Construction, Forestry, Maritime, Mining and Energy Union v Flinders Adelaide Container Terminal Pty Ltd

[2019] FWC 4121

[2019] FWC 4121

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.739—Dispute resolution

Construction, Forestry, Maritime, Mining and Energy Union
v
Flinders Adelaide Container Terminal Pty Ltd
(C2018/5208)

FLINDERS ADELAIDE CONTAINER TERMINAL STEVEDORING ENTERPRISE AGREEMENT 2017-2021

Stevedoring industry
COMMISSIONER HAMPTON	ADELAIDE, 5 JULY 2019

Dispute about matters arising under the enterprise agreement – selection processes for recruitment and promotional opportunities – decision made as to proper application of the agreement – parties given opportunity to resolve dispute in context of decision – no resolution made – final disposition of the dispute application determined by the Commission.

1. What this decision is about

[1] This decision concerns the final determination of a dispute about the proper application of the Flinders Adelaide Container Terminal Stevedoring Enterprise Agreement 2017-2021 (the 2017 EA, or the Agreement). That instrument is an enterprise agreement approved¹ by the Commission under the Fair Work Act 2009 (the FW Act). The matter is before the Commission as a result of an application lodged under s.739 of the FW Act by the Construction, Forestry, Maritime, Mining and Energy Union (CFMMEU). The CFMMEU relies upon Clause 10 – Dispute Resolution of the 2017 EA.

[2] The 2017 EA commenced operation on 30 March 2018 and it covers and applies to Flinders Adelaide Container Terminal Pty Ltd (FACT) - the respondent employer, the employees whose interests are impacted by the dispute, and the CFMMEU.

[3] The substance of this matter involves a dispute about the operation of Clause 26 – Career Paths and Work Grades. Amongst other matters, clause 26.10.3 sets out selection criteria as part of a process when selecting employees for training and employment vacancies. The matter has arisen in the context of the selection of three employees for vacant Team Leader roles in the early part of 2018 and the subsequent dispute about the appropriate application of the Selection Criteria in the 2017 EA.

[4] In February 2019, I issued a decision 2 (the February 2019 Decision) determining the proper application of the 2017 EA as it applied to the circumstances leading to the dispute. The parties have been unable to finally resolve the final disposition of the dispute within that context and it now falls to the Commission to do so.

2. The February 2019 Decision

[5] This Decision is to be read in conjunction with the February 2019 Decision and I do not propose to outline the content of that Decision or to repeat all its approach and findings for present purposes. However it is appropriate, in order to set the immediate context, to cite the following summary findings:

“[108] When read together and considered in the context of the Agreement as a whole, I consider that clause 26 means that:

• The selection criteria and process set out in clause 26.10 is to be used for internal vacancies (including promotional positions such as the Team Leaders);

• The category of eligible candidates (FSEs/VSEs and/or Casuals) and the inherent requirements for the position will be discussed and determined by the ERC and management within the parameters of the requirements in the tables in clause 26.10.3, with management having the ability to determine those eligibility requirements, within the same framework, if agreement is not reached;

• Candidates who do not meet the inherent requirements are not eligible to have their applications further considered;

• The performance, behaviour and attitude outcomes for use within the overall score are to be considered by a panel assessing the results of feedback questions agreed between the ERC and management after input from other relevant staff;

• The performance, behaviour and attitude, absence management; availability; and tenure scores are to be applied to each of the eligible applicants according to the tables in clause 26.10.3 to produce a ranking of candidates;

• Where it becomes necessary to differentiate between candidates with equal scores, a sub panel, comprising at least 50% of the original panel will further assess the candidates and apply, in the case of a Team leader position, the additional five points referred to in table 26.10.3;

• The selection process and application of the selection criteria will establish an eligibility list ranked according to the application of the selection criteria and points allocations in clause 26.10.3 and appointments would in the normal course be made (determined) by applying the rankings determined on that list;

• The ranking list would also be used to determine relevant opportunities that arise over the 12 months following the process, subject to continued good performance; and

• Management make the final selection, but given the detailed and prescriptive nature of the selection criteria and process within the Agreement, should depart from that outcome in an open and transparent manner and only where sound objective reasons exist for doing so, which would need to be disclosed.

[109] Accordingly, some discretion does exist for management to make the final selection; however it is a discretion to be exercised strictly within the constraints that it has agreed to apply to these matters.”

[6] The conclusions to the February 2019 Decision are also important to set the immediate context, and were as follows:

“[110] The question for determination has been framed as follows:

“In applying the Flinders Adelaide Container Terminal Stevedoring Enterprise Bargaining Agreement 2017-2021 is FACT bound to apply the results of the criteria in clause 26.10.3 when making the selection for training or internal vacancies?

This will involve consideration of the Agreement as a whole including:

• How clause 26.8 and clause 26.10 are intended to operate; and

• Whether clause 26.8.2 and/or clause 26.10.2 mean that management can make a selection using a general or other discretion.”

[111] The answer to the question must be somewhat nuanced given my findings about the objective intention of the Agreement. It is clear that FACT does not have an absolute or general discretion to ignore the selection process, criteria or outcomes of the same. It does have a limited discretion that may give it the opportunity to not apply the results of that process where sound objective reasons exist, but it must take into account and pay due regard to the outcome of the agreed selection process (including the rankings that it produces), and make any decision in an open and transparent manner.

[112] Ultimately, because of the fact that the differences in wording between the two agreements are not important, and in light of the approach that I have adopted to the relevance and weight to be afforded to the discussions leading to the 2017 EA, the above findings are also apposite to the 2014 EA under which the original selections were made.

[113] The present circumstances are very unfortunate for all of those involved. The existing appointments were made on a misapplication of the agreed selection criteria. I do not consider that the misapplication of the tenure points was deliberate and it appears that all members of the panel acted in good faith relying upon the information provided by FACT to that point. I do find that the prospect of the potential mistake in the application of the tenure points in the case of the Team Leaders should have been identified and acted upon earlier than it was. In any event, this has led to a case where FACT is seeking to rely upon a discretion, which I have found does exist to a point, to maintain a decision that was actually made on a different and incorrect basis.

[114] Although not intended, this process and outcome does not follow the kind of open and transparent process envisaged by clause 26 of the 2014 and 2017 EAs.

[115] Regrettably, this has led to some dispute about the legitimacy of two of the three appointments (who management now consider are performing well in the roles), and the non-appointment of two others, when the available evidence would indicate that all are qualified and capable of performing the Team Leader roles.

[116] There is little information about the present circumstances of the Team Leaders before the Commission other than the fact that the two contested appointees have been treated as being on an interim basis now for some 10 months or so. Further, one or both of the unsuccessful candidates have also acted for some periods in the role of Team Leader on a relief basis.

[117] I have not heard directly from the selected Team Leaders and none of the parties to this dispute have yet had an opportunity to consider their positions in light of my findings.

[118] Accordingly, I recommend that the parties consider their positions in light of this decision and seek to agree upon the appropriate outcome. The options for moving forward by agreement between them might include redoing the selection process for the Team Leader positions applying the process required by the agreement as determined by the Commission, letting the appointments stand, applying the corrected selection outcome in the absence of some good reason not to do so and/or making some arrangements for the four candidates directly affected.

[119] None of these options should disturb the appointment of the Team Leader who ranked first on each occasion.

[120] I also grant liberty to any of the parties to seek that the Commission ultimately determine the final outcome of the dispute to give effect to this decision.”

3. The agreed facts

[7] As part of the process leading to this decision, the parties have agreed the following facts:

“1. On 6 February 2019, the Commission issued a decision in respect of this matter: Construction, Forestry, Maritime, Mining and Energy Union v Flinders Adelaide Container Terminal Pty Ltd [2019] FWC 4 (the Decision).

2. The Commission recommended (at paragraph [118] of the Decision) that the parties agree an appropriate outcome for the dispute in accordance with the Decision, namely the appointments of two team leader positions held, at the time the dispute was heard by the Commission, on a provisional basis by Mr Chris Gibbs and Mr Selby Carmody, provided that any agreed outcome did not disturb the team leader position held by Mr Todd Smitham.

3. On 1 March 2019, Mr Todd Smitham’s appointment to the position of team leader on a permanent basis was confirmed.

4. On 13 May 2019, Mr Chris Gibbs was offered and accepted the position of supervisor, a position that is more senior to that of team leader. As such, as of 14 May 2019, the team leader position held by Mr Gibbs on a provisional basis became vacant. To date, that position has been filled shift by shift on a rotational basis.

5. The other team leader position, currently held by Mr Selby Carmody on a provisional basis remains in dispute.

6. On 9 April 2019 Mr David Sleath, General Manager of FACT wrote to Mr Newlyn, South Australian Branch Secretary of the MUA, in regards to FACT’s proposed outcome of the dispute. This letter is attached and marked Annexure A.

7. On 6 May 2019, Mr David Sleath, Ms Alessandra Daley, General Manager Human Resources, and Mr Jamie Newlyn met to discuss the outcome of the dispute.

8. At that meeting, FACT proposed three options for resolving the dispute:

a. appointing Mr Darryn Evans (the second ranked candidate, after the selection criteria scores were corrected in regards to the tenure component) to the vacant team leader position and confirming the appointment of Mr Selby Carmody; or

b. re-running the recruitment process for the vacant and disputed team leader positions, including FACT exercising managerial discretion during the recruitment process, if and where appropriate; or

c. referring the matter to the Commission for formal determination.

9. During the meeting Mr Newlyn stated that it was the Applicant’s position that FACT has a limited discretion.

10. Shortly thereafter, Mr Newlyn discussed the options described above with Employee Representative Committee.

11. On 7 May 2019, FACT was advised by Mr Newlyn by email that the Applicant’s preferred position was that the matter be referred to the Commission for formal determination. That email is attached and marked Annexure B.

12. Further, the Applicant requested that in light of Mr Gibbs appointment to the Supervisor’s role, Mr Darryn Evans be appointed to the vacant team leader position with the other team leader position, currently held by Mr Selby Carmody on a provisional basis remaining in dispute.

13. The Company did not agree to this request.

14. The parties agree that the appropriate outcome of the dispute should be determined by the Commission.” 3 (Annexures omitted)

[8] I note also that the parties expressly agreed (with my concurrence) to have the Commission determine the final disposition of the dispute on the basis of the agreed facts and written submissions and that a further hearing was not required.

4. The positions of the parties as to the final disposition of the dispute

4.1 The Construction, Forestry, Maritime, Mining and Energy Union

[9] The CFMMEU contends that the Commission is empowered to, and should make, the following determination:

“44.1 On its proper construction, and application of the Flinders Adelaide Container Terminal Stevedoring Enterprise Bargaining Agreement 2017- 2021 FACT are bound to apply the results of the Selection Criteria in clause 26.10.3 when making the selection for training or internal vacancies.

44.2 Confirm that the decision to select the employees who were ranked second and third because of the error when calculating the score for Tenure and total Selection Criteria score was premised on a misunderstanding of the Agreement, and was unfair and unjust.

44.3 Mr Darryn Evans be appointed to the Team Leader made vacant by Mr Gibbs.

44.4 Ms Delaine Rosling, who was ranked third after the Tenure scores were revised be appointed to the Team Leader role that remains in dispute.

44.5 That the decision referred in 44.2 above be revoked.” 4

[10] In support of that outcome, the CFMMEU contends that FACT’s decision to let the original selections stand was not open or transparent and the reasons provided were not sound or objective. In relation to the first proposition, the CFMMEU contends:

•  On about March 2018, at least one of the senior officers of management were aware that the tenure score in other recruitment processes was not being applied correctly.

•  The employees with the incorrect Tenure scores were appointed to the Team Leader roles on 2 April 2019.

•  On 10 April 2018, most or all or senior management were aware that the tenure score in other recruitment processes was not being applied correctly. The evidence of Mr Alexander is that FACT did not review any other recruitment processes including the recently appointed Team Leader roles.

•  Soon after 8 May 2018, FACT reviewed the Team Leader Tenure scores only after issues about the selection process was raised by the ERC. The review revealed that the Tenure scores for the Team Leader roles were applied incorrectly.

•  It was not until 7 June 2018 that FACT informed the ERC that the Tenure scores, and logically, the total scores for the Team Leader roles had been applied incorrectly. There is no evidence as to when the candidates for the Team Leaders roles were informed of the error.

•  Two more meetings were held with the ERC on 6 July 2018 and 26 July 2018. As observed at [74] of the February 2019 Decision, the ERC understood that the appointment of the Team Leader Roles would be further discussed to review the correct allocation of the selection points.

•  This did not occur, and on 30 July 2019, FACT determined to maintain the original appointments.

•  Clause 26.8 of the Agreement requires that the selection process will be open and transparent. The process in the present case and outcome was not open and transparent for the following reasons:

•  FACT was aware in March 2018 that the Tenure score in recruitment processes was not being applied correctly. A month later the Team Leaders were appointed. Had FACT acted in that period and reviewed the Team Leader process, the incorrect application of the Tenure would have been clear, and employees and the Union notified.

•  By 10 April 2018, senior management were aware of issues when applying the Tenure score. Curiously there was no review of the Team Leader scores and recent appointments. There is no evidence that the ERC or the Union were informed about issues with applications of Tenure scores.

•  There is no evidence when the ERC met with FACT on 8 May 2018, that the Respondent informed the ERC that there were issues with the application of the Tenure scores in other recruitment processes. This is in the context of complaints being made by candidates that there were issues with the process.

•  There were two further meetings with the ERC. During the second meeting on 26 July 2018, the ERC pressed for the three top candidates under the revised scores to be appointed.

•  The ERC members understood that the Team Leaders roles would be further discussed. This did not happen, and the ERC were informed by email on 7 August 2018 that management had made a decision to confirm the original outcome.

•  In the context of FACT, this is the first time it has determined to not apply the outcome of the Selection Criteria set out in the relevant enterprise agreements, that is, a significant issue for employees and the ERC.

[11] In relation to the reasons for FACT’s selection decision, the CFMMEU contends that:

•  The decision to “let the original selections stand” was not open and transparent, and the reasons given by the employer were neither sound nor objective.

•  There is no detail or reasons provided as to why the circumstances were unusual.

•  The performance scores are a subjective assessment of the candidates and form only one part of Selection Criteria that consists of other objective criteria. The overall merit of candidates is assessed by applying the Selection Criteria in total. In its determination to maintain the original Team Leader selections FACT’s reasons are founded purely on a subjective assessment of the employees.

•  Furthermore, Mr Sleath gave evidence at the Hearing that in management’s opinion, two of the three originally selected employees (Mr Gibbs and Mr Carmody) were better candidates based in part on their performance, and in part on management’s observations of the successful candidates performing the Team Leader roles: an opportunity to “try before you buy”.

•  The “try before you buy” approach applied by FACT is again a subjective assessment of an employee. More significantly, it is a fundamental departure from the selection process, and is not permitted under clause 26.10, the Selection Criteria, or any part of the Agreement

•  There is an obvious issue of unfairness to other candidates in the process who have not been given an opportunity to perform in the Team Role and be assessed by management

•  Finally, it is self-evident that the Tenure score at first instance was calculated incorrectly. As concluded at [113] of the February 2019 Decision, FACT is seeking to rely upon a discretion to maintain a decision that was “actually made on a different and incorrect basis”. The CFMMEU contends that in the face of such error, compounded by the fact that FACT had applied other Tenure scores incorrectly; the determination to uphold the original Team Leader appointments is unsound and unreasonable.

•  Again, a real issue of fairness arises for the employees whose scores through management error were applied incorrectly. This is in the context of Team Leader being a sought after position, and the error caused by management followed by the decision to uphold the original Team Leader appointment, causing those employees to miss an opportunity for promotion.

[12] As to the implications of the eligibility list of candidates arising from the original selection process, the CFMMEU contends that:

•  The parties agree that while the dispute is being determined, the appointments to the Team Leader roles of Mr Gibbs and Mr Carmondy are provisional.

•  On 13 May 2019, Mr Chris Gibbs was offered and accepted the position of supervisor, a position that is more senior to that of team leader. As of 14 May 2019, the team leader position held by Mr Gibbs on a provisional basis became vacant.

•  Clause 26.10, and clause 26.10.3.1 of the Agreement envisages an eligibility list subject to the application of the Selection Criteria.

•  Mr Darryn Evans was ranked 4th after the incorrect application of the tenure scores, and 2nd after applying the revised scores.

•  Consequently, Mr Evans should be appointed to the vacant Team Leader role provisionally held by Mr Gibbs. Further Ms Rosling, who was ranked third after the tenure scores were revised, should be appointed to the Team Leader role that remains in dispute.

[13] The CFMMEU submits this would be consistent with the application of provisions at clause 26.10, irrespective of the dispute between the parties in relation to the third team leader position.

[14] In final reply submissions, the CFMMEU contended that the February 2019 Decision was not the final determination of the matter and that the manner of FACT’s exercise of discretion is a question for final determination. In addition, the CFMMEU rejected the notion that it was seeking to “appeal” the earlier decision but rather, having regard to that decision at paragraph [108], “the exercise of discretion is limited by the detailed and prescriptive nature of the selection criteria and the Commission cannot be satisfied that in this present case (FACT) may exercise its discretion in the way it did.” 5

4.2 Flinders Adelaide Container Terminal Pty Ltd

[15] FACT contends that the Commission should order to the following effect:

•  Mr Carmody’s position be confirmed on the basis that “the discretion had been exercised by FACT in a timely manner when that process is considered in its entirety, and for which sound and objective reasons existed, he would have otherwise secured a team leader position”; and

•  The second position be given to Mr Evans who was ranked fourth in respect of the performance criteria after Mr Smitham, Mr Gibbs and Mr Carmody.

[16] FACT also advanced a position in the alternative and I will return to this shortly.

[17] FACT contends that the CFMMEU seeks, in effect, to “appeal” a finding in the February 2019 Decision and to advance propositions based on a misunderstanding of the 2017 EA. Rather, the Commission should now determine that in making the selection decisions, FACT as the employer:

•  Had sound objective reasons for the decision (which the Respondent says it did, including but not limited to the merit based scores considered in conjunction with tenure, and the Decision by this learned Commission did not find to the contrary);

•  Took into account and paid due regard to the outcome of the agreed selection process, including rankings (which the Respondent says it did, having complied with the process in its entirety and, when making its decision(s), considered each of the selection factors before making its final decision, and the decision by the Commission did not find to the contrary); and

•  Made the decision in an open and transparent manner (which the Respondent says it did given the consultation afforded to the union during the selection process or, in the alternative, now that these proceedings have ventilated matters to a significant extent, there can be no suggestion that the union and the employees concerned are not well aware of the basis and justification for the Respondent’s decision).

[18] FACT did recognise, that in the February 2019 Decision, the Commission did find error in the process but contends that this did not suggest that its exercise of the discretion itself was not sound or objective. It further contends that the only concerns raised by the Commission were the initial circumstances in which the exercise of the discretion first arose (being an unintentional error in the calculation of the tenure scores) and also the timing of the exercise of that discretion. In that regard it submits that the delay was short, in the context of the overall consultation process and that there was “a comprehensive and reasonable period of open and transparent consultation, before the final decision was actually made”, this was “the very definition of an ‘open and transparent’ process”.

[19] In the alternative, FACT contended that the Commission make an order to the effect that the provisional appointment held by Mr Carmody should cease and that FACT should conduct a fresh Selection Criteria process for the two available Team Leader positions “where FACT can exercise managerial discretion, in an open and transparent manner, within the limits identified in the Decision.” 6

5. Consideration

[20] At the outset, I observe that there are elements in each party’s case that seek to reargue matters considered and determined in the February 2019 Decision. The CFMMEU, in effect, seeks that the Commission apply the revised selection scores, retain the rankings produced, and determine that the appointments now be made on that basis, without any recognition of the particular and defined discretion found by the Commission. For its part, FACT, in effect, seeks a finding that it has already exercised the discretion found by the Commission and apply the original selection scores (after taking into account the staff movements that have occurred), despite the Commission’s finding that the process leading to the original scores and outcomes did not accord with the EA.

[21] Whilst it is open to the Commission to reconsider the issues, nothing that has been put has warranted me doing so. Accordingly, I will determine the dispute in line with the approach to the 2017 EA, and the findings made, as set out in the February 2019 Decision.

[22] As would be clear from that Decision, there were three Team Leader positions involved in the selection process under review. I found that one of the appointments, which was justified on both the original and revised selection scores (Mr Smitham) and supported by all parties, should not be disturbed. The parties have advanced their respective positions as to the final determination of this matter on that basis. Accordingly, the submissions currently before the Commission are primarily directed to who should be appointed to the two Team Leader positions (one which is currently vacant (not yet filled) and one which is held on a provisional basis by Mr Carmody).

[23] Without detracting from the detailed findings and observations set out in the February 2019 Decision, and the summary extract appearing earlier in this decision, paragraphs [108] to [114] of the February 2019 Decision remain apposite for present purposes.

[24] The present difficulty is whether to attempt to partially or wholly unscramble the “omelette” created by the events leading to this point, given the findings made in the February 2019 Decision, the time that has now elapsed, and the impact upon the parties, including the individual workers involved.

[25] I have carefully weighed the competing considerations and submissions in the context of the view that I have formed about the proper application of the 2017 EA. Amongst the considerations that are influential in reaching my final determination, I consider that:

•  The Commission should give effect to all of the elements of 2017 EA as found to constitute the proper application of that instrument and not just those selected by the parties to support their positions;

•  Although there is a strong basis for the corrected selection scores to be applied, it is inappropriate to assume that the proper application of the provision would have automatically led to the result now sought by the CFMMEU, given my findings that a discretion exists;

•  It is also inappropriate to assume that the same result as the provisional appointments would have arisen if the 2017 EA was properly applied given my findings that the original appointment process did not meet the requirements of the instrument and that any discretion to be exercised was not one that ignored the corrected selection scores and sought to retain a decision made on a different and incorrect basis;

•  The present appointment(s) remain on a provision basis and it is important that the final appointments be recognised as being legitimately made under the Agreement;

•  Some time has elapsed and there may well be changes in circumstances that could objectively affect the application of the Selection Criteria, scores of the individuals, or other objectively relevant factors; and

•  The Commission should, in determining the matter, seek to provide an outcome that reflects the integrity of the agreed provisions of the 2017 EA and fairness to all parties.

6. Conclusions and determination

[26] In all of the circumstances, I consider that FACT should now declare the two (contested) Team Leader positions vacant and recommence the full process to fill the relevant positions, and all parties should strictly apply the terms of the 2017 EA in the manner reflected in the February 2019 Decision.

[27] In terms of FACT’s discretion to make the final selection, I would emphasise that this must operate within the framework of the agreed and detailed terms of the 2017 EA. This would not properly involve the employer simply substituting or adding different criteria to the relevant selection scores and rankings produced by the correct application of clause 26 so as to, in effect, ignore that outcome.

[28] I determine accordingly.

COMMISSIONER

Final written submissions:

Construction, Forestry, Maritime, Mining and Energy Union, 5 and 26 June 2019.

Flinders Adelaide Container Terminal Pty Ltd, 20 June 2019.

Printed by authority of the Commonwealth Government Printer

<AE427747  PR709340>

1 [2018] FWCA 1738 on 23 March 2018.

 2   [2019] FWC 4.

 3   Agreed statement of Facts 4 June 2019.

 4   Final submissions of CFMMEU, 5 June 2019.

 5   Final submissions of the CFMMEU, 26 June 2019 at 17.

 6   Submissions of FACT, 20 June 2019 at 25.