Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia-Electrical, Energy and Services Division Tasmanian Divisional Branch v Tasmanian Water and..

[2015] FWC 4233

[2015] FWC 4233 [Note: An appeal pursuant to s.604 (C2015/4782) was lodged against this decision - refer to Full Bench decision dated 30 September 2015 [[2015] FWCFB 5906] for result of appeal.]

FAIR WORK COMMISSION

DECISION

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

Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia-Electrical, Energy and Services Division - Tasmanian Divisional Branch
v
Tasmanian Water and Sewerage Corporation (Southern Region) Pty Ltd T/A Southern Water; Ian Nelson Consulting; Australian Municipal, Administrative, Clerical and Services Union - Victorian and Tasmanian Authorities and Services Branch; Association of Professional Engineers, Scientists and Managers, Australia, The; Construction, Forestry, Mining and Energy Union-Tasmania Branch; CPSU, the Community and Public Sector Union-SPSF Group, Tasmanian Branch; "Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union" known as the Australian Manufacturing Workers' Union (AMWU)-Printing Division Tasmanian Region; Mr Michael Swanton; The Australian Workers' Union - Tasmania Branch
(B2014/1735)

Water, sewerage and drainage services
DEPUTY PRESIDENT ABEY	HOBART, 25 JUNE 2015

Concerning employees of Tasmanian Water and Sewerage Corporation - scope order - employer proposed single state-wide agreement to replace existing regional agreements - SBU seeks retention of the status quo - good faith bargaining considerations - fair and efficient conduct of bargaining - onus on respondent to alter the status quo - application granted

[1] This is an application lodged by the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia - Electrical, Energy and Services Division - Tasmanian Divisional Branch (CEPU) (applicant) for a Scope Order pursuant to s.238 of the Fair Work Act 2009 (the Act).

[2] The respondent employer is the Tasmanian Water and Sewerage Corporation (Southern Region) Pty Ltd (TasWater) (respondent). Ian Nelson Consulting is named as the other bargaining representative respondent.

[3] Mr Ash and Mr Dilger of legal counsel were granted permission to appear on behalf of the applicant and respondent respectively. Mr Ash also appeared for the other union members of the Single Bargaining Unit (SBU), which are identified later in the decision.

[4] Mr Swanton appeared as a bargaining representative.

Background

[5] TasWater as a legal entity came into effect on 1 July 2013 by virtue of the Water and Sewerage Corporation Act 2012 (Water Corporation Act). The new entity replaced and consolidated the resources of four previous separate legislative entities, namely:

• Tasmanian Water and Sewerage Corporation (Northern region) (Ben Lomond Water);



• Tasmanian Water and Sewerage Corporation (North West Region) (Cradle Mountain Water);



• Tasmanian Water and Sewerage Corporation (Southern Region) (Southern Water); and



• Tasmanian Water and Sewerage Corporation (Common Services) (Onstream).

[6] Prior to 2008 water and sewerage services in Tasmania had been provided by Local Government entities, which remain as the shareholders of TasWater.

[7] Section 6 of the Water Corporation Act provides:

“Principal objectives of Corporation

(1) The principal objectives of the Corporation are as follows:

(a) to efficiently provide water and sewerage functions in Tasmania;

(b) to encourage water conservation, the demand management of water
and the re-use of water on an economic and commercial basis;

(c) to be a successful business and, to this end –

(i) to operate its activities in accordance with good commercial
practice; and

(ii) to deliver sustainable returns to its members; and

(iii) to deliver water and sewerage services to customers in the
most cost-efficient manner.

(2) Each of the principal objectives of the Corporation is of equal importance.”

Existing Industrial Instruments and Related Demographics

[8] There are three enterprise agreements which currently apply to TasWater employees. They are:

• Tasmanian Water and Sewerage Corporation (Southern Region) Enterprise Agreement 2010-2014 (SW Agreement) which expired on 1 July 2014;



• Cradle Mountain Water Enterprise Agreement 2010 (as varied 28 June 2013) (CMW Agreement) which expired on 1 July 2014; and



• TasWater (Northern Region) Enterprise Agreement 2013 (BLW Agreement) which expired on 30 June 2014.

[9] TasWater employ approximately 735 employees subject to industrial agreements across the State. The number of employees covered by each agreement is as follows:¹

• SW Agreement – around 330 employees



• BLW Agreement – around 235 employees



• CMW Agreement – around 170 employees

Nature of the Scope Application

[10] Since April 2014 the parties have been formally bargaining for an agreement with a single state-wide scope (General Agreement).

[11] The applicant now seeks to bargain separate agreements so as to preserve the scope of the current enterprise agreements.

Brief Summary of the Bargaining Process

[12] Bargaining negotiations commenced in April 2014. The respondent sought to bargain for a single enterprise agreement (EA). The SBU indicated a preparedness in principle to accommodate this objective provided their bargaining position referred to as the “best of the best” was satisfied.

[13] Between April and December 2014 there were approximately 24 bargaining meetings. These negotiations were characterised with the following elements:

• Considerable disagreement as to the format and logistics of meetings, coupled with animosity between bargaining representatives;



• An experiment with smaller, subject specific, negotiating groups which reported back to the larger bargaining group;



• An application by the respondent for bargaining orders;



• Protected industrial action;



• A lock-in bargaining session whereby the parties effectively locked themselves in to bargaining for several consecutive days;



• An application for Scope Order by Professionals Australia; and



• A decision by the respondent to put the proposed agreement to an employee ballot, resulting in an overwhelming ‘No’ vote.

[14] Whilst some progress was made, certain key issues remained in dispute. These issues could be fairly described as in the category of protecting existing conditions.

[15] On 17 December 2014 the SBU advised the respondent of concerns that bargaining for the proposed agreement was not proceeding fairly or efficiently. TasWater responded on 19 December 2014.

[16] On 31 December 2014 the applicant lodged the application for a Scope Order.

Prosecution of the Application

[17] The application wasinitiallyreferred to Commissioner McKenna who conducted a conciliation conference on 28 January 2015. Subsequently the file was referred to Deputy President Wells.

[18] In a decision handed down on 14 April 2015 the Deputy President recused herself from further hearing.

[19] Subsequently the file was referred to the Commission as presently constituted.

[20] Prior to the formal commencement of proceedings both parties indicated that there was no likely prospect of the matter being settled through conciliation and the matter should proceed to arbitration.

[21] The hearing commenced on 14 May and continued on 15, 18 and 19 May 2015.

[22] Sworn evidence was taken from the following witnesses:

For the applicant:

Todd Edwin Lambert, Organiser CEPU

Noel Washington, Senior Vice President of the Construction, Forestry, Mining and Energy Union, Victoria/Tasmania Branch (CFMEU)

Luke Michael Crowley, Director, of the Association of Professional Engineers, Scientists, and Managers Australia trading as Professionals Australia (APESMA) in Tasmania

Robert Flanagan, Assistant Branch Secretary of the Tasmanian Branch of the Australian Workers Union (AWU)

For the respondent:

Alexandra Garrott, Department Manager, Employee Relations and lead negotiator for TasWater

Ian Andrew Nelson, principal of Ian Nelson Consulting Pty Ltd and bargaining representative for TasWater

Rodney Burles, Director and Consultant of Burles Consulting Pty Ltd and appointed by TasWater on 25 June 2014 to assist with bargaining for the proposed agreement

[23] In addition, well in excess of 100 documents were tendered in support.

[24] I am indebted to the parties for the comprehensive and professional manner in which this matter was presented. All the material and authorities relied upon have been taken into account. However in the interests of a timely decision, I have attempted to focus on the heart of the issues in contention, rather than analyse the minutiae of the bargaining process. Failure to refer to a particular incident or event should not be viewed as an indication that it has not been considered.

The Bargaining Process

[25] On 4 November 2013, Trevor Gauld, (State Secretary CEPU) met with Kathy Cuthbertson and Alex Garrott of TasWater. It would seem that the CEPU noted the significant disparity in terms and conditions between the three agreements, and expressed concerns that, unless those matters were dealt with effectively, a single agreement would not be capable of negotiation. The CEPU suggested ‘grandfathering’ arrangements with a committee to work through each issue over the life of the agreement.²

[26] A Notice of Representational Rights (NRR) was issued by TasWater on 13 November 2013 and again on 26 February 2014.³

[27] The first bargaining meeting was held on 9 April 2014 and focused on meeting logistics including timing, location and attendance of delegates. It would seem that little agreement was reached as to these arrangements.

[28] On 16 April 2014 Kevin Harkins, Secretary, Unions Tasmania, advised of the formation of an SBU of which he would be the coordinator. Unions represented by the SBU are:

• CEPU



• AWU



• APESMA



• Community and Public Sector Union (CPSU)



• Australian Manufacturing Workers’ Union (AMWU)



• Australian Municipal, Administrative, Clerical and Services Union (ASU)



• CFMEU

[29] The next meeting occurred on 7 May 2014 at which the issues of delegate numbers and video conferencing were discussed. Ms Garrott said she was concerned as to the behavior displayed at the meeting.⁴ At this meeting both the SBU and TasWater presented their respective log of claims.

[30] Relevant extracts from these documents include:

SBU⁵

“1.Maintain Current Conditions and Entitlements (No Trade-Off's)

No reduction of any current condition or entitlement.

Unions seek to maintain the best clauses and conditions from each section of the current 3 agreements and have them included in the combined agreement.

Retain Job Security.

2. Consolidated Agreement

Unions note that TasWater is seeking the establishment of a single agreement covering all TasWater Employees. The current Agreements are the Tasmanian Water and Sewerage Corporation (Southern Region) Enterprise Agreement 2010-2013, the Ben Lomond Enterprise Agreement 2011, Cradle Mountain Water Enterprise Agreement 2010 and the Tasmanian Water and Sewerage Corporation (Onstream) Enterprise Agreement 2010.

The combined unions are prepared to support this proposition providing that all areas have the autonomy to make a decision on whether or not the agreement is acceptable to them and does not lead to their concern/issues being ignored simply by weight of numbers in the other areas.

...

27.No Loss of conditions

No individual will be disadvantaged through a move from an existing industrial instrument to the new TasWater Enterprise Agreement(s).”

[31] The SBU chose to describe their bargaining position as the “best of the best,” which presumably meant the most favourable provision from each agreement extended across the State.

TasWater⁶

“TasWater seeks the following terms to be included in the proposed Agreement.

1. Consolidated Agreement

TasWater seeks one enterprise agreement to cover all employees currently covered by enterprise agreements plus ex-Onstream employees who fall within existing enterprise agreement classifications. The enterprise agreements currently covering TasWater employees are to be replaced by the proposed Agreement.

2. Current employment terms

All current terms and conditions of employment may be subject to negotiation. This does not mean that TasWater seeks to reduce the overall terms and conditions of employment, but as an outcome of the negotiation process some terms and conditions may increase while others decrease.”

[32] With the benefit of hindsight, I am satisfied that it was the contrast, indeed conflict, between these respective negotiating positions, maintained by the respective parties for the duration of the bargaining, which characterised the often rancorous nature of the negotiations and ultimately led to an impasse.

[33] A number of bargaining meetings continued throughout June and July 2014. According to Mr Lambert “little progress was made as the issue of meeting arrangements and delegate numbers dominated most discussion at that point of time.”⁷

[34] During this period the SBU presented two subsequent logs of claims (3 June 2014, (54 pages) and 9 July 2014, (86 pages)).

[35] At some point during this period the parties agreed to trial small working groups working on discrete subjects and reporting back to the larger bargaining group. It seems that the initiative for this approach came from the SBU. Ms Garrott said:

“I supported the suggestion of small working groups because I felt that the large meetings were unproductive because of the unruly behaviour of a number of union organisers and delegates. I considered that smaller groups may provide a mechanism to improve bargaining by allowing interested and knowledgeable employee representatives to contribute more effectively to discrete claim items and topics which were not based on any specific regional differences.”

[36] Whist this small group model was undoubtedly well intentioned, the evidence suggests that it did not work.

[37] Ms Garrott’s evidence is that the SBU members contradicted each other concerning elements of their claim and that it “was impossible to understand what the SBU’s claims actually were in a number of instances, with the result that I could not respond effectively to those claims. Despite my many requests for a properly considered log of claims, we still did not have one. This issue was the final straw that convinced me that we needed to apply to FWC for a good faith bargaining order otherwise the conduct and lack of organisation from the SBU could continue indefinitely.”⁸

[38] On 4 July 2014 TasWater lodged an application for Good Faith Bargaining Orders with the FWC.

[39] On 18 July 2014 Lee C conducted a conciliation conference. The outcome of the conference was the following recommendation from Commissioner Lee:

“1. This matter was listed for hearing before me today. The parties agreed to enter into a period of conciliation. That period of conciliation has concluded and I issue the following recommendation.

● The SBU, the employer and all other bargaining representatives will meet weekly in Campbelltown for the purposes of bargaining for a new agreement. A roster of meetings for an 8 week period is to be prepared for the consideration of participants at the first meeting.

● All bargaining representatives are to confirm their membership or otherwise of the SBU or otherwise 3 days prior to the first scheduled meeting date.

● The employer and the bargaining representatives will confirm their attendance or otherwise at each weekly meeting 3 days prior to each scheduled meeting.

● Chairing of the meetings will alternate between the SBU and the employer on a week to week basis.

● All parties will submit their agenda items 3 days in advance. Agenda items will be considered on an alternate basis, commencing with an agenda item submitted by the chair of the meeting. Each meeting will discuss and bargain over those items on the agenda unless otherwise agreed at the relevant meeting.

● During meetings, participants will respond to and give genuine consideration to proposals made by other bargaining representatives at that meeting, provided the proposals are consistent with the agenda. If the participant is unable to respond to the proposal at the meeting they shall indicate the reason they are unable to respond and nominate a date by which they expect to be able to respond.

● One organiser from each of the unions will attend the meetings. Delegates of the unions will attend the meetings in person. The number of delegates that will attend the meetings will be as per the table below:

CPSU	2
AWU	1
PA	2
CEPU	3
CFMEU	1
ASU	2
AMWU	1

● Provided that the 3 CEPU delegates will number 1 from each region as defined by the existing enterprise agreement coverage. The two CPSU delegates will also come from separate regions. Also provided that the ASU will be permitted one extra delegate on occasions that the “Onstream” issues are on the agenda for discussion. The bargaining representatives will advise the employer within 3 days of each meeting the identity of those delegates they seek to have attend the meeting. Reasonable paid time will be afforded to delegates in order that they can report back to their respective membership on meeting outcomes.

● The employer will within 3 days of the first scheduled meeting, confirm their proposed classification structure to the bargaining representatives. Provided the SBU receives the proposed classification structure within that timeframe, the bargaining representatives will provide to the employer their proposed wage claim and finalised log of claims at or before the subsequent scheduled weekly meeting. The finalised log of claims will identify any changes made in the log from the 3 June document.

Conduct

● The parties will be accurate in their reporting of the outcomes and or conduct of the meetings. All participants at the meetings will be treated with courtesy and respect at all times.

2. The proceedings in this matter have now been adjourned.”

Protected Industrial Action

[40] A successful protected industrial action ballot was declared on 10 September 2014 for all unions. Industrial action, including a series of two hour stoppages and various bans, commenced on 26 September 2014 and continued thereafter.

[41] On 5, 9 and 12 September 2014 meetings occurred involving the TasWater CEO, senior managers and nominated SBU representatives.

[42] Industrial action was suspended on 3 October 2014 pending the scheduled “lock-in” meeting.

[43] From 14 October to 20 October 2014 (excluding the weekend) SBU representatives, Taswater General Managers and union delegates undertook “lock–in meetings in Hobart aimed at resolving the outstanding claim items. This process occupied some 35 hours of negotiation. Ms Garrott said “During this lock-in negotiation period, I observed some members of the SBU engage in inflammatory tactics that were not in the spirit of the agreed lock down or aimed at reaching agreement within the lockdown period.”⁹

[44] On 20 October 2014 the following appeared on the CEPU facebook page:¹⁰

“After the final day of the week long lock-down we don't have very much positive news on the TasWater bargain. There are now many clauses in the proposed new agreement which are substantially less than your current entitlements and there are even more which haven't even been fully negotiated meaning TasWater intend to draft something behind closed doors and just send it out to the vote. We will be holding meetings with all TasWater CEPU members as soon as the company releases the proposed agreement to the workforce so that everyone has access to information and a comparison to their current agreement. Most importantly if you choose to vote NO then the agreement you are currently on stays in place and you aren't any worse off - don't be in a hurry to accept anything that reduces your job security and conditions.”

[45] On 21 October 2014 TasWater provided the SBU with a draft proposed ‘General EA’ for feedback prior to the agreement being put to a vote of eligible employees.

[46] On 22 October Mr Crowley emailed Ms Garrott as follows:¹¹

“Joint Unions had a caucus this afternoon, and the following feedback is on behalf of the Seven unions.

We believe that the offer Taswater is putting out is unacceptable to TasWater staff, and it needs significant improvements before it would be accepted. These improvements were detailed at length over the 5 day lock in. We believe that a vote on the current agreement constitutes an unnecessary delay to the process and that the parties should return to negotiations to ensure an acceptable agreement is put out to a vote.”

[47] On 13 November 2014 a vote occurred in relation to the proposed enterprise agreement. The result was an approximately 88% ‘No’ vote.

[48] The evidence of Mr Lambert in relation to the next phase is as follows:¹²

“Return to negotiations

There having not been a meeting since 20 October 2014 on 2 December 2014 Alexander Garrott (TasWater Department Manager Employee Relations) wrote to the SBU requesting to progress negotiations as quickly as possible in the interests of the employees. Ms Garrott also requested a list of our top six priority matters for the negotiations which they stated would help shape the direction of discussions moving forward.

Both TasWater and the SBU surveyed their employees and members during the interim pause in negotiations with both parties receiving substantially differing feedback.

TasWater said their surveys indicated the following was most important to employees in respect of the proposed enterprise agreement, the 'General Agreement' :

a) guaranteed cost of living (CPI) wage increases in 2015 and 2016;

b) back pay to 1 July 2014; and

c) wage increase amount for 2014 (2.8%).

SBU surveys indicated the following were most important to the employees;

a) no loss of conditions; and

b) no individual will be disadvantaged through a move from an existing industrial instrument to any replacement enterprise agreement.”

[49] On 1 December 2014 Mr Crowley emailed TasWater with a list of 22 items the SBU were seeking to negotiate when bargaining resumed. By email of 2 December 2014 the CEPU described these issues as “die in the ditch issues according to our members.”¹³

[50] On 4 December 2014 a bargaining meeting was held at which the SBU presented TasWater with a new proposal in the form of a single enterprise agreement. Following discussions, the SBU agreed to suspend work bans with effect from 5 December 2014. Further meetings were programmed for later in December.

[51] On 8 December 2014 Mr Crowley emailed an electronic version of the document presented on 4 December 2014. According to Ms Garrott, this document contained an additional 14 items.

[52] There was a further bargaining meeting on 11 December 2014. The evidence of Ms Garrott is:¹⁴

“I presented a written response to the SBU proposal that was delivered at the bargaining meeting of 4 December 2014. The response included areas where TasWater agreed with the SBU proposals, areas that were not agreed and areas where further negotiation was likely to achieve agreement. After caucusing, Mr Robert Flanagan, on behalf of the SBU, provided a general statement expressing disappointment in the response provided by TasWater. He further advised that the SBU would no longer meet with TasWater on 15 December 2014 to discuss TasWater’s response but instead would caucus on that day themselves and that the SBU would consider what options were available to them. The SBU members then called the meeting to a close and left.”

[53] On 15 December 2014 Ms Garrott emailed SBU members a revised proposal for the General agreement. This included a wage increase offer of 2.5% retrospective to 1 July 2014.

[54] A further meeting was held on 17 December 2014. The evidence of Mr Lambert is:¹⁵

“I asked TasWater to demonstrate to the unions that their members in the separate regions would not be worse off under the proposed enterprise agreement. I asked some specific question on the proposed enterprise agreement. For example, I said words to the effect of:

“How could Ben Lomond be better off for losing their job security clause for a 2.8% wage increase?”

Alex Garrott of the Respondent replied with words to the effect of:

“You know that's a rhetorical question”.

At this point, it became clear to me that the negotiations had truly reached a stalemate. At this time, I handed Alex Garrott written correspondence outlining our concerns about the negotiations. That correspondence is annexed to this statement. TasWater representatives then walked out of the meeting and did not return. I was directed by the CEPU State Secretary, Trevor Gauld, to remain in the meeting room in case they returned. Mr Gauld sent correspondence to Mike Brewster, CEO of TasWater, enquiring as to whether they would be returning to the bargaining meeting as he had directed me to remain in the room. TasWater responded to our concerns on 19 December 2014, Their response largely argued that we weren't bargaining in good faith and did not address our concerns. I did not consider the response appropriate.”

[55] The evidence indicates that the “Notice of Concern” was emailed to Ms Garrott shortly after the meeting ended, rather than handed to her at the meeting. Nothing material turns on this minor discrepancy in the evidence.

[56] It was at this meeting that the SBU abandoned the “best of the best” strategy in favour of “no loss of conditions” , which members of the SBU believed would be better delivered by reverting back to the three enterprise agreements.

[57] The “Notice of Concerns” dated 17 December 2014 relevantly reads:

“CEPU is concerned that bargaining for the Proposed Agreement is not proceeding fairly or efficiently.

The other employee bargaining representatives, aside from Michael Swanton who has not been asked, share our concerns.

Our concerns are:

a) bargaining is not proceeding fairly and/or efficiently because the claims of groups of employees in a particular location, as determined by the existing enterprise agreement, are not being given appropriate consideration;

b) bargaining is not proceeding fairly because the current Proposed Agreement would apply significantly differing impacts on employees' current terms and conditions of employment, depending on their location of work within the State of Tasmania;

c) bargaining is not proceeding fairly and/or efficiently because the Proposed Agreement would apply significantly differing impacts on employees' current terms and conditions of employment such that it is unlikely that a majority of employees will vote to approve the Proposed Agreement;

d) bargaining is not proceeding efficiently because the Proposed Agreement is an inefficient exercise of consolidation of disparate terms and condition of employment;

e) bargaining is not proceeding efficiently because the existing enterprise agreements cover the appropriate employees and the Proposed Agreement will not cover appropriate employees.

This correspondence is written notice of our concerns, in accordance with subsection 238(3) of the Fair Work Act 2009.

This correspondence will be copied to all relevant bargaining representatives. We require a response to our concerns above by close of business, Tuesday, 23 December 2014. We will also consider any response from other relevant bargaining representatives.”

[58] On 17 December 2014 the SBU issued a newsletter which in part reads:¹⁶

“Unions met with Taswater at Campbell Town today and relayed our concerns about the unfairness of the current bargaining process along with the fact that Taswater are trying to play employees off against one another. This is not acceptable.

It is not acceptable that TasWater are demanding specific groups of the workforce to just give up major employment conditions and entitlements, fundamentally changing their employment.

...

Since the start of these negotiations, our members have told us they will not accept wholesale changes and reductions in their wages and conditions. Taswater have consistently sought to implement a single agreement with entirely different terms and conditions to the existing 3 agreements which cover your employment.

After 8 months of negotiations and an 88% no vote on their proposed single agreement, TasWater just aren't listening.

Your Unions wrote to TasWater today clearly outlining our members concerns about the process.

If TasWater don't change, then the Unions will be seeking assistance from Fair Work Australia for the three existing agreements to remain in place, By that we mean, each region stays under their current agreement arrangements and we accept the CPI increase on offer.”

[59] On 19 December 2014 TasWater responded to the “Notice of Concerns.”¹⁷ Ms Garrott said:¹⁸

“In that correspondence, I advised that TasWater would vigorously defend any scope application and that I considered that bargaining had been proceeding fairly and efficiently and that the current scope has been fairly chosen. I further requested that the SBU give genuine consideration to the most recent TasWater proposal and return to bargaining.

To date I have not received a response from any member of the SBU to my correspondence of 19 December 2014.”

[60] On 31 December 2014 the CEPU lodged the Scope Order application.

Union Coverage

[61] Presumably as a consequence of historical reasons going back to the period when water and sewerage services were delivered by local government; union representation differs between the regions. This is demonstrated by the following table which lists the unions that are party to each existing agreement:

SW Agreement	BLW Agreement	CMW Agreement
CEPU APESMA CPSU AMWU AWU	CEPU APESMA CPSU CFMEU ASU	CEPU APESMA CPSU ASU

Evidence of Robert Flanagan (AWU)

[62] Mr Flanagan tendered a witness statement. His evidence is that the AWU represents the industrial interests of approximately 29 employees engaged in the operation and maintenance of sewerage treatment facilities and civil works in the Hobart and Blackmans Bay area.

[63] Mr Flanagan said that based on discussions with members, the AWU had resolved that its claim was essentially to protect existing conditions. His further evidence is as follows:¹⁹

“The AWU agreed to be part of a single bargaining unit in order to best protect our member's interests from being compromised by employees with other issues of concern. In short we did not want other employee's votes to act to our members detriment. Other unions with discrete interests have adopted the same approach.

In the bargaining process to date, the vast majority of the discussions have been about issues which have no material impact upon our member's industrial interests. This has impeded the capacity of the AWU to resolve and move forward with matters which do materially impact upon them.

The negotiations for the Taswater Enterprise Agreement are from my experience unparalleled in terms of the lack of progress in reaching agreement. The AWU has spent in excess of one full working day per Taswater member in its endeavours to achieve an Enterprise Agreement to replace the existing Enterprise agreement.

To date our key concerns remain unresolved because of issues related to employees covered by other Enterprise Agreements that do not apply to AWU members and the desire of Taswater to reduce our members existing rights and benefits to terms that are less favourable and that apply elsewhere in Tasmania under those other enterprise agreements.

I feel that Taswater have not provided a proper response to some of our claims. For example we outlined our claim for the classification structure in October 2014, and Taswater just rejected it without explaining why.

The effect of Taswater's approach to a state-wide Enterprise Agreement is standardisation of employment conditions that currently apply to the lowest common denominator. As a consequence our members face real detriment.

I have discussed the approach of Taswater at meetings with AWU members. I have held multiple meetings with members throughout the negotiations. These included 21 and 22 October 2014, 19 November 2014, 15 December 2014, 20 January 2015 and 12 February 2015.

I have discussed the issue of scope with my members since November 2014 (following the vote rejecting Taswater's agreement). At those meetings the members have expressed unanimous support for the AWU to take the approach that if Taswater did not change their approach to the negotiations we would seek to maintain our current separate agreement.

AWU members have taken protected action in 2014 in support of our bargaining position. That action has taken the form of bans and 2 hour stoppages.”

Evidence of Noel Washington (CFMEU)

[64] Mr Washington tendered a witness statement.²⁰ His evidence is as follows:²¹

“The CFMEU only have coverage of employees working in the region covered by the TasWater (Northern Region) Enterprise Agreement 2013, being the Ben Lomond Region (BLW Agreement).

Throughout the negotiations to date, TasWater have been proposing not to retain the job security clause, the current dispute settlement procedure and change the Handling Sewerage Material allowance (the HSM allowance) in the BLW Agreement.

My members have made it very clear to me that they are very concerned about the proposal to remove the job security provision, changes to the dispute settlement procedure and changes to the HSM allowance. My members are not all interested in the other claims from the employer or other bargaining representatives (except desiring a wage increase).

I understand that TasWater is most recently prepared to accept that the dispute settlement procedure in any enterprise agreement will contain a status quo provision clause. As of yet I have not seen any proposed clause. In any event the current provision in the northern region agreement remains the CFMEU's position.

Nevertheless, my members have also made it clear to me that they would not vote in favour of a proposed enterprise agreement that retained their terms and conditions of employment but reduced other union members and employees terms and conditions of employment.

During the bargaining meetings I have attended, I estimate that 75% of the time has been spent discussing claims that are of no interest to my members.

I believe that if negotiations were confined to the scope of the BLW Agreement, we could narrow the issues in dispute and use the time more efficiently to focus on the issues that matter to my members. I estimate that 75% of the time has been wasted focussing on issues that do not matter to my membership.”

[65] Under cross-examination Mr Washington said:²²

“Well, you tell me what's different? What would be - it's not a three regional scope agreement, is it?---I know that well over 12 months of discussion has been absolutely fruitless. The prospect of getting a single agreement, in my judgment, is Buckleys and none. In any event in the northern region there are conditions that we do not want to have changed and we want them to roll over. That is the problem from our perspective.

So you -?-All of the talk has just been talk. It hasn't resulted in an agreement. You'd be well aware that when you're in discussions you talk about a whole range of things. A whole range of propositions, proposals, considerations are on the table and you attempt to reach an agreement. We have not been able to reach an agreement. It is extremely unlikely in my judgment that we ever will on the basis of where we're at, at the moment. Therefore our position is that the northern agreement should remain with a CPI increase and move on.

Mr Washington, that's just so you can achieve your particular outcome, isn't it? You have an outcome that you want for your particular members?--Yes.

And it relates to terms and conditions of their employment?---Yes, obviously.

Okay, and so you actually have had multiple opportunities to raise the issue of scope and the CFMEU have not advised in any document provided to this Commission where you have objected to a single scope agreement?---I may not have in a document. I'd be amazed if your client's suggesting that I've never raised it. That we've always had a preference to remain as three agreements. We've gone along and we've been part of a process to see if an agreement was possible. We have suggested that, you know, there might have to be three very closely linked agreements. There's been discussion about three appendixes. There's been a range of matters over a long period of time floated, discussed and put out there.

So if I -?-And to suggest that I have favoured a single agreement is stretching a very long bow.

…

So despite that list which I went over of the priority items, you're now suggesting that you had no interest in 75 percent of the matters being discussed?---A number of issues, when they talk about the organisation you mentioned before, Visionstream or whatever that is, is of no interest. There are some unique circumstances in the northwest. Adverse weather by all means is important to those people but not important to our people. There's some issues in the south that are of great interest to those people in the south but is of no interest to us. There are numerous issues, and a long time spent debating issues that had no bearing on our people.

Evidence of Luke Michael Crowley (APESMA)

[66] Mr Crowley tendered a witness statement.²³

[67] Mr Crowley’s evidence is that APESMA represents approximately 100 members across the three existing agreements. Primarily APESMA’s membership is in the upper classifications (bands 5-7). APESMA also represents a large number of staff for whom his organisation is negotiating a senior staff enterprise agreement (Senior Agreement) in parallel to the General EBA negotiations.

[68] Relevantly, Mr Crowley’s evidence is:²⁴

“On 15 and 16 December 2014 I held three (3) meetings with APESMA members employed by Taswater to discuss the negotiations and Taswater's approach. Around 70 members in total attended those meetings.

Each of those meetings had a unanimous outcome by the members that seeking to renegotiate the three (3) existing agreements (instead of one agreement) was a good option if Taswater did not change their approach.

At these meetings all members who spoke supported the proposition that they would not accept a reduction in their conditions. This view of our members was also reflected in the results from the SBU survey of members.

A further bargaining meeting was held on the 17th of December. Prior to the meeting the SBU discussed the issue of scope and agreed we may need to continue the separate agreements. We agreed that we would first need to consider what Taswater proposed in the meeting.

…

After the 17 December 2014 meeting, APESMA came to the view that Taswater's efforts to combine the three (3) existing agreements was causing a fundamental breakdown of negotiations, and that a better option was to continue the three regional agreements.

Additionally, I felt that Taswater's efforts to strip away unique regional conditions and move to what was often the worst option from the thee original agreements was unfair to specific groups of staff who would potentially be outvoted in a Taswater wide ballot and was also one of the prime causes of stalling in the negotiations.

There was a meeting on 5 February 2015. Taswater's representative (Alex Garrott) reiterated that their offer was the same as that made on 17 December 2014. Ms Garrott also stated that Taswater would only discuss one agreement.

Taswater had thereby indicated to me that they were not prepared to move on the key Items for APESMA members, Including the HSM allowance, classification structure and yearly pay review system.

I have further discussed the agreement negotiations with APESMA members on 18, 19 and 20 February 2015. During those meetings members endorsed the approach of maintaining the coverage of the existing agreements and of not losing existing conditions.

…

Based on my conversations with APESMA members, they have consistently communicated to me that they are worried that Taswater in creating a single agreement was attempting to bring all staff onto the lowest possible conditions.

Members have indicated they would accept this CPI increase with no other changes to conditions for the time being. This approach has been rejected outright by Taswater.

As it stands the parties are at a stalemate. There are many areas where the parties are a long way apart. I currently cannot see a practical way forward for reaching a consolidated agreement without a scope order being made.”

[69] Mr Crowley tendered the results of an on-line survey which purported to show that 91.2% of respondents favoured the scope of the existing agreements over that of a single state-wide agreement.²⁵

Position of AMWU

[70] Correspondence dated 20 March 2015 from Jacob Batt, AMWU Organiser, was tendered.

[71] Membership of the AMWU is limited to the SW Agreement. Relevantly Mr Jacob states:

“From my experience in and observations of the bargaining process, I do not believe that it has been proceeding efficiently or fairly because of the current scope of the agreement.

My members will be worse off under Taswater's proposed changes to the on-call provisions. Currently members are paid an on-call allowance of $289.57 per week, with an additional 10 hours paid at their base rate of pay. For example, someone on Level 3.3 would receive a guaranteed $568.77 per week for being on-call.

Applicable overtime rates apply to call outs, where the first 2 hours are at time and a half, and every hour after that is at double time. The minimum call out pay is 3 hours (5 hours at the base rate). This means there is no additional pay for the first two call outs (6 hours work, 10 hours base rate).

Taswater propose the on-call allowance to be $350 per week, and the applicable overtime rate be applied for each call-out, with the minimum call out being 3 hours. This would leave members $218.77 worse off if no call outs were done in the week, and $79.17 worse off if one call out was done in the week, based on the base rate of a Level 3.3.

This issue has been raised at bargaining negotiations but Taswater have failed to ensure my members will not be worse off with their on-call allowance by their proposal. I am seriously concerned that if a single agreement encompassing the three previous agreements is pursued my members will be out voted and will subsequently be worse-off.

Currently my members receive a higher duties allowance after working the higher duties for one consecutive day, and all time worked is paid at the higher level. Taswater propose higher duties allowance will only be available after working five consecutive days at the higher level.

Additionally, currently my members will receive the higher level pay for time taken on paid leave if they've been working the higher duties for a period of three consecutive weeks. Taswater proposes they must be working for three consecutive months at the higher level before their paid leave is paid at the higher duties allowance level.

This has been raised at numerous bargaining negotiations but Taswater have failed to ensure my members will not be worse-off under their proposal. I am again deeply concerned that if a single agreement encompassing the three previous agreements is pursued my members will be out voted and will subsequently be worse-off.

...

At the bargaining meetings there were various discussions that were not relevant to my members. One such discussion was the exclusion of the Ben Lomond Water job security clause from the agreement. At each meeting this was discussed at length by CFMEU representative Noel Washington and his Ben Lomond Water delegates, with it taking up at least an estimated 35 percent of the meeting time. This means that over a third of my time was spent discussing a clause that was not relevant to my membership.

As a bargaining representative, my view is that bargaining would proceed efficiently and fairly if we were negotiating agreements with the same scope as the current agreements. For this reason I support the CEPU's application for a scope order.”

Position of ASU

[72] Correspondence from Brendon Honner of the ASU dated 20 March 2015 was tendered. The ASU has membership under all three existing agreements.

[73] Mr Honner states:

“From my experience in and observations of the bargaining process, I do not believe that it has been proceeding efficiently or fairly because of the current scope of the agreement.

As a bargaining representative, my view is that bargaining would proceed efficiently and fairly if we were negotiating agreements with the same scope as the current agreements. For this reason I support the CEPU’s application for a scope order.”

Legislative Framework

[74] Section 238 of the Act relevantly reads:

“Bargaining representatives may apply for scope orders

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

No scope order if a single interest employer authorisation is in operation

(2) Despite subsection (1), the bargaining representative must not apply for the scope order if a single interest employer authorisation is in operation in relation to the agreement.

Bargaining representative to give notice of concerns

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

(a) has taken all reasonable steps to give 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 the FWC may make scope order

(4) The FWC may make the scope order if the 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 the 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, the FWC 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.”

[75] TasWater does not challenge the CEPU’s standing to make application under s238(1). Section 238(2) is not relevant and TasWater concedes the CEPU has met the obligations to give notice of concerns under s238(3).

[76] Consequently the focus of this decision is on the tests referred to in s238(4).

Good Faith Bargaining (s238(4)(a))

The requirements for good faith bargaining are found in s228(1) of the Act. They are:

“(1) The following are the good faith bargaining requirements that a bargaining representative for a proposed enterprise agreement must meet:

(a) attending, and participating in, meetings at reasonable times;

(b) disclosing relevant information (other than confidential or commercially sensitive information) in a timely manner;

(c) responding to proposals made by other bargaining representatives for the agreement in a timely manner;

(d) giving genuine consideration to the proposals of other bargaining representatives for the agreement, and giving reasons for the bargaining representative’s responses to those proposals;

(e) refraining from capricious or unfair conduct that undermines freedom of association or collective bargaining;

(f) recognising and bargaining with the other bargaining representatives for the agreement.

[77] The respondent contends that the CEPU (and the SBU) have failed to meet the good faith bargaining requirements because it:²⁶

a) failed to comply with the Recommendations of Lee C²⁷;

b) provided misleading and/or inflammatory representations regarding TasWater, TasWater’s representatives and/or the conduct of bargaining;

c) provided proposals on a ‘take it or leave it basis’

d) pursued a capricious, inconsistent and contradictory bargaining strategy which undermined collective bargaining from the periods:

i. 7 May 2014 – 16 December 2014;

ii. 17 December 2014 – 4 February 2015; and

iii. 5 February 2015 to current proceedings;

e) in relation to TasWater’s most recent proposal delivered on 15 December 2014 the CEPU (and/or members of the SBU):

i. failed to give genuine consideration and give detailed reasons for their response to that proposal; and

ii. failed to discuss the proposal and to explain how or whether the proposal or a modified form of it might be acceptable to the CEPU (and/or members of the SBU).

f) in relation to the meeting on 17 December 2014:

i. attended the bargaining meeting on with a view not to achieve any agreement with TasWater;

ii. engaged in a pre-prepared and pre-emptive course of action to pursue a scope order;

iii. abandoned or significantly altered their ‘log of claims’, single agreement strategy and ‘best of the best’ strategy without warning.”

[78] From the evidence I am satisfied that the requirements of s228(1) (a), (b), and (f) have been met. There is no doubt in my mind that the SBU at all relevant points was genuinely trying to reach an agreement.

[79] The focus of the respondent’s evidence and submission seems to be on subsections (c), (d) and (f).

[80] From the evidence it would seem that the bargaining sessions were robust and even at times acrimonious. There is evidence of a difficult relationship between Mr Harkins and Ms Garrott in particular and the communication style of the former might at times be reasonably described as disrespectful.

[81] In LHMU v Hall & Prior Aged Care Organisations & Ors, Cloghan C observed: ²⁸

“[23] Without doubt, the actions of the Employer such as taking “great delight” in the failure of the Protected Action Ballot; using emotive language and having direct discussions and a “straw poll” of employees, would annoy the Union; however, negotiations are not timid and genteel affairs. Further, and this is clearly a difficulty which the Union faces, it did not come into this hearing with “clean hands” as some of its own deliberate actions, and material, would have similarly annoyed the Employer.

[24] In making these comments, it should not be seen as giving the “green light” to all and any actions of negotiators. The Act is framed in such a way of expectations that parties will conduct themselves in the normal “rough and tumble” of bargaining negotiations, without the intervention of the Tribunal. This is apparent also in another case which the Applicant referred me to, Liquor, Hospitality and Miscellaneous Union v Foster’s Australia Ltd [2009] FWA 750 at paragraph 17.

[25] In the case referred to in para [24], Kaufman SDP stated that the Tribunal should be:

“slow to interfere in the legitimate tactics undertaken by the parties during the bargaining process unless an applicant for a bargaining order has demonstrated that there are sound reasons for doing so.” ”

[82] The respondent contends that certain media releases and newsletters issued by the SBU were false and misleading. Again LHMU v Hall & Prior Aged Care Organisations & Ors is on point:²⁹

“[26] Of all the actions taken by the Employer which the Applicant referred to, the issue of misleading information or misinformation, and meetings of staff, were highlighted.

[27] As both parties took objection to certain information circulated during negotiations, it is clear that each put the position they saw which accurately reflected the situation – simply put, the information was from their perspective. The Union stated that it was their duty to inform their members and, for the Employer, to inform their staff. The taking and putting your own (best) perspective on information circulated, is a normal dimension to negotiations, and I find nothing illegitimate in such a tactic.”

[83] I accept that these communications were clearly directed towards a target audience and may not have been to the liking of the respondent, but I am unable to conclude that they were in breach of good faith bargaining requirements.

[84] There is also evidence that the SBU may have at times shown signs of fracturing; that individual members may have been sending inconsistent messages and that some of the paperwork (eg absence of tracked changes) may have been less than optimum.

[85] Whilst I have no doubt that this type of behavior may have been irritating to the respondent, I feel it necessary to inject a note of realism at this point. Collective bargainng is notoriously “resource hungry” and inconsistent positions from individuals within an SBU are not unusual in bargaining. Simply put, their interests do not always coincide and unlike the employer (in this case TasWater) their responsibilities invariably extend far beyond the single enterprise agreement in question. To quote Mr Washington, “It might surprise you to know that TasWater is not the only thing on my agenda.”³⁰ I suspect that this sentiment would reasonably extend to the other union official members of the SBU.

[86] The alternative to an SBU is a group of individual bargaining representatives who do not caucus, do not present a united position and do not have an individual responsible for coordination, drafting of documents etc. It is not unreasonable to suggest that the difficulties identified by TasWater might be even more profound under the alternative model.

[87] The respondent contends that the failure to consistently provide a consolidated and complete log of claims does infringe upon the good faith bargaining requirements because TasWater was entitled to rely on the CEPU/SBU disclosing relevant information in a timely manner.

[88] It is true that the SBU did provide a number of different logs during the bargaining process. Whilst this undoubtedly causes difficulties and frustration for the respondent, in my experience it is not unusual nor is it proscribed. Bargaining representatives are entitled to modify or refine their position during the course of negotiations. That is the nature of bargaining.

[89] The respondent submits that a proposal submitted on a “take it or leave it basis” is capable of infringing the good faith bargaining requirements. In National Union of Workers v Linfox Australia Pty Ltd Roe C said:³¹

“… it is a critical part of the bargaining process that parties disclose their bargaining proposals, including responses to those proposals, to the other bargaining parties. This is an essential element of collective bargaining. Collective bargaining is a process. It is not a unilateral act by one party to present a proposal on a ‘take it or leave it’ basis.”

[90] I readily accept that an initial log of claims presented on a ‘take it or leave it’ basis, and held on this basis over the course of negotiations, would likely be inconsistent with good faith bargaining requirements. However it is not unusual during the course of negotiations for a bargaining representative to present a position, (usually a subset of a broader claim) which if accepted on full, would settle the dispute.

[91] In this case the respondent identifies in particular events on 31 July and 11 December 2014.

[92] The TasWater notes of the 31 July 2014 meeting³² record:

“The SBU advised that the document presented by the SBU following the previous meeting of 24 July was not a log of claims but an offer made in an attempt to progress negotiations.

The SBU further advised that this offer was made as a total package and that it was not negotiable.”

[93] TasWater rejected the offer and negotiations continued.

[94] I am unable to find that this event was contrary to good faith bargaining requirements.

[95] The event on 11 December 2014 had its precursor on 8 December 2014 when Mr Crowley forwarded a revised draft EA to TasWater. The covering email from Mr Crowley reads:³³

“A quick bit of background, these are the documents presented to you on Friday. I have made some changes to reflect the negotiations we had on the day. The documents have also gone out to the SBU who have also added some changes. I can answer some questions about the reasons for some of the changes, but I am unsure about others. I have also made some notes where the clause has been edited from the document we provided to you on Friday, but I may have missed some. Nothing sinister if I have missed any, just trying to do too many edits to too many documents at one time.

These documents are best seen as something that would guarantee Taswater a vote of yes to an agreement. As discussed at the negotiations, some clauses may not be required if others are agreed (the job security/uncapped redundancy) in the general agreement, and the use of Mercer points vs the provision of the Mercer documentation to staff on request in the senior agreement are two good examples.”

[96] TasWater presented a written response at a bargaining meeting held on 11 December. Mr Garrott’s evidence is that Mr Flanagan, on behalf of the SBU, made a general statement expressing disappointment and that the SBU would use the scheduled 15 December meeting to caucus, rather than meet with TasWater.

[97] There comes a time in many negotiations when one party or the other chooses to take a step back and consider their position. This is what occurred on 11 December, and in any event, a further meeting was scheduled and occurred on 17 December 2014.

[98] I am similarly unable to conclude that this event was contrary to good faith bargaining requirements.

[99] There is some evidence of SBU breaches relating to the recommendation of Lee C issued on 18 July 2014. For example it appears that some SBU members may not have routinely advised the employer of delegate attendance three days prior to each meeting. In addition there is evidence which suggests the SBU may have sought to modify the meeting agenda on occasions. Such breaches, whilst material, are in my view at the margin and not of sufficient moment to give rise to a finding that good faith bargaining requirements had not been met.

[100] On 17 December 2014 a bargaining meeting was held in Campbell Town. It was at this point that negotiations broke down. The respondent contends:

1. In relation to TasWater’s revised proposal of 15 December 2014, the CEPU/SBU failed to give genuine consideration and give detailed reasons for their response to that proposal and failed to discuss the proposal and to explain how or whether the proposal or a modified form of it might be acceptable to the SBU

2. In relation to 17 December 2014 meeting, the SBU attended the meeting with a view not to achieve any agreement and with a pre-prepared and pre-emptive course of action to pursue a scope order. In doing so the respondent contends that the SBU adopted a capricious, inconsistent and contradictory bargaining position by abandoning the “best of the best” single agreement strategy without warning.

[101] On the evidence before me I am satisfied that the negotiations broke down, not because of a failure to reach agreement on say dispute resolution or classification structure, notwithstanding these has been included in the “die in a ditch” list, but rather, failure to reach agreement on a number of key issues which the SBU identified as amounting in a significant reduction in conditions. Mr Lambert identified these issues as:³⁴

● On call Allowance (SW Agreement)

● Handling Sewer Matter Allowance (SW Agreement)

● Adverse Working Conditions Allowance (Cradle Mountain Water)

● Job Security clause (Ben Lomond Water)

[102] To contend that the SBU abandoned at the last minute a deeply held commitment to a single state-wide agreement is in my view an inaccurate an unfair characterisation of the SBU position.

[103] The single agreement has been TasWater’s key agenda (and non-negotiable) item from the outset.³⁵

[104] As early as November 2013 the CEPU expressed reservations as to whether a single agreement was achievable. The potential loss of conditions was at the heart of these concerns.

[105] This position was reflected in the nature of the SBU log of claims presented at the first substantive bargaining meeting on 7 May 2014. In my assessment the SBU members were at best ambivalent towards the concept of a single EA. The SBU was prepared to explore the concept provided members were not disadvantaged; hence the “best of the best” strategy. It was a position akin to the adage, “everyone’s house is for sale, all that needs to be determined is the price”.

[106] It is true that there is no documentary evidence of a change in this position prior to 17 December 2014, although there is evidence that individual SBU members raised the issue verbally at various points of the bargaining process. Further, on 15 July 2014 Mr Harkins emailed Ms Garrott as follows:³⁶

“I think the Unions put their position very firmly early in the negotiations, that is, the “best of the agreements”. It is our obvious position that we don’t’ wish to see any employee lose a single entitlement through the process of combining the four water agreements, as difficult as that is. If we were to negotiate the agreements separately, this position would have been well understood by those on the employer team, including your myriad of consultants and lawyers.”

[107] I am left in no doubt however that TasWater would have been aware from the outset that ‘no loss of conditions’ was at the heart of the SBU position and maintained throughout, even if it did not manifest itself in an early claim for three separate agreements.

[108] Mr Lambert’s evidence is that the amendments in the TasWater revised response³⁷ “are seen as minimal by TasWater employees and fails to address the key issues which are constantly being raised.”³⁸

[109] It is true that events post 15 December proceeded quickly, and whilst it was not said, it may well have been that the looming Christmas break and “silly season” was a factor in this time-table.

[110] By email dated 26 March 2015 Mr Lambert said:³⁹

“Alex,

You continue to assert that we have not properly responded to TasWaters proposal of 15 December 2014. We have consistently stated that, whilst the proposal sees a reduction in terms and conditions of employment of employees, it is rejected. You continue to confuse that response with what you want to hear and label it ‘not a full nor specific response’. We couldn’t be any clearer in our position. We know it’s not your preferred position of cutting wages and conditions. The ball is in your court.

We truly are at a stalemate in these negotiations - you won’t move on your position and won’t put the proposed agreement out to ballot.

We look forward to receiving your statements of evidence and submissions for the scope order application tomorrow.”

[111] Whilst it may have been prudent for the SBU to spell out in detail the perceived shortcomings of the TasWater position and what was required to retrieve the position, I accept that it would have been stating the obvious. I conclude that the SBU could and should have responded in a more considered manner as envisaged by the Act. I also acknowledge that the SBU felt strongly that an impasse had been reached and decisive action was required.

[112] On balance I am satisfied that the CEPU/SBU has met and continues to meet the requirements of good faith bargaining.

Promote Fair and Efficient Bargaining

[113] In United Firefighters ‘Union of Australia v Metropolitan Fire & Emergency Services Board the Full Bench observed:⁴⁰

“ “The relevant consideration under s.238(4)(b) is whether the order will promote the fair and efficient conduct of bargaining. The implication is that the tribunal should be satisfied that if an order is made the bargaining will at least be fairer or more efficient or both than it would be if no order were to be made.” ”

[114] I turn firstly to the matter of ‘efficiency’.

[115] In terms of resources, the picture that presents is mixed.

[116] For those unions that are not party to all three agreements (AWU, AMWU, CFMEU), there would likely be clear advantages in terms of resource utilisation. These unions would be able to focus only on the agreement relevant to their membership.

[117] For those unions party to more than one agreement, the likely outcome is a greater call so far union officials are concerned. That is, the union will be represented presumably by a paid official in two or three parallel bargaining exercises rather than one.

[118] However in every case I suspect the result would be a more efficient utilisation of delegate resources, as delegates would only participate in meetings within their geographic area, thus eliminating the need for extensive travel.

[119] For TasWater, the outcome would clearly be more resource intensive as manangement representatives would need to involved in and service three sets of negotiations rather than one.

[120] On this measure, (i.e resource utilisation) it is not possible to make a definitive finding that a three EA model would be more efficient than a single EA, or vice versa, as there are clearly winners and losers.

[121] However if the likelihood of reaching an agreement is a measure of efficiency, the picture that emerges is quite different.

[122] On any measure, progress between April and December 2014 was painstakingly slow. That in itself is not necessarily an indication of inefficiency. Of greater importance is the prospect of reaching agreement under the one EA model.

[123] On the evidence before the Commission, I conclude that, absent a fundamental change or circuit breaker, the likelihood of reaching agreement in the foreseeable future is remote.

[124] Ms Garrott described the large state-wide meetings which were a feature of the current bargaining round as “chaotic.” 41Further, it would seem that TasWater is reluctant to return to the large state-wide meeting format. The following email from Ms Garrott dated 17 March refers:⁴²

“The SBU have now made it clear by your Scope application and subsequent discussions about that application that you are unwilling to consider returning to the aim of achieving one consistent set of terms and conditions for our employees state-wide.

On that basis TasWater sees no benefit in continuing to conduct large scale state wide meetings for one General EA with the SBU, as you have proposed. This is because in the meantime, the SBU continues to assert to the Fair Work Commission (via the Scope Application) that there should be three different sets of terms and conditions (not one General EA). To continue negotiations for one General EA, in light of the SBU’s current position, would be futile.

Having said that, TasWater remains prepared to continue to participate in bargaining for one General EA and will review, consider and respond to proposals that the SBU may put to us. We consider, as we have always maintained, that the current unresolved clauses are operational issues of ‘hard bargaining’ and not matters relating to scope.

Large scale group bargaining is not, as you seem to claim, the only method for bargaining. TasWater remains, as an example, prepared to accept proposals via email, small groups or via telephone. As you are aware, at the suggestion of the Fair Work Commission, TasWater and SBU representatives have already met (not utilizing large state wide group meetings) on three ‘face to face’ occasions recently to attempt to resolve this issue.”

[125] Irrespective of the bargaining format, so far as the Commission is aware, no progress towards a single EA has been made in the past six months.

[126] TasWater rightly points to the significant resources which have been already directed to this bargaining round, which they contend will be wasted should the scope application be granted.

[127] The investment to date is in the nature of a ‘sunk cost’. To continue with a process which is unlikely to produce a result will only serve to increase these sunk costs.

[128] In AMWU & Ors v Shinagawa Refractories Australasia Pty Ltd Sams DP said:⁴³

“ “In one sense, it seems to me that it will be necessary for FWA to consider the current state of the negotiations and the reasons why the making of the proposed order would promote fair and efficient bargaining. Answering this question, of course, might implicitly require a judgment call that the present state of the negotiations may not be proceeding fairly and efficiently, or at all. All parties are ad idem on this point, albeit, as noted from the evidence, blame each other for the current stalemate in the negotiations. In my view, the legislature plainly intended that FWA should take steps to rectify such a stalemate through the making of a scope order upon application by a party/s to the negotiations.” ”

[129] The respondent contends that a scope order which is not made at or shortly after the commencement of bargaining should inevitably fail to satisfy the requirements that it would promote the efficient conduct of bargaining. “In this case 7 months and some 20 bargaining meetings was ‘too late’ in the course of bargaining to have reasonably enabled a scope order to interfere with the current process.”

[130] In Australian Rail, Tram and Bus Industry Union v Australian Rail Track Corporation (ARTC) Cambridge C observed:⁴⁴

“There appears to be an inescapable inefficiency attached to the pursuit of a scope order at a point in time after the enterprise bargaining negotiations have progressed. Logically, in order to ensure that enterprise bargaining is undertaken with efficiency any issue regarding the scope of the proposed agreement needs to be resolved before time, money and energy is spent in negotiation of the particular terms of a proposed agreement. Consequently there is a very strong prospect that any scope order which is not made at or shortly after the commencement of the bargaining process will fail to satisfy the requirement that it would promote the efficient conduct of bargaining.”

Ordinarily there would be considerable force in this contention. However as previously discussed, the SBU did not abandon at the last minute a long held commitment to a single EA. The SBU support for a single EA was entirely conditional on the achievement of certain claims which did not materialise. In one sense it is perhaps surprisingly the SBU stayed with process for as long as it did, but as Mr Washington said:⁴⁵

“So you've been an experienced union official for so long. If these are of no relevance to you why did you keep on turning up to meetings and being part of the SBU?---Because I had the forlorn hope that your people might actually properly negotiate and move on, and stop carrying on with this nonsense.

What you talk about -?-I live in hope, albeit a fool's paradise.

So you still believe that this agreement can be reached, Mr Washington?---No, I have said I don't believe that. I believe that this -.

Well, why were you living in hope? What were you living in hope in the previous statement you made?---We have had months and months of meetings. You asked why did I attend. I attended on the hope or the exploratory possibility to see whether an agreement was possible, and we have - you know, there's discussion underway. Of course we're going to attend. Why wouldn't we attend?

Well, you said it's a waste of time in your statement?---Well, it is a waste of time. That's why we're - that's self-evident I would have thought. You get to a point in all negotiations where, you know, you're either going to get an agreement or you're not. And in this case, in terms of trying to have a state wide agreement it is my view that it's simply a bridge too far.”

[131] In this case the status quo in terms of industrial coverage is the existing three EAs. It follows that the onus is on TasWater to convince the SBU as to the value of a single EA, a point I return to under the consideration of s238(4)(d). The SBU was for a period of time a reluctant fellow traveller in pursuit of this objective, a strategy only abandoned when the SBU determined the attendant conditions to be unachievable. In my view the circumstances are such that this case can be distinguished from ARTC.

[132] It is important to distinguish between outcomes and the bargaining process. In this case the symptoms are found in the failure to reach agreement on the four key issues as identified by Mr Lambert. This is an outcome. However I am satisfied that the root cause of this outcome is found in the bargaining process itself. It is difficult to see how the same outcomes would manifest under a three regional EA model.

[133] Whilst of course there can be no guarantee that the grant of the scope order would result in agreement/s being reached, based on the foregoing discussion, I consider it a far more likely outcome than would be the position if the single EA scope is persisted with.

[134] Based on this, coupled with the neutrality of the ‘resources’ discussion, I am satisfied that the scope order sought would, if granted, promote a more efficient conduct of bargaining than the alternative.

[135] I turn now to the matter of ‘fairness’.

[136] At the heart of this dispute is the view held by the SBU members that individuals and groups of employees will be disadvantaged in terms of loss of conditions of employment. Given the totality of the evidence, coupled with rejection of Mr Lambert’s proposals concerning joint management/SBU forums to discuss the ‘no loss of conditions’ issue,⁴⁶this view is not without justification.

[137] The applicant submits that under the single EA model, “it is clear that the three separate regions have the capacity to ‘out vote’ a region. For instance, employees covered by the CMW agreement are only concerned with the adverse working conditions allowance and the other regions are not and are much larger in number.”⁴⁷

[138] TasWater contends that regional differences have been taken into account. The evidence of Ms Garrott is:⁴⁸

“The statements of union organisers other than Mr Lambert contain examples of claim matters where they state that their members will be worse off in respect to particular entitlements. TasWater’s position is that claim and counter-claim is part of the bargaining process and is not, in and of itself, a sufficient ground to warrant the issuing of a scope order. The fact that a particular entitlement may ultimately reduce under a new enterprise agreement, while other entitlements may increase, is part of the give and take of bargaining. In this context TasWater sees the current bargaining as appropriate and reasonable given the quantum of claims made by both sides during this bargaining process.”

[139] In Stadium Australia Operations Pty Ltd t/a ANZ Stadium Casual Employees Enterprise Agreement 2009 Lawler VP said:⁴⁹

“ “The real remedy for a subgroup of employees, such as the customer service employees in this case, who perceive themselves to be unfairly disadvantaged by a proposed agreement, is for one or more of their bargaining representatives to seek a scope order under s.238. Such an order can be sought if bargaining is “proceeding… unfairly” because “the agreement… will cover employees that it is not appropriate for the agreement to cover”. In circumstances where there is a clear risk of the tyranny of the majority prejudicing the minority in a proposed agreement, it may well be open to FWA to find that if bargaining is proceeding unfairly towards the minority this makes it inappropriate that they be covered by the agreement and appropriate to make a scope order.” ”

[140] In Australian Salaried Medical Officers Federation v Commonwealth of Australia as represented by the Department of Human Services Drake SDP observed:⁵⁰

“ “… I was satisfied that the ability of these particular employees to bargain fairly and efficiently regarding their conditions in the face of any community of interests with the vast number of employees on ordinary classifications, who would have no interest in maintaining the conditions of the medical professionals, was nil. I was satisfied that these employees would be unable to bargain fairly and efficiently whilst they were obliged to be part of a bargaining group with which they had no common interests and who had no interest in assisting them to maintain their conditions. I was not satisfied that the general benefit of one agency agreement “reflecting collaboration” within the agency offset the difficulties for these particular employees who I considered to be “an operationally and organisationally distinct group which is readily identified by reason of their professional qualifications and registration.” ”

[141] In AMWU v Shinagawa Sams DP said:⁵¹

“Accepting that the maintenance employees have obviously different interests and perform different functions, I consider that their concern regarding potential for their interests to be overwhelmed by a larger majority of production employees, to be real, legitimate and understandable.”

[142] The respondent relies on Paterson v Police Federation of Australia; Victoria Police in which Smith C found:⁵²

“As to the question of fairness, I am not satisfied that it would be fairer if there was a separate bargaining unit for Superintendents even though they would be joined with Commanders. The main reason for this proposition by the Superintendents is that they would be put into a minority and outvoted, thus leaving them powerless to achieve any real objectives. To begin, it is not unusual for particular self interests to be the subject of consideration in a bargaining unit and bargainers often have to reach an accommodation between those self interested groups. In this connection there is no evidence that previous bargaining by the PFA, which included Superintendents, has failed to take account of views or objectives of Superintendents. Indeed representations have been made on their behalf in the past.”

[143] In my view Paterson is not on point with the instant case in that the applicant in Paterson sought to excise an occupational group, indeed part of an occupational group, which in the past had managed to bargain, apparently without detriment. A parallel with the instant matter would be an application to excise an occupational group from say the SW agreement, which is not the case.

[144] The workforce has a relatively high level union membership density and appears to be well organised. I am satisfied on the evidence, including the 88% ‘No’ vote, that employees are unlikely to support an agreement which materially disadvantages individuals and groups.

[145] The scope order sought by the applicant will largely eliminate the ability a sectional groups to be outvoted by others who have no particular interest in the issue which the former sector seeks to protect.

[146] I am satisfied that the scope order will create a situation whereby bargaining is fairer than under the single EA model.

[147] It follows, therefore, that on balance, I am satisfied that the making of the order will promote the fair and efficient conduct of bargaining consistent with s238(4)(b).

Fairly Chosen

[148] The respondent concedes that the three regional agreement scope is “fairly chosen”.

Reasonable in all the Circumstances

[149] I am satisfied that the requirements of s238(4)(a) to (c) have been met. Nonetheless it is still necessary to make an assessment as to whether it is reasonable in all the circumstances to make the scope order sought.

[150] In my view this is not a typical bargaining situation. Normally in bargaining employees would expect to be better off as a consequence of agreement being reached, or at the very least, not worse off. Situations where groups of employees fair better than others are relatively common. Situations whereby groups of employees actually go backwards are certainly less common.

[151] In the instant matter the key focus of the SBU is no loss of conditions, not for the majority but for all employees. This is akin to ‘survival mode’, a situation I am satisfied has been driven by the bargaining environment rather than any overwhelming economic calamity which might see ‘pain’ shared equally across the workforce.

[152] The authorities indicate that views of employees prima facie carry greater weight than that of the employer unless there are circumstances which might make a contrary conclusion appropriate.

[153] I am satisfied on the evidence that scope application is generally supported by the employees affected.

[154] The position of TasWater is well put by Ms Garrott in her evidence:⁵³

“So what is the impediment to TasWater? We are proceeding to operate on the three enterprise agreements at the moment. What does that mean for TasWater now? That we are not working towards One TasWater. This is not the objective of why we came together to be a One TasWater. It is a cultural change for TasWater to have one set of terms and conditions of employment. It is about our team members knowing that their peer down in the south of the state, if they're in the far north west, operates under the same terms and conditions of employment as they do. There is legacy from the many previous councils, 29 councils, and the three water corporations that we are trying to, although value and appreciate, bring together to have a holistic organisation and our people are understanding of that. All of our other work is towards TasWater, One TasWater. That is our safety imperatives. That is our organisational values. That is our cultural change program. It is our strategic objectives. It is working in every aspect of TasWater. For us to have three enterprise agreements is totally at odds with everything else that is One TasWater.”

[155] The position of TasWater, as expressed by Ms Garrott, is perfectly legitimate. I further accept that, whilst the Water Corporation Act is silent on the matter of industrial instruments, an outcome of one state-wide EA would not be inconsistent with the objectives of the statute.

[156] I conclude that the views of employees and that of TasWater are evenly balanced, and that this application should not be decided on this criterion.

[157] There is however one compelling factor which tips the balance in favour of granting the application.

[158] The status quo in terms of industrial instruments is three regional EAs. It is TasWater that seeks to alter the status quo and as such bears the onus of convincing the SBU and employees as to the validity of this position. The respondent has failed to do so.

[159] As I understand the position of the SBU, they now seek to roll over existing agreements with a wage increase consistent with prevailing industrial standards. This is hardly an outrageous position and one which is comfortably within the financial bargaining parameters of TasWater, although I recognise that it does not meet the strategic objectives of the respondent.

[160] I propose to grant the scope application in the terms sought.

[161] In doing so I would certainly not rule out the parties moving to a single EA at some point in the future. This is an entirely legitimate and sensible objective. My own view is that to achieve this objective, the issue of ‘no loss of conditions’ will need to be addressed, although I emphasise that this observation is entirely ‘obiter’.

[162] The Order is attached.

DEPUTY PRESIDENT

Appearances:

Mr William Ash for the Applicant

Mr David Dilger for the Respondent

Mr Michael Swanton - bargaining representative.

Hearing details:

Hobart

14, 15, 18 and 19 May 2015

1 Todd Lambert witness statement para 18

2 Todd Lambert witness statement para 19; Alex Garrott witness statement para 28

3 Crowley statement, Exhibit LMC01

4 Alex Garrott witness statement para 34

Ibid para 48

5 Exhibit IN05

6 Exhibit IN06

7 Lambert witness statement para 31

8 Garrott statement para 61

9 Ibid para 104

10 Exhibit TW23

11 Exhibit TW24

12 Lambert statement paras 43-46

13 Exhibit TW35

14 Garrott statement para 131

15 Lambert statement paras 49-51

16 Exhibit TW40

17 Exhibit TW41

18 Garrott statement para 145

19 Exhibit RF paras 31 to 39

20 Exhibit NW1

21 Ibid paras 5-11

22 Transcript PN 1317- 1322, 1328

23 Exhibit LMC

24 Ibid paras 49-52, 58-62, 67-69

25 Exhibit LMC 1

26 Closing submission para 4

27 18 July 2014, B2014/145

28 [2010] FWA 1065 at 23-25

29 Ibid 26,27

30 Transcript PN 1310

31 [2013] FWC 9851

32 TW66

33 TW36

34 Lambert statement para 52

35 IN01

36 TW15

37 TL3

38 Lambert statement para 52

39 TW14

40 [2010] FWAFB 3009 at 55

 41   Transcript PN 2431

42 TW44

43 [2011] FWA 5935 at [26]

44 [2012] FWA 6329 at [69]

45 Transcript PN 1337 -1341

46 TW44 email from Todd Lambert dated 12/3/15

47 Applicant submission para 30

48 Garrot statement para 168

49 [2010] FWAA 3758 at [35]

50 [2011] FWA 5920 at [24]

51 Ibid at [27]

52 [2011]/1420 at [47]

53 Transcript PN 2408

Printed by authority of the Commonwealth Government Printer

<Price code G, PR568646>