“Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers' Union (AMWU) v AGC Industries Pty Ltd & Meisei Industrial Co Ltd T/A Amjv

[2017] FWC 4510

[2017] FWC 4510

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.739—Dispute resolution

“Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU)
v
AGC Industries Pty Ltd & Meisei Industrial Co Ltd T/A AMJV
(C2017/3712)

COMMISSIONER SIMPSON BRISBANE, 5 SEPTEMBER 2017

Alleged dispute about attendance of AMWU delegates at a Delegate Development Education Course in Darwin – jurisdictional objection – whether dispute relates to demarcation – agreement gives rise to ambiguity – AMWU interpretation preferred - jurisdictional objection dismissed

[1] On 6 July 2017, the “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU) filed an application pursuant to s.739 of the Fair Work Act 2009 (the Act) to deal with a dispute in accordance with the dispute settlement procedure in the AMJV Ichthys Onshore Construction Greenfields Agreement (the Agreement). The dispute is brought against AGC Industries Pty Ltd & Mesei Industrial Co Ltd T/A AMJV (the Respondent).

[2] The application states that the AMWU has a number of delegates employed by the Respondent including Mr Martin and Mr McMinimee. The AMWU wrote to the Respondent on 27 and 29 June 2017 advising the two persons were delegates of the AMWU. The AMWU sent correspondence to the Respondent on 23 and 28 June 2017 seeking paid leave for the two employees to attend a delegate training course between 11 and 14 July 2017.

[3] The Respondent did not agree to the requests on the basis it did not accept that the AMWU rules permitted it to enrol as members persons employed as Cryogenic Insulators as Mr Martin or Mr McMinimee were employed, and did not recognise Mr Martin or Mr McMinimee as delegates for purposes of clause 22 of the Agreement. The application itself provides the disputed issues arise under clause 22 of the Agreement. The applications to attend the training made under clause 22(g) of the Agreement were not granted.

[4] Conferences were conducted before the Fair Work Commission (FWC) on the basis that the Respondent reserved its rights to object to the jurisdiction of the FWC. The matters were not resolved, the AMWU sought for the matter to proceed to arbitration and the Respondent pressed for its objections to be dealt with. I issued directions for the filing of material and listed the matter to hear the jurisdictional objection on Thursday 31 August 2017.

[5] The Respondent initially submitted it had two jurisdictional objections to the application, stating that:

(a) the Dispute is one relating to demarcation, and the pre-requisites set out in clause 18.2(c) of the Agreement in order for the FWC to arbitrate such a dispute, do not apply; and

(b) in the alternative, if the Dispute is a dispute other than one relating to demarcation, the dispute resolution process set out in clause 18.2(b) of the Agreement has not been followed. 1

[6] Following the filing of material the Respondent advised that it did not press its objection that clause 18.2(b) had not been followed.

[7] The AMWU submitted that the Commission has jurisdiction where the subject matter of the dispute arises under the Agreement, and that no interpretation of clause 18.2(c) of the Agreement could restrict the capacity of a person covered by the Agreement to refer a matter arising under the Agreement to the FWC. 2

[8] At the Hearing the AMWU was represented by Mr T McCauley of Taylor and Scott Lawyers, and the Respondent was represented by Mr V Rogers of Ashurst. Each party filed one witness statement and neither witness was required for cross examination. I admitted into evidence the statements of Mr John Burgess 3 and Mr Benedict Martin.4

RELEVANT PROVISIONS

[9] Clause 18 of the Agreement provides:

“18 Dispute Resolution Process

18.1 Objective of the Dispute Resolution Process

(a) The objective of this procedure is to:

(1) Avoid the escalation of disputes or grievances; and

(2) Provide prompt resolution of issues of concern.

18.2 Steps in the Dispute Resolution Process

(a) Any disagreement or dispute in respect of any matters arising under the Agreement or the National Employment Standards (NES) will be dealt with as outlined in this clause 18.2.

(b) Subject to clause 18.2(c), a disagreement or dispute will be dealt with as follows:

(1) The Employee concerned shall raise the matter with the appropriate team leader for resolution.

(2) If not resolved, the Employee may raise the matter with the supervisor/superintendent of the Employer for resolution.

(3) If the matter remains unresolved, either the Employee or the supervisor/superintendent shall request a formal meeting with the Employer’s most senior manager on the Project Site, or that manager’s representative.

(4) At any stage of this process the Employee may elect to have an Employee representative in attendance.

(5) Once this dispute resolution process has been invoked, both the Employee and the Employer shall attempt in good faith to resolve the issue by utilising the above steps until resolution is achieved. In the event that resolution is not achieved, any party or the Employee may refer the matter to Fair Work Australia for conciliation and/or arbitration.

(6) While the above process is being pursued, work shall continue as normal. Failure to work within the process described in this subclause and/or the failure of any Employee to continue work as normal shall constitute a fundamental breach of the Agreement by the Employee(s) involved.

(c) Any disagreement or dispute relating to demarcation of Employee classifications or scope of work in relation to a matter under clause 23 will be dealt with as follows:

(1) The Party concerned shall informally raise the matter with the appropriate other Party or Parties for resolution.

(2) If not resolved, either Party shall require the other Party or Parties involved in the dispute or disagreement to attend a formal meeting to discuss the dispute.

(3) Any Employees involved in the disagreement or dispute may, at any stage of this process, elect to have an Employee representative in attendance.

(4) Once the Dispute Resolution Process has been invoked, all Parties involved shall attempt in good faith to resolve the issue by utilising the above steps until resolution is achieved. In the event that resolution is not achieved, but only in situations where disagreement or dispute has disrupted or adversely affected the Project or performance of any work on, related to or incidental to the Employer party’s scope of work, any Party may refer the matter to Fair Work Australia for conciliation and/or arbitration.

(d) While the above process is being pursued, work shall continue as normal. Failure to work within the process described in this subclause and/or the failure of any Employee to continue work as normal shall constitute a fundamental breach of the Agreement by the Parties or Employees involved.

(e) Any settlement of a dispute pursuant to this clause shall not vary the terms and conditions contained in this Agreement. It is a condition of employment that no industrial action be taken during the life of the Agreement. Industrial action of any nature will be contrary to the Dispute Resolution Process set out in this clause and a breach of the Agreement.”

[10] Clause 22 of the Agreement provides:

“Employee Representatives

(a) The Employer recognises the right of their employees to elect a representative(s) (Delegate) to represent them, and will recognise that the Delegate(s) can represent those employees industrially, provided they receive formal advice from the delegate’s industrial Union that verifies the Union is both satisfied a proper election has occurred and the duly elected Delegate(s) is a person who can represent the industrial interests for employees of the Employer and the members of the respective union.

(b) The Delegate(s) is first and foremost an employee and is therefore required to discharge their normal duties and obligations as an employee. Before leaving their normal duties to perform any delegate duties, the Delegate(s) shall first seek permission from the Employer. Such permission shall not be unreasonably withheld.

(c) The Employer will not subject any Delegate to any material disadvantage in his/her present employment or future employment opportunities due to them having performed the role of a Delegate on the Project.

(d) The Employer shall, where requested by the Delegate(s), provide him/her with reasonable facilities to produce and store electronic documents, photocopy a reasonable number of documents and send and receive documents via a facsimile or other electronic means, where the Employer possesses such a machine. Nothing in this subclause requires the Employer to supply the Delegate(s) with dedicated office space to perform their delegate duties.

(e) The Employer will, where it needs to consult with the Union and/or its employees, first consult with the appropriate Delegate(s), duly recognised by the Union(s).

(f) Where the Employer is involved in any industrial proceeding that involves a member(s) of the Delegate(s) Union, the Delegate(s) shall be entitled to attend those proceedings without deduction from their Ordinary Time Earnings.

(g) The Delegate(s) shall, upon application to the Employer, be permitted to take up to five (5) days of non-cumulative leave in any year to allow them to attend formal courses that promote the practice of sound industrial relations.”

[11] Clause 23 of the Agreement provides:

“23 Demarcation of Craft Classifications

(a) The parties have agreed on the terms reflected in this clause to:

(1) ensure a harmonious working relationship between the Employer and the Unions for the Project; and

(2) Identify clear understandings and guiding protocols that the Parties have agreed and adopted for the execution of the Project.

(b) The Unions have agreed that the only persons that each Union will admit or retain as members, or seek to admit or retain as members, will be those Employees for whom that Union has legal coverage under the respective eligibility rules of that Union.

(c) The Unions agree that should any kind of demarcation issue arise, their preference would be for them to resolve the issue initially between themselves, and failing that, resolution in accordance with the dispute resolution process in clause 18 of this Agreement.

(d) Should any kind of demarcation issue arise, the Unions and Employees must ensure that the issue and its resolution does not in any way disrupt or adversely affect the Project or the performance of any work on, related to or incidental to the Project.

(e) The Unions acknowledge that they have had extensive discussions regarding which craft classifications would, on the basis of their eligibility rules, have natural and legal coverage by each respective Union, and that at the time of entering into this Agreement, there are no issues between any of the Unions in relation to competing rights of coverage of membership.”

[12] Sections 738 and 739 of the Act provide:

“738 Application of this Division

This Division applies if:

(a) a modern award includes a term that provides a procedure for dealing with disputes, including a term in accordance with section 146; or

(b) an enterprise agreement includes a term that provides a procedure for dealing with disputes, including a term referred to in subsection 186(6); or

(c) a contract of employment or other written agreement includes a term that provides a procedure for dealing with disputes between the employer and the employee, to the extent that the dispute is about any matters in relation to the National Employment Standards or a safety net contractual entitlement; or

(d) a determination under the Public Service Act 1999 includes a term that provides a procedure for dealing with disputes arising under the determination or in relation to the National Employment Standards.

739 Disputes dealt with by the FWC

(1) This section applies if a term referred to in section 738 requires or allows the FWC to deal with a dispute.

(2) The FWC must not deal with a dispute to the extent that the dispute is about whether an employer had reasonable business grounds under subsection 65(5) or 76(4), unless:

(a) the parties have agreed in a contract of employment, enterprise agreement or other written agreement to the FWC dealing with the matter; or

(b) a determination under the Public Service Act 1999 authorises the FWC to deal with the matter.

Note: This does not prevent the FWC from dealing with a dispute relating to a term of an enterprise agreement that has the same (or substantially the same) effect as subsection 65(5) or 76(4) (see also subsection 55(5)).

(3) In dealing with a dispute, the FWC must not exercise any powers limited by the term.

(4) If, in accordance with the term, the parties have agreed that the FWC may arbitrate (however described) the dispute, the FWC may do so.

Note: The FWC may also deal with a dispute by mediation or conciliation, or by making a recommendation or expressing an opinion (see subsection 595(2)).

(5) Despite subsection (4), the FWC must not make a decision that is inconsistent with this Act, or a fair work instrument that applies to the parties.

(6) The FWC may deal with a dispute only on application by a party to the dispute.”

SUMMARY OF THE RESPONDENT’S SUBMISSIONS

[13] The Respondent submitted that the disputed issue was one relating to demarcation, and that the pre-requisites set out in clause 18.2(c) for the Commission to arbitrate such a dispute did not apply. The Respondent submitted the Agreement clearly contemplated the occurrence of demarcation issues, and set out a process for such issue to be resolved in clause 23. 5

[14] The Respondent submitted that the disputed issue could be characterised as a demarcation dispute, and acknowledged that the Agreement did not provide a definition of a demarcation issue for the purposes of clause 23, nor did it define a disagreement or dispute relating to demarcation for the purposes of clause 18. 6

[15] The Respondent referred to the definition of a demarcation dispute in the Registered Organisations Act 2009 (Cth) as including;

“(a) a dispute arising between 2 or more organisations, or within an organisation, as to the rights, status or functions of members of the organisations or organisation in relation to the employment of those members; or

(b) a dispute arising between employers and employees, or between members of different organisations, as to the demarcation of functions of employees or classes of employees; or

(c) a dispute about the representation under this Act or the Fair Work Act of the industrial interests of employees by an organisation of employees.”

[16] The Respondent claimed the issue was a disagreement or dispute relating to demarcation given the dispute between the AMWU and the Respondent about the AMWU’s entitlement to enrol the two employees. The Respondent also asserted that the AWU contends that it is able to enrol Cryogenic Insulators.

[17] The Respondent claimed that the phrase “any disagreement or dispute in relation to demarcation” in clause 18.2(c) is extremely broad and contemplates issues “relating to demarcation” arising in a number of ways. Therefore the dispute falls squarely within the scope of clause 18.2(c) and 23 of the Agreement.
[18] The Respondent argued that the effect of clause 18.2(c) is that before the FWC can arbitrate a disagreement or dispute in relation to demarcation the dispute must be adversely impacting or affecting the Project or the performance of any work on, related to or incidental to AMJV’s scope of work. 7 Based on the uncontested evidence of Mr Burgess8 it was said the disputed issue has not had any impact on the Project or performance of any work on, related to or incidental to the Respondent’s scope of work. Accordingly it was said the FWC did not have jurisdiction to arbitrate.

[19] The Respondent referred to s.739(1) and s.595(3) to make the point that the FWC is only permitted to arbitrate a dispute where the Agreement expressly authorises the FWC to arbitrate. The Respondent relied on the Full Bench decision in Woolworths Ltd trading as Produce and Recycling Distribution Centre. 9

SUMMARY OF APPLICANTS SUBMISSIONS

[20] The AMWU submitted the dispute relates to clause 22 of the Agreement, and the employer’s failure to recognise employee representatives identified to the employer under clause 22. The AMWU says it provided the formal advice required by clause 22(a) and upon that advice the relevant delegate has the benefit of entitlements under clause 22. The AMWU says it disputes the basis of the Respondent’s refusal to allow the delegates to attend the formal training courses.

[21] The AMWU referred to the principles in the Full Bench decision in The Australian Meat Industry Employees Union v Golden Cockerel Pty Limited 10 and subsequent modification of those principles in AMWU v Berri.11

[22] The AMWU referred to the decision in Kentz (Australia) Pty Ltd v Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia 12where in that matter the dispute settlement clause was in identical terms to the dispute settlement clause in this matter. The Full Bench found in regard to that clause as follows:

“[56] Clause 18 of the Kentz Agreement is broad in its reach, relating to “[a]ny disagreement or dispute in respect of any matters arising under the Agreement or the National Employment Standards (NES)” . There is no limitation expressed – it applies to any dispute in respect of any matters arising under the Kentz Agreement.

[57] In clause 18.2(b)(5), the parties agree that the Commission may arbitrate the dispute. It provides that, following attempts in good faith to resolve the issue(s) in dispute through earlier steps in the process:

“In the event that resolution is not achieved, any party or the Employee may refer the matter to Fair Work Australia for conciliation and/or arbitration.”

[58] The processes within clause 18 are directed to avoiding the “escalation of disputes or grievances” and providing “prompt resolution of issues of concern.”

[59] Clause 18 of the Kentz Agreement confers the authority of the parties on the Commission to arbitrate any disagreement or dispute in respect of any matters arising under the Kentz Agreement for the purpose of resolving the dispute. It affords the Commission a power of private arbitration in relation to such disputes. It does not limit the scope of an arbitration to preclude the resolution of disputes in relation to past events or about rights and obligations under the agreement. There is no basis for reading an unstated limitation on the scope of the dispute resolution provision in the context of the broad scope which is expressed in it – “[A]ny disagreement or dispute”. Clause 18 does not provide or purport to provide an authority that exceeds what is permitted by either The Constitution or the Act.” 13

[23] It was put for the AMWU that this is not a dispute settlement procedure that distinguishes in the capacity of the FWC to deal with a dispute by conciliation but only arbitration by agreement.

[24] It was also said that the Respondent’s submission to the effect that clause 18.2(c) must be complied with before the FWC can arbitrate must be rejected as there is no distinction between conciliation and arbitration in this dispute settlement procedure, and the real question for the FWC is whether a dispute can be referred to it at all where the Respondent says the conditions of clause 18.2(c) apply but have not been met, particularly clause 18.2(c)(4).

[25] The AMWU submitted the kernel of the Respondent’s contention is that clause 18.2(c) operates as an ouster of the capacity of a party or employee to refer a dispute to the FWC where the disagreement or dispute relates to demarcation where the conditions of clause 18.2(c) are not met.

[26] It was submitted on the Respondent’s case (and accepted by the Respondent in the course of oral submissions) that the dispute did not have to solely relate to clause 23 to prevent a referral to the FWC.

[27] The AMWU submitted that the Respondent’s contentions would mean that clause 18 would not be capable of satisfying the FWC that the Agreement included a term that complied with s.186(6) of the Act. Section 186(6) of the Act provides as follows:

“Requirement for a term about settling disputes

(6) The FWC must be satisfied that the agreement includes a term:

(a) that provides a procedure that requires or allows the FWC, or another person who is independent of the employers, employees or employee organisations covered by the agreement, to settle disputes:

(i) about any matters arising under the agreement; and

(ii) in relation to the National Employment Standards; and

(b) that allows for the representation of employees covered by the agreement for the purposes of the procedure.”

[28] It was submitted in its legislative context, a dispute resolution procedure may not oust from the capacity to refer to the FWC (or another independent person) a dispute about certain subject matters where that matter is a matter arising under the agreement.

[29] The AMWU therefore submitted an ambiguity arises in the sense contemplated by principles 1 and 8 distilled in AMWU v Berri 14. The principles referred to were set out as follows:

“1. The construction of an enterprise agreement, like that of a statute or contract, begins with a consideration of the ordinary meaning of the relevant words. The resolution of a disputed construction of an agreement will turn on the language of the agreement having regard to its context and purpose. Context might appear from:

(i) the text of the agreement viewed as a whole;

(ii) the disputed provisions place and arrangement in the agreement;

(iii) the legislative context under which the agreement was made and in which it operates.

……………………

8. Regard may be had to evidence of surrounding circumstances to assist in determining whether an ambiguity exists.”

[30] The AMWU submitted that no application of clause 18 could oust the capacity of a person covered by the agreement to refer a matter arising under the Agreement to the FWC because of the legislative context of s.186(6).

[31] It was submitted that the preamble to clause 18.2(c) restricts its operation to disagreements or disputes relating to clause 23, which is consistent with the syntax and terms of clause 23 itself which refers to the “preference” of Union parties to resolve demarcation issues themselves, and failing that resolution under clause 18. The AMWU submitted clause 23 provides no role for the employer. It is put that where a Union party to a “demarcation issue” under clause 23 seeks to use clause 18 it does so as its “preference”. This interpretation would not then render clause 18.2(c) otiose because the words would restrict the resolution of demarcation disputes between unions to those that affect the Employer party’s scope of work, and would not be available for a demarcation dispute.

[32] The AMWU submitted that where a dispute involves the employer about “any matter arising under the agreement” clause 18.2(b) operates according to its terms and this interpretation is consistent with the Full Bench decision in Kentz v CEPU. 15

[33] In the alternative the AMWU argued that should the FWC determine that “any disagreement or dispute in relation to demarcation” must be dealt with in accordance with clause 18.2(c) including where the employer is involved, then the prohibition on referring matters to the FWC for “conciliation and/or arbitration” must be read down so as not to oust from the parties the capacity to refer a dispute to the FWC about “any matters arising under the agreement”.

[34] It was also put in the alternative that the evidence supported a conclusion that clause 18.2(c)(4) was satisfied because of the impact on the delegates in being unable to attend the training affected R&R and other matters.

[35] The AMWU submitted it does not dispute that the AWU may also have coverage; however the AWU has not indicated to the AMWU that it is in dispute with the AMWU about coverage. The AMWU and AWU met on 1 August 2017. The AWU despite being aware of this dispute has not participated in these proceedings. There is no evidence before me at this point of a live dispute between the AMWU and AWU.

RESPONDENT’S SUBMISSIONS IN REPLY

[36] The Respondent submitted that it is well established that an industrial association can only represent persons who fall within its eligibility rules. It was said the Respondent is entitled to refuse to recognise the purportedly enrolled delegates.

[37] The Respondent submitted that it did not contest that the FWC could conciliate a “disagreement or dispute in relation to demarcation” although as referred to above this position was modified in oral submissions.

[38] The Respondent argued its construction is consistent with a recent Full Bench decision in CC Pty Ltd v CFMEU 16.

[39] The Respondent submitted that as the AMWU contended clause 18.2(c) only relates to matters under clause 23, and clause 23 provided no role for the employer, such a construction should be rejected because disputes between two unions are not about a permitted matter.

CONCLUSION

[40] I accept that an ambiguity arises from the language of clause 18 including that on one reading it appears to be contrary to legislative intent, and in particular s.186(6). I prefer the AMWU interpretation as set out above. In its legislative context it is the most natural and ordinary interpretation of clause 18.

[41] On its written submissions the Respondent put that the FWC could not arbitrate because of the effect of clause 18.2(c) which appeared to leave open a suggested interpretation that the FWC could conciliate under 18.2(c). As I understood the oral submissions of the Respondent it modified its position to the extent that the effect of clause 18.2(c) was that where a dispute arose that fell within the ambit of clause 23 (which it regarded as any dispute within the broad meaning of demarcation by reference to the definition in the Registered Organisations Act 2009 (Cth)), then such a dispute could only be referred to the FWC for conciliation or arbitration if the qualifications in the clause were met.

[42] Contrary to what appeared to be suggested in the Respondent’s written submissions, clause 18.2(c)(4) does not provide for any distinction between the FWC’s role in conciliation and arbitration, and only allows referral of the dispute on satisfaction of the conditions in 18.2(c)(4). Such an interpretation immediately gives rise to a conflict between clause 18 and s.186(6) of the Act. It is unlikely the parties would have intended to attempt to oust the capacity of a person covered by the agreement to refer a matter arising under the Agreement to the FWC because of the legislative context of s.186(6).

[43] I also agree with the AMWU reading of the intended relationship between clause 18.2(c) and clause 23. It is logical to accept that the parties intended that disputes between unions that do not involve the employer were not intended to enliven an entitlement to bring such a dispute before the FWC as such a dispute would not be a permitted matter as defined by s.172(1). However if a demarcation dispute affects the employer party’s scope of work, clause 18.2(b) would operate in accordance with its terms and clause 18.2(c) would not prevent that.

[44] I am also satisfied that a proper characterisation of the dispute is that it involves a dispute in respect of a matter arising under clause 22. The Respondent in oral submissions conceded as much but went on to argue that because it is also a dispute in respect of clause 23 it is caught by clause 18.2(c).

[45] As I have accepted the preferred interpretation as put by the AMWU as being correct I do not need to deal with the submission in the alternative.

[46] On the basis of my findings the Respondent’s jurisdictional objection is dismissed. The matter will be listed for a directions hearing in regard to the substantive dispute shortly.

COMMISSIONER

Appearances:

Mr T. McCauley of Taylor & Scott Lawyers for the Applicant

Mr V. Rogers of Ashurst for the Respondent

Hearing details:

2017,

Brisbane:

August 31

 1 Respondent’s Outline of Submissions in relation to it Jurisdictional Objections dated 15 August 2017 at [12].

 2 Applicant’s Outline of Submissions in respect of Jurisdictional Objections dated 23 August 2017 at [30].

 3   Exhibit 1.

 4   Exhibit 2.

 5 Respondent’s Outline of Submissions in relation to its Jurisdictional Objections dated 15 August 2017 at [15].

 6 Respondent’s Outline of Submissions in relation to its Jurisdictional Objections dated 15 August 2017 at [17].

 7   See clause 18.(c)(4) of the Agreement.

 8   Statement of John Burgess paragraphs [35] to [37].

 9   [2010] FWAFB 1464.

 10   [2014] FWCFB 7447.

 11   [2017] FWCFB 3005 at [114].

 12   [2016] FWCFB 2017.

 13   [2016] FWCFB 2017 at [56] – [59].

 14   [2017] FWCFB 3005 at [14].

 15   [2016] FWCFB 2017 at [56].

 16   [2017] FWCFB 2749.

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