BlueScope Steel Limited T/A BlueScope v Australian Workers' Union

[2017] FWC 2260

[2017] FWC 2260

FAIR WORK COMMISSION

INTERIM DECISION

Fair Work Act 2009
s.739—Dispute resolution

BlueScope Steel Limited T/A BlueScope
v
Australian Workers’ Union, The
(C2017/2066)

Manufacturing and associated industries
COMMISSIONER RYAN	MELBOURNE, 5 MAY 2017

Alleged dispute about use of contractors –Interpretation of terms of an enterprise agreement.

[1] The principles to be applied in the interpretation of the terms of an enterprise agreement have been clearly stated in AMIEU v Golden Cockerel P/L 1 (Golden Cockerel) and have been usefully added to by the Full Bench decision in Paper Australia Pty Ltd v AMWU.2

[2] BlueScope Steel Ltd (BlueScope) wants to utilise a number of labour hire employees to cover a spike in workload at its Westernport facility. BlueScope has discussed this issue with its employees and the Australian Workers Union (AWU) but without gaining any acceptance of the proposal from employees or the AWU.

[3] BlueScope contended that despite the opposition from its employees and the AWU that it is able to utilise labour hire under clause 13.1 of the Agreement because clause 13.1.3 of the Agreement does not require AWU involvement for BlueScope's use of "Contractors". Rather, clause 13.1.3 only requires AWU involvement for BlueScope's use of "part-time or casual employees".

[4] In the alternative BlueScope contended that, should clause 13.1.3 require AWU involvement for BlueScope's use of "Contractors”, in these circumstances:

(i) contractors are an alternative arrangement that is more appropriate than permanent full-time employment under clause 13.1.1; and

(ii) the AWU is unreasonably withholding its consent for Blue Scope's use of labour hire. This is because the AWU's proposed alternative solution (for BlueScope to request its permanent fulltime employees work overtime shifts between May to June 2017 inclusive) is not realistic, achievable or appropriate.

[5] The AWU contended that the terms of the Agreement require the involvement and agreement of the AWU to the proposal from BlueScope to utilise a number of labour hire employees to cover a spike in workload at its Westernport facility, and that the AWU is not unreasonably withholding agreement to the proposal from BlueScope.

The relevant terms of the Agreement

[6] The relevant provisions of the Agreement are as follows:

13. ALTERNATIVE EMPLOYMENT ARRANGEMENTS

13.1 General

13.1.1 Permanent full-time employment will continue to be the standard employment arrangement at Western Port. However, it is recognised that there may be situations where alternative arrangements are more appropriate.

13.1.2 All other things being equal, the Company will give preference of employment to residents of the local region.

13.1.3 Contractors may be used by the Company to cover such situations. Where the Company requires part-time or casual employees, the Company will involve the Union in the decision, prior to any part time or casual arrangements being implemented. In the event that either part time or casual employment is required by the Company then the Company will only engage in such arrangements after consultation and agreement is reached with the Union. Such agreement will not be unreasonably withheld.

13.2 Fixed Term Employment

13.2.1 The intent of this clause is to better enable the Company to meet labour requirements in a demand based business. It is not the intent of this clause to casualise or de-skill the workforce.

13.2.2 Subject to sub-clause 13.2.4, the parties agree that the Company may engage fixed term employees automatically (that is, without Union consultation or agreement) for any period or periods of between 4 weeks and 12 months in any of the following circumstances:
(i) Annual or long service leave coverage;
(ii) Maternity/Paternity leave;
(iii) Absences due to illness/injury; and
(iv) Demand for labour that is not likely to result in permanent employment.

The Company will notify AWU Site Delegate(s) at the time of appointment of the fixed term appointments on site.

13.2.3 Subject to sub-clause 13.2.4, any consecutive term beyond 12 months will be discussed and agreed with the Union. Agreement will not be unreasonably withheld.

13.2.4 In the case of MCL5 re-commissioning:

(i) The parties have agreed that fixed term employees may be engaged automatically (that is, without Union consultation or agreement) for a 12 month period for the purposes of restarting MCL5 and evaluating its on-going viability. Such engagement may be extended for a further period of up to 12 months on up to two occasions where prior consultation has taken place with the Union. Such consultation must consider all aspects of the MCL5 restart, including the genuine need for fixed term employment.

(ii) The Company agrees that any existing employee who transfers to MCL5 for the re-commissioning period, will suffer no financial disadvantage for the period of the re-commissioning.

13.2.5 Wherever possible, a fixed term employee will commence work prior to the permanent employee commencing their period of absence (as above) to facilitate induction and training.

13.2.6 In the event of a fixed term employee obtaining a permanent employment opportunity with the Company at the conclusion of the fixed term period, the Company will recognise the fixed term employee's continuity of service for the continuous period immediately prior to the permanent engagement.

13.3 Part-Time Employment

13.3.1 Employees may be engaged by the week to work on a part-time basis for a consistent number of hours which, having regard to the various ways of arranging ordinary hours, will average less than 38 hours per week.

13.3.2 Rate of Pay
Part-time employees will be paid, per hour, one thirty-eighth of the weekly rate prescribed by this Agreement, for the Level at which the employee is accredited.

13.3.3 Leave Entitlement
Part-Time employees are entitled to annual leave, long service leave and personal/carer's leave on a proportionate basis.

13.3.4 Overtime
A part-time employee who works in excess of his or her contracted hours will be paid as overtime in accordance with Clause 28 (Overtime).

13.3.5 In the event that a department wishes to utilise part-time employment, prior to these arrangements being implemented the Company will consult with the Union as outlined in 13.1 above. The Company will provide reasons as to why part-time employment is more appropriate than full-time employment or other arrangements.

13.3.6 The Company will consider, subject to business requirements, employee initiated requests to work part-time, e.g. due to family responsibilities.

13.3.7 Where a part-time employee's normal rostered hours fall on a public holiday and work is not performed by the employee, such employee will not lose pay for the day.

13.3.8 Where a part-time employee works on a public holiday, such employee will be paid in accordance with clause 39.3 (Payment for Time Worked on a Public Holiday) of this Agreement.

13.4 Casual Employment

13.4.1 In the event that a department wishes to utilise casual employment, prior to these arrangements being implemented the Company will consult with the Union in accordance with 13.1 (Alternative Employment Arrangement) above. The Company will provide reasons as to why casual employment is more appropriate than full-time employment or other arrangements.

13.4.2 Casual employees will be paid a casual loading of 25%.

The relevant authorities

[7] The Full Bench decision in Golden Cockerel set out the principles to be followed in interpreting the terms of an enterprise agreement as follows:

“The AI Act does not apply to the construction of an enterprise agreement made under the Act.

1. In construing an enterprise agreement it is first necessary to determine whether an agreement has a plain meaning or contains an ambiguity.

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

3. If the agreement has a plain meaning, evidence of the surrounding circumstances will not be admitted to contradict the plain language of the agreement.

4. If the language of the agreement is ambiguous or susceptible to more than one meaning then evidence of the surrounding circumstance will be admissible to aide the interpretation of the agreement.

5. Admissible evidence of the surrounding circumstances is evidence of the objective framework of fact and will include:

(a) evidence of prior negotiations to the extent that the negotiations tend to establish objective background facts known to all parties and the subject matter of the agreement;

(b) notorious facts of which knowledge is to be presumed;

(c) evidence of matters in common contemplation and constituting a common assumption.

6. The resolution of a disputed construction of an agreement will turn on the language of the Agreement understood having regard to its context and purpose.

7. Context might appear from:

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

(b) the disputed provision’s place and arrangement in the agreement;

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

8. Where the common intention of the parties is sought to be identified, regard is not to be had to the subjective intentions or expectations of the parties. A common intention is identified objectively, that is by reference to that which a reasonable person would understand by the language the parties have used to express their agreement.

9. The task of interpreting an agreement does not involve rewriting the agreement to achieve what might be regarded as a fair or just outcome. The task is always one of interpreting the agreement produced by parties.”

[8] Recently, a Full Bench in Paper Australia P/L v AMWU (Paper Australia) usefully added to what Golden Cockerel had decided. One of the grounds of appeal before the Full Bench in Paper Australia P/L v AMWU was that “the Commission had applied principles of statutory interpretation to the interpretation of the Agreement in a manner contrary to the decision of the Full Bench in AMIEU v Golden Cockerel Pty Limited.” In dealing with this aspect of the appeal the Full Bench said:

“[21] Australian Paper made the submission that no principle of statutory construction has any application to the interpretation of enterprise agreements, and relied upon the proposition stated in Golden Cockerel that the Acts Interpretation Act 1901 (Cth) does not apply to the construction of enterprise agreements in support of that submission. The submission is rejected. It does not follow from the fact that enterprise agreements are not instruments to which the Acts Interpretation Act applies that modes of textual analysis developed in the general law in the context of the interpretation of statutes are incapable of application to enterprise agreements. While it undoubtedly remains necessary in interpreting a particular instrument to pay attention to the peculiar characteristics of that instrument, it is equally the case that there has been a convergence in the approach taken to the interpretation of statutes, agreements and other types of instruments - in particular, in the emphasis on the objective ascertainment of the instrument’s purpose and the move from textual to contextual interpretation. Additionally, many of the grammatical aides to the interpretation of statutes are equally applicable to other types of instruments. In the High Court decision in Royal Botanic Gardens and Domain Trust v South Sydney City Council, Kirby J said “... it would be indefensible for this Court, without good reason, to adopt a different approach in the ascertainment of the meaning of contested language in a contract from the approach observed in respect of legislation”. We therefore do not consider that Golden Cockerel should be taken as an exhaustive statement of the means by which the text of an enterprise agreement might be construed.”
[citations removed]

[9] I approach the task of discerning the meaning of the terms of the Agreement having regard to both the decision in Golden Cockerel and the decision in Paper Australia.

[10] In the present matter where there is a dispute over the construction of clause 13 regard must be had to principles 7 and 8 in Golden Cockerel.

[11] The structure of clause 13 creates a very strong context in which to understand the meaning to be given to clause 13.1.3.

[12] The very fact that clauses 13.2, 13.3 and 13.4 respectively have the headings of Fixed Term Employment, Part-Time Employment and Casual Employment and that each sub-clause deals specifically with that type of employment, then, where clause 13.1, which has the heading General, refers to fixed term employment, part-time employment or casual employment then, those references must be understood as referring to a type of employment dealt with in one of clauses 13.2, 13.3 or 13.4.

[13] The contention of the AWU that the reference to part-time and casual employees within clause 13.1 is not limited to employees of BlueScope is rejected. The AWU contended that because clause 13.1.3 refers to “part time or casual arrangements” that this suggests something broader than just part-time or casual employees of BlueScope is also rejected. The use of the word “arrangements” in clause 13.1.3 simply reflects the language of clause 13.1.1 which refers to “alternative arrangements”.

[14] In the context of a clause which specifically deals with employment by BlueScope any reference to full-time, part-time, casual or fixed term employees must be to employees of BlueScope.

[15] Clause 13.1.3 is constructed oddly when seen in the context of the language used in clauses 13.1.1 and 13.1.2. The heading of clause 13 is Alternative Employment Arrangements and clause 13.1.1 makes clear that whilst permanent full-time employment is the standard employment, arrangement other alternative arrangements may be used. Clause 13.1.2 provides for a general preference for local employees.

[16] The opening sentence of clause 13.1.3 does not deal with employment by BlueScope but rather provides an exception to employment by BlueScope namely, that “(c)ontractors may be used by the Company to cover such situations.” The remaining sentences of clause 13.1.3 refer only to part-time and casual employees and imposes conditions upon BlueScope if it wants to employ part-time or casual employees. There is no mention within clause 13.1.3 of fixed term employment.

[17] BlueScope submitted that the first sentence of clause 13.1.3 expressly deals with “contractors”, that it permits the engagement of contractors and that there are no restrictions upon their engagement.

[18] The submission of BlueScope that there are no restrictions on the engagement of contractors is unsound.

[19] On the other hand the AWU contended that “(w)ere the requirement to consult and reach agreement with the AWU in clause 13.1.3 not to apply to the use of contractors, the protection in clause 13.1.3 would be rendered otiose, as BSL could avoid its obligations by simply electing to use contractors, rather than directly employed part-time or casual employees. Clause 13.1.3 should not be interpreted as rendering this protection wholly or substantially ineffective unless the language used permits no other outcome.”

[20] The submission of the AWU that the specific consultation and agreement requirements in clause 13.1.3 also apply to the use of contractors is unsound.

[21] Whilst it is clear that clause 13.1.3 does not place any restrictions on the engagement of contractors, the first sentence of clause 13.1.3 which permits the use of contractors must be understood in the context of the whole of clause 13.

[22] It is also important to note that the absence of any mention in clause 13.1.3 of fixed term employment is unsurprising given the very detailed provisions in clause 13.2.

[23] Significantly, the use of other than permanent full time employees is conditional upon the appropriateness of the use of contractors, fixed term employees, part-time employees or casual employees. Some guidance is given within clause 13 as to the appropriateness of using some forms of labour but no guidance is given as to the appropriateness of using other forms of labour.

[24] Clause 13.2 gives real substance to when it is appropriate to use fixed term employment. Clause 13.3 provides no guidance as to when it is appropriate to use part time employment. However, clause 13.1.3 requires that, before part time employment can be used as an alternative to full time employment, BlueScope must consult with the AWU and the AWU has to agree with the use of part time employment, although the AWU cannot unreasonably withhold its agreement. Clause 13.4 requires that BlueScope provide reasons as to why it is appropriate to use casual employment and requires that BlueScope consult with the AWU as required under clause 13.1.3. Apart from the permission given to BlueScope in clause 13.1.3 to use contractors there is nothing in clause 13 which specifically deals with processes to be undertaken by BlueScope when it wishes to use contractors as an alternative to using full time employment.

[25] When read in the context of the whole of clause 13 it is reasonable to conclude that BlueScope is permitted to use contractors rather than full time permanent employees but only if the use of contractors is appropriate. Whether the use of contractors in any given situation is an appropriate alternative to using full time permanent employees will, in the case of a dispute as to the appropriateness of using contractors, depend upon a consideration as to the appropriateness of using full time permanent employment or the appropriateness of using fixed term employment. The necessity to look at the appropriateness of using fixed term employment is because clause 13.2 makes it very clear when it is appropriate to use fixed term employment.

[26] The foregoing analysis makes clear that the permission granted by the first sentence of clause 13.1.3 to BlueScope to use contractors is not conditional upon both BlueScope consulting with the AWU and the AWU agreeing to the use of contractors. However, the use of contractors as an alternative to the use of full time employees is subject to a test of appropriateness and where a dispute arises as to the appropriateness of the use of contractors as an alternative to the use of full time employment the disputes resolution procedures of the Agreement apply.

[27] In its application in this matter BlueScope addressed the issue of the appropriateness of using contractors in its description of the dispute as follows:

1. BlueScope met with the AWU site delegate on Tuesday 11 April 2017 at our regular Monthly AWU meeting.

During the meeting:

(a) BlueScope and the AWU discussed BlueScope's use of 4 contractors to undertake ancillary Pack line tasks at the Metal Coating Line Coated Coil Packline (MCL CCP) from the beginning of May to the end of June 2017 under clause 13.1 .3 of the Agreement (the Arrangement); and

(b) BlueScope provided the AWU the attached communication pack.

2. In summary, BlueScope needs to implement the Arrangement due to a spike in orders for packing, which is forecast for an eight-week period (through May and June 2017). BlueScope is concerned about the lag in steel coils being packed for dispatch and the excess requirements on its permanent full-time employees throughout this period.

3. The Arrangement was specifically noted in the meeting as requiring urgent attention given the imminent spike in orders for packing. Having reviewed, and discussed with the AWU, alternatives to the Arrangement such as overtime, internal secondments and fixed term employees, BlueScope is of the view that the use of contractors is the most sensible, practical, and desirable solution for this short term demand. Importantly, implementing the Arrangement is more appropriate than employing new (or using existing) permanent full-time employees because:

(a) the short-term nature of the spike in orders for packing does not warrant BlueScope employing new permanent full-time employees; and

(b) the use of overtime for current permanent full-time employees does not guarantee that Blue Scope will have adequate employees, while ensuring their health and safety, to manage the demand of packing orders. This is because:

(i) the MCL CCP is currently working the maximum shift pattern on site (2 x 12 hour shifts per day, 7 days per week);
(ii) overtime rates for permanent full-time employees in the MCL CCP are currently over 20%;
(iii) employees may (and are within their rights to) refuse to work overtime, and some employees have indicated to BlueScope they are unable or unwilling to work overtime or additional overtime during this period;
(iv) BlueScope has serious concerns about the impact of such levels of overtime on the health and safety of its current permanent full-time employees (particularly due to risks of employee fatigue); and
(v) any overtime levels not meeting the four additional pack line positions would result in BlueScope being unable to meet the required number of coils passing the MCL CCP.”

[28] The AWU has addressed the issue of the inappropriateness of using contractors. The AWU contended, and has provided sworn statements from BlueScope employees in support of its contention, that the use of contractors as an alternative to the use of permanent fulltime employees is less safe and less efficient and no less expensive than using the exiting fulltime employees of BlueScope.

[29] It is clear from the above that BlueScope has considered the appropriateness of the use of contractors as an alternative to the use of full time employees. However, it is also clear that BlueScope has not considered the appropriateness of the use of fixed term employment as an alternative to the use of either full time employment or the use of contractors. It is also clear that the AWU has only responded to the use of contractors as an alternative to the use of existing full time permanent employees and not to any other alternative.

[30] It is clear from the specific language of clause 13.2.2 that one of the specific appropriate uses of fixed term employment was in circumstances where there was a demand for labour that would not lead to permanent employment. Relevantly clause 13.2.2 provides as follows:

“the parties agree that the Company may engage fixed term employees automatically (that is, without Union consultation or agreement) for any period or periods of between 4 weeks and 12 months in any of the following circumstances:
(iv) Demand for labour that is not likely to result in permanent employment.”

[31] The situation described in the present matter by BlueScope as giving rise to the need to labour other than permanent full time employees is exactly one of the circumstances mentioned as constituting a circumstance in which the use of fixed term employment would both be an appropriate alternative and an alternative that can be implemented by BlueScope “without Union consultation or agreement”.

[32] The language and structure of 13 treats the use of contractors, fixed term employment or part time employment as competing alternatives to full time permanent employment and without preferring one alternative over the other. However, any consideration of the appropriateness of using contractors as the alternative to permanent full time employment must take into account that the Agreement has specifically identified fixed term employment as an appropriate alternative to full time permanent employment in a situation where there is a demand for labour that is not likely to result in permanent employment. That is exactly the situation outlined by BlueScope as giving rise to a need to use an alternative to full time permanent employment.

[33] Nothing has been put by BlueScope either in its application or in its written submissions which considers the appropriateness of the alternatives of contractors vis a vis fixed term employees as an alternative to using full time permanent employees.

[34] In all of the circumstances of the matter the Commission could not be satisfied that the use of contractors is an appropriate alternative arrangement as envisaged by clause 13.1.1.

[35] The issue in dispute remains unresolved and it is appropriate that the Commission give the parties an opportunity to make further submissions having regard to the contents of this interim decision.

[36] The Commission notes that after the AWU filed its material BlueScope sought to depart from the agreed process to deal with this dispute. At the conference held at 3.30pm on Friday 21 April 2017 BlueScope sought that the issue in dispute be resolved quickly. At that conference the AWU raised a jurisdictional challenge to the dispute being dealt with by the Commission as well as identifying strong opposition to the outcome being sought by BlueScope in relation to the substantive issue in dispute. In programming the dispute the Commission discussed with both parties time frames for the filing of the parties’ respective cases. The AWU sought a period of at least a week in which to file its material on the jurisdictional issue and a further period of at least another week to file its material in relation to the substantive issue if the jurisdictional challenge failed. BlueScope was quite happy to agree to file all of its case, both in relation to the jurisdiction of the Commission to deal with the substantive dispute and all of its material in relation to the substantive dispute by close of business on Monday 24 April 2017. On that basis the Commission required the AWU to file its material on the jurisdictional issue by close of business on Friday 28 April 2017 with the Commission issuing a decision on the jurisdictional challenge on Monday 1 May 2017 and with the AWU then filing its materials in relation to the substantive dispute by close of business on Thursday 4 May 2017 with the Commission issuing a decision on the substantive dispute on Friday 5 May 2017. BlueScope were happy with this process of dealing with both the jurisdictional challenge and the substantive matter in dispute. For BlueScope to now want an opportunity to seek to cross examine the AWU witnesses and also an opportunity to lead evidence in reply is inappropriate and is inconsistent with the position adopted by BlueScope at the conference.

COMMISSIONER

 1   [2014] FWCFB 7447.

 2   [2017] FWCFB 1621.

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