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

[2016] FWC 1826

[2016] FWC 1826

DECISION

Fair Work Act 2009

s.739—Dispute resolution

Communications, Electrical, Electronic, Energy, Information, Postal,

Plumbing and Allied Services Union of Australia

v

Essential Energy

(C2015/5686)

Electrical power industry

SENIOR DEPUTY PRESIDENT HAMBERGER SYDNEY, 11 APRIL 2016

Dispute about restructure of vegetation officer positions; application of clause 3.6 of

Essential Energy Enterprise Agreement 2011.

[1]        The Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing

and Allied Services Union of Australia (CEPU) applied on 14 August 2015 to the Fair Work

Commission to deal with a dispute in accordance with the dispute settlement procedure in the

Essential Energy Enterprise Agreement 2011 (the enterprise agreement).

[2]        The application included the following:

“1. The CEPU has been involved in “consultation” with Essential Energy for a

considerable period in relation to Vegetation Control work.

2.          A portion of the work done by existing Vegetation Staff has been included in

the new contracts being utilised by Essential Energy. Over the last 18 months the

Position Description has been modified by Essential Energy to reflect this change and

was completed in November 2014.

3.          A restructure was implemented in January 2015 where Essential Energy

provided a structure diagram indicating little impact on the current staffing levels.

4.          In February 2015 the individual employees were advised, via email, that they

were “incumbent appointments” and “it has been determined that all current

employees employed as Vegetation Officers or Vegetation Control Officers will be

appointed to the new Vegetation Officer position description at their current pay point

as an incumbent to the role.”

[2016] FWC 1826

5. That approach was consistent with the existing Redeployment Policy… and the

Salary Maintenance Policy…

6. However, now in late July and early August 2015 Essential Energy has begun

information sessions outlining employees who are to be affected by the restructure and

what those effects would be.

th

7. Essential Energy have as of 5 of August 2015 and without consultation

advised all “incumbent appointment” Vegetation employees that they are now

“spilled” and are redeployees and all Vegetation positions would be advertised as of

18 August 2015 and recruitment would proceed to selection over a three to four week

period...

9.          This activity is in direct violation of the processes required by Essential Energy

under its Redeployment Policy … and Clause 3.6 of the Agreement…”

(emphasis added)

[3]        A number of conferences were held in an attempt to resolve the dispute by

conciliation, on 18 August 2015, 2 October 2015, and 26 November 2015. On 11 December

2015 the CEPU requested that the dispute be arbitrated. The matter was heard on 8 and

9 March 2016. The CEPU was represented by Mr McKinnon, and Essential Energy

by Ms Shanahan, a solicitor with K and L Gates. Mr Michael Koppie (Organiser) gave

evidence on behalf of the CEPU. Mr John O’Neill (Industrial Relations Research Officer) and

Mr Patrick Kelleher (Manager Programs) gave evidence on behalf of Essential Energy.

[4]        Clause 3.6 of the enterprise agreement is as follows:

“3.6 REDEPLOYMENT AND SALARY MAINTENANCE

(a) Employees whose positions have been identified as being no longer

required or restructured/redesigned to a lesser value and who elect to remain

with the organisation will be subject to the provisions of Essential Energy’s

Redeployment Policy (CEC1083) as varied from time to time in accordance

with subclause (c) of this clause.

(b) In conjunction with the provisions of the Redeployment Policy

employees who have elected to remain with the organisation will also be

subject to the provisions of Essential Energy’s Salary Maintenance Policy

(CEC1026) as varied from time to time in accordance with subclause (c) of this

clause, from the date being informed in writing that their position is no longer

required.

(c) The parties agree that Salary Maintenance and Redeployment Policies

will not be altered without consultation and the agreement of the Union parties

to this Agreement.”

[2016] FWC 1826

The facts

[5]        The following is my summary of the relevant facts. In some cases it involves

conclusions based on a consideration of competing evidence. Generally I have preferred the

version of the evidence that is best supported by contemporaneous documents, including

minutes of meetings, staff newsletters, correspondence etc.

[6]        Vegetation management is Essential Energy’s largest single operating expense after

labour. Effective vegetation management requires considerable expertise and the use of

specialised equipment and other resources. Traditionally Essential Energy has mostly

outsourced the vegetation management or cutting work associated with its program, with

internal resources utilised predominantly for scoping (or inspections), customer notifications,

quality assurance auditing and a relatively small volume of vegetation management work –

for example in more isolated areas where contractors are not established, and for ad hoc

1

works.

[7]        In around September/October 2013 a review of the position description (PD) for

Vegetation Officers was undertaken. I am satisfied that the review was focused on the work

that was currently being undertaken in line with existing processes at that time, though there

was an added emphasis placed on auditing responsibilities, partly because it was understood

that this might be more important as a result of the proposed contract reform process. The

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evaluation for the role remained unchanged.

[8]        Commencing in 2013 a review was undertaken of the Vegetation Branch as part of the

‘operating model’ process. Consultation on the proposed operating model for the branch

commenced in November 2013. Arising from this process the position descriptions in the

Vegetation Branch were reviewed (again). A subcommittee made up of vegetation programs

management, industrial relations staff, and officials and delegates from the CEPU and the

ASU was established to undertake a review of both the Vegetation Officer (VO) and

Vegetation Control Officer (VCO) roles, with a view to capturing all the functions required

under one position description. The exercise was completed and submitted to HR for

evaluation. The review determined that the Vegetation Officer was a Certificate II role with

some Certificate III units of competency and that it would be appropriate when the new

enterprise agreement was negotiated to have an additional stream in the classification

structure for Vegetation Officers. This would start at the current pay point 9 and extend to a

point which reflected the nature of the role. The relevant staff were advised in October 2014

that, due to the large numbers of existing employees in these roles, all VOs and VCOs would

move to the new position description ‘under their current arrangements’. This meant that all

VCOs (whose existing classification was above the evaluated range of the new VO role)

would become present occupant only (POO), while those who occupied the ‘old’ VO roles

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would have access to annual progression until they reached the top of the evaluated range.

[9]        The new position description was published in November 2014 and appointments

4

were formally made under this PD in February 2015.

[10]      The new PD did not reflect any actual change in the functions performed by the staff,

nor did their appointment to the ‘new’ VO roles. According to Mr Kelleher, this was why the

5

existing employees were appointed to the ‘new’ roles as incumbent employees.	This was the
[2016] FWC 1826

case, even though at the time the new PD was developed, regard was had to the capacity of

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the new PD to fit in with the strategic objective of moving to alternative contract models.

[11]      Meanwhile, in July 2014, Essential Energy indicated to its staff that it was considering

changes to its contract models that could potentially result in further outsourcing of vegetation

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work. In particular it was proposed to test two differing contract model options through a

tender process. A Contract Reform Contracting Consultative Committee (Contract Reform

CCC) was established and 10 meetings were held between 16 September 2014 and

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10 February 2015.

[12]      On 29 May 2015 Essential Energy advised the Contract Reform CCC that the

Essential Energy Board had approved the recommendation to award new contracts to perform

vegetation management services, including functions then performed by Vegetation Officers

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in South eastern, Mid North Coast and North Coast Regions (Phase 1).

[13]      The committee was also advised of the impact on employees of the proposed change.

The changes included an impact on the functions actually performed by the VOs as well as a

reduction in the number of VOs required and the location at which VOs were required. There

would be 11 surplus VO roles – five on the far North Coast, five on the Mid North Coast and

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one in the South East.

[14]      On 19 June 2015 Essential Energy issued a newsletter indicating that 29 employees

would be directly affected, with 11 of the 29 roles identified as surplus following the

completion of workforce modelling. The newsletter added:

“Any displaced employees will be managed according to Essential Energy’s Enterprise

Agreement and policies, including support through the HR Mobility team. Remaining

roles will require re-skilling in order to support the delivery of vegetation management

services under the new contract arrangements.”

[15]      The newsletter also indicated that tenders for Phase 2 areas (remainder of South

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Eastern and Southern/Central West zones) had closed and evaluation had commenced.

[16]      A presentation was made to affected staff in the week commencing 3 June 2015

setting out the background to the decision, the decision itself and the effect it would have on

employees. This confirmed that certain functions currently performed – namely pre-listing

(inspection and assessment of vegetation around power lines) and customer

notification/consultation (which together made up about 60 -70% of VOs work under the

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previous model ) - would cease under the proposed (“outcomes based”) contract model.

Other aspects of the work would be less affected. The presentation indicated that 12 FTE

positions in the Far North Coast would be reduced to 7, the 12 positions in the Mid North

Coast also be reduced to 7, and the five positions in South Eastern would be reduced to 4.

There would need to be some training for VOs to support the new contract model prior to the

contract commencement date. There would be further consultation to determine the

13

appropriate recruitment process.

[17] A further presentation in July 2015 indicated the effect on individual roles on a depot

by depot basis. For example, in Bega there were currently two roles and this would be
[2016] FWC 1826

reduced to one; in Goulburn there was currently one role and there would still be one role in

the new structure; in Yass there was currently one role but there would be no role in the new

structure; whereas in Queanbeyan there was currently no role but there would be one role in

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the new structure.

[18]      On 23 July 2015 Mr Koppie sent an email to Mr Kelleher which included the

following:

“The ETU would be keen to discuss a process to provide the most equitable solution

and seek your opinion:

1.          The Employees group concerned be given opportunity for Voluntary

Redundancy in the first instance. This potentially will lessen the number of potential

applicants for the reduced number of positions.

2.          The spill, selection and recruitment process be undertaken and appointments

made
3.	During this process that other opportunities be examined for Employee

placement, for example, Line Worker positions.

4.          The remaining unplaced Employees be then given the opportunity for a

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Voluntary Redundancy or become Redeployees’.

[19]      The process that Essential Energy has sought to implement was communicated to

employees in August 2015. This was as follows:

“(a) All impacted employees will be provided redeployment status - effective

immediately

 Provides for access to other available roles/vacancies

(b) Required roles and locations will be open to all redeployees to apply in the

first instance

 Consistent with recruitment principles and fair/equitable with VO

opportunity to also apply for other roles as a redeployee

(c) Nominated location/s for required roles will include all locations that are

acceptable/suitable to complete role - e.g. this could mean one depot is still preferred

or that the role could be undertaken from two or more locations

 Will be considered on a location by location basis

…

(d) All appointments will be made following a merits-based application process,

within the evaluated band for the role

[2016] FWC 1826

 POOs would be appointed at the highest possible pay point in the evaluation

band

 Other non-POOs appointed at their current pay point (e.g. EW4) with future

progression – where available

 The VO PD has been through a separate consultative process and

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evaluated...”

Consideration

[20]      While the parties had some difficulty in agreeing on a correct characterisation of the

dispute, I am satisfied that the dispute before the Commission for arbitration is whether

Essential Energy was acting in conformity with clause 3.6 (a) of the enterprise agreement

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when, in August 2015, it made 29 Vegetation Officers redeployees.

[21]      The CEPU summarised the questions to be considered by the Commission as:

Does the enterprise agreement (and in particular clause 3.6(a) prevent Essential

Energy from deeming a vegetation officer a redeployee and thereby subject to the

Essential Energy Redeployment Policy unless:

(a) Essential Energy identifies the position as no longer required; or

(b) Essential identifies the employee’s position as having been

restructured/redesigned to a lesser value?

(c) Has Essential Energy validly identified any or all of the 29 Phase 1 Vegetation

Officer positions as being no longer required for the purpose of clause 3.6 of the

enterprise agreement?

(d) Has Essential Energy validly identified any or all of the 29 Phase 1 Vegetation

Officer positions as having been restructured/redesigned to a lesser value?

[22]      It is not in contention that under clause 3.6 of the enterprise agreement, employees

whose positions have been identified as no longer required (and who have not been made

voluntarily redundant) become subject to the terms of Essential Energy’s Redeployment

Policy. A ‘redeployee’ is relevantly defined in the redeployment policy as ‘[a]n employee

whose substantive position has been identified as no longer required…. The policy also

includes the following under the heading of ‘Purpose’:

“The purpose of this policy is to ensure that permanent employees whose substantive

positions have been identified as no longer being required are treated in a fair and

equitable manner…”

[23]      It follows that ‘a redeployee’ is an employee whose substantive position has been

identified as no longer required (and who has not taken a voluntary redundancy).

[2016] FWC 1826

[24]      I think it can be inferred that the ‘person’ who is to do the ‘identification’ is Essential

Energy. Thus the key question is whether Essential Energy identified the positions occupied

by the 29 VOs as ‘no longer required’.

[25]      The CEPU contends that the answer to this question must be ‘no’ (though it concedes

that it might be possible to hold that the answer to this question might be ‘yes’ in those small

number of depots where one VO position exists and this is to be reduced to zero).

[26]      The CEPU argues that Essential Energy:

“…to the extent it purports to have notified and deemed each of the 29 VO employees a

redeployee, on the basis that the numbers of officers required was less than current

numbers and without identifying specific positions which are no longer required … has

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and continues to act contrary to the terms of [clause 3.6 of] the Agreement…”

[27]      The CEPU notes:

“Essential Energy contends that the outcome of transitioning to outsourcing of

vegetation management service to contractors is the creation of 11 surplus VO

positions. Essential has not however sought to undertake a process of identifying to

incumbent employees or the union which positions are these surplus positions in

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accordance with the obligations of Clause 3.6(a) of the Agreement.”

[28]      According to the CEPU Essential Energy is obliged to identify the 11 specific

positions (for example by their unique position numbers) it says are no longer required. It is

only once that has occurred and the employee incumbents in the identified positions are so

advised and then given the opportunity to either remain with or to leave the organisation

under some other process that the incumbents could be said to be redeployees.

[29]      This is too narrow a reading of the enterprise agreement. The agreement gives

Essential Energy more discretion as to identify the positions it deems as no longer required.

[30]      The concept of a “spill and fill” is well recognised and accepted as an appropriate

method of dealing with a situation where a restructure involves a reduction in the number of

similar positions in a part of an organisation. This normally involves declaring all affected

positions vacant and then inviting the affected employees to apply for the remaining positions,

to be selected on a merit basis.

[31]      As Sams DP recently observed:

“… where the employer seeks to restructure its workforce by reducing the numbers of

its workforce and reallocating the duties to be performed by a reduced workforce, it

will often ‘spill and fill’ all the available positions and undertake a selection process

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from the existing employees.”

[32] The reality in the current situation is that Essential Energy has 29 similar positions –

all with the same job description. As a consequence of its decision to further outsource part of
[2016] FWC 1826

the vegetation management process it will only need a smaller number of positions. This is a

classic case that calls out for a “spill and fill” process. By effectively deeming all the existing

positions as no longer required, all affected employees are given the opportunity for a position

in the new structure, and the employer is able to retain those employees most suited to the

new role. It is relevant in this regard that while the ‘new’ VO positions have the same job

descriptions and work value as the ‘old’ ones the work will in practice be significantly

different. In particular VOs will spend little or no time undertaking pre-listing and customer

notification activities - which used to take 60-70 per cent of their time prior to the

introduction of the new outsourcing contracts - whereas there will now be a greater emphasis

on auditing.

[33]      The “old” positions have been identified as no longer required by Essential Energy.

The employees who have chosen not to become voluntarily redundant have therefore been

declared ‘redeployees’ and given the opportunity to apply for one of the “new” positions. If

they successfully obtain one of these positions they would cease to be a redeployee. This is

consistent with the obligations imposed on Essential Energy by the enterprise agreement.

1. Thus the answers to the questions posed by the CEPU are yes, yes and no.

SENIOR DEPUTY PRESIDENT

Appearances:

A McKinnon for the Communications, Electrical, Electronic, Energy, Information, Postal,

Plumbing and Allied Services Union of Australia

L Shanahan, solicitor, for Essential Energy

Hearing details:

Sydney.

2016

March 8 and 9

<Price code C, PR578270>

9

Exhibit E1, paragraph 51

10

Exhibit E1, paragraph 52, and attachment PK11

11

Exhibit E1, attachment PK12

12

Exhibit E1, paragraph 68

13

Exhibit E1, paragraph 54 and attachment PK13

14

Exhibit E1, attachment PK14

15

Exhibit E1, PK15

16

Exhibit E1, paragraph 59, attachment PK16

17

PN1512-1520

18

Submissions for the applicant, paragraph 14

19

Submissions for the applicant, paragraph 19

20

Bertrand v Navitas Professional Institute Pty Ltd [2015] FWC 3147 at [268]

1

Exhibit E1, paragraphs 4-5

2

Exhibit E1, paragraphs 14-20 and attachment PK2, PN1002-1023

3

Exhibit E1, paragraph 31 and attachment PK4

4

Exhibit E1, paragraph 33

5

Exhibit E1, paragraph 34

6

PN1002-1012

7

Exhibit E1, paragraph 39, attachment PK6

8

Exhibit E1, paragraphs 47 - 48