"Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union" Known as the Australi v Australian Nuclear Science and Technology Organisation

[2013] FWC 8589

[2013] FWC 8589

DECISION

Fair Work Act 2009

s.739 - Application to deal with a dispute

"Automotive, Food, Metals, Engineering, Printing and Kindred Industries

Union" known as the Australian Manufacturing Workers' Union (AMWU)

v

Australian Nuclear Science and Technology Organisation

(C2009/11238)

Commonwealth employment

VICE PRESIDENT LAWLER SYDNEY, 5 NOVEMBER 2013

Dispute in relation to Clauses 4.5 and 8.3 of the Australian Nuclear Science and Technology
Organisation Enterprise Agreement 2009-2011.

[1] From about 1958 ANSTO operated a nuclear reactor known as the High Flux Australian Reactor (HIFAR). In the 1990’s a decision was made to build and operate a new, replacement reactor initially known as the Replacement Research Reactor (RRR) and eventually known as the Open Pool Australian Light Water Reactor (OPAL).

[2] The planning and construction of a nuclear reactor is a major undertaking that takes many years. The OPAL reactor commenced operation in 2006.

[3] The consequences for existing employees, especially operators of the HIFAR reactor,

was a significant and ongoing industrial issue in the years prior to 2006 and gave rise to
disputes pursued by the AMWU on behalf of employees.

[4] There were major differences between the HIFAR and OPAL reactors that dictated different staffing requirements staffing requirements for the OPAL reactor. The HIFAR reactor was operated by a team headed by a Shift Supervisor (Band 6), an Assistant Shift Supervisor (Band 5) and operators (Band 4). The Assistant Shift Supervisor position became redundant on the OPAL reactor because of the engineering requirements involved in supervising the reactor.

[5]        On 2 April 2004 Mr Rod Davies, ANSTO’s Human Resources Manager, wrote a letter

to the AMWU in which he stated (Davies Letter):

“I refer to your statement:

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'The AMWU has sought from ANSTO a guarantee that reactor operators from

HIFAR will have ongoing employment in the RRR, in their current role. To

date, ANSTO has not provided such a guarantee"

Both the CEO and I have provided written communication to the staff and to the

AMWU confirming that RRR training for interested HIFAR staff will be available.

For the staff who d were not selected last week, this training will have to occur

following the closure of HIFAR as previously advised.

The above statement indicates a lack of, understanding of the situation. HIFAR

operators cannot continue in their current role, however, because the role of HI FAR

operator will cease to exist after 2006. The role of operator at the new facility is

completely different from that of HIFAR operator. Hence the commitment to the

training, which will be extensive. HIFAR operators who continue employment beyond

2006 will retain their substantive classification, but will be required to perform in a

different role.

...

Given the above situation, it is not clear to me what issues are in dispute. ...”

(underline emphasis added)

[6]        That letter formed part of the resolution or partial resolution of an industrial dispute.

[7] The present dispute concerns the pay and classification of two employees of ANSTO who work as OPAL reactor operators, Mr Papazian and Mr Middleton.

[8] As at the beginning of 2005 Mr Papazian worked in a Band 5 position in an area

known as the Radiopharmaceuticals Research Institute. Mr Middleton was a Band 5 Assistant
Shift Supervisor on the HIFAR reactor.

[9] Dr Storr, who was then the Manager of Reactor Operations and is now a Group Executive, had responsibility for establishing the OPAL reactor in operation, including the recruitment of operators for the new reactor.

[10] In 2005 ANSTO invited expressions of interests from employees for training as HIFAR reactor operators. Mr Papazian expressed interest. On 18 October 2005, Mr Papazian and Dr Storr (on behalf of ANSTO) executed an agreement entitled “Memorandum of Understanding” which contains the following preamble:

“This memorandum sets out arrangements agreed between ANSTO and Mr Vahan Papazian (the employee) in relation to payments made to the employee in consideration of his performing duty as a trainee HIFAR reactor operator.”

[11]      The agreement provided that Mr Papazian

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“...will be paid at the salary rate of full performance band 4 (applicable at the time)
plus a shift average loading of 37%. ...

At other times, where the employee reverts to working in Radiopharmaceuticals Research Institute (RRI) (his substantive role), he will be paid his normal substantive salary (currently $61,390)”

(underline emphasis added)

[12] A second agreement was executed the same day. It had the same preamble but had materially different terms in relation to payment. It established an “incentive bonus” rather than a “shift loading”. The incentive bonus was based on “the employee’s salary at Band 5” and is constructed as a top up to Band 4 rates so that Mr Papazian eventually received payment for time worked as a HIFAR reactor operator at his Band 5 classification. The Agreement contains the following provisions:

“Overtime at the employee’s band 5 salary. The adjustment (between band 4 and 5) will be paid at the end of the HIFAR Assignment as part of the incentive bonus.

Salary

Payment calculations for overtime and incentive bonus will be adjusted to take into account increase in the employee’s salary for Band 5 arising from EBA or other rises.

(underline emphasis added)

[13] Mr Papazian signed in the box indicating acceptance of the offer but added the words “at my current substantive band (5 F/F)”.

[14] In 2006 ANSTO sought expressions of interest from employees interested in training to become OPAL reactor operators. Mr Papazian expressed interest.

[15] On 15 December 2006 Dr Storr met with Mr Papazian to discuss the matter. Dr Storr’s recollection of the conversation, supported by a contemporaneous file note, was as follows:

Storr: "If you accept the position of trainee OPAL reactor operator, ANSTO is

prepared to maintain your salary at the ANSTO Band 5 level, including any increases

associated with that classification, until January 2009. After this, your salary will be

frozen and you will receive no further salary increases until the salary for the top of

the ANSTO Band 4 classification catches up with your frozen salary. ANSTO's offer

of employment as an OPAL reactor operator is contingent on you agreeing to these

conditions."

Papazian: "I'm not happy about the situation, but I would like to move to OPAL

operations."

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Storr: "I will write you a letter confirming the grandfathering and freezing

arrangements."

Papazian: "The letter will need to make sure everything you have said is covered

appropriately."

Storr: "I will talk to Rod Davies to get the letter drawn up."

[16]      On 9 February 2007 Dr Storr wrote a letter of offer to Mr Papazian in the following

terms:

I refer to my letter to you of 11 May 2006 offering you a position as an OPAL Reactor

Operator in training.

You replied on 23 May 2006 accepting the position, contingent upon transfer at your

current Band and performance level (Band 5 FF).

In subsequent discussions I explained that should you accept the position your salary

would be maintained at Band 5 classification until January 2009; that is at the end of

the current Enterprise agreement. During that time period you would be paid at the

relevant rate. By working on a shift roster, you would receive the relevant shift

allowance which applies to that roster. After January 2009, you would continue to

receive the salary as at January 2009, but would receive no further increases until the

Band 4 salary catches up the Band 5 level applicable to you. You would also be paid

the shift allowance applying at the time and this will be based on your January 2009

salary.

The offer for employment as an OPAL Reactor Operator in training remains,

contingent upon your agreement to the conditions outlined above. If you accept this,

please sign and date the enclosed copy of this letter and return it to me at your earliest

convenience.

(emphasis added)

[17] The letter contained a pre-printed box for the employee’s signature under the printed

words “I understand and accept the above offer”. Mr Papazian signed the letter of offer in the
‘acceptance box’ but added in handwriting the following words:

“Provided that... if in the future a role on OPAL shift is identified at Band 5 or above

or the role is reclassified upwards or the next EB agreement reflects retainment of both

or upward reclassification at band, or the industrial acts reflect retention or higher

reclassification of band, then Band 5ff (Fully Functional) or above as at the time shall

apply.”

[18] Turning to Mr Middleton, he also expressed interest in a position as OPAL reactor

operator in training. Dr Storr and Mr Middleton had a conversation in June of 2006 in which
Dr Storr said words to the effect:

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“If you accept the position of trainee OPAL reactor operator, ANSTO is prepared to

maintain your salary at the ANSTO Band 5 level, including any increases associated

with that classification, until January 2009. After this, your salary will be frozen and

you will receive no further salary increases until the salary for the ANSTO Band 4

classification catches up with your frozen salary. ANSTO's offer of employment as an

OPAL reactor operator is contingent on you agreeing to these conditions.”

[19]      Mr Middleton told Dr Storr that he did not agree with any "grandfathering".

[20]      On 16 March 2007 Dr Storr had a conversation with Mr Middleton to the following

effect:
Storr: "If you accept the position of trainee OPAL reactor operator, ANSTO is
prepared to maintain your salary at the ANSTO Band 5 level, including any increases
associated with that classification, until January 2009. After this, your salary will be
frozen and you will receive no further salary increases until the salary for the ANSTO
Band 4 classification catches up with your frozen salary. ANSTO's offer of
employment as an OPAL reactor operator is contingent on you agreeing to these
conditions:
Middleton: "I don't agree with being frozen. I think I should be able to stay as Band 5
and continue to advance to get increases for that point."
Storr: "This is ANSTO's offer. I think it is fair."
[21]	On 16 May 2007 Dr Storr wrote a letter of offer to Mr Middleton in the following
terms:
“Dear Ian
One year ago I advised you that an interview panel had identified you as having met
the selection criteria for the role of OPAL Reactor Operator (RP-0600) and therefore I
wished to offer you a position as an OPAL Reactor Operator in training.
Since that time we have had a number of discussions on this matter. Attached you will
find the arrangements for transfer of staff from HIFAR to OPAL. It is expected that
you wilt be released from your current role in HIFAR and will transition to OPAL
Operations when HIFAR shifts finish.
Upon transition, it is expected that you will undertake classroom training for the role,
be assigned to a shift and subsequently accredited. Once you are accredited, your role
as an OPAL Reactor Operator will be confirmed.
I have also attached the original letter that was sent to you. If you wish to accept the
offer, please sign the acceptance letter and forward to my office as soon as possible.”

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[22]      The attachment stated (transfer arrangements):

“Summary of OPAL transfer arrangements

Band: People transferring to a position that is Band lower than their current position

have done so through application of the following arrangement:

1. Maintain the higher band classification until January 2009, ie the end of the

current Enterprise Agreement.

2.          During that time, an employee will be paid at the relevant rate. No further

increase in salary after the current EBA until the relevant lever in the lower

band catches up.”

[23] That letter also has a pre-printed box for the employee’s signature under the printed

words “I understand and accept the above offer”. Mr Middleton signed in the ‘acceptance
box’ but added in handwriting the following words:

“* Attached is letter regarding the grandfathering of band limit. Do not agree with no

increases (? - through) bargaining agreement.”

[24] ANSTO submitted that the execution of these documents involved each of the employees in an acceptance the offer in the letter of offer.

[25] On the evidence before me, there was no further negotiation between the parties before Mr Papazian and Mr Middleton commenced working in the role of OPAL reactor operator training.

[26] The fact that there had been no agreement on ANSTO’s transfer arrangements did not have any practical consequences until the expiry of the period of salary maintenance under transfer arrangements (a period that was unilaterally extended, to the benefit of both employees, because of pay administration errors that ANSTO did not seek to correct). During that period the employees continued to be paid at Band 5 rates for the shiftwork hours worked as OPAL reactor operators.

[27] In April 2009 Dr Storr wrote to each of the two employees reminding them of the ANSTO’s transfer arrangements and end of the salary maintenance period. The AMWU became involved and notified the present dispute to Fair Work Australia in December 2009.

[28] Dr Storr was a most impressive witness. I accept his evidence without reservation. Dr Storr was ignorant of the Davies Letter at the time he was negotiating the transfer of employees to the OPAL reactor. I am satisfied that Dr Storr acted in good faith and that he was clear about ANSTO’s position and the proper reasons that drove that position.

[29] However, on a proper analysis, there was never any meeting of the minds in relation to the substantive transfer of either Mr Middleton or Mr Papazian from their pre-existing Band 5 position to a Band 4 position as an OPAL reactor operator receiving Band 4 rates of pay

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following the end of the salary maintenance period provided for in ANSTO’s transfer
arrangements.

[30] It is a trite matter of contract law that the purported acceptance of an offer that is

qualified by material conditions is not, at law, an acceptance of the offer. Rather, it amounts
to a rejection and counter-offer.

[31] I find that, in the case of each of the employees, their signing of the 2007 letters of offer from ANSTO did not involve an acceptance of the offer, but rather a rejection and counter offer. ANSTO did nothing to accept that counter-offer or otherwise resolve the disagreement between the parties on the terms of transfer.

[32] I do not consider that the physical transfer and commencement of work as operators in training on the OPAL reactor involved an acceptance of an offer by conduct - by either ANSTO or the employees. ANSTO had rational bases to determine that the operator positions on the OPAL reactor should be classified at Band 4 and that it would not accept OPAL operators having a Band 5 classification beyond the grandfathering period offered by ANSTO. ANSTO’s position, as conveyed by Dr Storr, was clear and consistent from before the time expressions of interest were sought for training as operators of the OPAL reactor. However, at all times, the two employees, and the AMWU, have maintained an objection to the transfer arrangements determined by ANSTO and embodied in the 2007 letters of offer.

[33] In reality there was no agreement and, instead, there was disagreement that has continued to the present time.

[34] Mr Middleton’s substantive Band 5 position as Assistant Shift Supervisor was to become redundant for genuine operational reasons upon the closure of the HIFAR reactor. His redeployment prospects within ANSTO were problematic. Mr Papazian seems to have been a very high performer in Radiopharmaceuticals and it is probable that ANSTO would have restored him to his Band 5 position in Radiopharmaceuticals if the issue had been pushed.

[35] The legal consequence of the findings I have made is that, contractually, the two

employees remain substantively in the Band 5 classification because there has never been a
binding agreement that they become Band 4 employees.

[36] At the time the two employees commenced working as OPAL operators, each was legally entitled to insist that they maintain their existing contractual Band 5 classification, in which case ANSTO would have been entitled to remove them as OPAL operators and restore them to their previous positions or otherwise deal with them in accordance with the enterprise agreement.

[37] The two employees physically transferred into OPAL reactor operator roles knowing

that those roles were Band 4 roles (albeit subject to the salary maintenance period provided
for in ANSTO’s transfer arrangements).

[38] In the particular circumstances of this case, the two employees ought be regarded as

being on a temporary transfer to the Band 4 operator positions in which they have been
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working, pending the resolution of their dispute (albeit subject also to the salary maintenance
payments that ANSTO has already made).

[39] The AMWU contends that the two employees are entitled to back pay because they were at all times Band 5 employees and had their entitlement to wage payments for time worked, including wage increases specified in successive enterprise agreements, to be based on the Band 5 salary. If the circumstances of the two employees are properly characterised as temporary transfers from their Band 5 positions to Band 4 OPAL reactor operator positions, then that contention incorrectly assumes that the enterprise agreement operates on the employee’s substantive contractual classification. In the particular circumstances of these two employees, the enterprise agreement operated on the position in which the employee was actually working, namely a Band 4 shift work position as OPAL reactor operators.

[40] In a practical sense, the present position is no different from the position that obtained at the time the employees commenced working in the role of OPAL reactor operator. The employees have a continuing entitlement to work in a Band 5 role if they elect to return to a Band 5 role. However, ANSTO has no legally enforceable obligation to pay them Band 5 rates for performing work in the Band 4 role of OPAL reactor operator. The Davies Letter does not contain a legally enforceable agreement and there is no other basis upon which such an obligation can be said to arise.

[41] The two employees can continue working as operators, being paid at Band 4 rates. However, they may also elect to terminate the temporary transfer and return to their substantive Band 5 classification, in which case ANSTO would be obliged to make genuine efforts to redeploy them into a Band 5 role.

[42] There are practical reasons why this dispute has not been pursued with vigour. Mr Middleton no doubt remains concerned about the risk that he would be made redundant if he insisted on being returned to a role in his substantive Band 5 classification. So far as Mr Papazian is concerned, because the role of reactor operator involves shift work (with associated shift penalties), he earns more gross income as a reactor operator paid at Band 4 rates than he would have earned in his old Band 5 role in Radiopharmaceuticals.

[43] However, given the age and long service of the two employees, in all the

circumstances I consider that it would be unfair for either of these employees to be made redundant at this point, or that they should be deprived of the benefit of their substantive Band 5 classification for the purposes of their superannuation.

[44] In the exercise of my discretion as to remedy, I settle the dispute with the following arbitral determination:

(i)         The two employees are to be treated as being on temporary transfer in the role of Band 4 OPAL reactor operator with entitlements to pay under the Enterprise Agreement based on that Band 4 role.

(ii)        ANSTO has no obligation to make back pay to either of two employees.

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(iii)       Each of the two employees has a continuing entitlement to return to a Band 5 role. If and when either of the two employees advises ANSTO that they wish to cease working in their Band 4 OPAL reactor operator role and resume in a Band 5 role, ANSTO must make a genuine and continuing effort to identify a Band 5 role into which each of the employees may, with their agreement, be transferred. In the circumstances, the employees ought be allowed to wait until what seems to them a favourable time before making such an election.

(iv)       To the extent that a vacancy in a Band 5 role becomes available within ANSTO, each of the two employees should be accorded the same priority for consideration in relation to such vacancy as would be accorded them if they were identified as surplus under the Enterprise Agreement.

[45] I recognise that there is a risk that Mr Middleton may properly be made redundant if he elects to resume his substantive Band 5 classification because he lacks the qualifications for most Band 5 roles within ANSTO other than as a reactor operator. In that regard, nothing has changed since the time of his transfer into the role of OPAL reactor operator. That said, I also note that the industrial agreement recorded in the Davies Letter, while not legally enforceable, gives rise to moral considerations that would, for example, be highly relevant on any unfair dismissal application by either of the two employees challenging a decision to make them redundant following their insistence on being returned to a Band 5 role.

VICE PRESIDENT

Appearances:

Mr D O’Sullivan of counsel for the AMWU

Mr S Jauncey of Henry Davis York for ANSTO

Hearing details:

2013
Sydney
September 4, 5

Final written submissions:

24 September 2013
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