“Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU)

[2014] FWC 3615

FAIR WORK COMMISSION

REASONS FOR DECISION

Fair Work Act 2009
s.739—Dispute resolution

Maritime Union of Australia, The
v
Patrick Stevedores Holdings Pty Ltd
(C2014/3370)

Stevedoring industry
COMMISSIONER CRIBB	MELBOURNE, 11 JUNE 2014

Alleged dispute concerning the respondent’s intention to implement significant change including a reduction in workforce numbers.

[1] This is the fourth and final Reasons for Decision in respect of a cluster of disputes notified by the Maritime Union of Australia (the union, MUA) between itself and Patrick Stevedores Holdings Pty Ltd (Patrick, the company) regarding the closure of Webb Dock. The decision deals with the final step in the process (arbitration of the union’s application) following determination of various jurisdictional objections by the company and an application for interim orders by the union. In terms of the disputes to be arbitrated, the union withdrew 1 dispute C2013/7789 on 24 April 2014. Therefore, this decision concerns one dispute notification only - C2014/3370.2

[2] The hearing of this dispute took place on Monday 28 April 2014 and Tuesday 29 April 2014. As a quick decision was requested by the parties, the following day, 30 April 2014, the Commission issued a brief written decision 3 regarding the orders sought by the union.

[3] Consistent with the previous hearings, the issues that were dealt with on 28 and 29 April 2014 were intertwined and a combination of jurisdictional points and an arbitration. At the commencement of the hearing, Mr Follett, on behalf of the company, made submissions that:

1. The orders sought by the MUA are not capable of being made by the Commission because of the nature of the arbitral function being performed ie. it is not a merit arbitration.

2. In the alternative, if it were a merit arbitration, the Commission could not make the orders sought by the union because of section 739(5) of the Fair Work Act 2009 (the Act).

3. If the Commission is against the company on points 1. and 2., assuming it were a merit application and the Commission is entitled to make the orders, the manner in which the Commission should approach the question from a merit perspective is consistent with the XPT principles. These were said to be that the Commission does not interfere unless and until what is proposed by the employer is unfair or unreasonable. 4

[4] From the union’s perspective, the hearing was said to be a merit arbitration on three issues. These were defined as the labour model issue (the union has set out a minimum staffing level that the Commission should impose); the question of who is to conduct the performance assessments (the forepersons rather than the Shift Managers) and what the weighting of the various selection criteria should be.

[5] In terms of the jurisdictional issues raised by the company, Mr Fetter argued that, if the Commission is satisfied that it can make the orders the union is seeking, the Commission will have to decide whether, based on the merits of the case, to make the orders. 5

ORDERS SOUGHT BY THE UNION

1. Labour model

[6] The union is seeking the following order:

“1. That the respondent not dismiss any employees on ground of redundancy such that its workforce falls below the following levels:

(a) Full-time employees: 25

(b) PGE employees: 32

(c) A supplementary employees: 42

(d) B supplementary employees: 40.”

(a) Witness evidence

Mr Hoy

[7] Mr Hoy has been an employee of the company at Webb Dock for 7 years. He is also the job delegate for the MUA at Webb Dock. 6

[8] It was Mr Hoy’s evidence:

It was confirmed that the voluntary redundancies and transfers had been proceeded with by the company. 7

As at 18 April 2014, when the union met with the company, the number of employees was 27 permanents and 32 PGE’s. The number of PGE’s is now 32 rather than 40. The Committee has not wanted anyone to be made compulsorily redundant or moved to maintain those numbers. 8 The union is also trying to retain as many permanents and PGE’s as possible.9

In terms of recent car ship movements, these were said to include - 17 April (dayshift) – Divine Ace; 19 April (night shift and dayshift) - Heritage Leader; 23 April (evening shift) - Prestige Ace; 24 April (day and evening shift) - Perseus Leader; 26 April (dayshift) - Transfuture; 26 April (evening) - Modern Peak; 28 April (evening) - Hoegh America. 10 If there are 1000 or more cars being discharged, up to 58 employees will be required.11 It was acknowledged that these ships were listed on the forward shipping schedules but it was stated that the actual arrival date of some of the ships was different to the scheduled arrival time.12

Originally, one day shift only had been allocated to the Heritage Leader but it ended up being two shifts (night shift and day shift). This type of situation would not happen very often. 13

He has worked sporadically at Geelong; at Westernport (frequently in the past) and one day at East Swanson Dock (ESD). 14 He has no direct knowledge of the composition of the workforce at these ports.15

It was confirmed that the number of employees at the commencement of the Agreement, in December 2012, was 45 full-timers; 53 part-timers and 66 A Supplementaries. These numbers had varied, particularly A Supplementaries, due to natural attrition. A Supplementaries had reduced from 66 to about 45 in September 2013. 16

The number of B Supplementaries had increased from 60 to 80 in October/November 2013 as 20 had probably left. It was common for B Supplementaries to leave due to insufficient work. Webb Dock has been supplementing the labour from ESD to try and retain Webb Dock’s current numbers. 17

The labour model put forward by the union in March 2014 was for 25 permanents, 40 PGE’s, 45 A Supplementaries and 40 B Supplementaries. 18

In terms of the costings of the union’s labour model undertaken by Mr Hoy, 19 it was explained that it was based on information provided by the company. The assumptions, on which the union’s model is predicated, come from the information provided by the company together with the contents of the Patrick Bulk and General Melbourne Enterprise Agreement 2012 (the Agreement) plus commonsense.20

He was not aware that the company had amended the cost of its labour model from $9.478M to $9.172M. 21 The union’s labour model was said to cost $9.430M.22

In terms of Mr Tobin’s costing of the union’s labour model ($10.3M), this was thought to be based on the union labour model provided to the company in March 2014. This labour model was said to be 25 permanents, 45 PGE’s, 45 A Supplementaries and 45 B Supplementaries. 23

The current union labour model is different to the one that Mr Tobin costed and the union has not had the opportunity to present the revised one to him. It was said that the numbers may be identical but that that distribution of hours (those shifts being worked by each category) might be different. 24 It was agreed that the union’s model, based on 40 PGE’s, resulted in 124,000 hours. If eight PGE’s are taken out, only 115,000 hours are provided for albeit at a cheaper total cost.25

It was said that, perhaps, the union labour model is a little more restrictive employing employees compared with Supplementary employees as Supplementary employees are the easiest labour to allocate and are more flexible. However, PGE’s were said to be easily accessible as well. 26

PCC (car vessel) work (to be done at Webb Dock West) is the most unpredictable in terms of when and how it arises. 27 Delays can be caused by a Qube vessel, in front of a Patrick’s one, being stevedored first and unforeseen circumstances including weather, delays in the previous port etc.28 It has been possible (but highly unlikely) for multiple vessels to arrive on the one day. The number of employees required to stevedore a vessel is approximately 40 - 50 (up to 58).29 It was said to be physically possible to stevedore three car vessels in one day through a combination of Webb Dock West (proposed to increase from 1 to 3 berths) and Appleton Dock (where Patrick and Qube both operate).30 The company has indicated that probably 70% of the work will be done at Webb Dock West with 30% out of Appleton Dock (now a common user berth and very congested).31

The proposed work going forward is predominantly PCC work with some of the break bulk and container cargo going to Geelong. 32

The MUA labour model operates on the premise that full-time employees will not be required to work 1645 hours per year (the normal number of full-time hours) but 1480 hours. However, this would not attract the same rate of pay as currently. It was explained that the 185 days (185 x eight hours = 1480 hours per annum) in the union’s labour model is based on a reduction in the salary on a pro rata basis to retain those numbers. This was said to be the only way to make it workable. 33 Based on the company’s figures, there was also a difference for PGE’s.34 The MUA’s model is preferable and more appropriate.35

There is work available at Geelong which Webb Dock employees could be sent down to perform. If Webb Dock employees go to Geelong they are not necessarily taking shifts that would have been available for Geelong employees. This is because there is an order of pick at Geelong before the work is supplemented by Webb Dock employees. 36

There is a list of Webb Dock volunteers provided to the company for inter-port transfers to Geelong. Geelong would need labour from Webb Dock when they hit a peak. Bulk and general cargo was said to be known for its peaks and troughs. 37

The company advertised for about 20 casuals at Geelong approximately 4 weeks ago. New work had commenced at Geelong (Swire contract) with bulk and general cargo moving from Webb Dock to Geelong. 38 It was his understanding that the permanents were making their hours at Geelong. The extra work (Swire contract) has not been factored into the company’s labour model.39

It was suggested that there will be growth in the work in the future and therefore more hours available that Mr Tobin has estimated, e.g. car imports. 40

If Webb Dock employees want to work also at Geelong and Westernport, the company needs to obtain the employees’ consent. 41 It was agreed that the cost of the temporary transfers is borne by the company. The windmill work at Westernport has just commenced with the company having obtained a general stevedoring licence there.42

A document - Anticipated Operations post WDE 43 was presented to the union by the company and reflects the company’s anticipated operations following the closure of Webb Dock East together with Mr Tobin’s costing of the company's labour model.44

The document indicates that, between 1 January 2012 and 31 December 2012, there were 18.25 movements (PCC operations) per month. 45

For each of the five shipping companies, it set out the number of shifts required and the average manning per shift resulting in a yearly total. The total number of hours required for all of the shipping companies were stated as 118,264. 46

In terms of the proposed manning, the company’s labour model was said to be based on, for permanents, 14 employees x 193 day’s work resulting in a total of 2702 days. 47

The union’s labour model assumes permanent employees will work 185 days per year which is eight days less than Patrick has budgeted for. It was also assumed that, through consultation, the hours and wages would be reduced by 10% to sustain the permanent numbers. The total cost for full-time employees would be $3.6M. 48

In terms of PGE’s, the union’s model is based on 32 PGE’s x $68,299.00 (including on-costs) which comes to a total of $2.1 85M. 49 This means that the PGE figures in Mr Hoy’s statement had changed with a reduction in the number from 40 to 32 but with a slight increase in the cost per worker from $67,108.00 to $68,299.00. The net result was a lower total figure of $2,185,572.00 instead of $2,684,320.00.50

The union’s figure for A Supplementaries of $2.329M (45 employees) has not changed. 51 However, the number of B Supplementaries has reduced from 45 to 40.52 This meant about a $500,000.00 reduction a year on the previous labour model numbers. The total cost had reduced from $9.43M to approximately $8.93M.53

Mr Tobin

[9] Mr Tobin is the Southern Regional Manager, Patrick Stevedores Holdings Pty Ltd.

[10] It was Mr Tobin’s evidence that:

Prior to the recent changes, the work being performed at Webb Dock East was PCC container cargo and break bulk cargo operations (steel, timber, pulp et cetera). There are three berths. 54

PCC vessels will be the main core business moving forward. There are no berths available in Melbourne for Patrick to lease so that it can stevedore general or break bulk cargoes. Projected revenue for this year had been $30.9M but, going forward, it will only be $13M. 55

At Webb Dock West, Patrick holds a stevedoring licence which Qube also has and potentially another company. 56 A similar arrangement exists at Appleton Dock. (Transcript PN 2379)

Container vessels required 6 - 8 shifts of about 10 people per shift depending on whether operating one or two cranes. Break bulk vessels required about 6 or 7 shifts of 8 - 10 people depending on the number of cranes. 57

With PCC vessels, 35 - 50 people are needed and sometimes 55 for a loader with railway on board. 200/250 cars - 300 cars could be on a PCC vessel. 58

Prior to the changes, there were 45 full-time, 53 PGE, 45 A Supplementary and about 60 B Supplementary employees. 59

The changes to the vessels being stevedored means that knowing exactly when the vessel is going to arrive will be less certain and the quantum of labour on each shift will increase to up to 50 people and on three shifts per day - a peak of 150 people. 60

With respect to the Forward Schedules, 61 which looks ahead two weeks, the arrival times of the vessels changes constantly due to inclement weather et cetera. The Forward Schedule dated 25 April 2014 shows seven PCC vessels over 16 days and the Forward Schedule dated 28 April 2014 shows five ships over 16 days. Currently, three ships are scheduled to arrive on 6 May 2014 which was said to be a real possibility.62

The business model moving forward is based on 16 - 18 vessels per month (the number of vessels in 2012/2013). 63 Looking at the Forward Schedules, it was said that an average of 7 movements per 16 days was going to be representative of what would happen.64

Based on customer figures, the volume of cars has been decreasing since 2009 and is expected to continue to decrease to 229,000 cars, based on customer's forecasts for next year. This had therefore been incorporated into the business’s budget for next year. The business had, together with their customers, looked at the forecast for car imports over the next 12 months. It was suggested that the downturn in car production in Australia will not occur until 2015/2016 so that this would not have a significant impact over the next 12 months. As well, given the quantity of cars in storage in Australia, there will be a decline in imports over the next 12 months, in Melbourne. Therefore, work will decline by 4.6% between this year and next year (240,000 cars this year and 229,000 cars next year). This is a significant decrease in business. 65

In terms of the article which cites the possible future operator of Webb Dock West (MIRRAT) as saying that car imports into Webb Dock will increase, it was Mr Tobin's view that this was an inflated figure put out in an attempt to win the contract at Webb Dock West. 66

In five years time, he assumed that there will be an increase in the level of car imports due to Australia’s population growing and Australian car production declining. 67

Based on the projected 16 - 18 vessels per month, full-time employees would need to work on every vessel but would still struggle to meet their hours (1645 per year). 68

In terms of the projected budget moving forward regarding the number and composition of employees, the company made the assumption that 150 people would need to be available at the peak periods totalling 118,000 hours for the year. These hours needed to be cost-effective and provide the business with flexibility moving forward. 69

Patrick’s labour model, compared with the union’s, gives greater flexibility. If the number of permanents remains, there will be a significant number of down hours based on the number of hours the model shows that they are able to work. Supplementaries provide greater flexibility as they are available on a regular basis on call and are more freely available than full-timers. 70 Purely from a labour flexibility perspective, the best model for the company would not include full-time employees. However, the company is proposing to retain 15 full-timers.71

Webb Dock West and Appleton Dock (common berth facilities), which are shared with Qube, are managed by a third party (AAT) who determines the stevedoring schedules for the two berths. 72 If a Qube vessel is given priority, Patrick’s work will be delayed. This has implications in terms of the cost, walk up starts etc. If the vessel is delayed into a weekend this would have significant ramifications for the business. This is due to full-time permanent employees not generally being available as, over a period of 8 weekends, they would have 4 weekends off.73

The estimated cost of the company’s labour model had reduced to $9.172M from $9.478M due to computation errors in the first version. The revised model is based on 15 full-time, 24 PGE, 45A Supplementary and 60 B Supplementary employees. 74

In terms of the union’s labour model which provides for 90 shifts for A Supplementaries and 30 shifts for B Supplementaries, it was said that these employees will not stay in the business. This view is based on the high turnover of Supplementary employees. 75

It had been conveyed to him that, if a full-time employee works over 1480 hours, they would receive penalty payments. Further, the union’s model was said to anticipate that full-time employees would be paid the full Agreement rate for working 10% less hours. 76

The work at Westernport was said to be the stevedoring of the five remaining windmills vessels only requiring 8 - 10 people, four shifts. It will end by about June/July 2014. 77

If an employee works at Westernport or Geelong, the cost is borne by Webb Dock. Positions (permanent transfers) were offered at Geelong and two Webb Dock employees (out of 45) expressed an interest in doing so. No employees have taken up any of the positions as they do not want to work 12 hour shifts. 78

The company is taking its obligation to try and minimise compulsory redundancies seriously and it has a genuine commitment to preserve permanent employment. The company’s labour model is the best model for the business moving into the future. The main reason for maintaining any of the full-time employees (15) is to retain a skill base in terms of leadership and qualities for the business going forward. The company is unable to keep the current 27 full-time employees. The attraction of casuals is that they give the business flexibility to man up in peak periods. They cost more on an hourly basis but are flexible. 79

Full-time employees are not required to be loading/unloading every minute of their shifts (e.g. safety meetings etc). The company’s labour model has enough fat in it with the reduction of cargoes to account for the additional peripheral hours. 80

The business is a whole new business model compared with what it was previously (two months ago). 81 The labour numbers set out in the Agreement were said to have been the commencement numbers at the commencement of the Agreement. As the numbers of A and B Supplementaries have diminished over time (through natural attrition), the company was not going to reduce the current numbers any further. The new Patrick labour model is very different to what the parties anticipated at the beginning of the Agreement.82

Patrick Stevedores Holdings supplies the labour that is used at Webb Dock East and Webb Dock West and Appleton Dock. Geelong is a different entity. Mr Tobin confirmed that he is the manager responsible for the Southern Region which includes both Webb Dock and Geelong and that the business managers for both ports report to him. It was stated that, subject to employees giving consent to be transferred to Geelong, he still needed to get Geelong's permission for labour to be sent to Geelong from Webb Dock on a temporary basis (inter-port transfer). There had been issues in trying to get Geelong people to volunteer for inter-port transfers in that they will not volunteer. 83 Historically, it was explained that Geelong requested labour from Melbourne about every three or four weeks. The company had to continuously ask employees to volunteer as volunteers did not come freely.84 It was agreed that, within his region, if there was a call for additional labour and an employee has volunteered, then the company can transfer them.85

In terms of the PGE hours at Geelong, it was indicated that Supplementaries, late last year/early this year, may have been doing approximately 1200 hours in a nine-month period.

[2014] FWC 3797

11 JUNE 2014