Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Konecranes Pty Ltd

[2017] FWC 909

[2017] FWC 909

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.437—Protected action

Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia
v
Konecranes Pty Ltd
(B2017/98)

COMMISSIONER WILLIAMS PERTH, 14 FEBRUARY 2017

Proposed protected action ballot of employees of Konecranes Pty Ltd.

[1] This decision concerns an application by the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (the Applicant or the CEPU) for a protected action ballot order and is made under section 437 of the Fair Work Act 2009 (the Act). The Respondent is Konecranes Pty Ltd (the Respondent or Konecranes).

[2] Konecranes opposes the application on the grounds that the Applicant has not been and/or is not genuinely trying to reach an agreement and so the requirements of section 443(1)(b) of the Act have not been met in this case.

[3] Putting aside the grounds of the Respondent’s objection I am otherwise satisfied on the evidence before me that the Commission should make the protected action ballot sought by the CEPU. The question to be determined is whether or not as is required by section 443(1)(b) of the Act the Commission is satisfied that the Applicant has been, and is, genuinely trying to reach an agreement with the employer of the employees who are to be balloted. If I am not so satisfied then this application will be dismissed.

Evidence and factual findings

[4] Evidence was given by Mr Peter Carter (Mr Carter) who is the CEPU Organiser for members employed by Konecranes in the North West of Western Australia.

[5] On October 25 2016 Konecranes issued a notice of representational rights to its employees in the North West in order to negotiate to replace the Konecranes Pty Limited North West WA Service Branch Enterprise Agreement 2011 [AE405070] (the current Agreement).

[6] To date there have been three negotiation meetings, which have all been held at Konecranes premises:

• 17 November 2016;



• 24 November 2016; and



• 2 December 2016;

[7] There are no further meetings scheduled.

[8] Mr Carter has attended all negotiation meetings and Mr John Bailey (Mr Bailey) has represented Konecranes at each meeting.

[9] The CEPU presented its log of claims via email on 23 November 2016.

[10] Mr Bailey responded following the meeting on 24 November 2016.

[11] Konecranes were seeking cuts in employees’ wages and entitlements which Mr Carter believes amount to reductions varying from 14% to 22%.

[12] The CEPU reduced its claim and agreed to cuts of 10% to wages during discussions, in an attempt to reach an agreement.

[13] Mr Carter does not accept that the amount of reduction Konecranes is pursuing of 13% to 14% is necessary or reasonable. Whilst Mr Carter recognises the competitive nature of the industry he believes that the CEPU’s members at Konecranes with their skills and qualifications and experience will mean Konecranes clients will not be going elsewhere just on cost.

[14] Mr Carter’s evidence is that the employees have not had a wage increase since 2013.

[15] His evidence is that employees of at least one of Konecranes’ competitors are on rates of pay comparable to Konecranes.

[16] The CEPU believes that the company has admitted that they are still profitable although sales are down and profitability levels were not as much as they were previously.

[17] At the conclusion of the final meeting Konecranes informed Mr Carter that they would put a proposed agreement to a ballot of employees.

[18] Mr Carter sent an email to Mr Bailey on 2 December 2016 setting out the CEPU’s position and options following that meeting.

[19] On 13 December 2016 Konecranes’ proposed agreement was voted down by the workforce and Konecranes immediately made an application to terminate the current Agreement (AG016/7710).

[20] Mr Carter’s evidence was that the parties are still apart and in dispute over wages, allowances, income protection, living away from home allowance and travel allowances.

[21] Mr Carter was on annual leave from 15 December 2016 until the first half of January 2017. After that the Applicant was waiting for the Commission conference to deal with Konecranes’ application to terminate the current Agreement.

[22] The CEPU says it is willing to continue to hold discussions with Konecranes in order to try to reach an agreement. 1

[23] Evidence was also given by Mr Bailey Konecranes’ District Manager – Industrial Service, West District.

[24] Mr Bailey’s evidence is that as a result of the current economic downturn, which has been particularly harsh, faced by companies working in the construction industry in the North West of WA the Respondent has no alternative but to reduce the amount of wages and entitlements employees receive under any agreement.

[25] Mr Bailey says during the three meetings with the CEPU he has made it clear that in order for the Respondent to remain competitive and attempt to be successful in winning work, the employees’ wages and entitlements need to be reduced by 13% to 14% from what is contained in the current Agreement.

[26] His evidence was that there is simply no alternative available for the Respondent in order to remain commercially viable, than for a 13% to 14% reduction in wages and entitlements in the new agreement.

[27] He says that during the whole bargaining period, the CEPU has failed to acknowledge the Respondent’s position and the critical nature of the reduction required and they have only ever offered no more than a 10% reduction in wages and entitlements although on his calculations the reduction is less than 10%.

[28] The Respondent’s main competitors are Eilbeck Cranes and indirectly contractors such as YEM Technology and UGL who work on remote sites and are capable of performing works similar to Konecranes. These companies’ agreements (where applicable) provide for rates and other entitlements that are lower than the CEPU is currently pushing for in its negotiations with the Respondent.

[29] Further, Konecranes’ main competitor Eilbeck Cranes does not have an in-term agreement.

[30] A comparison between other companies’ agreements, the applicable award and the current Agreement shows that in particular, allowances such as income protection, living away from home allowance (LAFHA) and travel allowances are either not contained in the other companies’ agreements or are applied in a strict manner.

[31] Specifically, LAFHA is not contained in the YEM agreement or the UGL agreement as the companies undertake to provide accommodation and meals free of charge for distant employees and LAFHA under the applicable award only applies to employees where they have not been provided with board and accommodation.

[32] Mr Bailey says the CEPU has been unrealistically bargaining for LAFHA payments to apply to employees at all times regardless of whether they are being provided with accommodation and meals. Similarly travel allowances under the UGL agreement and the applicable award only apply when an employee is mobilised to site on the first occasion and demobilised from site on the last occasion. There is no provision for paid travel under the YEM agreement.

[33] The CEPU has been seeking to apply a travel allowance payment for employees upon every visit to and from site. The Respondent conceded this point and in the agreement that went to vote, the offer was for 4 hours travel to be paid for each swing, up to 2 hours each way.

[34] Mr Bailey acknowledges that the problem is not that the employees are demanding more than the current Agreement but rather that they are not willing to agree to cuts as large as the Respondent would like. The employees want to hang on to entitlements they currently have. 2

[35] On 13 December 2016 a proposed agreement was voted down by employees. The CEPU then proposed alternative terms and conditions.

[36] Mr Bailey says that the CEPU’s view about Konecranes’ profitability is wrong and the bottom-line earnings in their business unit are down 80% and are on negative earnings month by month.

[37] On 20 January 2017 the CEPU filed the application for a protected action ballot which is the only communication the Respondent has received from the union since 13 December 2016.

[38] The Respondent is willing to continue bargaining in good faith provided the CEPU starts negotiating from a realistic position taking into account the current economic climate.

[39] I accept the evidence of both Mr Carter and Mr Bailey noting however that some of their evidence is subjective and in conflict. These differences are not relevant for the determination of this matter.

[40] It is a matter of public record that on 14 December 2016 Konecranes made an application under section 225 for the termination of the current Agreement. A conference with the parties was convened before the Commission as currently constituted on 11 January 2016. As directed by the Commission on 20 January 2017 the CEPU reported back as to their view on this application and related matters.

[41] This application for a protected action ballot order was made on 20 January 2017.

Submissions

[42] The Respondent submits that it is being forced to make cuts to the wages and conditions of the workforce to remain competitive in the industry.

[43] It is recognise that the CEPU has made concessions during the discussions and has agreed to some cuts but it is continuing to seek matters that are not genuine including the demand for LAFHA in circumstances where full board and lodging is provided.

[44] The Respondent accepts that the LAFHA is a provision of the current Agreement, however due to the downturn in the industry and the resulting competitiveness to win tenders they submit it is not an allowance that can be considered in the proposed new agreement.

[45] There is no dispute that the Respondent put an agreement out to ballot that was rejected by the workforce on 13 December 2016.

[46] The Respondent acknowledges that it made an application to the Commission to terminate the current collective agreement pursuant to section 225 of the Act.

[47] The Respondent remains happy to continue with its negations for the proposed agreement, but also separately needed to terminate the current Agreement to provide the Respondent with alternative options to engage new employees in a competitive market.

[48] The Respondent also disputes the submissions that the CEPU has requested that the negotiation meetings continue. The Respondent asserts that there has been no request from the CEPU for further negotiation meetings since 2 December 2016. The Respondent therefore considers that the CEPU is not currently genuinely trying to reach agreement and that its application for a protected action ballot order has been made prematurely.

[49] It is the Respondent’s submissions that it has, and will continue to genuinely try to reach an agreement with its employees and their representative.

[50] The Respondent again contends that some claims being made by the Applicant in the agreement negotiations are not genuine including the payment of a LAFHA when employees are provided with full board and lodging, claims for annual leave, income protection insurance and travel allowance.

[51] The Respondent contends that these claims were included in enterprise agreements in boom times in the construction industry but due to the economic downturn are no longer genuine claims.

[52] As such, the Respondent contents that the Applicant is not bargaining in good faith.

[53] The Respondent maintains that bargaining in good faith for a new agreement should continue.

[54] The Respondent submits that the protected action ballot application should be dismissed.

[55] The CEPU rejects the Respondent’s view that it is not genuinely trying to reach an agreement and urge the Commission to issue the ballot order.

The legislation

[56] Section 443 of the Act prescribes the circumstances in which the Commission must make a protected action ballot order and are set out below.

“443 When the FWC must make a protected action ballot order

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

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

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

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

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

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

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

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

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

(3A) For the purposes of paragraph (3)(c), the FWC must specify a date that will enable the protected action ballot to be conducted as expeditiously as practicable.

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

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

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

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

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

Consideration

[57] In determining an application for a protected action ballot order pursuant to sections 443(1)(b) and 443(2) of the Act the Commission must be satisfied that the Applicant has been, and is, genuinely trying to reach agreement.

[58] The onus in this instance is on the CEPU to prove to the Commission’s satisfaction that it has been ‘genuinely trying’ to reach agreement.

[59] In this case the CEPU through its witness Mr Carter have provided evidence that the Applicant’s intention indeed is to reach an enterprise agreement under the Act with Konecranes. Meetings have been held, claims have been put to the employer and concessions have been made by the Applicant on behalf of its members for changes which would involve a reduction in costs for Konecranes under a new agreement. The evidence is the Applicant remains willing to continue negotiation process.

[60] Given this the evidentiary onus shifts to Konecranes, opposing the application, to demonstrate why that evidence ought not be accepted. 3 To this end the evidence of Mr Bailey is that the economic circumstance Konecranes finds itself in is such that the company has no alternative other than to reduce the current wages and entitlements of employees by 13% to 14% through the process of negotiating a replacement agreement. His evidence is that the CEPU has failed to acknowledge the critical nature of the reduction required and have only offered a 10% reduction in wages and entitlements. In particular Mr Bailey says the current Agreement includes allowances such as income protection, LAFHA and travel allowances which are greater than their competitors and the applicable award. He also points to the fact he believes the CEPU has been unrealistically bargaining for LAFHA to apply regardless of whether employees are being provided with accommodation and meals and the circumstances in which travelling allowances apply

[61] A finding that an applicant has not been, or is not, genuinely trying to reach agreement will necessarily involve accepting evidence establishing that the applicant had some other, extraneous purpose. An example of when an applicant may be found not to be genuinely trying to reach agreement will include where the evidence demonstrates that the applicant’s true motivation is to ‘apply pressure in pursuit of political or environmental goals or simply to punish the employer for some perceived wrong doing’. 4

[62] There is nothing in the evidence before the Commission to support a conclusion that the CEPU is pursuing some other purpose than to reach agreement with Konecranes.

[63] The complaint made by Konecranes is simply that the CEPU will not agree to the level of reduction in wages and entitlements that Konecranes believes is necessary. The evidence however demonstrates that Mr Carter and Mr Bailey have different views as to the vulnerability of Konecranes to its competitors in the marketplace. They also have different views about the profitability of the employer and I note that Mr Bailey’s evidence focuses on the business unit rather than the employer generally. Mr Bailey’s subjective evidence that the CEPU is bargaining unrealistically with regard to how various allowances will operate needs to be understood in the context that what the CEPU propose is nothing more than those allowances being retained in the manner in which they are found in the current Agreement.

[64] The CEPU on behalf of its members have made offers to reduce the levels of their current paying conditions. There is no evidence here that the Applicant has acted capriciously or other than genuinely.

[65] However I accept it may be that Mr Bailey and Konecranes are correct that a larger reduction in employee costs is necessary to successfully win future tenders and to ensure the security of the current employees jobs but the fact the employees and their bargaining representative have not agreed to reductions of this magnitude in the past nor do they agree at the moment is not to say that they are not genuinely trying to reach agreement.

[66] The parties have, at the moment, simply come to a stalemate in the negotiations.

[67] In all the circumstances I am satisfied that the CEPU has been, and is, genuinely trying to reach an agreement with the employer of the employees who are to be balloted. Consequently section 443 of the Act requires that the Commission must make a protected action ballot order in relation to a proposed enterprise agreement and I will now do so.

COMMISSIONER

Appearances:

N. O’Brien on behalf of the Applicant.

J. Lilleyman of the Chamber of Commerce & Industry of Western Australia for the Respondent.

Hearing details:

2017.

Perth:

February 2.

 1   Transcript at PN23.

 2   Ibid., at PN80.

 3   JJ. Richards & Sons Pty Ltd v Transport Workers' Union of Australia[2010] FWAFB 9963 at [62].

 4 Ibid., at [63].

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