstances. There must be exceptional circumstances “justifying” the specification of a longer notice period. The notion of justification is critical and calls for a consideration of the purpose of the notice required by s.441.”

[11] The Respondent submitted that an issue to be taken into account was that, where the interests beyond that of the immediate parties are impacted by the taking of industrial action, the tendency is for an extension of the notice period to be provided, and in this regard relied onthe decision of Commissioner Lewin in Transport Workers’ Union of Australia 3, which is extracted as follows: (citations omitted)

“[17] Decisions of Fair Work Australia cited above which have granted an extension of the relevant period of notice beyond that prescribed by s414(2)(a) of the Act have all involved circumstances where a broader public interest to those of the parties immediately concerned with the protected industrial action existed. Such circumstances are the conjunctive circumstances of the employer and third parties referred to by Vice President Lawler. Those circumstances included: the national interest in the operation of the Australian Customs and Border Protection Services; the availability of public transport services in a capital city; and a particular form of industrial action involving risks to public safety from prisoners of a State and access to medical services within a State prison, in which case the period of notice was extended from three to five working days but limited to a particular form of protected industrial action, among others, which might be taken by employees of the employer responsible for the management of the prison.”

[12] In Commissioner Lewin’s later decision in Construction, Forestry, Mining and Energy Union 4 (EnergyAustralia), regarding a proposed protected action ballot of employees of EnergyAustralia Yallourn Pty Ltd, the Commissioner referred to the following passage from his earlier decision in Transport Workers’ Union of Australia as follows: (citations omitted)

“[41] I was required to consider the approach to be taken by the Commission to the exercise of the discreationary (sic) power provided by s.443(5) of the Act in the case of Transport Workers’ Union of Australia. In the course of my Decision I referred to a number of Decisions of Fair Work Australia and in particular the decision of Vice President Lawler as referred to below:

[13] A number of decisions of Members of the Tribunal in relation to the operation of s443(5) of the Act have given consideration to the proper interpretation and application of the words ‘exceptional circumstances’ as they appear in the subsection . Those Decisions have uniformly followed the decision of Vice President Lawler, of the Australian Industrial Relations Commission, in CEPU v Australia Post which cites with approval the decision of Rares J of the Federal Court of Australia in Ho v Professional Services Review Committee No 295. In the Court’s decision the expression ‘exceptional circumstances’ appearing in a Commonwealth Act was considered with reference to the relevant authorities.”

[13]  The Respondent referred to a number of cases where the Commission has increased the notification period, generally in relation to essential services important to the public interest, such as health services 5, public transport services6, correctional7 and fire8 services, the provision of power9 and airport security10, and customs and border protection services11. Between five and seven working days were for granted for notice periods in these cases.

[14] Commissioner Stanton heard a similar case to the current matter of Australasian Meat Industry Employees' Union, Newcastle and Northern Branch, and the Australasian Meat Industry Employees' Union, New South Wales Branch v Coles Supermarkets Australia Pty Ltd and Bi-Lo Pty Ltd 12(AMIEU v Coles and Bi-Lo).

[15] The Respondent contended that, on the basis of the definition in the CEPU v Australia Post 13  case, exceptional circumstances exist which justifies an extension of the notice period as sought.

[16] The Respondent submitted that, on the basis of the circumstances of supply and operation of Coles Meat departments throughout Queensland and the perishable nature of the product (meat), failure to grant the order with an increased notification period would give rise to significant wastage of the product, due to the nature of the Respondent’s supply chain, processing arrangements and the limited shelf life of the fresh product.

[17] Further, it was submitted that industrial action in peak periods (Christmas, school holidays etc), together with the issues of delay in supply, meant wastage would be significantly exacerbated.

[18] The Respondent further contended that there was a basis, for the exercise of the discretion, to extend the period where a public interest exists. The Respondent submitted a public interest existed on the basis of the unnecessary slaughter of livestock. The evidence of the Respondent was that the business was, in its guidelines for operation, focussed on avoiding the unnecessary slaughter of livestock.

[19] Additionally the Respondent tendered the statement of Mr Eric William Daffy (Meat Operations Manager). Mr Daffy gave evidence at the hearing. Mr Daffy’s statement detailed the meat department operations in Coles’ stores:

“...

The meat department

7. The Coles meat department stocks a variety of fresh beef, veal, lamb, chicken, pork cuts and small goods, as well as game meats. It is typically comprised of refrigerated shelves (meat cases) located near the dairy, deli and fresh produce departments which customers can access. In some stores, the meat department may contain a service area.

8. Not all meat products are prepared on-site, with many lines prepared by third party providers under strict Coles requirements. Coles employs over 800 Butchers within its stores, in addition to other skilled non-trades team members. A Butcher may hold a Certificate III qualification, or have four years’ general experience in butchery. Coles operates three meat department models in its stores:

(a) The first meat department model is referred to as ‘in-store meat production’ or an ‘ISM store’. ISM stores perform basic butchering tasks (for example, butchering of fresh beef, lamb and pork into packaged offerings). Under this model:

i. there is a separate ‘meat production’ area within the store. The butchering of meat is performed within the confines of the store although in a separate area that is often visible to, but not accessible by members of the public;

ii. weighing and packing is then performed within the meat department of the stores and the meat products are made available to customers on the retail floor; and

iii. even under this model, not all of the products are prepared within the meat production area within store. Some meat products (such as mince) are delivered to Coles produced and packaged ready for display in the meat case for sale to customers (meaning that butchering tasks are not required).

(b) The second meat department model is the sale of ‘retail ready’ meat products, which are sourced from third party suppliers. Under the ‘retail ready’ model:

i. a third party supplier provides Coles with produced and packaged meat products. Typically, butchering skills are not required and the products are displayed within the stores; and

ii. there is no necessity for Meat Department Team Members to pack the meat products. They are simply displayed to customers on the retail floor.

(c) The third meat department model is referred to as ‘Coles butchery’. This is a similar model to the ‘in-store meat production’ model but generally does not have a band saw and cuts boneless beef only. In the majority of these stores, lamb and pork is prepared by a third party pursuant to the ‘retail ready’ model referred to above.

9. If the Meat Department Team Members take industrial action, each of the above three models would be affected. The impact is bigger in ISM stores and Coles butchery stores, because they hold primal stock at the store which must either be processed or wasted...”

[20] Mr Daffy provided an explanation of the meat model operations of Coles’ stores 14:

(a) the ‘in store meat’ model stores cut beef, lamb and pork on site;

(b) the ‘retail ready’ model; and

(c) the ‘Coles butchery’ model stores cut beef and lamb and a number of stores cut only boneless beef.

[21] Mr Daffy also stated:

“...

11. The duties of Meat Department Team Members, subject to the relevant job classification, typically include receiving, unloading and processing delivered loads, slicing, general butchering, packing, wrapping and labelling the stock (where necessary, depending upon the meat department model in store), filling the meat cases and maintaining the presentation of stock, engaging and servicing customers (including offering product knowledge and cooking advice), replenishing and merchandising the case, rotating stock and general cleaning duties.

12. The meat cases are those refrigerated cabinets within the store (generally located in the fresh food area) where customers can self-select product....”

[22] The evidence further stated the significant number of meat department employees and that each day a significant number of tonnes of “primal cut beef, lamb and pork products are delivered to Queensland Coles stores to be cut by our Butchers in an ISM store or a Coles butchery store. This figure excludes mince and other meat products such as sausages, poultry and roasts which are produced at third party facilities...” 15

[23] Mr Daffy’s statement further specifically addressed the wastage issue, as follows:

“...

Meat spoilage and waste

30. Our farmers grow livestock to meet Coles’ ongoing forecast, which is typically three months in advance. That product is slaughtered to meet our needs. We kill and bone based on that forecasted plan. In light of the three month lead time, we are committed to that livestock and cannot reduce our livestock order on account of industrial action. The supply chain continues to push the primal product through. If through industrial action we cannot process the primal product or do not sell as much meat as a result, the primal product will continue to build up and simply go to waste. There is nowhere for the product to go if we cannot process it and sell it through our stores.

31. Our farmers are located around Australia. A lot of our beef farms are located in Queensland. The pork farms are located in South Australia. Lamb farms are predominantly in NSW and Victoria.

32. Depending upon the species, fresh meat can be kept vacuum sealed for anywhere between 28 and 60 days from slaughter. Pork has the least amount of shelf life, at only 28 days. It is produced and slaughtered in South Australia and transported to various distribution centers, including in Brisbane. However, vacuum packed product can be released from the distribution centre with as little as 12 days shelf life remaining under Coles guidelines. Any stoppages would reduce the capacity for Coles to produce these products prior to their best before date.

33. Once the vacuum seal is broken (at the time that the product is cut) it becomes highly perishable. As noted at paragraph 21 above, it has a maximum shelf life before it spoils of approximately 6 days (including day of production) when kept refrigerated. Coles cannot sell meat product after its ‘best before’ date or its ‘use by’ date...”

[24] In response to questioning as to strategies that could diminish the impact of action; Ms Daffy stated he would need to reduce orders to stores. The relevant considerations were set out as follows:

“...

34. Where Coles has only 3 days' notice of employees taking protected industrial action, Coles will have next to no ability to ensure that the meat at the ISM stores and Coles butchery stores is processed. Meat cannot be sent back through Coles’ supply chain to the processing plants in Queensland or for redistribution before it spoils. Further, any orders that have already been placed and processed cannot be cancelled by a store, due to the tight timeframes associated with meeting road and rail transport requirements.

35. In contrast, in the space of 7 days, Coles could ensure that the majority of primal product at ISM stores and Coles butchery stores can be processed and further orders reduced. This will help Coles take steps to minimise waste. Notwithstanding this, Coles and its customers will still be affected even with 7 days’ notice. The logistics of managing the protected industrial action is still very complex. It means that Coles still must redirect product from our abbatoirs or our distribution centres to prevent that product being wasted as far as possible. Any stoppage will compound the issue, with Meat Managers trying to plan when butchers will be at work to cut primal product ordered.

36. Furthermore, it will be difficult for Coles to supply product to remote stores to meet their customers’ needs. Even if Coles were to rely upon retail ready product as an alternative, we will encounter capacity problems in the Brisbane retail ready facility to accommodate this additional demand. This will result in lost sales to Coles and will reduce our capacity to deliver the full range of meat products to all Queensland Coles customers, therefore affecting customer satisfaction. In addition to inevitable lost sales, putting in place contingencies such as reducing stock holding or supplying alternative product will take up a significant amount of time, it is inconvenient and it imposes additional cost upon Coles in managing this process.

37. I have read each of the types of notices of action proposed in the protected ballot. the impact upon Coles, as set out in this statement will be felt in respect of each kind of intended action, as apart from the overtime ban.

...” 16

[25] The Applicant contended that the substantial premise on which the Respondent relied for its claim for an extension of the notice period, was that it would suffer economic harm if an order were not made to extend the period.

[26] In reliance on the authority of CEPU v Australia Post 17, the Applicant submitted that the granting of an order with the increased notice period as sought, would lead to a diminution of effectiveness of the protected industrial action. The Applicant argued that the basis of the objection was that any industrial action would cause economic harm and that this is the purpose of protected industrial action. Further, it was argued that this cannot constitute exceptional circumstances.

[27] The Applicant submitted that economic harm occasioned by wastage is not an exceptional circumstance, and that wastage of product is but an outcome of industrial action and does not make the circumstances of the Respondent’s operations exceptional.

[28] Furthermore, the Applicant acknowledged that, whilst customer dissatisfaction may result from not being able to acquire their usual meat products, it does not represent an exceptional circumstance, nor is the requirement for customers to resort to alternative food stuffs or suppliers an exceptional circumstance.

[29] The Applicant identified that the Respondent’s slaughter of animals is scheduled to occur some three months in advance and therefore the provision of an increased notice period would not influence this schedule. Further, Mr Daffy conceded under cross examination by Mr Norris, that the Coles and Australian Country Choice were able to divert non-required beef primals (due to protected industrial action) to the export market.

[30] Accordingly the Applicant contended that, if the “unnecessary” slaughter, referred to by the Respondent, meant that the Respondent would be unable to benefit from the sale of the meat, this did not represent an exceptional circumstance justifying an extension of the notice period.

[31] The Applicant contended that no actual exceptional circumstances had been demonstrated by the Respondent apart from predominantly potential financial loss.

Conclusion

[32] The evidence of the Respondent emphasised the significant logistical exercise of providing fresh meat product to the 186 Queensland Coles stores. It is recognised that the supply of fresh meat products to the Respondent’s Queensland supermarkets can take three days to transport to from the distribution centre.

[33] Is recognised that the industrial action will cause disruption to the provision of the full range of meat products in the employer’s business operation, however, the most significant impact, argued on the evidence, was in relation to concerns regarding wastage. Evidence was also provided on the range of defensive strategies the Respondent could take, within the ordinary three day notice period. The Respondent agreed that alternative offerings of retail ready meat products, such as chicken, and a range of other goods would be maintained.

[34] The length of the notice period is not designed to deliver a period in which the effect of the industrial action on the Respondent’s business is significantly reduced or nullified.

[35] Mr Gardner, on behalf of the Respondent, clearly set out the impact the imposition of industrial action with only three working days notice will have on the supply of meat products to stores.

[36] Mr Daffy highlighted the difficulties in maintaining the supply of the full suite of fresh meat products during periods of increased customer demand for special events, where public holidays provide reduced trading hours and increased sales on the surrounding days.

[37] The impact of proposed protected industrial action on Coles supermarkets in New South Wales was considered by Commissioner Stanton in AMIEU v Coles and Bi-Lo 18, a similar application heard in November 2012.

[38] In that matter, Commissioner Stanton ordered an extended notice period of five working days for the Easter period in that year. It is noted that no experience from this period arising from that order was available, as no industrial action was taken at that time.

[39] The Respondent’s overall claim for the extension of the notice period to cover all authorised protected industrial action (except overtime) has been considered against the statutory entitlement to take the action. As per Vice President Lawler's consideration of exceptional circumstances in CEPU v Australia Post, it is necessary for the Commission to balance the statutory entitlement to take protected industrial action and whether exceptional circumstances exist which warrant a longer notice period for the industrial action. The following two paragraphs of Vice President Lawler’s decision are relevant to the determination of exceptional circumstances:

“[21] Essentially, what is required in determining whether exceptional circumstances justify an extension of the required notices period is a weighing of the interests of the employer and third parties in the employer having a greater opportunity to take appropriate defensive action as against the diminution in the effectiveness of the employees’ bargaining power that results from such an extension. The fact that the legislature has seen fit to condition the ordering of an extension of the required notice period on the presence of exceptional circumstances justifying it, as distinct from merely conferring a simple discretion to extend the required notice period, indicates that ordinarily there should be no extension.

[22] The first example provided in Davids Distribution provides an illustration of where exceptional circumstances may justify an extension of the required notice period. A sophisticated piece of plant, such as a smelter, may take many days to shut down without damage. The employer is exposed to wholly disproportionate damage if it is prevented by too limited a notice period from undertaking an orderly shutdown of the plant. A further example may be afforded by a strike by teachers where the school needs to be able to notify parents of the strike so as to give them an opportunity to make alternative arrangements for the care of their children on the days of the strike. Typically, three working days will be insufficient for this purpose…” 19

[40] Taking into account all of the facts and circumstances raised with the supermarkets’ operations, it is determined that, to accommodate the range of matters, including the decreased trading hours due to the Easter public holidays, the longer supply times and production issues and customer demand, an Order will issue which will allow for an increased notice period of five working days for remote and regional Queensland stores, to accommodate the exceptional circumstances to these stores at this time.

[41] The evidence confirmed that the supply of product to these remote and regional stores takes three days, compared with Brisbane metropolitan stores where product can be ordered and delivered the next day.

[42] In conclusion, exceptional circumstances justify the extension of the notice period to five working days for the Easter 2015 period. Factors taken into consideration in exercising this discretion include the distance in the supply chain to these stores, and the demand and provision of fresh (perishable) product across this peak trading and holiday period, during which operations are affected by normal daily trading hours which are broken and reduced by public holidays at this time. The issue of waste and the avoidance of the unnecessary culling of livestock have also been taken into account, in relation to supply, for this fragmented trading period.

[43] A separate Order [PR558865] will issue.

COMMISSIONER

Appearances:

L Norris for the Australasian Meat Industry Employees Union

C Gardner (of Seyfarth Shaw Australia), for Coles Supermarkets Australia Pty Ltd

Hearing details:

2014

Brisbane

December 10.

 1   [2007] AIRC 848

 2 [2007] FCA 388 (27 March 2007)

 3   [2012] FWA 133

 4   [2013] FWC 2748

 5   HSU v Victorian Institute of Forensic Mental Health[2012] FWA 4633; Australian Nursing Federation v Victorian Hospitals Industrial Association[2011] FWA 7198

 6   TWU and AMWU v the Chief Executive of the ACT Internal Omnibus Network(ACTION) on behalf of the Australian Capital Territory[2010] FWA 3355

 7   CPSU, the Community and Public Service Sector v G4S[2011] FWA 2115

 8   United Firefighter’s Union of Australia [2013] FWC 5360

 9   Construction, Forestry, Mining and Energy Union (EnergyAustralia) [2013] FWC 2748; AMWU v Clyde Babcock-Hitachi (Australia) Pty Ltd[2011] FWA 2291

 10   TWU v ISS Security Pty Ltd[2012] FWA 7141

 11   CPSU, the Community and Public Sector Union v Commonwealth Government - Australian Customs and Border Protection Service[2011] FWA 3919

 12   [2012] FWA 2730

 13   [2007] AIRC 848

 14   Witness statement of Eric William Daffy filed 5 December 2014 at paragraph 10

 15   Witness statement of Eric William Daffy filed 5 December 2014 at paragraphs 13-14

 16   Witness statement of Eric William Daffy filed 5 December 2014

 17   [2007] AIRC 848

 18   [2012] FWA 2730

 19   Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Australian Postal Corporation [2007] AIRC 848

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