Australian Rail, Tram and Bus Industry Union v KDR Victoria Pty Ltd T/A Yarra Trams

[2018] FWC 4837

[2018] FWC 4837

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.739—Dispute resolution

Australian Rail, Tram and Bus Industry Union
v
KDR Victoria Pty Ltd T/A Yarra Trams
(C2018/3048)

COMMISSIONER GREGORY MELBOURNE, 16 AUGUST 2018

Alleged dispute in relation to consultation and dispute resolution – major change – ‘significant effect on employees’ – further process of genuine consultation to take place.

Introduction

[1] This matter concerns an application by the Australian Rail, Tram, and Bus Industry Union (“the RTBU”) made under s.739 of the Fair Work Act 2009 (Cth) (“the Act”). The employer is KDR Victoria Pty Ltd T/A Yarra Trams (“Yarra Trams”) and the dispute is before the Commission as a consequence of clause 12 of the Yarra Trams Enterprise Agreement 2015 – Rolling Stock, Infrastructure, Administration, Technical & Professional (“the Agreement”) 1 that covers the parties

[2] Yarra Trams is making changes to its supply chain area. It is primarily responsible for procurement on behalf of the business. The changes are centred on a partnership that has been entered into with another business, Unipart Rail, to provide services and additional expertise in the supply chain area. These changes include employees of Unipart working alongside employees directly employed by Yarra Trams. In addition, a number of Unipart employees will now be in management positions in the supply chain area.

[3] The RTBU submits that in making these changes Yarra Trams has not complied with the consultation obligations in clause 8 of the Agreement. The matter was dealt with in conference on 18 June 2018 but was not able to be resolved. The RTBU then requested it be determined by way of arbitration and it was accordingly set down for hearing on 27 July 2018, with directions issued for filing and service of evidence and submissions. There is no dispute that the matter is properly before the Commission in accordance with the dispute resolution procedure in clause 12 of the Agreement.

[4] Mr Y. Bakri of Counsel appeared on behalf of the RTBU. Mr J. Snaden of Counsel appeared on behalf of Yarra Trams. Both were given permission to appear under s.596(2)(a) of the Fair Work Act 2009 (Cth) as the matter involves a degree of complexity and their involvement might enable it to be dealt with more efficiently.

The Evidence and Submissions

The Australian Rail, Tram and Bus Industry Union

Mr Phil Altieri

[5] Mr Altieri is the Secretary of the RTBU – Victorian Branch and has been in this position since February 2011. The supply chain function is part of Yarra Trams’ Technical Delivery Division and 15 employees work in the area. Unipart Rail is part of the multinational logistics company, Unipart Group, headquartered in the United Kingdom and provides supply chain, procurement, maintenance and consultancy services in the rail industry.

[6] Mr Altieri was first alerted to some concerns from his members in March last year about the involvement of Unipart in the Yarra Trams’ business. He then sent a letter to Yarra Trams on 3 March 2017 setting out the concerns raised by his members, and requesting that Yarra Trams formally notify its employees of its intentions. 2

[7] Mr Altieri was then informed by his members in March of this year that further changes involving Unipart were occurring in the supply chain area, and Ms Diane Page, a Unipart employee, was now the Supply Chain General Manager. He again wrote to Yarra Trams on 28 March about his concerns and requesting a meeting to discuss the changes. 3 The meeting took place on 6 April 2018 and he was given a copy of an organisational chart setting out the proposed new structure of the supply chain area, including the involvement of Unipart. A copy of that organisational chart was also attached to his witness statement.4 Mr Altieri states that the new structure involves the following changes:

“a. a further 15 positions or teams have been created. Each new role is occupied, or will be occupied, by a Unipart employee. A number of these new positions are filled by Unipart employees based in the United Kingdom;

b. In addition to the 15 new positions that have been created, the new structure also incorporates an entire new team, the “RMS2 Team”, which is also based in the United Kingdom;

c. Yarra Trams employees who previously reported to a manager employed by Yarra Trams will now report to managers employed by Unipart;

d. a new position of General Manager Supply Chain has been created with overall responsibility for the Supply Chain area. As noted above, Diane Page, an employee of Unipart, has been appointed to that position;

e. five manager-level positions have been created in addition to Mr Cooper’s role as Logistics Manager. Each of those positions has either been filled by a Unipart employee, or will be filled by a Unipart employee; …” 5

[8] On 7 May 2018, the RTBU delegate in the supply chain area at the Preston Stores worksite gave Yarra Trams notice of a dispute for the purposes of the dispute resolution procedure, 6 and specifically invoked the status quo provisions in clause 12.8 of the Agreement. Yarra Trams responded on 23 May by indicating that it did not accept there was a dispute, or that the status quo provisions had been triggered.7

[9] Mr Altieri then attended a further meeting with Yarra Trams on 24 May and was told it was engaging Unipart in order to carry out new project work and, in particular, it wished to utilise its buying power for this purpose. It also indicated that it did not consider the changes amounted to “major change” for the purposes of clause 8 of the Agreement. 8 Mr Altieri was then advised by his members that Yarra Trams and Unipart “were forging ahead with various changes in the workplace.”9 These involved:

“a. representatives of Unipart continuing with renovations of the Preston Stores offices;

b. representatives of Unipart meeting, calling and emailing vendors, including to make demands, apply pressure in relation to prices and lead-times, and chase warranty claims that had been raised by the Supply Chain area;

c. representatives of Unipart claiming savings made by the Supply Chain area employees as their own;

d. representatives of Unipart making decisions on stock holding and write-offs;

e. representatives of Unipart bringing in new vendors without any consideration of the existing experience, requirements or policy in the Supply Chain area;

f. representatives of Unipart initiating unnecessary catalogue changes;

g. representatives of Unipart having regular meetings with Yarra Trams Directors (a privilege rarely afforded to Yarra Trams’ employees in the Supply Chain area);

h. representatives of Unipart having regular meetings and planning work with Yarra Trams’ Rolling Stock Heavy Maintenance Managers;

i. representatives of Unipart receiving priority information regarding Yarra Trams’ “Super Depots” project that had not been provided to Yarra Trams employees in the Supply Chain area;

j. representatives of Unipart providing instructions to, and seeking advice from, Yarra Trams Supply Chain employees;

k. representatives of Unipart arranging meetings that Yarra Trams Supply Chain employees were required to attend;

i. representatives of Unipart occupying the meeting room at the Preston Stores worksite, refusing to allow Yarra Trams Supply Chain employees to use that area as designed and intended; and

m. Yarra Trams providing personal information of its Supply Chain employees to Unipart.” 10

[10] Mr Altieri then received further correspondence from Yarra Trams restating its position in regard to “major change,” and advising that it was considering a proposal to change the hours of work for supply chain employees to provide increased coverage to meet the requirements of the rolling stock overhaul. 11 He then received further correspondence on 10 July confirming this change and indicating that Yarra Trams was “commencing a consultation process regarding these proposed changes.”12 Mr Altieri understood from this that Yarra Trams was prepared to engage in consultation about these changes, but not about others.

[11] Mr Altieri said his members were also now concerned about the potential loss of job and promotional opportunities that might follow from these changes, given that most of the managers in the supply chain area are now employees of Unipart. He also indicated in his examination-in-chief that he understood that some personal details of Yarra Trams employees, such as drivers’ licences, personal addresses, WorkSafe licenses, and other related information had been provided to Unipart by Yarra Trams. 13

[12] He indicated, in conclusion, that the RTBU now seeks that the implementation of the changes be put on hold, and the status quo reinstated prior to the introduction of the changes while further consultation takes place. He also requests that Yarra Trams write to its employees in the supply chain area and notify them of the proposed changes, and then provide a minimum period of six weeks for them to assess what is involved. A consultation process in accordance with clause 8.4 of the Agreement should then take place.

[13] Mr Altieri also acknowledged in cross-examination that as far as he was aware there had not been a decrease in the number of Level 3 positions occupied by Yarra Trams employees in the supply chain area. 14 He also acknowledged that the number of Level 2 employees directly employed by Yarra Trams had increased from five to six with the addition of an extra driver.15

[14] He also acknowledged that there had been four occasions in which Yarra Trams management had spoken to the supply chain employees about the Unipart partnership arrangements, although they had not necessarily been provided with all of the information and answers they were seeking. He continued to state, “But what we’ve seen, I guess from the worker’s point of view by stealth, is some of their duties being taken away.” 16

The RTBU’s Submissions

[15] The RTBU submits that there are 4 questions that need to be determined in this matter:

“Question 1: Do the disputed changes constitute a major change within the meaning of cl 8.1 of the Yarra Trams EA?

Question 2: Are the disputed changes likely to have a “significant effect on employees” within the meaning of clauses 8.1 and 8.7 of the Yarra Trams EA?

Question 3: In relation to the disputed changes has Yarra Trams:

(a) informed the relevant employees of the effect that the changes are likely to have on the employees in accordance with its obligation in clause 8.4(a)(ii)?;

(b) informed the relevant employees of the measures that Yarra Trams is taking to avert or mitigate the adverse effect of the changes on the employees in accordance with its obligation in clause 8.4(b) ?;

(c) provided in writing all relevant information about the changes including the nature of the changes proposed in accordance with its obligation in clause 8.4(b)(i)?;

(d) provided in writing information about the expected effects of the change on employees in accordance with its obligation in clause 8.4(b)(ii);

(e) provided in writing information about any other matters likely to effect the employees in accordance with its obligation in clause 8.4(b)(ii) ?;

(f) provided the employees and the RTBU with a reasonable opportunity to meet with Yarra Trams for the purpose of consultation in accordance with its obligation in clause 8.10?;

(g) provided prompt and genuine consideration to matters raised by the employees and the RTBU about the changes in accordance with its obligation in clause 8.12?;

(h) provided the employees and the RTBU with the opportunity to identify alternatives to the proposed changes in accordance with its obligation in clause 8.13?; and

(i) maintained the status quo ante in accordance with its obligation in clauses 8. 13 and/or 12.8?

Question 4: What steps should Yarra Trams take in order to resolve the dispute?” 17

[16] The RTBU continues to submit that consultation is an important and valuable right, and if the applicable consultation obligations have not been complied with then appropriate steps should be taken to remedy this situation. It continued to provide the following submissions in regard to each of the above questions:

Question 1

[17] The RTBU submits the changes must be characterised as a “major change” as they involve a change to the organisation and/or structure as they include:

•  a further 15 positions being created with each new role occupied by a Unipart employee, some of whom are based in the United Kingdom;

•  the creation of a new RMS2 team based in the UK;

•  the remaining Yarra Trams employees in the supply chain area now report to a Manager employed by Unipart whereas previously they reported to a Manager employed by Yarra Trams;

•  a new position of General Manager Supply Chain has been created with overall responsibility for the supply chain area and an employee of Unipart, Ms Diane Page, has been appointed to that position; and

•  Five new managerial positions have been created in addition to the existing role of Logistics Manager. Each of these will be filled by a Unipart employee. 18

[18] Accordingly, the RTBU submits that the extent of these changes therefore represents a “major change” within the meaning of clause 8.18.1 of the Agreement.

Question 2

[19] It is submitted that the changes are likely to have a significant effect on the employees within the meaning of clauses 8.1 and 8.7 of the Agreement, because they involve the elimination or diminution of job and promotional opportunities, the altering of hours of work, and a major restructuring of jobs.

Question 3

[20] The RTBU relies on the evidence of Mr Altieri to establish that Yarra Trams has failed to take each of these actions.

Question 4

[21] The RTBU continues to submit that the Commission should direct Yarra Trams to take steps to address its failure to consult in accordance with the Agreement. It should also be directed to immediately cease to implement the changes to the supply chain area, and should reinstate the status quo as it was prior to their introduction, and then maintain the status quo pending the consultation process. It submits in this context that the status quo should be restored to what was in place at the beginning of March of this year.

[22] It also rejects the submission made by Yarra Trams that regardless of whether “major change” has occurred it has, in any event, effectively complied with what sub clause 8.3 (a) to (i) of the Agreement requires. The RTBU emphasises in this context that Yarra Trams has not given consideration to various alternatives, or given the employees the option of identifying other options and it has instead, by its own acknowledgement, simply proceeded to implement the changes in the manner intended.

[23] It submits, in conclusion, that Yarra Trams should now be directed to resume the status quo as it applied at 8 March of this year, and also be directed to write to its employees in the supply chain area notifying them about the changes it proposes to implement, and then providing at least six weeks for them to analyse those changes. A process of consultation should then occur in accordance with clause 8.4 of the Agreement.

Yarra Trams Evidence and Submissions

Ms Anthea Antonio

[24] Ms Antonio is the Executive Director, Asset Performance at Yarra Trams and has been in this role for approximately 15 months. The role includes oversight of the supply chain area and the procurement arrangements for Yarra Trams’ infrastructure, including its trams.

[25] Yarra Trams has partnered with Unipart in order to complement and enhance its supply chain function and, on 1 May 2018, Ms Antonio met with the supply chain employees to discuss these new arrangements as she was aware there was some confusion about what they involved. She also attended the meeting on 24 May with Mr Altieri and indicated at that time that Yarra Trams did not consider the engagement of Unipart to constitute a major change that required consultation in accordance with the Agreement.

[26] Ms Antonio provided the following responses to each of the matters contained in Mr Altieri’s witness statement.

“(a) There are renovations being conducted at the Preston site to accommodate the Unipart employees. These renovations have no impact on the working arrangements of Supply Chain employees.

(b) Unipart is engaged to meet, call and email vendors, including to make demands, apply pressure in relation to prices and lead-times, and chase warranty claims that had been raised by the Supply Chain area.

(c) Regarding sub-paragraph (c), I understand this relates to warranty and other work performed by Unipart under Phase 1.

(d) I understand Unipart does not make decisions on write offs, but do make decisions on stock holding. Only Public Transport Victoria can make decisions about write offs.

(e) Unipart is bringing in new vendors; however, this is done in accordance with Yarra Trams’ requirements and policy.

(f) I’m not aware of any catalogue changes being considered unnecessary. Supply chain employees can raise any catalogue changes they consider unnecessary; however, I’m not aware of this ever being raised.

(g) In the normal course, Directors may not have much input into Supply Chain, however the relationship with Unipart is relatively new, which explains the increase in meetings. Furthermore, it is the General Manager of Unipart engaging in meetings with Directors, not all Unipart employees.

(h) It is true that representatives of Unipart have meetings and are planning work with Yarra Trams’ Rolling Stock Heavy Maintenance Managers. These tasks are necessary for Unipart to fulfil its obligations to Yarra Trams.

(i) It is not correct that Unipart representatives received priority information regarding Yarra Trams’ “Super Depots” project that had not been provided to Yarra Trams employees in the Supply Chain area. Any information of this kind was shared with Supply Chain employees at the same time as Unipart.

(j) Unipart employees have been providing instructions to and seeking advice from Supply Chain employees which is necessary for Unipart to perform its functions.

(k) Unipart are expected to work with Supply Chain employees and as such, do arrange meetings with them.

(I) Unipart employees are currently occupying one of many meeting rooms as there are not enough desks to accommodate them. I am not aware of any Supply Chain staff having asked to use the room occupied by Unipart, as there are other meeting rooms available for Supply Chain staff to use.

(m) While the dispute has been notified by the RTBU, Unipart are only notified when Supply Chain staff are on leave. I am not aware of any other information that has been provided during the period disputed by the RTBU.” 19

[27] Ms Antonio met again with the employees on 4 July and confirmed that Unipart was now part of the business, and they would be required to work with these new arrangements. They were also required to follow instructions given by Unipart Managers, and to work cooperatively with them, and failure to do so may have disciplinary consequences. She again confirmed that Yarra Trams did not consider the partnership with Unipart to constitute “major change.” 20 She also confirmed that there was no incentive scheme in place as part of these changes to remove existing Yarra Trams’ employees from the supply chain function.

[28] She also indicated in cross-examination that the changes did not involve Unipart as a new supplier to Yarra Trams. She also disagreed with the suggestion that the business had not provided details to employees about the changes, and there had instead been “… a lot of detailed conversations around the changes.” 21 The employees had also been provided with various documentation, including the new organisational chart. She was also of the view that the changes did not impact adversely on the existing employees.

Mr Andrew Frankel

[29] Mr Frankel is employed by Yarra Trams in the role of Business Partner, People & Organisational Effectiveness and has been in this role since 2012. He is responsible for providing human resources advice and support across the organisation.

[30] Yarra Trams employs 2,300 employees, including 1,200 tram drivers. It has six executive functions, including Asset Performance & Projects, and the supply chain function sits within this area. There are currently 13 Yarra Trams employees in the supply chain function at two locations, New Preston and E-gate in West Melbourne.

[31] In September 2017, Yarra Trams was awarded a new contract to continue operating the tram network, and a key element of that arrangement is a requirement for Yarra Trams to deliver improved operational and performance outcomes. The changes in the supply chain area are part of its response to these requirements. They involve a supply chain partnership with Unipart to increase and improve capability and efficiencies in the supply chain function. Under this partnership, Unipart is to provide supply chain management services, including product and service procurement, inventory management, obsolescence management, engineering support, reliability improvements, warehousing, kitting and distribution. This is intended to deliver benefits, including improvement in quality and reliability of materials, improvement in speed of parts, enhanced cost effectiveness, as well as innovation and continuous improvement in overall service levels.

[32] The changes involve six Unipart employees being embedded in the supply chain function. Those roles involve –

•  General Manager Supply Chain – overall responsibility for the supply chain function;

•  Inventory Manager – responsible for ensuring that parts are available to the business when required;

•  Rotables Manager – responsible for the procurement and inventory management of tram wheels and bogies;

•  Procurement Manager – responsible for implementing new supply contracts, managing existing contracts and purchasing parts;

•  Engineering Manager – responsible for specialist technical engineering requirements involving, for example, the manufacture or supply of particular parts;

•  Operational Support Manager – management of five Operational Support Co-ordinators based at the depots and in heavy maintenance and stores. These roles will also be filled by Unipart employees. 22

[33] Mr Frankel indicated that there are also other roles currently being performed by Unipart employees based in the UK, and they provide global support to the supply chain partnership.

[34] The partnership with Unipart has not resulted in any redundancies at Yarra Trams, apart from the role of Logistics Coordinator which has been separated into two roles. The previous incumbent was given the option of choosing which of those roles he preferred. The only other change is that three Yarra Trams employees are now required to report to a Manager employed by Unipart. These involve both of the Coordinator Purchasing roles, who report respectively to the Procurement Manager and the Rotables Manager, and the Coordinator, Inventory and Catalogue, who now reports to the Inventory Manager.

[35] Mr Frankel understands that one-on-one meetings were held with the three employees whose reporting lines would be affected by the Unipart partnership, and a meeting was then held with all supply chain employees. They were also given a copy of the proposed organisational structure of the supply chain area in that meeting. 23 He also attended the meeting with Mr Altieri on 6 April 2018 in which the purpose of the Unipart partnership was explained and employees’ questions answered. A memo containing information about the partnership was also provided to employees at that meeting.24 It was also indicated that Yarra Trams did not believe the changes involved “major change,” but it would continue to communicate about the changes. Further meetings were then held in May.

[36] Mr Frankel also indicated that the changes do not limit the promotional opportunities for Yarra Trams employees as the existing Logistics Manager role remains a position occupied by a directly employed Yarra Trams employee. He also indicated in cross-examination that a Yarra Trams employee could be promoted into a position now occupied by a Unipart Manager if they chose to resign from Yarra Trams. 25 However, he acknowledged that Yarra Trams could not appoint them into one of those positions under the current arrangements.26

The Respondent’s Submissions

[37] Yarra Trams submits the changes in the supply chain area are not a “major change,” and simply involve the introduction of a small number of new positions into the supply chain function. They affect four employees only in a relatively inconsequential way in an organisation that employs more than 2,300 employees.

[38] Secondly, they do not involve structural or organisational change. The structure of the business is unchanged, and the introduction of additional roles within the supply chain function is not structural change, and the organisation of work across that structure has not altered. Structural change instead involves change to an organisation structure, such as the abolition or creation of distinct business units or functions. Organisational change also involves changes to the way work is allocated across those units or functions. The current changes do not fall into either of these categories.

[39] In addition, the evidence does not establish that job or promotional opportunities are going to be diminished, and the same number of Yarra Trams employees will remain within the supply chain function. There is also not going to be any change to the hours of work and there has not been any major restructuring of jobs. The changes only involve the introduction of a small number of additional roles which will have, at most, an inconsequential impact upon existing Yarra Trams employees. It also emphasises there has been no reduction in the number of employees across the business, and all of the existing employees retain the positions they hold at their current levels. There is also an additional promotional opportunity for the Level 1 employees, given there are now six Level 2 positions instead of five.

[40] It also relies on the decision of the Full Court of the Federal Court of Australia in Port Kembla Coal Terminal Ltd and Another v Construction, Forestry, Mining and Energy Union and Others (“Port Kembla”) 27 in support of its submissions, and described that matter as “… a case that raised a virtually identical issue to the one with which this case is concerned. That is whether an employer was obliged to consult under a materially similar consultation provision.”28 That matter involved the forced redundancies of three employees out of a total workforce of 98. It refers, in particular, to the following extract from the decision of Jessup J at paragraph 187:

“As to the second of the two ways in which his Honour characterised the circumstances leading to the termination of the employments of these three employees, again I do not, with respect, agree that the occurrence of a “forced redundancy” makes the underlying, or corresponding, change a “major” one. If many employees were to be made redundant, there may well have been a major change with which those redundancies were associated, but the size and importance of the change would have to be assessed by reference to facts which went beyond, although they may include, the facts of the redundancies. In the present case, it is enough to reiterate that the forced redundancy of three employees out of a workforce of about 98 did not of itself constitute a major change within the meaning of cl 7.1.” 29

[41] It continues to submit, in conclusion, that Yarra Trams is at liberty to introduce non-major changes to matters such as reporting lines, recruitment and job functions. It also submits that Clause 12.8 of the Agreement cannot be read as conferring on the RTBU a right of temporary veto over the making of decisions it does not like, and the status quo provisions cannot be used as an open-ended mechanism for delay or to obstruct lawful and legitimate management initiatives. 30

[42] It finally submits that the four questions posed by the RTBU should be answered in the following way:

“(a) question one: “No”;

(b) question two: “No”;

(c) question three (and in respect of each of the various aspects of it): “Not applicable by reason of the answers above”; and

(d) question four: “None”.” 31

[43] Yarra Trams also indicated in its submissions that, while its principal position is that clause 8 does not have application, the cross-examination of Mr Altieri, in particular, demonstrates that the substance of what the clause requires has effectively been complied with, given the series of meetings that have taken place between Yarra Trams management and its employees in the supply chain area.

Consideration

[44] The requirement for an employer to consult about decisions in the workplace involving “major change” has its genesis in the landmark Termination, Change and Redundancy test case (“TCR”) decisions handed down by a Full Bench of the then Australian Conciliation and Arbitration Commission in August and December of 1984. 32 That case was mounted, in large part, because of concerns by Unions and others about a range of new technologies impacting on traditional work arrangements.

[45] The Full Bench decided at that time that Awards should be varied to include a term requiring that:

“… consultation take place with employees and their representatives as soon as a firm decision has been taken about major changes in production, program, organization, structure or technology which are likely to have significant effects on employees.” 33

[46] It is understood that the framing of this term was derived, in part, from standards developed by the International Labour Organisation. However, a review of the TCR decisions does not assist in providing guidance about how some the elements of the term, including “major change,” “organisation,” “structure,” and “likely to have a significant effect on employees” are to be interpreted and applied.

[47] The current legislation obviously continues to recognise the importance of consultation by requiring that enterprise agreements contain a consultation term, 34 and if they do not then they are required to incorporate the model consultation term set out in the Regulations.35

[48] Clause 8 in the Agreement does not replicate the words from the TCR decision but, as indicated, it obviously has its genesis in that decision. It is appropriate to set out the clause in full at this point –

“Section 2 – Consultation and Dispute Resolution

8. Consultation

8.1 The parties agree that genuine and effective mechanisms for consultation and communication are fundamental to the achievement of greater job satisfaction, productivity, efficiency and flexibility.

This clause applies if:

(a) Yarra Trams has made a decision to introduce a major change to service delivery, organisation, structure, or technology in relation to its business that is likely to have a significant effect on the employees; or

(b) proposes to introduce a change to the regular roster or ordinary hours of work of employees

(c) the change is likely to have a significant effect on employees covered by the Agreement.

8.2 Yarra Trams must notify the relevant employees and their union or employee representatives (collectively referred to as the ‘Representatives’) of the decision to introduce the major change.

8.3 If:

(a) a relevant employee appoints, or relevant employees appoint a Representative for the purposes of consultation; and

(b) the employee or employees advise Yarra Trams of the identity of the Representative;

Yarra Trams must recognise the Representative.

8.4 As soon as practicable after making its decision, Yarra Trams must:

(a) discuss with the relevant employees and their Representatives:

(i) the introduction of the change; and

(ii) the effect the change is likely to have on the employees; and

(b) measures Yarra Trams is taking to avert or mitigate the adverse effect of the change on the employees; and for the purposes of the discussion - provide, in writing, to the relevant employees:

(i) all relevant information about the change including the nature of the change proposed; and

(ii) information about the expected effects of the change on the employees; and

(iii) any other matters likely to affect the employees.

8.5 However, Yarra Trams is not required to disclose confidential or commercially sensitive information to the relevant employees.

8.6 If a clause in the agreement allows for a change as part of a major change the requirements in clauses 8.2 to 8.4 and 8.10 to 8.14 do not apply.

8.7 In this clause, a major change is likely to have a significant effect on employees if it results in:

(a) the termination of employment of employees; or

(b) major change to the composition, operation or size of Yarra Trams’ workforce or to the skills required of employees; or

(c) the elimination or diminution of job opportunities and diminution of promotion opportunities and tenure; or

(d) the alteration of hours of work: or

(e) the need to significantly retrain employees: or

(f) the need to permanently relocate employees to another workplace (this is not intended to apply to temporary transfers).

(g) The major restructuring of jobs.

8.8 In this clause, relevant employees means the employees who may be affected by the major change, and who are covered by this agreement.

8.9 The parties must act reasonably in relation to the consultation process.

8.10 Yarra Trams will provide the employees and their Represen1atives with the reasonable opportunity to meet with the company for the purposes of consultation. The consultation process will occur over a minimum period of six weeks (or a longer period where a party can reasonably demonstrate that a longer period is necessary having regard to the circumstances).

8.11 A shorter consultation period than that contained in clause 8.10 may apply where Yarra Trams is not in control of the decision making process. Where the State of Victoria, its agencies or instrumentalities direct or require Yarra Trams to implement a change in a lesser timeframe.

8.12 Yarra Trams must give prompt and genuine consideration to matters raised about the major change by the relevant employees and their Representatives.

8.13 Prior to making the final decision to introduce the change, Yarra Trams will give the employees and their Representatives the opportunity to identify alternatives to the proposed changes. Yarra Trams will remain open to and genuinely consider the options put forward by the employees and their Representatives in relation to the significant effects on employees of the major change.

8.14 The employer will consider any reasonable proposals provided by the relevant employees and their Representatives to mitigate against any significant adverse effects of the proposed changes before making a final decision.

8.15 While the consultation procedure is being conducted work shall continue and the parties will maintain the status quo for the period specified in clause 7.1 0, unless to do so would be contrary to law.” 36

[49] It is noted at the outset that clause 8 commences by confirming the parties’ acknowledgement and agreement “… that genuine and effective mechanisms for consultation and communication are fundamental to the achievement of greater job satisfaction, productivity, efficiency and flexibility.” 37 It can be presumed that the parties are genuine in their belief about this.

[50] Clause 8.1(a) is then the critical consideration in regard to whether the consultation term applies. It requires, firstly, that a decision has been made by Yarra Trams “… to introduce a major change to service delivery, organisation, structure, or technology in relation to its business …” 38 However, that is not the end of the matter. The “major change” must be “… likely to have a significant effect on the employees.”39 Further guidance about when a major change can be considered likely to have a significant effect on employees is provided by sub clause 8.7.

[51] Therefore, the Commission is first required to consider whether the current changes involve a major change to service delivery, organisation, structure or technology.

[52] The parties did not take the Commission in great detail to examples of previous decisions where these concepts have been considered. However, Yarra Trams does rely on the decision of the Full Court of the Federal Court of Australia in Port Kembla Coal Terminal Ltd and Another v Construction, Forestry, Mining and Energy Union and Others (2016) 248 FCR 18. It described that case as being similar to the present one, particularly given the nature of the consultation provision. It concerned three employees being made redundant out of a total workforce of just fewer than 100, and an appeal brought against an earlier decision of a single member of the Court.

[53] Yarra Trams relies on the judgement of Jessup J when he turned to consider whether the changes amounted to a change to “production, program, organisation, structure, technology, shift arrangements, work organisation or the level of outsourcing,” and his conclusions in [187] when he stated:

“As to the second of the two ways in which his Honour characterised the circumstances leading to the termination of the employments of these three employees, again I do not, with respect, agree that the occurrence of a “forced redundancy” makes the underlying, or corresponding, change a “major” one. If many employees were to be made redundant, there may well have been a major change with which those redundancies were associated, but the size and importance of the change would have to be assessed by reference to facts which went beyond, although they may include, the facts of the redundancies. In the present case, it is enough to reiterate that the forced redundancy of three employees out of a workforce of about 98 did not of itself constitute a major change within the meaning of cl 7.1.” 40

[54] However, I have also had regard to the judgement of White J in that matter. His Honour indicated at the outset that he agreed with the judgement of Jessup J “subject to two qualifications”. 41 He concluded in regard to the second of those qualifications at [499]:

“The second qualification is that I do not regard a simple comparison between the number of employees to be terminated, and the number of the employees in its workforce overall, for which PKCT contended, as being necessarily conclusive of the question of whether a change is “major”. Much may depend on the circumstances of a given case including, for example, the seniority and importance of the employees in PKCT’s operations, the extent to which PKCT’s employees work in an integrated or disconnected manner; the consequences for the continuing employees of the redundancies and consequent terminations, as well as other matters. In the present case, the primary judge did not rest his conclusion on an analysis of this kind. Nor did the applicants contend, in the manner of a notice of contention and with references to the evidence, that the judge should have made findings on these matters in relation to their redundancies and terminations.” 42

[55] It is also noted that the first of his Honour’s “qualifications” concerned the term “work organisation,” noting that “organisation” is also referred to in the relevant clause in the present matter. His Honour continued to state at [498]:

“The first qualification concerns the meaning of the term “work organisation” in cl 7.1(a). That is a term of variable meaning. At its widest, it could mean something like the way in which things are done” in PKCT’s terminal operations, including its employee allocations. On that construction, the change implemented by PKCT may have amounted to a change in “work organisation” because there was some change in the way it would conduct its operations.” 43

[56] However, he concluded by noting that it was not necessary to express a concluded view about this matter because the change did not involve a “significant change.” 44

[57] I have also had regard to the more recent decision of Gostencnik DP in Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Jemena Asset Management Pty Ltd 45 when he was required to consider a clause referring to “…major changes in production, workplace location, program, organisation structure or technology that will have significant effects on employees.”46 The change in that case involved a change to a motor vehicle policy, which the Deputy President concluded “seeks to realign practice with policy.”47 He concluded that it clearly involved a change, but then turned to consider whether it involved “… a change in production, organisation and/or structure.” He concluded at [35] that it did not when he stated:

“The subject matter of the change identified does not fall within the description. To deprive an employee of the use of the motor vehicle to travel to and from work or for private purposes, or to limit such use does not involve a change in “production”. It does not alter the way in which the activities for which the business exists are carried out. It alters the way in which an employee arrives at work, but once at work the activities being carried out are the same. Nor does it alter the organisation, as again, once the employee arrives at work, the organisation is unchanged. The same may be said of structure.” 48

[58] He continued to state at [36]:

“Not every change which may have a deleterious effect on employees of the Respondent, or on the conditions or benefits derived from employment fall within the ambit of clause 4.3. The change must be a major change and the change must be “in” one or more of the areas identified. In my view, the change identified, namely a decision by the Respondent to enforce an existing policy which previously was not enforced or at least not strictly enforced, is not a change in any one or more of the areas identified in clause 4.3.2 of the Agreement.” 49

[59] The Deputy President concluded by noting that as a consequence of his decision it was not necessary to consider whether the change involved a “major change,” and whether it will have a “significant effect” on the affected employees. It is also noted that he rejected the notion that the dictionary definitions of terms such as “organisation,” “structure” or “technology” are of assistance, and this “… approach ignores context.” 50 It was instead preferable to consider the intended meaning of these terms in the context of how the business undertaken by the Respondent was being carried out.

[60] He continued to state at [28] with reference to the decision in Kucks v CSR Limited (‘Kucks’) 51:

“The general approach to the construction of industrial instruments of the kind at issue here is to begin with a consideration of the ordinary meaning of its words having regard to the context and purpose of the provision or expression being construed. A narrow pedantic approach to interpretation should be avoided, and a search for the evident purpose is permissible with meanings which avoid inconvenience or injustice also permissible but within reasonable bounds; however, the task remains one of interpreting an industrial instrument produced by another or others and a court or tribunal is not free to give effect to some anteriorly derived notion of a result that would be fair or just, regardless of that which has been written into the instrument being considered.” 52

[61] The approach in Kucks has been endorsed more recently in the Full Bench decision in Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union known as the Australian Manufacturing Workers’ Union (AMWU) v Berri (‘Berri’), 53 which confirmed the approach to be applied in interpreting an enterprise agreement. It is not necessary to go to that decision in detail at this point, however, it also made reference to the long line of authority in support of the proposition that a “narrow or pedantic”54 approach to the interpretation of an enterprise agreement is to be avoided, and that “fractured and illogical prose may be met by a generous and liberal approach to construction.”55

[62] The principles established by the Full Bench in Berri also include reference to the common intention of the parties being identified objectively by reference to that which a reasonable person would understand by the language used.

[63] It is appropriate at this point to confirm, in summary, what the changes involve. These matters are not necessarily in contention. The evidence of Mr Altieri indicates the changes are confined to the supply chain area, and involve 15 new positions or teams being created. Each of those new roles is occupied or will be occupied by a Unipart employee, and some of those employees are based in the United Kingdom. A new position of General Manager Supply Chain has also been created with overall responsibility for the area, and that person is also an employee of Unipart. An additional five Manager level positions have also been created in addition to the existing role of Logistics Manager, which is occupied by a Yarra Trams’ employee. Some Yarra Trams’ employees will continue to report to the Logistics Manager, but a number of other Yarra Trams’ employees will now be reporting to the newly appointed Unipart Managers.

[64] The evidence of Mr Frankel also confirms the appointments of these Managers from Unipart and sets out their responsibilities. They involve the Inventory Manager, the Rotables Manager, the Procurement Manager, the Engineering Manager, and the Operational Support Manager, as well as the overriding General Manager Supply Chain. He also provided further details about the partnership with Unipart, and the objective of delivering benefits such as improvement in the quality and reliability of materials, improvement in speed of supplier parts, enhanced cost effectiveness, together with innovation and improvement in overall service levels. He also indicated that the changes do not involve any redundancies, with the previous Logistics Coordinator role being split into two, and the previous incumbent in that role being given a choice about which of the new roles he wished to take on. He was also of the view that the changes do not limit promotional opportunities in that a number of existing Yarra Trams employees continue to report to the Manager, who is a direct employee of Yarra Trams, and they could be promoted in the future to that role. He also indicated that Yarra Trams employs a total of 2,300 employees and it has six different functional areas, including Asset Performance & Projects, and the supply chain function sits within that area. In addition, there are currently 13 Yarra Trams employees in the supply chain area.

[65] It is acknowledged in response that the changes involve a discrete part of the Yarra Trams’ operation. It is also acknowledged that they cannot be considered to be major when considered solely in the context of 15 employees out of a total Yarra Trams workforce of 2,300. However, I am not satisfied that these factors alone are necessarily determinative.

[66] While the supply chain area is a discrete part of the organisation, it is obviously not unimportant. Mr Frankel’s evidence makes clear that the new contract Yarra Trams has entered into with the Victorian Government places emphasis on improved operational and performance outcomes, and the changes to the supply chain function are an important element in Yarra Trams meeting this obligation. He also made reference to the enhanced services to be provided by Unipart as the result of the partnership entered into with Yarra Trams. He referred in this context to product and service procurement, inventory management, obsolescence management, engineering support, reliability improvements, warehousing, as well as kitting and distribution. He also made reference to the anticipated improvements that will follow.

[67] The changes to the structure of the supply chain area are also significant. It is no longer to be managed by a Yarra Trams’ employee, but by an employee of Unipart. Five new management positions have been created as well, and each will be occupied by a Unipart employee. A number of Yarra Trams employees will continue to report to the remaining Yarra Trams employed Manager, but others will be reporting to Managers employed by Unipart. However, all employees in the supply chain area are now ultimately responsible to the newly appointed General Manager Supply Chain who is, as indicated already, a Unipart employee.

[68] It was submitted on behalf of Unipart that these circumstances are not unusual, and it is common now for external consultants to be appointed to work alongside existing employees in a business, and to also exercise management or other directing responsibilities on occasions. I accept that a much more diverse range of business arrangements exist now and outsourcing, insourcing, the use of external consultants, and the engagement of external specialist expertise, are just some examples of these developments.

[69] However, the present circumstances involve more than this and I am satisfied that it is unusual, by any objective standard, for employees to be reporting to Managers who are employed by another business. The evidence also indicates that some of the records relating to these employees have been handed over to Unipart, such as information about various licenses they hold. I am also satisfied that working alongside employees employed by another business at any level can have challenges and complexities in terms of the cultural and attitudinal differences that might exist in the different businesses, the different terms and conditions of employment that might apply, the different management approaches that might be in place, along with a range of other potential factors. In summary, these are significant changes compared to what was previously in place at Yarra Trams in the supply chain area.

[70] I am also satisfied that these changes impact on service delivery as Mr Frankel’s evidence makes clear when he referred to the anticipated benefits associated with improvements in the quality and reliability of materials and the improvement in overall service levels. I am satisfied in this context that service delivery does not necessarily need to relate to the external delivery of services to customers, but can have equal application in terms of how one area of a business provides services to other parts of the business.

[71] I am also satisfied that the changes go to the organisation and structure of the supply chain area. It is accepted in this context that they do not involve changes in the overall structure or organisation of Yarra Trams in terms of its existing divisional structure, headed up by various the Executive Directors. However, I am satisfied that they are significant changes in the structure and organisation of the supply chain area. I am accordingly satisfied that they are changes to service delivery, organisation and structure for the purposes of sub clause 8.1(a) of the Agreement.

[72] In coming to this conclusion it is acknowledged that it could simply be viewed as a subjective expression of opinion, however, I am satisfied that the same conclusion can readily be justified when considering what a reasonable person would understand to mean by the language used and by what is currently occurring by way of change in the supply chain area.

[73] In addition, there are clearly no hard and fast rules to be applied to decisions of this kind. As the separate judgements of Jessup J and White J in Port Kembla make clear there will always be questions of degree. For example, Jessup J concluded that, while the forced redundancy of three employees was not a major change, if more employees were to be made redundant it might well have then constituted “major change,” but ultimately the circumstances would have to be assessed by reference to facts which went beyond just the redundancies. White J opined that the number of employees being terminated was not necessarily conclusive, but a range of other factors including seniority and the importance of the employees, and whether they work in an integrated or disconnected matter, could all be relevant considerations. In addition, while he did not consider it necessary to come to a concluded view about the term “work organisation” he also speculated that “[a]t its widest, it could mean something like “the way in which things are done” 56 in terms of how a business conducts its operations.

[74] I turn now to consider whether the changes can be considered to have a “significant effect” on the employees. This requires consideration of the matters in sub clause 8.7. The RTBU relies, in particular, on sub paragraphs (b), (c) and (g) in that sub clause. I have had regard to all the evidence and submissions provided by the parties about these matters. It is also clear that some of the matters that have been referred to already in the preceding paragraphs are also relevant in this context.

[75] I am satisfied, firstly, that the changes do involve changes to the composition and operation of Yarra Trams workforce in the supply chain area. In coming to this conclusion, I have had particular regard to the fact that some Yarra Trams employees are now reporting directly to Managers employed by Unipart, while all of the employees in the supply chain area now ultimately report to the General Manager Supply Chain, who is also a Unipart employee.

[76] In terms of whether there are now diminished job or promotional opportunities Yarra Trams submits that there are not because there was only ever one Yarra Trams Manager in the supply chain area, and this remains the case. I accept that argument is strictly correct in one sense. However, the creation of more management positions in the supply chain area means there are now more potential opportunities to be promoted to a management position. However, given that all of the other Managers are employees of Unipart it would seem difficult, as the evidence of Mr Frankel makes clear, for employees of Yarra Trams to access those potential promotional opportunities, unless they are prepared to resign from their employment with Yarra Trams.

[77] Sub clause 8.7 also makes reference to a major restructuring of jobs and I am satisfied that the current changes do involve a major restructuring of jobs in that the structure now involves management of Yarra Trams employees by employees of Unipart, whereas previously the relationships were all “in-house.”

Conclusion

[78] It follows, in conclusion, from the decisions I have come to in this matter that the first of the three questions that the RTBU submits should be determined in this matter are to be answered on the following basis.

•  Question 1: the changes do constitute a “major change” within the meaning of clause 8.1 of the Agreement.

•  Question 2: the changes are likely to have a “significant effect” on the employees within the meaning of sub clauses 8.1 and 8.7 of the Agreement.

•  Question 3: Yarra Trams has not complied with all of the matters referred to by the RTBU in terms of the changes that are being implemented.

[79] The final question posed by the RTBU concerns what steps should Yarra Trams take now, and it has set out what it proposes. This includes a proposal that Yarra Trams stop implementing any further changes, and return to the position that existed at 8 March. It should also then write to the affected employees providing details about what is proposed, and then provide a six week period for the Union and the employees to consider what matters they wish to raise in the consultation processes that should then take place.

[80] I have considered these submissions. It is accepted at the outset that Yarra Trams should not necessarily be allowed to avoid the obligations it has committed to in the Agreement. These obviously include a commitment to consult in appropriate circumstances. I note in this context the Recommendation of Senior Deputy President Richards in United Voice v Goodman Fielder Baking[2012] FWA 5682. That matter also concerned a dispute about whether the proposed changes involved “major change,” and submissions by the employer that it faced a commercial imperative to commence a new roster at a certain point in time. Senior Deputy President Richards concluded in response at [11]:

“[11] While this might be the case, the commercial imperative cannot negate the reasonable operation of the Agreement. There would be little purpose in having an Agreement if this were not the case.

[12] As a consequence, I am of the view that a reasonable period of consultation with employees and United Voice should be conducted before such time as the roster is introduced.” 57

[81] He recommended that there should now be a period of “genuine consultation” over the next nine days, and there should be no changes to the roster during this time. 58 He also noted that the employer had already embarked on some discussions with the employees about the new roster, and this should assist the progress of the consultation process.

[82] I am satisfied, firstly, that there is no evidence to suggest that Yarra Trams has set out to deliberately act in breach of the Agreement. The evidence of Mr Altieri is that, in discussions with Yarra Trams at various points in the early part of this year, he indicated that in his view the changes being proposed involved “major change.” However, Yarra Trams indicated in response that it did not believe this was the case, and I have no reason to doubt that this view was legitimately held by the relevant Managers at the time.

[83] Secondly, the evidence makes clear that there has already been a significant amount of discussion with employees and the Union about the establishment of the Unipart partnership. For example, Mr Altieri has attended at least three meetings with management and employees about these matters, and there has been at least one further meeting with various additional documents, including organisational charts and other materials being circulated. While it is not necessarily accepted that all of the relevant consultation obligations have been met through these processes, they have been substantially addressed in a number of different ways. However, it is not necessary at this point to trawl through all of the evidence in order to make detailed assessments now about which of these various obligations have or have not been met.

[84] However, these circumstances should be acknowledged and it would be a punitive and seemingly unrealistic approach to suggest that Yarra Trams should now “turn back the clock” and return to the world as it existed at 8 March of this year. I am also of the view for the same reasons that a further six week period of consultation is not required. The focus now should not be upon punitive action or point scoring, but should instead be about putting in place processes that allow the joint agreement in the consultation clause about genuine and effective mechanisms for consultation and communication to be enabled.

[85] However, I am satisfied that some steps need to be put in place to remedy the defects that have occurred in the process to date. I accordingly determine that Yarra Trams should now cease any further implementation of the changes associated with the establishment of the partnership with Unipart in the supply chain area for a period of four weeks. The Union should also have a period of 14 days from the date of this decision to consolidate any outstanding issues that its members wish to have addressed as part of these changes, so as to enable them to identify and raise with Yarra Trams any possible alternatives to what is now being proposed. Yarra Trams should also within the next seven days provide in writing to the Union and the employees any further information or other details about the changes and their likely effect on employees that has not been provided already, including any measures to be taken to avert or mitigate possible adverse effects on the employees.

[86] At the end of that 14 day period a series of meetings should then be arranged over the following two weeks between the Union and Yarra Trams, or longer if mutually agreed, to allow a process of genuine consultation to take place in accordance with what clause 8 contemplates. These processes will obviously include the requirement imposed on Yarra Trams to give prompt and genuine consideration to matters raised by the employees and their representative.

COMMISSIONER

Appearances:

Y Bakri of Counsel for the Australian Rail, Tram and Bus Industry Union.

J Snaden of Counsel for KDR Victoria Pty Ltd T/A Yarra Trams

Hearing details:

2018.

Melbourne:

July 27.

Printed by authority of the Commonwealth Government Printer

<PR610026>

 1   AE417552.

 2   Exhibit RTBU1, Attachment PA-1.

 3   Ibid, Attachment PA-3.

 4   Ibid, Attachment PA-4.

 5   Ibid, [21].

 6   Ibid, Attachment PA-5.

 7   Ibid, Attachment PA-6.

 8   Ibid, [34].

 9   Ibid, [40].

 10   Ibid.

 11   Ibid, Attachment PA-9.

 12   Ibid, [45].

 13   Transcript, 27 July 2018, PN 46.

 14   Ibid, PN 124.

 15   Ibid, PN 129.

 16   Ibid, PN 236.

 17   Applicant’s submissions, dated 10 July 2018, [7].

 18   Ibid, [15].

 19   Exhibit YT1, [7].

 20   Ibid, [9].

 21   Transcript, 27 July 2018, PN 306.

 22   Exhibit YT2, [16].

 23   Ibid, Attachment AF-1.

 24   Ibid, Attachment AF-2.

 25   Transcript, 27 July 2018, PN 382.

 26   Ibid, PN 383.

 27 (2016) 248 FCR 18.

 28   Transcript, 27 July 2018, PN 513.

 29   Port Kembla Coal Terminal Ltd and Another v Construction, Forestry, Mining and Energy Union and Others (2016) 248 FCR 18, 72 [187].

 30   Respondent’s submissions, dated 24 July 2018, [26].

 31   Ibid, [27].

 32   Termination, Change and Redundancy Case (1984) 8 IR 34; 9 IR 115.

 33   Termination, Change and Redundancy Case (1984) 8 IR 34, 52.

 34   Fair Work Act 2009 (Cth) s 205(1).

 35   Fair Work Regulations 2009 (Cth) reg 2.09 and sch 2.3.

 36   Yarra Trams Enterprise Agreement 2015 – Rolling Stock, Infrastructure, Administration, Technical & Professional, cl 8.

 37   Ibid, cl 8.1.

 38   Ibid, cl 8.1(a).

 39   Ibid, cl 8.1(c).

 40   Port Kembla Coal Terminal Ltd and Another v Construction, Forestry, Mining and Energy Union and Others (2016) 248 FCR 18, 72 [187].

 41 Ibid, 143 [497].

 42   Ibid, [499].

 43   Ibid, [498].

 44   Ibid.

 45   [2016] FWC 6494.

 46   Jemena Asset Management - ETU Victorian Electricity Enterprise Agreement 2013, AE408576, cl 4.3.2.

 47   Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Jemena Asset Management Pty Ltd[2016] FWC 6494, [19].

 48   Ibid, [35].

 49   Ibid, [36].

 50   Ibid, [29].

 51 (1996) 66 IR 182.

 52   Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Jemena Asset Management Pty Ltd[2016] FWC 6494, [28].

 53   [2017] FWCFB 3005.

 54   Kucks v CSR Limited (1996) 66 IR 182, 184.

 55   City of Wanneroo v Australian, Municipal, Administrative, Clerical and Services Union (2006) 153 IR 426, 440 [57].

 56   Port Kembla Coal Terminal Ltd and Another v Construction, Forestry, Mining and Energy Union and Others (2016) 248 FCR 18, 143 [498].

 57   United Voice v Goodman Fielder Baking[2012] FWA 5682, [11]-[12].

 58   Ibid, [14].