Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Monadelphous Engineering Associates Pty Ltd
[2010] FWA 9304
•2 DECEMBER 2010
[2010] FWA 9304 |
|
DECISION |
Fair Work Act 2009
s.437 - Application for a protected action ballot order
Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia
v
Monadelphous Engineering Associates Pty Ltd
(B2010/3483)
DEPUTY PRESIDENT MCCARTHY | PERTH, 2 DECEMBER 2010 |
Proposed protected action ballot by employees of Monadelphous Engineering Associates Pty Ltd.
Background
[1] This matter concerns an application by the Communications, Electrical, Electronic, Energy, Postal, Plumbing and Allied Services Union of Australia (the CEPU) for a Protected Action Ballot Order (PABO) for employees of Monadelphous Engineering Associates Pty Ltd (Monadelphous). The employees are employed by Monadelphous at the BP Kwinana Refinery site (the Site) engaged in work involving storage and handling facilities for liquefied petroleum gas (LPG). The CEPU asserts that the work involved is construction work relating to the construction of a new LPG plant at the BP Refinery (Kwinana).
[2] Monadelphous objects to the order sought, arguing that the work on the Site is already covered by an Agreement viz; the Monadelphous Engineering Associates Pty Ltd BP Refinery (Kwinana) Site Electrical Agreement 2010 (the Agreement) 1. The Agreement has a nominal expiry date of 30 June 2012. They therefore argue that by operation of s.438 of the Fair Work Act 2009 (the FW Act) an order cannot issue.
[3] The FW Act provides at s.438 that:
“If one or more enterprise agreements cover the employees who will be covered by the proposed enterprise agreements, an application for a protected action ballot order must not be made earlier than 30 days before the nominal expiry date of the enterprise agreement, or the latest nominal expiry date of those enterprise agreements (as the case may be).”
[4] The CEPU argues that the scope and coverage of the Agreement as provided in Clause 4 of the Agreement limits the coverage to maintenance work at the Site. They say that as the employees concerned are not performing maintenance work, they therefore do not fall within the scope of employees covered by it. They argue that the requirements of the FW Act have been otherwise met and that s.438 does not prevent a PABO issuing.
[5] The CEPU line of argument is that:
a. They approached Monadelphous to negotiate an Agreement to cover those employees working in construction, but Monadelphous refused to negotiate;
b. The Agreement covers those employees who are performing maintenance work as defined in Clause 4, which excludes those employees working in construction;
c. The intention of Clause 4 was to exclude construction work from the Agreement;
d. The work being performed by these employees is the construction of a complete unit, in isolation from the rest of the Site. This is new construction work and does not constitute the maintenance or upgrade of existing facilities;
e. The employees, the subject of this Application, are specifically engaged in the construction of a new LPG plant and are therefore not covered by the maintenance Agreement;
f. The employees are free to enter into an agreement with their employer and accordingly are able to make an Application for a Protected Action Ballot; and
g. The scope of the work performed by the employees is primarily the construction of the new LPG plant at the facility.
[6] Monadelphous asserts that:
a. The CEPU is estopped from denying that the Agreement applies to all Monadelphous employees at the Site;
b. The CEPU has not properly made an application under section 437;
c. The CEPU is precluded from an entitlement to bring such an application by operation of s.438;
d. Fair Work Australia (FWA) cannot be satisfied that the CEPU has been, and is genuinely trying to reach an agreement with Monadelphous, as the disagreement as to the scope of any proposed agreement prevents negotiations from progressing to a sufficient stage;
e. The CEPU has not sufficiently identified the class of employees who will vote on the Ballot and will take Protected Industrial Action; and
f. As a result, FWA does not have jurisdiction under section 443 to make a PABO order.
[7] Essentially then I must determine whether the Agreement covers the work in question as a necessary step in considering whether a PABO should issue.
The Agreement
[8] The coverage by the Agreement is provided in Clause 4 of the Agreement as follows:
“This Agreement will cover the employment of all Monadelphous employees working in classifications contained at Clause 27 of this Agreement on all work at the BP Refinery (Kwinana) Site, who are employed to undertake project, maintenance and modification work, including shutdown work.
Maintenance and Modification includes the upgrading of a piece of equipment, unit or system design performance by a process involving physical changes to the equipment, including the upgrading of process equipment by direct replacement with equipment of a different performance capacity or the replacement of piping systems or parts of systems where the primary intention is to upgrade the system performance, and changes to process control systems, including software with the intent of changing the system performance and the connection of a new unit to the existing facilities. The work may be carried out as a turnaround or under shutdown conditions.
Construction means the building of a complete process system or unit where the activity of construction is carried out in isolation from the operating parts of the Refinery. Typically these construction sites are physically isolated by a fence or similar barrier.”
[9] The CEPU argued that the scope does, on a basic reading of Clause 4, show that it is to cover maintenance employees and maintenance work. The CEPU argued that on a plain reading of the clause, construction work is excluded from the scope, reflecting the intention of the parties to the Agreement.
[10] Monadelphous argued that Clause 4 was proposed by the CEPU to overcome an apparent impasse about the Agreement’s coverage. The impasse appears to have been that the CEPU wanted the LPG work to be excluded but Monadelphous wanted all of its electrical employees at BP to be covered and would not agree to an agreement that did not have that coverage. They argue that the definition of construction work in the Agreement does not have the effect of excluding the LPG works and they did not agree at any stage to the Agreement having that effect. Indeed, they assert that the inclusion of the definition of construction work is superfluous as it has no work to do in the Agreement. It is, in their eyes, without any purpose. The inference being that whilst the CEPU may have proposed Clause 4 with the intention of achieving the CEPU's purpose, the clause did not have the effect that the CEPU intended.
The Evidence
[11] Mr Les McLaughlan, State Secretary of the CEPU, gave evidence. He outlined the history of the industrial instruments applying to contractors at the BP site. He also gave evidence regarding the other major industrial sites and the common practice of different industrial instruments applying to construction works and maintenance works.
[12] He said that in discussions leading up to the making of the Agreement the issue of coverage of the Agreement was canvassed. Apparently, there was a difference of view between the CEPU and Monadelphous about the scope of the Agreement as it related to employees performing what the CEPU regarded as construction work. His evidence was that as consequence of that difference, construction work was excluded from the Agreement. It seems this was achieved through the insertion of what amounts to a definition of construction in the Agreement. 2
[13] Mr Tim Hayes, an organiser in the Kwinana strip and the South-West of Western Australia for the CEPU, also gave evidence. He stated that the LPG project is construction work and that during the negotiations leading to the making of the Agreement, he made it quite clear to Monadelphous that it was a construction project and construction rates should apply. He claimed that a clause was inserted in the Agreement which had the effect of clearly distinguishing what construction was so that the LPG work would be recognised as construction work.
[14] Mr Luke Farnden, Electrician, an employee of Monadelphous at the BP site, gave evidence. He stated that he was involved in working on the constructing of a new LPG plant at the Site. He said this involved work such as substation work, usual electrical activities, pulling cables, putting up new ladders, new pumps and motors and the like. He and other employees involved had been employed on that work since January 2010. He also stated that he had not been involved in performing any maintenance work, asserting that all of the work he had performed was construction work.
[15] Mr Farnden stated that he had voted for the Agreement in March 2010, apparently believing that once the Agreement was in place it would apply to maintenance employees and that there would subsequently be bargaining for a construction agreement.
[16] Mr Ross Middenway, the Project Manager employed by Monadelphous at the BP Kwinana site, gave evidence. He outlined the nature of the contract between Monadelphous and BP at the Site. Monadelphous perform works under a contract with BP Refinery (Kwinana) Pty Ltd (BP) known as the Onsite Service Contract (the Contract). There is, under that contract, a defined Scope of Work for Capital Construction Services. He said that the term “construction” is an engineering term used in the Contract.
[17] Typically, BP allocates Monadelphous a certain budget for each project which is then negotiable depending on any issues that may arise with a project. Each month BP reimburses Monadelphous for costs, overheads and profit arising from each project or piece of work. Mr Middenway has been responsible for overseeing approximately 100 projects of varying size which have involved the replacement, modification, installation and upgrading of equipment and processes on the Site. The nature of the work performed by Monadelphous on each project is typically in mechanical and electrical trade disciplines.
[18] The LPG upgrade work was commenced in December 2009. The work includes a number of projects that will result in upgraded capacity for the Liquefied Petroleum Gas Unit at the Site (LPG Unit). At the commencement of the LPG Upgrade Work the LPG Unit was composed of:
a. 4 LPG storage vessels;
b. a Horton Sphere;
c. odorant injections;
d. LPG tanker loading facilities; and
e. pumps, piping, electrical and instrumentation equipment connecting the LPG storage vessels to the Site.
[19] The LPG Upgrade Work involves installing and connecting two storage vessels and the associated pumps, piping, stench system and analysers to the LPG Unit, known as the Additional Butane Storage Project, and upgrading and repairing the existing fire water system, fire and gas detection systems, vessel nozzles and installing a loading gantry, known as the Process Safety and Minimum Expectation 16 Risk Reduction Project.
[20] He explained that employees of Monadelphous at the Site move between projects depending on operational requirements. At the time of the hearing there were 20 electrical employees working on the LPG Upgrade Work. The total number of electrical employees on the Site is generally around 30 to 40 employees. Operational demands have meant that the 20 employees currently working on the LPG Upgrade include a core of electrical employees who have been consistently working on the LPG Upgrade Work for a period as this work has the highest priority on the Site. Should other projects or work of higher operational priority arise, employees working on the LPG Upgrade Work may then be required to move to that work. The number of employees performing the LPG Upgrade Work has varied as the various projects have progressed.
[21] Employees are moved on and off a project according to operational demands. This mobility is reflected in the pro-forma contracts of employment for the Site which does not in any way restrict what work will be performed by an employee. During the performance of work and once a project is completed, Monadelphous report to BP on the key elements of the project. This includes information such as how many staff and man hours the project has taken, the equipment used and labour loadings and final costs of the project. Employees who are allocated to work on larger projects or turnarounds (shut downs) are typically given an induction briefing that explains the project goals and objectives, the initial and final outcomes of the project, duty of care, safety aspects and emergency procedures for the project.
[22] Mr Middenway was involved in the negotiation of the Agreement. He stated that Monadelphous made its position as to the intended scope of Agreement extremely clear. That is, the Agreement would cover the scope of all work that is currently being performed at the Site. The LPG Upgrade Work was already underway and discussed at the time the Electrical Agreement was bargained for by the CEPU and voted on by the electrical employees on the Site. He says that the LPG Upgrade Work is project and modification work and involves upgrading the LPG Unit through physical changes to, and replacement of, equipment which forms part of the LPG Unit. Put simply, the LPG Upgrade Work involves an upgrade to system performance.
Consideration
[23] The consideration here boils down to what is the proper interpretation of Clause 4 of the Agreement and whether the circumstances giving rise to the Agreement are such that the intent of the parties were to give it a meaning beyond what it actually says.
[24] The evidence satisfies me that the LPG work is work that comes within the meaning of the words project, maintenance and modification work.To me, the work and its nature as described by Mr Middenway, is clearly work involving an upgrade of equipment or a process. The scale of the work might be larger than one would ordinarily expect but it nevertheless falls within the meaning of those words. Furthermore, I consider the inclusion of the definition of construction work neither adds to nor detracts from the meaning of the first two paragraphs of Clause 4 of the Agreement.
[25 I also accept the evidence of Monadelphous that at no stage did they concede nor give any indications that they were entering into an agreement that excluded the works in question or the employees that were or would be engaged in that work. It was the CEPU who proposed the wording and in my view they were under a misapprehension about its effect.
[26] The evidence of Mr Middenway about the nature of the contract with BP and the manner in which employees would be utilised also support the logic of the reasons behind Monadelphous’ insistence that the Agreement cover all employees at BP and gave credibility to their evidence about what transpired in the making of the Agreement.
[27] Indeed the conduct of employees, or at least Mr Farnden, by being involved in voting for the Agreement, serves to confirm beyond any doubt in my mind that the Agreement was made to cover the employees that now seek a separate agreement.
[28] I consider and determine that the Agreement once made did cover the employees now wishing to have a separate agreement. In the absence of a clause in the Agreement, stipulating some type of conditions subsequent provision, that allows employees to not to be covered by the Agreement, the Agreement still does and will continue to cover those employees.
[29] Therefore, the provisions of s.438 prevent a PABO issuing, as an enterprise agreement covers the employees and it is earlier than 30 days before the nominal expiry date of the enterprise agreement.
DEPUTY PRESIDENT
Appearances:
Ms N Ireland for Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia
Mr K Petit of counsel and Mr D Fletcher for Monadelphous Engineering Associates Pty Ltd.
Hearing details:
2010.
Perth:
November 9
1 13 April 2010 ([2010] FWAA 2938)
2 the third paragraph of Clause 4
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