BP Refinery (Kwinana) Pty Ltd v Australian Workers' Union; Mr Clive Hacking and Australian Workers' Union v BP Refinery...

[2013] FWC 8564

[2014] FWC 8564 [Note: An appeal pursuant to s.604 (C2013/7027) was lodged against this decision - refer to Full Bench decision dated 3 April 2014 [[2014] FWCFB 1476] for result of appeal]

FAIR WORK COMMISSION

DECISION
AND
REASONS FOR DECISION

Fair Work Act 2009
s.238 - Application for a scope order

BP Refinery (Kwinana) Pty Ltd
v

Australian Workers’ Union; Mr Rob Phillips; Ms Denise Solly; Ms Alicia Lever; Mr Michael Glover; Ms Kylie Taylor; Mr Clive Hacking

(B2013/1250)

and

Australian Workers’ Union

v

BP Refinery (Kwinana) Pty Ltd

(B2013/1366)

COMMISSIONER CLOGHAN PERTH, 2 DECEMBER 2013

Application for a scope order.

[1] On 19 September 2013, BP Refinery (Kwinana) Pty Ltd (BP or Applicant) made application (B2013/1250) to the Fair Work Commission (Commission) for a Scope Order pursuant to s.238 of the Fair Work Act 2009 (FW Act).

[2] The application for a scope order relates to bargaining to replace the:

● BP Refinery (Kwinana) Pty Ltd and AWU Operations Employees Enterprise Bargaining Agreement 2010 (Operations Agreement); and

● AWU and BP Refinery (Kwinana) Pty Ltd Laboratory Employees Enterprise Bargaining Agreement 2010 (Laboratory Agreement).

[3] The Operations and Laboratory Agreements each have a nominal expiry date of 30 November 2013.

[4] BP and the AWU are bargaining representatives for replacement of the Operations and Laboratory Agreements.

[5] Application B2013/1250 was the subject of a conference on 2 October 2013 but the dispute remained unresolved.

[6] Procedural directions were issued on 17 October 2013 for a hearing on 30 October 2013.

[7] On 28 October 2013, the AWU made application (B2013/1366) to the Commission for a scope order pursuant to s.238 of the FW Act. The application also relates to bargaining to replace the Operations and Laboratory Agreements. The AWU requested that application B2013/1366 be joined to application B2013/1250 and both matters be heard and determined together. BP did not object or oppose both applications being joined. Both applications were joined and heard together.

[8] The dispute between BP and the AWU can be summarised as follows. BP is seeking that bargaining should be for two (2) replacement enterprise agreements with each agreement retaining their current coverage. The AWU is seeking one enterprise agreement which will cover all employees who are presently covered by the Operations and Laboratory Agreements.

[9] At the hearing, BP was represented by Mr T Casperz of Counsel. Evidence for BP was given by:

● Mr S Royston, Human Resources Advisor;
● Mr B de Pinto, Quality Measurement Manager; and
● Mr J Garcia Galera, Operations Manager.

[10] The AWU was represented by Mr M de Carne, AWU National Office. Evidence on behalf of the AWU was given by:

● Ms D Solly, Laboratory Coordinator and Bargaining Representative;
● Mr M Glover, Process Technician and Bargaining Representative; and
● Mr R Phillips, Control Technician and Bargaining Representative.

[11] At the conclusion of the hearing, I reserved my decision. Having considered written and oral evidence, submissions, the FW Act and the cited authorities, this is my decision and reasons for decision.

RELEVANT STATUTORY PROVISIONS

[12] Section 238 of the FW Act provides:

“238 Scope orders

Bargaining representatives may apply for scope orders

(1) A bargaining representative for a proposed single-enterprise agreement may apply to FWC for an order (a scope order) under this section if:

(a) the bargaining representative has concerns that bargaining for the agreement is not proceeding efficiently or fairly; and
(b) the reason for this is that the bargaining representative considers that the agreement will not cover appropriate employees, or will cover employees that it is not appropriate for the agreement to cover.

…
Bargaining representative must have given notice of concerns

(3) The bargaining representative may only apply for the scope order if the bargaining representative:

(a) has given a written notice setting out the concerns referred to in subsection (1) to the relevant bargaining representatives for the agreement; and
(b) has given the relevant bargaining representatives a reasonable time within which to respond to those concerns; and
(c) considers that the relevant bargaining representatives have not responded appropriately.

When FWC may make scope order

(4) FWC may make the scope order if FWC is satisfied:

(a) that the bargaining representative who made the application has met, or is meeting, the good faith bargaining requirements; and
(b) that making the order will promote the fair and efficient conduct of bargaining; and
(c) that the group of employees who will be covered by the agreement proposed to be specified in the scope order was fairly chosen; and
(d) it is reasonable in all the circumstances to make the order.

Matters which FWC must take into account

(4A) If the agreement proposed to be specified in the scope order will not cover all of the employees of the employer or employers covered by the agreement, FWA must, in deciding for the purposes of paragraph (4)(c) whether the group of employees who will be covered was fairly chosen, take into account whether the group is geographically, operationally or organisationally distinct.

Scope order must specify employer and employees to be covered

(5) The scope order must specify, in relation to a proposed single-enterprise agreement:

(a) the employer, or employers, that will be covered by the agreement; and
(b) the employees who will be covered by the agreement.

Scope order must be in accordance with this section etc.

(6) The scope order:

(a) must be in accordance with this section; and
(b) may relate to more than one proposed single-enterprise agreement.

Orders etc. that FWC may make

(7) If FWC makes the scope order, FWC may also:

(a) amend any existing bargaining orders; and
(b) make or vary such other orders (such as protected action ballot orders), determinations or other instruments made by FWC, or take such other actions, as FWC considers appropriate.”

RELEVANT BACKGROUND

[13] There are approximately 460 employees employed in connection with the operations at the BP Refinery.

[14] There are approximately 200 employees who are involved in the refining process.

[15] Approximately 165 employees have their terms and conditions of employment regulated, in part, by the Operations Agreement.

[16] Approximately 17 employees are covered by the Laboratory Agreement.

[17] Since 1997, employees who are currently covered by the Operations and Laboratory Agreements have had separate industrial instruments.

[18] The Operations employees are within the Operations Branch of the Kwinana Refinery corporate structure.

[19] The Laboratory employees are within the Business Information Branch of the Kwinana refinery corporate structure.

[20] Operations employees work over 24 hours each day and seven (7) days per week.

[21] Laboratory employees work 16 hours per day for each day of the week.

[22] Laboratory employees have specialist technical skills based on theoretical knowledge in such areas as chemistry, physics, mathematics and potentially microbiology.

CONSIDERATION

Subsections 238(1)(a) and (b) of the FW Act

[23] The nominal expiry date for the Operations and Laboratory Agreements is 30 November 2013. Both Agreements require that renegotiation for a replacement enterprise agreement commence six (6) months before the nominal expiry date.

[24] The first bargaining meeting to renegotiate both agreements occurred on 1 July 2013. At the meeting, BP indicated that it envisaged a process of bargaining for two separate enterprise agreements based on the existing Operations and Laboratory Agreements. The AWU responded by stating that it was totally committed to one enterprise agreement with a scope clause covering both agreements 1.

[25] A further bargaining meeting took place on 19 August 2013 but did not make any substantive progress because of the differences between the parties regarding whether there should be two separate enterprise agreements or one composite agreement.

[26] The parties met again on 11 September 2013 when BP and the AWU bargaining representatives reiterated their respective positions. The parties agreed that the issue of “scope” needed to be determined before bargaining could continue.

[27] On 19 September 2013, BP made application to the Commission for a Scope Order pursuant to s.238 of the FW Act. Subsequently, the AWU made an application on 28 October 2013. Each application reflects the position the parties have taken so far in negotiations and is impeding bargaining in any meaningful way.

[28] For the above reasons, I am satisfied that, in accordance with paragraphs 238(1)(a) and (b) of the FW Act, the applications have been properly made and that bargaining is not proceeding efficiently. The reason for the lack of efficiency is the dispute between the parties as to the appropriate coverage of the replacement agreement(s).

Subsection 238(3) of the FW Act

[29] Neither party has submitted that the other party has not complied with s.238(3) of the FW Act. Accordingly, I am satisfied that the bargaining representatives have given notice of concerns. Each party does not consider the other party to have responded to their concerns appropriately.

Section 238(4) of the FW Act

[30] The objectives of Part 2-4 - Enterprise Agreements of the FW Act are contained in s.171. Section 171 of the FW Act enables the Commission to make orders to facilitate the making of enterprise agreements. Enterprise agreements are underpinned by collective good faith bargaining and achieving productivity.

[31] Subsection 238(4) of the FW Act enables the Commission to make a scope order if it is satisfied that four factors are in existence. The first factor in paragraph 238(4)(a) is essentially “backward” looking. By “backward” looking, I mean that the Applicant has and is meeting the good faith bargaining requirements.

[32] Paragraph 238(4)(b) is “forward” looking. By “forward” looking I mean that the Commission is satisfied that in making an order, the order will promote the fair and efficient conduct of bargaining.

[33] The third factor in paragraph 238(4)(c) is neither “backward” nor “forward” looking but a qualitative condition that the group of employees specified in the scope order are fairly chosen.

[34] The fourth factor at paragraph 238(4)(d) requires the Commission be satisfied that an order is reasonable in all the circumstances. Shortly put, the Commission has a positive obligation to be satisfied that in making an order, it is what might be expected in such circumstances. Any order must have the quality or attribute of being necessary to promote the fair and efficient conduct of bargaining.

Paragraph 238(4)(a) - good faith bargaining requirements

[35] BP submits that both it and the AWU have met and are meeting the good faith bargaining requirements.

[36] The AWU submits that it has and is meeting the good faith bargaining requirements, however, it asserts BP has not, and is not, meeting the good faith bargaining requirements. The basis of that assertion relates to BP’s lack of recognition of its bargaining representatives.

[37] I am satisfied that BP is bargaining in good faith. I find that the material relied upon by the AWU to support its assertion that BP is not bargaining in good faith tenuous particularly given the fact that substantive bargaining has not commenced because of the impasse over whether there should be one or two agreements.

[38] I am satisfied that both parties have, since 1 July 2013, met and are meeting the good faith bargaining requirements in subsection 228(1) of the FW Act to the extent of the limited bargaining that has taken place.

Paragraphs 238(4)(b) and (c) - the order will promote fair and efficient conduct of bargaining and the scope proposed by BP or the AWU is fairly chosen

[39] In view of the requirements of paragraphs 238(4)(b) and (c) of the FW Act, the parties gave considerable attention to what is fair in the circumstances. Having heard the arguments, it seems apposite to slightly distort the old proverb and come to the conclusion that “fairness is in the eye of the beholder”.

[40] BP asserts that, since 1997, there have been two separate industrial instruments covering Laboratory and Operations employees and it is only fair that the status quo remain. In contrast, the AWU submit that the employees should not be tied to historical arrangements and it is fair to reassess those arrangements.

[41] The AWU submit that, in bargaining for the current Operations and Laboratory Agreements, BP agreed to one replacement agreement in this round of bargaining and it would only be fair that the Employer be held to that commitment. However, the evidence relied upon the AWU for such a submission was not conclusive of such a commitment by BP; a matter which as conceded by witnesses in cross examination.

[42] The AWU submit that both the Operations and Laboratory Agreements share a number of similar conditions of employment. BP points out the dissimilarities in the agreements.

[43] BP submit that in the process of approval for the Operations and Laboratory Agreements in 2010, the AWU agreed with the Employer’s declaration that the respective employees had been fairly chosen, including by reference to “geographical, or operational or organisation distinctiveness”. While the AWU concede that it agreed to the position put by the Employer in 2010 that the employees were fairly chosen, that view does not remain in perpetuity 2 and does not disentitle “those employees seeking their preferred scope under current bargaining”3.

[44] The AWU submit a petition of 87 employees indicating their preference and support to one enterprise agreement to cover both operations and laboratory employees and it is only fair that the Commission take their preference into consideration. While 87 employees represent approximately 50% of the workforce, as a matter of fact, I do not know the views of the remaining employees. Notwithstanding the views of approximately 50% of the workforce, I must, as a matter for fairness and equity, take into consideration the views and preference of the Employer.

[45] The AWU submits that “intuitively” duplication of enterprise agreements is less efficient. The Employer submits that an amalgam of operational and laboratory bargaining representatives will be inefficient as each will not have detailed information or responsibility for the “other” group of employees. “Intuitively”, this situation also seems inefficient.

[46] The Employer submits that discrete employee bargaining representatives and relevant Employer bargaining representatives will be able to negotiate in a direct and focussed manner with respect to the particular claims of either operational or laboratory employees. As a proposition, this argument appears to be sound and sensible.

[47] In response, the AWU point to the common terms and conditions and the duplication of time and effort in two sets out negotiations. While such a situation may eventuate, experienced negotiators, in my view, would deliberately not let such a situation of duplicate discussions exist as it would defy a reasoned approach to such circumstances.

Subsection 238(4) - making the order will promote fair and efficient conduct of bargaining

[48] These applications reflect a situation where neither party is prepared to move from its original and maintained position. The issue of difference between the parties does not lend itself to a compromise. Shortly put, it is either one or two replacement enterprise agreements. Unless this threshold issue is determined, the parties are “locked” into to either not negotiating or “surface” bargaining.

[49] For the reasons immediately above, I am satisfied that making an order will promote the fair and efficient conduct of bargaining.

Subsection 238(4A) - matters the Commission must take into account

[50] The proposed scope options in the replacement enterprise agreements will not cover all of the employees of the Employer. However, for the purposes of paragraph 238(4)(c) of the FW Act, it is necessary for the Commission to be satisfied that the group of employees who are proposed to be covered is fairly chosen taking into account whether that group is geographically, operationally or organisationally distinct.

What is the meaning of “distinct”?

[51] The Australian Concise Oxford Dictionary defines the adverb “distinct” as, among others, “not identical, separate, individual, different in equality or kind, unmistakable”. Put shortly, the word “distinct” envisages that, in this case, one group of employees can be distinguished from another group of employees in terms of either location, operations or where they fit within the organisational structure.

Geographical distinction

[52] It is not in dispute that all the employees subject to these applications are located at the BP Refinery in Kwinana, Western Australia.

[53] Within the Refinery, the laboratory is approximately 200 metres from the Central Control Boardroom (CCB). However, laboratory testing for some speciality areas are carried out to the CCB.

[54] While there was argument about the geography of some specific testing and the quantity of such testing, I am satisfied on the evidence that the principal locations of work for operational and laboratory employees is different within the Refinery and find accordingly.

Operational distinction

[55] Are the operations and laboratory employees distinct?

[56] The ordinary meaning of operational I have taken to mean what are the respective employees engaged in, or put differently, what are their respective functions.

[57] In my view, it is useful to commence this analysis with the respective role profiles provided for each occupational group and not contested in evidence.

[58] The operations technician has a purpose of being:

“...accountable for the safe and efficient operation of process plant and equipment at BP Kwinana Refinery...” 4

[59] The purpose of the laboratory technician is the:

“...delivery of quality measurement data through testing and proactive identification of anomalies in order to allow the refinery processes to be optimised and to ensure the release of products that meet specifications”,

however, some laboratory technicians, because:

“of their areas of speciality or experience will be assigned to an area of technical responsibility such as CFR, Gas Analysis, Instruments...” 5

[60] Put very simply, the operations employee is primarily focussed on maximising the quantity of production of refinery products. Whereas the laboratory employees are primarily focussed on ensuring the quality of refinery products.

[61] Consistent with any contemporary workplace, there is a overlap of work activities. However, the similarity of activities do not detract from the overall discrete distinctiveness between operational and laboratory employees. A matter which was acknowledged in oral evidence by the respective laboratory and operational employee witnesses.

[62] This distinctiveness is no better illustrated by the education, skills and experience required of the respective laboratory and operational employees 6 at the time of recruitment.

[63] Finally, it was not disputed that laboratory employees work shifts covering 7:00 am to 11:00 pm, seven (7) days each week. Whereas, operations employees are required to work 24 hour shifts, seven (7) days per week.

[64] Having considered the written and oral evidence, I find that the operational and laboratory employees are operationally different and distinct.

Organisational distinction

[65] The Laboratory employees are organisationally within the Business Information Branch.

[66] The Operations employees are organisationally within the Operations Branch.

[67] Ms Solly is described as a Quality Measurement Technician and reports to the Quality Measurement Manager, who in turn, reports to the Business Information Manager 7.

[68] Mr Glover is described in the organisational structure as a Process Technician and reports to the Deputy Shift Team Leader (North). The Deputy Shift Team Leader (North) reports to the Shift Manager (B), who in turn, reports to the Operations Manager, Mr Garcia 8.

[69] The AWU stated that it was not prepared to “agree nor dispute” with the above evidence. The AWU agree that “administratively” the employees are in two distinct branches but “part of the production area” 9. I am not prepared to agree to such a broad organisational definition, especially one which is self serving and at odds with the documented evidence of the Employer’s organisational chart.

[70] I find that the Laboratory and Operations employees are organisationally distinct.

CONCLUSION

[71] The overwhelming weight of evidence provided in the hearing supports a finding that there is a well defined, plain and unmistakable difference between operational and laboratory employees.

[72] Having reached such a conclusion, should this structural arrangement which has existed for many years be considered not “fairly chosen” for the purposes of an enterprise agreement and be disturbed with a composite replacement enterprise agreement?

[73] I suspect that all the differences in terms of role, work activities, education, skill and required experience for employment for each occupational group would not change if there was a composite enterprise agreement. However, that is no more than an observation.

[74] It is important to note that while the Commission is required to take into account whether or not a group of employees is geographically, operationally or organisationally distinct, it is not decisive (Cimeco Pty Ltd v Construction, Forestry, Mining and Energy Union and Others[2012] FWAFB 2206 [20]) (Cimeco).

[75] However, it is more important in my view to note in Cimeco the Full Bench’s determination that:

“...it can reasonably be assumed that if a group of employees covered by the agreement are geographically, operationally or organisationally distinct then that would be a factor telling in favour of a finding that the group of employees was fairly chosen. Conversely, if the group of employees covered by the agreement was not geographically, operationally or organisationally distinct then that would be a factor telling against a finding that the group was fairly chosen.”

[76] In light of the well entrenched historical separation of industrial instruments and the geographical, operational and organisational difference, it is necessary to consider the AWU’s submission as to why a composite enterprise agreement of operational and laboratory employees would be fairly chosen.

[77] The AWU submit that the operations and laboratory employees work closely with each other. Such a situation is common in workplaces. In fact, management generally strive for alignment between different work groups in the workplace for efficiency, productivity and cohesion reasons. I am unable to find that the AWU’s argument compelling in advancing the proposal that there should be a composite enterprise agreement of laboratory and operational employees.

[78] I now turn to the AWU submission that some sampling and testing is carried out by both operational and laboratory employees. While the parties contested the facts surrounding the quantity and complexity of such sampling and testing, every organisation structure, like a “family tree”, has “roots”, a “trunk” and “branches”. The “roots” or foundation of operational and laboratory employees are different and can be best illustrated by the different educational, desired skills and experience required. The “trunk” of both occupational groups is different in terms of their primary focus and contribution to the refinery process. The individual characteristics of the two “trunks” make the two occupational groups dissimilar. However, unlike an organisational structure of neat discrete boxes, the reality is that where different trees (or occupations) occupy common ground, it is inevitable that at some point, “branches” will cross over into the space alongside. However, because there is a cross over of branches at some point does not mean that, the “trees” or occupations are inseparable.

[79] The fact that because some activities in the refinery process can be carried out by both groups of employees does not make them indistinguishable and fairly represent a chosen group of employees.

[80] At paragraph [21] of Cimeco, the Full Bench made the following observation:

“It is not appropriate to seek to exhaustively identify what might be the other relevant considerations. They will vary from case to case and will need to be demonstrated to the satisfaction of the tribunal. The word ‘fairly’ suggests that the selection of the group was not arbitrary or discriminatory. For example, selection based upon employee characteristics such as date of employment, age or gender would be unlikely to be fair. Similarly, selection based on criteria which would have the effect of undermining collective bargaining or other legislative objectives would also be unlikely to be fair. It is also appropriate to have regard to the interests of the employer, such as enhancing productivity, and the interests of employees in determining whether the group of employees was fairly chosen.”

[81] In conclusion, having considered the evidence, submissions and for the reasons set out above, I am satisfied that: both parties have met and are meeting the good faith bargaining requirements pursuant to paragraph 238 (4) (a) of the FW Act; that making an order will promote the fair and efficient conduct of bargaining; that the group of employees for each of the replacement enterprise agreements relating to the operations and laboratory agreements, as sought by BP in application B2013/1250 was and are fairly chosen, and finally, it is reasonable in all the circumstances to make an order that there be two agreements with the scope of the current Operations and Laboratory Agreements respectively, namely:

● BP Refinery (Kwinana) Pty Ltd Operations Employees Enterprise Bargaining Agreement 2013:

• Employees who are employed at the Kwinana Refinery who perform roles classified in Clause 32 and/or Clause 33 of the 2010 Operations Agreement.

● BP Refinery (Kwinana) Pty Ltd Laboratory Employees Enterprise Agreement 2013:

• Employees who are employed at the Kwinana Refinery who perform roles classified in the 2010 Laboratory Agreement.

[82] In view of these conclusions the application in B2013/1250 is granted and an order to this effect is issued conjointly with this Decision and Reasons for Decision. Further, as a consequence of this Decision and Reasons for Decision, it is necessary to dismiss application B2013/1366 and also to issue an order to this effect.

COMMISSIONER

Appearances:

T Caspersz of counsel for the Applicant.

M de Carne on behalf of the Respondents.

Hearing details:

2013:

Perth,

30 and 31 October.

 1   Exhibit A3(17)

 2   Transcript PN1438

 3   Transcript PN1437

 4   Exhibit A5(6)

 5   Exhibit A5(8)

 6   Exhibit A3(6,7 and 8)

 7   Exhibit A3(3)

 8   Exhibit A3(3)

 9   Transcript PN72

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