CEPU and AMWU v Kraft Foods Ltd

[2010] FWA 4404

[2010] FWA 4404

FAIR WORK AUSTRALIA

DECISION

Fair Work Act 2009
s.437 - Applications for a protected action ballot order

Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia

(B2010/3058)

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

(B2010/3059)

v
Kraft Foods Limited

COMMISSIONER HAMPTON ADELAIDE, 21 JUNE 2010

Applications made for protected action ballots by employees of Kraft Foods Limited - related applications joined - dispute as to scope of bargaining - whether ballot application premature - whether two applicant unions genuinely trying to reach agreement.

The Background

[1] The Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (the CEPU) and the Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union known as the Australian Manufacturing Workers’ Union (the AMWU) (collectively the applicant unions) have each made application pursuant to s.437 of the Fair Work Act 2009 (the Act) for a protected action ballot to be undertaken by their members at the Suttontown operations of Kraft Food Limited (Kraft or the employer).

[2] By consent, both applications have been joined and heard together.

[3] During the course of a hearing conducted in relation to this application on 11 June 2010, Kraft opposed the granting of the proposed orders. In that context I heard evidence and submissions from all parties and given the nature of issues involved in the case I drew some potentially relevant Full Bench authorities to their attention and provided an opportunity to make supplementary submissions.

[4] Having considered the matter and all of the material as filed 1, on 17 June 2010 I advised the parties of my determination and issued a protected action ballot order (PR998352). In so doing, I indicated that I would subsequently issue reasons for decision, which I now do.

The immediate statutory provisions

[5] The Act provides relevantly as follows:

“437 Application for a protected action ballot order

Who may apply for a protected action ballot order

(1) A bargaining representative of an employee who will be covered by a proposed enterprise agreement, or 2 or more such bargaining representatives (acting jointly), may apply to FWA for an order (a protected action ballot order) requiring a protected action ballot to be conducted to determine whether employees wish to engage in particular protected industrial action for the agreement.

(2) Subsection (1) does not apply if the proposed enterprise agreement is:

(a) a greenfields agreement; or

(b) a multi-enterprise agreement.

Matters to be specified in application

(3) The application must specify:

(a) the group or groups of employees who are to be balloted; and

(b) the question or questions to be put to the employees who are to be balloted, including the nature of the proposed industrial action.

(4) If the applicant wishes a person other than the Australian Electoral Commission to be the protected action ballot agent for the protected action ballot, the application must specify the name of the person.

Note: The protected action ballot agent will be the Australian Electoral Commission unless FWA specifies another person in the protected action ballot order as the protected action ballot agent (see subsection 443(4)).

(5) A group of employees specified under paragraph (3)(a) is taken to include only employees who:

(a) will be covered by the proposed enterprise agreement; and

(b) are represented by a bargaining representative who is an applicant for the protected action ballot order.

Documents to accompany application

(6) The application must be accompanied by any documents and other information prescribed by the regulations.

438 Restriction on when application may be made

(1) If one or more enterprise agreements cover the employees who will be covered by the proposed enterprise agreement, an application for a protected action ballot order must not be made earlier than 30 days before the nominal expiry date of the enterprise agreement, or the latest nominal expiry date of those enterprise agreements (as the case may be).

(2) To avoid doubt, making an application for a protected action ballot order does not constitute organising industrial action.

…

440 Notice of application

Within 24 hours after making an application for a protected action ballot order, the applicant must give a copy of the application to the employer of the employees who are to be balloted, and:

(a) if the application specifies a person that the applicant wishes to be the protected action ballot agent—that person; or

(b) otherwise—the Australian Electoral Commission.

441 Application to be determined within 2 days after it is made

(1) FWA must, as far as practicable, determine an application for a protected action ballot order within 2 working days after the application is made.

(2) However, FWA must not determine the application unless it is satisfied that each applicant has complied with section 440.

…

443 When FWA must make a protected action ballot order

(1) FWA must make a protected action ballot order in relation to a proposed enterprise agreement if:

(a) an application has been made under section 437; and

(b) FWA is satisfied that each applicant has been, and is, genuinely trying to reach an agreement with the employer of the employees who are to be balloted.

(2) FWA must not make a protected action ballot order in relation to a proposed enterprise agreement except in the circumstances referred to in subsection (1).

(3) A protected action ballot order must specify the following:

(a) the name of each applicant for the order;

(b) the group or groups of employees who are to be balloted;

(c) the date by which voting in the protected action ballot closes;

(d) the question or questions to be put to the employees who are to be balloted, including the nature of the proposed industrial action.

(4) If FWA decides that a person other than the Australian Electoral Commission is to be the protected action ballot agent for the protected action ballot, the protected action ballot order must also specify:

(a) the person that FWA decides, under subsection 444(1), is to be the protected action ballot agent; and

(b) the person (if any) that FWA decides, under subsection 444(3), is to be the independent advisor for the ballot.

(5) If FWA is satisfied, in relation to the proposed industrial action that is the subject of the protected action ballot, that there are exceptional circumstances justifying the period of written notice referred to in paragraph 414(2)(a) being longer than 3 working days, the protected action ballot order may specify a longer period of up to 7 working days.

Note: Under subsection 414(1), before a person engages in employee claim action for a proposed enterprise agreement, a bargaining representative of an employee who will be covered by the agreement must give written notice of the action to the employer of the employee.”

The cases presented by the parties

[6] Mr John Adley, a CEPU Branch Union Organiser, represented that union and also gave evidence as to his involvement in the bargaining process to date.

[7] Mr Colin Fenney, Assistant Secretary of the AMWU, represented that union and also gave evidence confirming the negotiations and positions of the parties leading to the application.

[8] The applicant unions contended that they had at all times conducted themselves in accordance with the Act and that they have been and remain genuinely trying to reach an agreement with Kraft. They further argued that although there was a dispute as to the scope of the proposed agreement, they had advanced positions on that issue and the content of an agreement more generally. In addition, although there had been limited meetings to this point, there were clearly articulated positions on the proposed agreement and various concessions had been offered by all parties. The proposals as made by the employer were not ultimately accepted by the unions’ members. On that basis, the applicant unions argued that they were entitled to seek a protected ballot order to pursue that option as contemplated by the Act.

[9] Kraft was represented by Ms Judy Barnesby, its Manager – Workplace Strategy, and called Mr Steven King, its Site Manufacturing Manager to give evidence regarding the state of the negotiations and the history of the matter more generally. Kraft contended that there was no consensus between the parties as to the scope of the new agreement and that this was the major issue between the parties. In that light, it argued that it was not possible for the unions to demonstrate that they were genuinely seeking an agreement without an agreed context. That is, the notice of representational rights was given in relation to a single site agreement and as the unions were not genuinely seeking such an agreement, they could not be said to be genuinely trying to make an agreement with it as the employer, as required by s.443(1)(b) of the Act.

[10] Further, as a result of that dispute, the employer argued that there had only been one substantive meeting between the parties and that only preliminary positions had been advanced. In that light, genuine consideration to the employer’s proposal had not been given. This it argued, was confirmed by the fact that this application had been brought before clarification on a major issue (the proposed classification structure) had been provided by the employer to the unions as requested.

[11] In that light, Kraft contended that these applications were premature and should not be granted.

[12] Other than for the specific basis for its opposition as outlined by Kraft, it is not otherwise disputed that the unions are eligible to make this application and have done so in accordance with the relevant statutory requirements.

The facts of the matter

[13] I have carefully considered the evidence before Fair Work Australia and I find that it establishes the following.

[14] The current enterprise agreement involving these parties (and others) was made in 2007 and has a nominal expiry date at the end of June 2010. That agreement covers all of the Suttontown operations of Kraft and includes those employees represented by the two applicant unions and the Liquor, Hospitality and Miscellaneous Union (the LHMU).

[15] Kraft provided a notice of representational rights in mid March 2010. 2 That notice confirmed the employer’s intention to bargain for a new (single) agreement to apply to all weekly and hourly hired employees at the Suttontown site.

[16] The applicant unions made various bargaining claims to the employer in early and mid April 2010 respectively, seeking a separate agreement to apply to maintenance employees at the Suttontown site and various improvements in wages and working conditions (the logs of claims). This position was earlier endorsed by a meeting of members held on site on 7 April 2010 and reaffirmed at a subsequent meeting conducted on 4 May 2010.

[17] On 4 May 2010, a negotiating committee comprising representatives of Kraft, the applicant unions and the LHMU met to commence negotiations. This meeting involved the preliminary presentation of Kraft’s position in terms of the new agreement and some discussion about the applicant union’s logs of claims. It became apparent at that time that the desire of the applicant unions for a separate agreement was a strongly held position. The employer’s representatives caucused separately and then advised the committee that Kraft had a strong desire to maintain a single site agreement and considered that “good faith” bargaining could not take place until that issue was resolved. The meeting did not proceed beyond that point, however there were apparently some separate discussions between Kraft and the LHMU. I add that the following day, 5 May, had also been set aside and that the officials of the applicant unions had travelled from Adelaide to attend these discussions and indicated to Kraft that they remained willing to continue the negotiations as scheduled.

[18] On 5 May 2010, the applicant unions wrote to Kraft alleging that the 4 May 2010 meeting was terminated by the employer on the basis that it did not wish to have separate discussions and reinforcing the desire of the applicant unions and their members to have a separate maintenance agreement.

[19] Kraft provided an update to its employees on the first meeting, including the position of the applicant unions on a separate agreement and its understanding that the scope of the agreement would be referred to Fair Work Australia. 3 I interpose that there was no agreement between the parties that this would occur and the applicant unions did not propose that course of action.

[20] On 12 May 2010, Kraft wrote to the applicant unions confirming that it understood their position but providing a rationale for the retention of a single site agreement. Kraft requested that the applicant unions reconsider their approach and participate in the bargaining process in order to “make a decision based on what transpires and not on the potential.” 4

[21] There were some telephone discussions between representatives of Kraft and the applicant unions and a further meeting on site was agreed.

[22] On 25 May 2010, the negotiating committee resumed discussions regarding the proposed new agreement. Early in that meeting, the applicant unions confirmed their preference to have a separate maintenance agreement but that members had endorsed a position whereby if a satisfactory result was achieved, “they would be happy to pursue a single agreement”. 5

[23] The meeting on 25 May 2010 then involved a comprehensive discussion on each of the logs of claims and in due course Kraft explaining its response, including that relating to the LHMU’s proposals. The meeting continued for most of that day and a number of union proposals were modified or dropped. The employer’s position as advanced in due course involved the rejection of certain claims, in-principle support for others and a proposal for a single classification structure including some changes that would in effect provide an additional increase for dual trade qualified employees (one of the applicant unions’ claims). The employer also put forward a wages offer based on acceptance of its package. This was understood by the unions at the time as being a final offer. I interpose that I accept the evidence of Mr King that the employer does not rule out further proposals depending upon the final package as agreed. 6

[24] The applicant unions, and I understand the LHMU, reported Kraft’s position and the outcomes of negotiations to that point to a meeting of members conducted on the following day, 26 May. The employer was then advised by all of the unions that the members did not consider that their logs of claims had been sufficiently met for them to be happy with the proposed single agreement and that an application to pursue a protected ballot order would be made. There were some limited further discussions between the applicant unions and representatives of Kraft on that day including an indication from the employer that it would get back to them in relation to the classification structure in an endeavour to further advance the matter.

[25] There have been some limited discussions between the parties since the 26 May 2010 meeting concerning the resumption of substantive negotiations which are now scheduled for 5 and 6 July 2010. Kraft has also provided further information to the applicant unions in support of its proposed new classification structure, including the impact upon the trade qualified employees.

[26] This application was filed on 4 June 2010, before the receipt of that further information.

[27] On 9 June 2010, the CEPU responded to the further information supplied by Kraft and in so doing reinforced its desire for a separate agreement and its view that a single classification structure was not therefore required in its view. The response also indicated that the proposal would be given due consideration. 7

Consideration

[28] In terms of the particular requirements of s.443(1)(b) of the Act at issue here, these have been considered by a number of Full Benches of Fair Work Australia including in Total Marine Services Pty v Maritime Union of Australia  8(Total Marine Services).

[29] In that matter the Full Bench considered the question of the interrelationship between the protected action ballot provisions and the good faith bargaining requirements of the Act, and the approach to the immediate question more broadly. It concluded in part as follows:

“[30] The requirement that an applicant for a ballot order genuinely try to reach an agreement and be continuing to do so at the time an application for a ballot order is made was a requirement in the Workplace Relations Act 1996. The wording of the relevant section has been altered because of the removal of a process of establishing a bargaining period during which protected action may be taken. The concept of genuinely trying to reach an agreement was dealt with in other parts of the Workplace Relations Act 1996, specifically in relation to the grounds for terminating a bargaining period.

[31] In our view the concept of genuinely trying to reach an agreement involves a finding of fact applied by reference to the circumstances of the particular negotiations. 9 It is not useful to formulate any alternative test or criteria for applying the statutory test because it is the words of s 443 which must be applied. In the course of examining all of the circumstances it may be relevant to consider related matters but ultimately the test in s 443 must be applied.

[32] We agree that it is not appropriate or possible to establish rigid rules for the required point of negotiations that must be reached. All the relevant circumstances must be assessed to establish whether the applicant has met the test or not. This will frequently involve considering the extent of progress in negotiations and the steps taken in order to try and reach an agreement. At the very least one would normally expect the applicant to be able to demonstrate that it has clearly articulated the major items it is seeking for inclusion in the agreement, and to have provided a considered response to any demands made by the other side. Premature applications, where sufficient steps have not been taken to satisfy the test that the applicant has genuinely tried to reach an agreement, cannot be granted.

[33] Arising from the submissions of the parties in the matter before him, Commissioner Thatcher considered a number of questions relevant to s 443(1)(b). He considered whether the MUA tried to get as far as it could in the negotiations but fell short of reaching a conclusion on the matter because the test involved a different question. In our view he was correct in that approach. He considered whether the MUA was bargaining in good faith as a relevant consideration to whether the MUA was genuinely trying to reach an agreement and again correctly in our view fell short of equating the concepts.”

[30] I interpose that s.238 of the Act permits, where relevant circumstances exist, any relevant bargaining representative to seek a scope order from Fair Work Australia to establish a firm basis for the negotiations. No party has yet made an application in this matter, although the employer’s contentions suggest that it at least considers the prerequisites to exist.

[31] In the case of Ford Motor Company Limited v Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia, and others (Ford) 10 a change in the proposed scope of an agreement from that as notified by the employer was considered and a majority determined:

“[45] In our view the unions’ submissions have little regard for the scheme of the Act, in particular the matters to which we have referred in relation to how bargaining commences and between whom. In our view, those employees to be covered by the proposed agreement must be identified and known at all stages of the bargaining process. If an employer refuses to bargain at all, an application can be made for a majority support determination under s.237 and the employer can be compelled to bargain, and the provisions of s.173 come into play. Similarly, if bargaining has commenced and there are issues about the appropriateness of the employees proposed to be covered, a scope order can be made and again the provisions of s.173 are activated. Single interest and low-paid bargaining also requires that the employers and employees to be covered by the proposed agreement be identified.”

[32] However, a later Full Bench in Stuartholme School and Others v Independent Education Union  11(Stuartholme) discussed the approach set out above in Ford and took an alternative view as follows (footnotes not included):

“[19] The appellants wish to argue that this passage requires the conclusion that because the IEUA and the appellants were in disagreement as to the number and scope of the enterprise agreements to be made, bargaining had not commenced and the IEUA was not genuinely trying to reach an agreement. There are a number of difficulties arising from this passage.

[20] The first difficulty relates to the fact that the conclusion expressed was reached without reference to the single interest employer authorisation provisions with which we are directly concerned in this case. The conclusion is inconsistent with the conclusion we have arrived at independently based on the construction of those provisions.

[21] The second difficulty is that there is Full Bench authority, not referred to by the majority in Ford, which strongly suggests the scope of a proposed agreement can be a proper subject for bargaining under the Fair Work Act. In Liquor, Hospitality and Miscellaneous Union v Coca-Cola Amatil (Aust) Pty Ltd (Coca-Cola) a Full Bench considered an appeal against the refusal of a member of Fair Work Australia to make a scope order. In the course of its decision the Full Bench noted that there was disagreement between the negotiating parties as to the scope of any agreement or agreements to be made. The situation is concisely set out in this paragraph:

“[32] Against this background, we turn to consider the competing interpretations of a s.237(2)(b) majority support determination, which arise because the LHMU and Coca-Cola have different bargaining positions as to the number and scope of agreements which should be made in relation to the relevant employees. The LHMU seeks a single agreement covering all employees, while Coca-Cola seeks three agreements covering various specified groups of employees. None of the agreements cover one small group of employees. There is a dispute as to the scope of the agreement or agreements to be made.”

[22] Despite the disagreement as to scope, there is no indication in the decision that because of that disagreement bargaining had not commenced. To the contrary, the Full Bench approached the appeal on the basis that a scope order might be applied for after bargaining had commenced.

[23] The third difficulty arises from the terms of s.238, which deals with scope orders. Section 238(1) is as follows:

“238 Scope orders

Bargaining representatives may apply for scope orders

(1) A bargaining representative for a proposed single-enterprise agreement may apply to FWA 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.”

[24] The terms of this section unambiguously suggest that bargaining may have commenced under the Fair Work Act even though the parties to the bargaining process are in disagreement about the scope of the proposed agreement.

[25] Given these difficulties we would not be inclined to adopt the reasoning of the majority in Ford. There is no reason why questions of scope cannot be included in bargaining in the context of a single interest employer authorisation and the mere fact that a bargaining representative puts scope in issue does not mean the bargaining representative is not genuinely trying to reach an agreement. ……”

[33] For my part, I see no reason under the scheme of the Act as to why the scope of the agreement may not itself be the subject of genuine bargaining. The proposed agreement is intended to be a product of negotiations and the Act contemplates that bargaining and scope orders may be sought during a bargaining process, including where parties have been genuinely attempting to progress the matters. Particularly in a case such as this, where the different views as to scope would involve a subset of the employee group as intended by the employer (rather than a group for whom the employer has not agreed to bargain), I consider that the approach adopted in Stuartholme to be particularly apposite.

[34] As a result, it is clear that the CEPU and AMWU, as the applicant bargaining representatives, bear the onus to demonstrate that they have been and are genuinely trying to reach an agreement with Kraft. This is evident from the Act and is reinforced by the directive in s.443(2) that I must not make the ballot order unless I am so satisfied. In addition, although as discussed above, the absence of an agreed scope of bargaining may not be a relevant consideration in its own right as part of this assessment, the conduct of an applicant union in that context might in some circumstances be such as to cast doubt upon whether they were in fact genuinely trying to reach an agreement with the relevant employer.

[35] There is no doubt that the applicant unions are seeking to have a separate agreement to apply to the maintenance workers at the Suttontown plant of Kraft and that this is being resisted by the employer. It is also clear that whilst this is a significant issue, the evidence supports the notion that the applicant unions and their members remain open to a single agreement, provided that the overall package meets their expectations.

[36] In any event, the scope of the agreement is a legitimate matter for negotiation and remains on the bargaining table. On that basis, the absence of an agreed scope for the proposed agreement at this point does not represent a barrier to the applicant unions demonstrating that they have been and are genuinely trying to reach an agreement with Kraft.

[37] The more significant issue is whether the state of the negotiations and the conduct of the unions as confirmed in the evidence before Fair Work Australia are sufficient to meet the onus cast by s.443 of the Act. It is clear from Total Marine Services that the Full Bench took the view that sufficient progress in the negotiations must be present in order to establish the necessary intent. It is also clear that the Full Bench expressly rejected the notion that some form of ridged rules or threshold should be established for this purpose.

[38] Consistent with that approach, I also consider that any attempt to establish a minimum duration for negotiations or a number of meetings would be inappropriate. Accordingly, whilst in most circumstances, this may mean that where a limited number of bargaining discussions have been held an applicant would have difficulty in meeting the required onus, it must be the substance of the process and the evidence in that regard that is to be assessed.

[39] In this case there have only been a limited number of negotiating meetings prior to bringing this application. However, in those few meetings, there has been joint consideration given to each of the respective logs of claims, the points of difference on the major issues have been articulated and considered, concessions and/or counterproposals have been made by all parties, and a comprehensive package proposal as made by Kraft has been put and considered by the workforce.

[40] It is clearly the case that additional negotiations may well further advance an agreement. The fact that the positions of the parties in relation to the classification structure and the overall package are not yet fixed would support that view. Indeed, it is evident that the applicant unions (and Kraft) anticipate ongoing negotiations and that further dates have been set in that regard. However, it is not a prerequisite for the making of a protected action ballot order that the negotiations have been exhausted or that such action is a matter of last resort. I add that there may well be good strategic reasons why the parties might adopt that approach, but this is not a requirement of the Act.

[41] The central question is whether the applicant unions have demonstrated that they have been and remain genuinely trying to reach an agreement with Kraft.

[42] Although I consider that in most cases an applicant would have difficultly in establishing this prerequisite after only a few bargaining meetings, the nature and status of the particular negotiations in this case are such that I am satisfied that the requirements of s.443(1)(b) of the Act have been met.

[43] In reaching this conclusion I would note that I have not relied upon what the applicant unions described as a concession by Mr King in his evidence that the unions were genuinely trying to reach an agreement with Kraft. 12 Although the questioning leading to that point was not objected to by the employer, Mr King’s position was not in fairness to him without reservations, and more importantly, the issue as to whether the requirements of the Act have been met is ultimately a matter for Fair Work Australia.

[44] Although not in dispute, I have considered all of the other prerequisites for the granting of a protected action ballot and I am satisfied that these have been met.

Conclusions

[45] Having had regard to the evidence before Fair Work Australia and considered the submissions made in this matter, I was satisfied that the applicant unions have been and are genuinely trying to reach an agreement with Kraft. Accordingly, the requirements of s.443(1)(b) had been met.

[46] Given my satisfaction that all other statutory prerequisites had been met in relation to this application I have issued an order for the conduct of protected action ballots in this matter.

COMMISSIONER

Appearances:

J Adley for the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia.

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

J Barnesby with S King for Kraft Foods Limited.

Hearing details:

Adelaide:

2010

June 11

Final written submissions:

2010

June 15 and 16.

 1   Kraft filed some supplementary submissions on 15 June and the CEPU, on behalf of both applicants filed some material early on 16 June 2010. Except as indicated I have had regard to all of that material. However, in the case of the CEPU submissions, some limited additional alleged facts that were not provided during the hearing were also set out and for reasons of natural justice I have not had regard to those elements in determining the matter.

 2   Exhibit R5.

 3   The evidence of Mr King – exhibit R6.

 4   Exhibit R4.

 5   Evidence of Mr Fenny – transcript PN183.

 6   The evidence of Mr King – transcript PN 271.

 7   Exhibit R2.

 8   [2009] FWAFB 368, 9 October 2009 per Watson VP, Hamberger SDP and Roberts C.

 9   Australian Industry Group v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union Print T1982; Re Media, Entertainment and Arts Alliance PR928033.

 10   [2009] FWAFB 1240, 11 December 2009 per Kaufman SDP, Ives DP.

 11   [2010] FWAFB 1714, 3 March 2010 per Giudice J, Hamberger SDP and Spencer C.

 12   Transcript PN288 – PN292.

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