BlueScope Steel (AIS) Pty Ltd v Australian Workers' Union, the

[2016] FWC 1345

[2016] FWC 1345

DECISION

Fair Work Act 2009
s.739 - Application to deal with a dispute
BlueScope Steel (AIS) Pty Ltd
v
Australian Workers' Union
(C2015/7468)
VICE PRESIDENT HATCHER	SYDNEY, 16 MARCH 2016
Application to deal with a dispute.

[1]        BlueScope Steel (AIS) Pty Ltd (Bluescope) has applied for the Commission to

exercise the dispute resolution powers conferred upon it by clause 35 of the BlueScope Steel

Port Kembla Steelworks Agreement 2015 (Agreement) to vary a departmental work

agreement known as “The Coke Guide” (Coke Agreement). Relevant to this application, the

Agreement provides, in summary:

	Clause 39.1 permits Bluescope to enter into agreements with employees in a
specific department or work area concerning work arrangements to apply in that
department or work area. Predecessor agreements and awards have contained an
equivalent provision.
	Clause 39.2 provides that work practices in place as a result of departmental work
agreements entered into before the Agreement took effect are not displaced or
affected, and continue to apply.
	Under clause 39.4, extant departmental work agreements may be terminated by
agreement between Bluescope and a majority of employees in the relevant
department or work area and their union, or in accordance with clause 35.2
	Clause 35.2 is concerned with the introduction of workplace change. Clause
35.2.1(c) provides that the criteria for the introduction of any change are whether
it is safe, efficient, legal and fair.
	Clause 35.1.8 confers on the Commission the power to arbitrate in respect of any
disputed change.

[2]        The Coke Agreement was entered into in 2001. It was intended to address issues of

low efficiency and morale, and a poor history of safety and industrial disputation. It

introduced a number of efficiency changes, the most significant of which was a change from

8-hour to 12-hour shifts. It also involved improvements in remuneration, manning and

training. There is no dispute that it delivered significant savings to Bluescope.
[2016] FWC 1345

[3]        Clause 15.1.1.3 of the Coke Agreement required the performance of “hot seat

changeovers”. This was defined as “relieving on the job (i.e. on the machine) by shift starting

time”. Their purpose was to maintain the pushing schedule on the coke batteries across

changes of shift, and they were said to “provide the opportunity for each team member to

receive a personal shift handover improving the information sharing within and between

shifts”. Employees were required to relieve on the job (that is, the machine) by the shift

starting time, and to remain responsible for their machine or process until relieved.

[4]        Clause 15.3 of the Coke Agreement established a system of annualised salaries for

employees. These salaries built in an assumed 5 hours overtime per week, of which 1.6 hours

was assigned to hot seat changeovers. Although not expressly stated in the Coke Agreement,

part of this 1.6 hours was to compensate for shower time. There is no dispute that the

environmental conditions of the Cokemaking Department require that employees shower

before leaving the site.

[5]        In 2010 there were further substantial changes in the Cokemaking Department which

involved agreed modifications to the Coke Agreement. In addition to reductions in staffing

levels and the amount of training days, the overtime element of the annualised salaries was

reduced from 5 to the 1.6 hours per week paid to compensate for hot seat changeovers and

shower time.

[6]        In 2015, as part of the memorandum of agreement (MOA) entered into to prevent the

closure of the steelworks (clause 4.1), there was an agreement to abolish all pre-paid

overtime, including pre-paid overtime arrangements in departmental agreements. The

Agreement which was subsequently made reflected the terms of the MOA. During the process

of seeking employee approval for the Agreement, a dispute arose about whether the

agreement to abolish pre-paid overtime encompassed the 1.6 hours per week payment in the

modified Coke Agreement. In a Recommendation issued by me on 25 November 2015,

subsequent to the approval of the Agreement by the Commission, I expressed the view that

clause 4.1 did not apply to the hot seat changeover payment in the Coke Agreement, and that

if Bluescope wished to vary or terminate the Coke Agreement in order to remove the hot seat

changeover payment it would need to utilise the dispute resolution procedure under the

Agreement. That conclusion was based upon the following reasoning set out in the

Recommendation:

“[23] ... Pre-paid overtime is a fixed payment which is payable for overtime which may

or may not in fact have to be performed and which in current circumstances is almost

never justified by the amount of overtime actually worked. The hot seat changeover in

the Cokemaking Department always has to be performed, and the payment is, in effect,

a fixed advance estimate of the time necessary for this to be undertaken... Therefore I

consider that clause 4.1 of the MOA does not apply to the hot seat changeover in the

Cokemaking Department. The departmental agreement continues to apply under clause

5 and Annexure D of the MOA. If Bluescope wishes to alter this, it will be necessary

to follow the procedure for varying or ending departmental agreements under clause

39.4 of the enterprise agreement. In that connection, there will need to be consideration

as to whether 15 minutes constitutes a reasonable time estimate for carrying out a hot

seat changeover ...”

[2016] FWC 1345

[7]        The existing payment provided for in the Coke Agreement amounts to 30 minutes pay

for each 12 hour shift worked, calculated at the relevant overtime rate. The variation to the

Coke Agreement proposed by Bluescope would reduce this to a 15 minute payment to

compensate for shower time only. This reduction was actually implemented on 10 January

2016, so the practical question is whether the payment should be restored.

[8]        As earlier stated, the criteria applicable to consideration of Bluescope’s proposal are

whether it is safe, efficient, legal and fair. The Australian Workers’ Union (AWU), as the

opponent to the implementation of the proposed change, bears the burden of demonstrating

1

that it is not safe, efficient, legal or fair.

[9]        The first three criteria do not require extensive consideration. I do not consider that

there is any basis to conclude that the change would not be safe, since it involves changes

only to remuneration and not work practices. In relation to legality, the AWU submitted that a

requirement to perform hot seat changeovers in overtime on an unpaid basis would not be

reasonable and would therefore contravene s.62 of the Fair Work Act 2009 (FW Act) as well

as clause 39.4 of the Agreement. However, if the hot seat changeover payment is abolished, I

would expect that Bluescope would comply with all the provisions of the Agreement relevant

to payment for overtime. Bluescope confirmed in its submissions that it would. If there were

to be any dispute as to whether any employees in the Cokemaking Department were being

paid in accordance with the Agreement, the AWU could utilise the dispute resolution

procedure in clause 35 of the Agreement or institute proceedings in an appropriate court to

enforce the applicable provisions of the Agreement. I am therefore satisfied that the change

would be legal.

[10]      In relation to efficiency, the evidence was that the change would save Bluescope

$300,000 per annum. All other things being equal, that would constitute a significant gain in

cost efficiency. However it was at least implicit in the AWU’s case that the introduction of the

change, with the corresponding reduction in remuneration, might cause employees in the

Cokemaking Department to cease cooperating in the flexible and self-guided work practices

which are a feature of the current shift changeover system and strictly “work to the clock” to

ensure that they did not perform any work in unpaid time, and that this would cause a loss of

efficiency. I consider that there are three answers to this proposition. The first is that,

provided Bluescope pays employees in accordance with the Agreement, I am confident that

employees would accept the decision of the Commission and not engage in such conduct.

Second, the flexibilities inherent in the current system, including in relation to shift start and

finish times and the ability to occasionally leave early when the pushing schedule permits,

would make it against employees’ own interests to depart from it. Third, I consider that

conduct of this nature would constitute industrial action as defined in s.19(1)(a) of the FW

Act (“the performance of work by an employee in a manner different from that in which it is

customarily performed ... the result of which is a restriction or limitation on, or a delay in, the

performance of the work”) which would not be protected and therefore amenable to an order

under s.418(1) that it stop. I consider that the change would be efficient.

[11]      That leaves the question of fairness. The major issue in this respect raised by the AWU

was that it would be unfair for Bluescope to retain all the savings and efficiencies achieved by

the Coke Agreement but for employees to lose what they gained from it in return. Whilst in

normal circumstances that submission might have some weight, the extremely difficult
[2016] FWC 1345

commercial situation which currently exists and is likely to exist for some time means that the

submission cannot be accepted. To the extent that the current payment arrangement for hot

seat changeovers involves payment for time that is not actually worked, that is a cost

inefficiency which cannot be allowed to continue. Such cost inefficiencies were removed

from all other parts of the steelworks as a result of the MOA, and were earlier substantially

removed from the Cokemaking Department by the agreed changes to the Coke Agreement in

2010. It will not be fair to anyone in the longer term if inefficiencies in the steelworks’ cost

structure prevent it from being as commercially competitive as it might otherwise be, with a

consequent elevated risk to jobs.

[12]      I consider that the major issue relevant to the criterion of fairness is, as stated in my

Recommendation of 25 November 2015, the extent to which the 15 minute hot seat

changeover payment is justifiable on the basis of the time actually necessary to effect the

changeover. If the existing payment represents a reasonable approximation of the time it

takes, in addition to the 12 hour shift and the 15 minute shower time, to complete the

changeover then, I consider it would be unfair to remove it.

[13]      In dealing with this issue, it is necessary to identify the various functional groups in

the Cokemaking Department. They are as follows:

(1)	5 Battery: employees consist of charger and ram drivers.
(2)	6 Battery: employees consist of charger and ram drivers, general purpose
operators (GPOs) and relief (across both 5 and 6 batteries).
(3)	7 Battery: employees consist of charger, ram and extractor drivers,
GPOs/operations assistants (OAs), and relief.
(4)	Gas Processing.
(5)	Regulators.
(6)	Coal and Coke Handling.

[14]      Evidence in relation to current changeover practices was given on behalf of Bluescope

by Ross Schuback, the Coke Plant 2 (7 Battery) Operations Manager, and on behalf of the

AWU by Mr Gregg Davies, a GPO/OA on 7 Battery, Mr David Bevan, a machine operator

(ram and charger) on 5 and 6 Batteries, and Mr Jonathon Nelse, OA on 7 Battery.

[15]      The evidence demonstrated that, despite all employees in the categories set out above

having received the hot seat changeover payment, many of them did not actually perform a

hot seat changeover. The Coke Agreement, as earlier quoted, proceeded on the basis that a hot

seat changeover involved relieving on the machine or process in order to maintain the

continuity of the pushing schedule across the change of shifts. Only the charger, ram and

extractor drivers relieve on a machine in the strict sense, and in addition it appears the gas

processors are relieved at their stations, the regulators are relieved on the batteries, and the

coke handling operators are relieved at the screen house. In the other cases (GPOs, OAs, and

coal handling) there is a handover carried out at the crib room, bathroom or the car park.

While there is no doubt operational value in such a handover, it does not in my view
[2016] FWC 1345

constitute the hot seat changeover contemplated by the Coke Agreement. That makes the

continuation of the payment for GPOs, OAs and coal handling operators strongly problematic.

[16]      It was Mr Schuback’s evidence that the regulators and coke handling operators are

nearly always able to take their shower during shift time, so that they are already showered

when they conduct their handover. This evidence was not contradicted by the AWU. In their

case therefore the payment of 15 minutes shower time, in circumstances where no time

additional to the 12 hours’ paid shift time is usually spent actually having a shower, would be

ample to compensate for any time spent conducting the changeover. Mr Schuback estimated

this to be 4-5 minutes in the case of the regulators and 2 minutes in the case of the coke

handling operators, but even if it took a full 15 minutes the same proposition would apply.

Therefore I do not consider that there is any basis to retain the 15 minute hot seat changeover

payment, for regulators and coke handling operators.

[17]      In relation to the other categories of employees, the evidence varied as to how long

their hot seat changeover or handover took. Mr Schuback’s evidence was that the “likely

duration” of the handover was not more than 2 minutes. However it is unclear the extent to

which this was based on direct observation, or on reports from others, or was simply an

estimate of how long it should take. The AWU witnesses gave evidence based on their own

experience as to how long each handover took. The times they described ranged from 2

minutes to 20 minutes, with 5-10 minutes being said to be the most common time (noting that

they described handovers occurring at both ends of the shifts). There is no suggestion that any

of the AWU witnesses had undertaken a time and motion study of the process, and the times

they gave involved a large degree of estimation. The evidence given on both sides was also no

doubt self-serving to a certain degree.

[18]      The evidence which I found most persuasive was that given by the AWU witnesses

concerning the total length of their working day. Mr Davies, a GPO/OA described himself,

typically, as changed and ready to start work at the bathroom at the beginning of the shift at

about 5.30, and having showered and ready to go home at the end of the shift at about 5.40.

That is a total working day of 12 hours and 10 minutes. From this should be deducted the

approximately 10 minutes in total (5 minutes each way) which it takes Mr Davies to drive

from the bathroom to 7 Battery and back, which it is accepted is not paid time. Mr Nelse, also

an OA, described commencing his handover at the bathroom at the beginning of the shift at

about 5.20, and being showered and ready to leave at the end of the shift at about 5.45. This

gives a total day of 12 hours and 25 minutes, from which a similar 10 minute deduction

should be made. In neither case does it appear that any payment in addition to the 15 minutes

shower payment is justified. I would assume that Mr Davies and Mr Nelse were representative

of GPOs and OAs generally who, as earlier stated, do not in any case carry out hot seat

changeovers in the proper sense. I also note the evidence of Mr Bevan, who said that when he

performed the work of a GPO on 5/6 Battery the handover took place in the crib room and

only took 2-5 minutes. I therefore do not consider that there is a case for retaining the hot seat

changeover payment for GPOs and OAs.

[19]      The position described by Mr Bevan in relation to the work of a machine operator on

5/6 Batteries was quite different. His evidence was that he was ready for work at the bathroom

at the beginning of the shift at about 5.30, but was not showered and ready to leave for home

until about 6.20. Once a deduction is made for the walk from the bathroom to the battery and

return, which in his case might take up to 10-20 minutes in total, there is a working day of 12

hours and 30 or 40 minutes in total. I again proceed on the basis that Mr Bevan’s evidence is
[2016] FWC 1345

representative of machine operators on all batteries, and I note that neither party suggested I

should proceed otherwise. The evidence tends to demonstrate that for machine operators - that

is ram, charger and extractor drivers - the payment is justified.

[20]      Bluescope pointed to the fact that, on 5 and 7 Batteries, the pushing schedule

sometimes provided for “block breaks” to occur at the shift changeover time, meaning that

employees could leave early. Bluescope estimated this occurred on about 30% of shifts. Mr

Bevan’s evidence was however that delays in the pushing schedule meant that, in practice,

only in a small proportion of that 30% of shifts was an actual early departure possible. Having

regard to this evidence, I do not consider the occasional capacity to leave early vitiates the

conclusion that the hot seat changeover payment remains justified for machine operators. I

consider it would therefore be unfair to deprive them of the payment.

[21]      That leaves the gas processing operators and the coal handling operators. The former

group, as earlier stated, actually carry out a hot seat changeover, and are required to do so on

100% of the shifts. Mr Schuback included them in the estimate of 2 minutes to carry out a

changeover, but it is apparent that his evidence in this respect was not based on any direct

observation or experience of their work. I am prepared to proceed on the basis that for gas

processing, the position is similar to that of machine operators. By contrast, Mr Schuback’s

evidence about the coal handling operators appeared to be based on direct observation. As

earlier stated, his evidence was to the effect that they do not actually do a hot seat changeover,

but rather they do a handover in the car park which usually took a couple of minutes. That

evidence was not contradicted. I do not consider that there is any justification for retention of

the hot seat changeover in their case.

[22]      My conclusion is therefore that the change to the Coke Agreement proposed by

Bluescope, namely the abolition of the 15 minutes overtime payment for the hot seat

changeover, is fair except in relation to the machine operators on 5, 6 and 7 Batteries and the

gas processing operators. For these latter employees, I consider that the payment is justified

and to permanently remove it would be unfair.

[23]      This conclusion does not align with the primary position of either party. I also note the

alternative position advanced by the AWU to the effect that it would prefer to retain a reduced

payment for all employees rather than have some employees keep it and others not. In that

connection I accept that issues concerning employee morale and efficiency in the

administration of the payment may arise if the payment remains for some and not others.

[24]      I consider that the appropriate course at this stage is to direct the parties to confer in

relation to the conclusions I have reached and as to whether those conclusions should be

implemented by way of machine operators on 5, 6 and 7 Batteries and the gas processing

operators retaining the payment and other employees foregoing it, or by a reduced payment

across the board.

[2016] FWC 1345

[25]      The parties are further directed to provide a report as to the outcome of the discussions

to my chambers in 14 days. If there is an agreed outcome, I will implement it. If there is not, I

will determine a final outcome.

VICE PRESIDENT

Appearances:

K. Brotherson solicitor with J. Fitzgerald and R. Nasta for BlueScope Steel (AIS) Pty Ltd.

J. Blaxland and W. Phillips for the Australian Workers' Union.

Hearing details:

2015.

Sydney:

12 February.

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BlueScope Steel (AIS) Pty Ltd v Australian Workers' Union and others [2015] FWCFB 5615 at [7]