Construction, Forestry, Maritime, Mining and Energy Union v OSM Australia Pty Ltd trading as OSM Australia

[2023] FWC 1406

[2023] FWC 1406

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009

s.739 - Application to deal with a dispute

Construction, Forestry, Maritime, Mining and Energy Union

v

OSM Australia Pty Ltd trading as OSM Australia

(C2023/284)

DEPUTY PRESIDENT BINET PERTH, 17 JULY 2023

Alleged dispute about any matters arising under the enterprise agreement and the NES;[s186(6)]

1. On 20 January 2023 the Construction, Forestry, Maritime, Mining and Energy Union (CFMMEU) filed an application (Application) pursuant to section 739 of Fair Work Act 2009 (Cth) (FW Act) with the Fair Work Commission (FWC).  The Application sought that the FWC deal with a dispute between the CFMMEU and OSM Australia Pty Ltd (OSM) in accordance with the dispute resolution procedure contained in Clause 10 of the OSM Australia Pty Ltd and MUA Offshore Oil and Gas Enterprise Agreement 2021 (Agreement).

1. The dispute concerns a requirement in clause 8.7 of the Agreement that OSM make every reasonable endeavour to maintain a minimum number of permanent employees during the life of the Agreement.

1. On 15 February 2023, the parties participated in a conciliation, but the issues in dispute could not be resolved.

1. Directions for the filing of materials in advance of a hearing to determine the Application were issued to the parties on 23 February 2023 (Directions).  The Application was listed for hearing in Perth on 14 July 2023 (Hearing).

Permission to be represented

1. The Directions invited the parties to make submissions as to whether the FWC should grant permission to the parties to be represented. A determination of this issue is necessary to ensure that the manner in which any hearing is conducted is fair and just.[1]

1. Neither the CFMMEU nor OSM sought permission to be represented at the Hearing.

1. At the Hearing, Ms Sumayyah Sayed (Ms Sayed) appeared on behalf of the CFMMEU and Mr Clarence Paul (Mr Paul) appeared on behalf of OSM.

Evidence

1. In advance of the Hearing the CFMMEU filed a witness statement of Ms Sayed, setting out her evidence in chief.[2] Ms Sayed is a lawyer employed by WA Divisional Branch of the CFMMEU Maritime Union of Australia - CFMMEU.  Ms Sayed gave further evidence in chief at the Hearing and was cross examined by Mr Paul. 

1. In advance of the Hearing OSM filed a witness statement of Ms Renae Hesford (Ms Hesford) setting out her evidence in chief.[3]  Ms Hesford is the general manager OSM People.  Ms Hesford gave further evidence in chief at the Hearing and was cross examined by Ms Sayed. 

1. The parties jointly prepared and filed a digital court book and a supplementary digital court book containing the evidence and submissions of the parties. 

1. In reaching my decision I have considered all the submissions made and the evidence tendered by the parties, even if not expressly referred to in these reasons for decision.

Background

1. OSM is a ship management and maritime services provider. OSM specialise in the supply of marine and catering personnel to the oil and gas industry.[4]

1. OSM commenced its business in Australia as part of a joint venture with Svitzer Australia Pty Ltd (Svitzer).  The joint venture arrangement ceased on 28 February 2018. [5]

1. The Agreement commenced operation on 9 June 2021.  The nominal expiry date of the Agreement was 10 October 2022.  

1. The Agreement covers OSM, the CFMMEU and employees employed by OSM to perform work in the classifications of Chief Integrated Rating, Integrated Rating, Chief Cook, Cook, Chief Steward, Steward, Bosun’s Mate, Provisional Integrated Rating, AB/Greaser (IR), Crane Operator (Employees).

1. Employees covered by the Agreement. are, or are eligible to be, members of the Maritime Union of Australia Division of the CFMMEU (MUA).[6]

1. Clause 8 of the Agreement provides for the establishment of a consultative committee and contains a commitment by OSM to engage a proportion of its workforce on a permanent basis as follows:

“8. 7 The Employer will make every reasonable endeavour to maintain a minimum rate of permanency through the life of this Agreement of 70% of the minimum number of Employees in the five year period prior to the commencement of this Agreement (the Permanency Benchmark).

8.8 The maintenance of the Permanency Benchmark will be managed through the Consultative Committee, taking into account the Employer's business model and the nature and duration of a particular project.”

1. On 17 September 2021, a meeting of the consultative committee was held during which the issue of permanency was discussed. At the meeting OSM confirmed that it currently employed nine Employees covered by the Agreement on a permanent basis. OSM indicated that had considered whether it could make any offers of permanent employment to other Agreement covered casual Employees but had determined that it could not because it did not at that time have any confirmed contracts beyond February 2022.[7]

1. The meeting minute records the discussions as follows:[8]

“Permanent Casual Ratio

1. Current employee numbers
2. TIR Births
3. Red days
4. Next intake of permanent employees as per EBA there is current
entitlement,
5. Replacement of permanent position that is vacant
6. New casual conversion laws

OSM Response

R – 7 (perm). Cook – 2 (perm)
IR - ** (casual). Cook - ** (casual)
TIR – nil. No plans for TIR placements at this stage.
Red days – as per the above.
OSM are currently reviewing the requirements for additional permanent crew.
At this stage there is no confirmed work / contact past Feb 2022.
OSM note that the team would like to see a replacement for IR to replace IM who recently retired as well as more permanent crew as per the enterprise agreement wording. OSM trying to confirm status of contracts before a decision of additional permanent crew is made.”

1. The meeting minutes record that Ms Hesford attending the meeting on behalf of OSM and that Mr George Gakis (Mr Gakis), an Organiser from the MUA, attended the meeting on behalf of the MUA.[9]

1. Ms Hesford says Mr Gakis accepted that it was not reasonable for the number of permanent employees to increase pursuant to clause 8 until the OSM secured more work.[10]

1. It is agreed by the parties that the CFMMEU complied with the provisions of the dispute resolution procedure found at clause 10 of the Agreement before filing the Application. [11]

Consideration

1. The power of the FWC to deal with disputes is set out in section 595 of the FW Act. Section 595 provides that the FWC may only deal with a dispute if it is expressly authorised to do so under, or in accordance with, a provision of the FW Act.

1. The Application was made pursuant to section 739 of the FW Act.

1. Section 739 of the FW Act allows the FWC to deal with a dispute about an agreement if the agreement includes a term containing a dispute resolution procedure.

1. The Agreement contains a dispute resolution procedure of the nature contemplated by section 739 at clause 10. Clause 10 provides as follows:

“10. DISPUTE RESOLUTION PROCEDURE

10.1     When any industrial dispute arises, including about a matter arising under this Agreement, the NES or any other matter pertaining to the employment relationship, this clause sets out the procedure to resolve the dispute.

Step 1:

Where a matter arises when the Employee(s) are on board a Vessel, the matter will in the first instance be discussed between the Employee(s) and the Master.
Where a matter arises when the Employee(s) are not on board a Vessel, the matter will in the first instance be discussed between the Employee(s) and the Employer's nominated representative.

If the matter remains unresolved:

Step 2:
The matter will be referred for discussion between the Employee, the Employee's Union delegate or other nominated representative and the Master and/or the Employer.

If the matter remains unresolved:

Step 3:

The matter will be referred for discussion between the appropriate Senior Union Official or other nominated representative and the Employer's Human Resources or Industrial Relations Manager.
If the matter remains unresolved or if Steps 1-3 are not resolved within 7 days of the initiation of Step 1:

Step 4:

In the event that the preceding steps have failed to resolve the matter and/or dispute, any person bound/covered by this Agreement or nominated representative may refer the dispute to the FWC for conciliation and/or arbitration pursuant to Section 739 and Section 595 of the Fair Work Act.

10.2     Where the matter remains unresolved, the FWC may deal with the dispute in two stages:

(a)   The FWC will first attempt to resolve the dispute as it considers appropriate, including by mediation, conciliation, expressing an opinion or making a recommendation; and

(b)   If the FWC is unable to resolve the dispute at the first stage, the FWC may then:

(i)        Arbitrate the dispute; and

(ii)       Make a determination that is binding on both of the parties.

10.3     While the parties to the dispute are trying to resolve the dispute using the procedures in this clause:

(a)   An Employee must continue to perform his or her work as he or she would normally,

(b)   unless he or she has a reasonable concern about an imminent risk to his or her health or safety; and

(c)   An Employee must comply with a direction given by the Employer to perform other available work at the same workplace, or at another workplace, unless:

(i)        The work is not safe; or

(ii)       Applicable occupational health and safety legislation would not permit the work performed.

10.4     The parties to the dispute agree to be bound by a decision made by the FWC in accordance with this clause, but note that a decision of a single member of the FWC can be appealed to a Full Bench of the FWC.

10.5     An Employee who is party to the dispute or the Employer may appoint another person, organisation or association to accompany and/or represent them for the purposes of the procedures in this clause.

10.6     Employees who are involved in the dispute during their off swing or off duty time are not entitled to any additional payments. Employees who are involved in the dispute whilst on duty, can only take time off with pay with the approval of the Master and for up to two hours per shift. Employees who are required as a witness in an arbitration will have access to on board teleconferencing facilities, where such facilities are available and working. Employees will not be transported from the vessel to any meetings to participate, unless directed by the FWC.

1. The FWC may deal with a dispute only on application by a party to the dispute.[12] 

1. There is no dispute[13], and I am satisfied, that the issues in dispute between the parties fall within the scope of clause 10 of the Agreement.

1. There is no dispute[14] and I am satisfied that the MUA has complied with the procedural steps contained in clause 10 of the Agreement.

1. I am satisfied that the MUA has standing to make the Application and that I have the jurisdiction to determine the dispute.

1. In dealing with the dispute the FWC can not exercise powers limited by the term.[15] If, in accordance with the term, the parties have agreed that the FWC may arbitrate (however described) the dispute, the FWC may do so. The FWC must not make a decision that is inconsistent with the FW Act or the Agreement.[16]

1. In Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union v ALS Industrial Australia Pty Ltd[17] the Full Federal Court said at [70] to [71] that the powers and functions of the FWC identified in sections 577, 578, 590, 593, 595, 677 and 678 of the FW Act are available to the FWC when conducting a private arbitration.

1. Relevantly sections 577 and 578 of the FW Act provide as follows:

“s.577 Performance of functions etc. by the FWC

The FWC must perform its functions and exercise its powers in a manner that:
(a)       is fair and just; and
(b)       is quick, informal and avoids unnecessary technicalities; and
(c)       is open and transparent; and
(d)       promotes harmonious and cooperative workplace relations.”

“s.578 Matters the FWC must take into account in performing functions etc.

In performing functions or exercising powers, in relation to a matter, under a part of this Act (including this Part), the FWC must take into account:
(a)       the objects of this Act, and any objects of the part of this Act; and
(b)       equity, good conscience and the merits of the matter; …”

1. Clause 8 of the Agreement provides for the establishment of a consultative committee and to a commitment by OSM to engage a proportion of its workforce on a permanent basis as follows:

“8. 7 The Employer will make every reasonable endeavour to maintain a minimum rate of permanency through the life of this Agreement of 70% of the minimum number of Employees in the five year period prior to the commencement of this Agreement (the Permanency Benchmark).

8.8 The maintenance of the Permanency Benchmark will be managed through the Consultative Committee, taking into account the Employer's business model and the nature and duration of a particular project.”

1. The parties are in dispute as to what the phrase ‘make every reasonable endeavour’ means and whether OSM has made every reasonable endeavour to maintain the Permanency Benchmark.

1. The Full Bench, in Princess Linen Services Pty Ltd v United Workers’ Union[18] at [15] and [16] of its decision, recently confirmed the principles of interpretation of enterprise agreements as follows:

“The most succinct expression of the correct approach is that articulated by the Federal Court Full Court in WorkPac Pty Ltd v Skene as follows (citations omitted):

“[197] The starting point for interpretation of an enterprise agreement is the ordinary meaning of the words, read as a whole and in context. The interpretation “… turns on the language of the particular agreement, understood in the light of its industrial context and purpose…”. The words are not to be interpreted in a vacuum divorced from industrial realities; rather, industrial agreements are made for various industries in the light of the customs and working conditions of each, and they are frequently couched in terms intelligible to the parties but without the careful attention to form and draftsmanship that one expects to find in an Act of Parliament. To similar effect, it has been said that the framers of such documents were likely of a “practical bent of mind” and may well have been more concerned with expressing an intention in a way likely to be understood in the relevant industry rather than with legal niceties and jargon, so that a purposive approach to interpretation is appropriate and a narrow or pedantic approach is misplaced.”

The Full Court observations are consistent with the approach taken by the Full Bench of this Commission in Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union known as the Australian Manufacturing Workers Union (AMWU) v Berri Pty Limited (Berri).”

1. It is justifiable to read an agreement to give effect to its evident purpose, having regard to such context, despite mere inconsistencies or infelicities of expression which might tend to some other reading. A Court or Tribunal should not adopt a narrow or pedantic approach to the interpretation of enterprise agreements.[19]

1. There is no dispute that:

a.The five year period prior to the commencement of the Agreement is 8 June 2016 to 8 June 2021 (Relevant Period).

2. During the Relevant Period the minimum number of persons employed for the purposes of the Permanency Benchmark was 25 on 10 October 2016.
3. The Permanency Benchmark is 70% of 25 or 17.5.
4. OSM did not satisfy the Permanency Benchmark for some or all of the nominal life of the Agreement.

1. The MUA did not file any written submissions, identify any relevant authorities or make any oral submissions as to the meaning of the phrase ‘will make every reasonable endeavour’.  The MUA did not call any evidence from those who negotiated the Agreement or voted to approve the Agreement as to what the phrase was intended by the parties to the Agreement to mean. 

1. The meaning of the phrase ‘reasonable endeavours’ was considered by the            Supreme Court of Western Australia in Electricity GeneraNon CorporaNon t/as Verve Energy v Woodside Energy Ltd[20] who found as follows:

“… whilst the phrase 'reasonable endeavours', like the term 'best endeavours' must take its meaning from the particular provision and its setting within the broader contractual context in which the words appear, prima facie, it is apt to signify an obligation to do all that can reasonably be done in the circumstances, but no more, to achieve the contractual object:…”[21]

1. The MUA assert that OSM has not made every reasonable endeavour to maintain the Permanency Benchmark.  It was not until its closing submissions that MUA identified the grounds upon which it made this assertion.  Namely, that there was no evidence that OSM advertised for permanent employees during the life of the Agreement (and that therefore it had not used its best endeavours to offer permanent employment).

1. Secondly, the MUA submitted that as OSM had asserted at the early stages of these proceedings that it had met the Permanency Benchmark that it could not have being making endeavours to maintain the Permanency Benchmark because the benchmark it was trying to achieve was less than the actual Permanency Benchmark.

1. I note that it was not put to Ms Hesford in cross examination that OSM had not sought to hire any permanent employees and therefore could not have being using its ‘best endeavours’. 

1. OSM assert that it has made every reasonable endeavour to maintain the Permanency Benchmark and was unable to do so while it had insufficient work to sustain the employment of additional permanent employees.

1. Clause 8.7 must be read within the context of the clause it which it appears, the Agreement in which it appears and the industrial environment in which the Agreement was made.  When this context is considered, it is clear that the parties contemplated that the requirement to maintain the Permanency Benchmark was not absolute and was subject to the ability of OSM to sustain that number of permanent employees.

1. For example, clause 8 in which subclause 8.7 sits, contains sub clause 8.8 which provides that:

“The maintenance of the Permanency Benchmark will be managed through the Consultative Committee, taking into account the Employer's business model and the nature and duration of a particular project.”

1. See also clause 5 – Objects of the Agreement which provides that:

“5.1     This Agreement represents a commitment between the Employer and the Employees to operate their Vessels to a high level of professionalism in a viable and competitive manner;
…
5.2      In developing this Agreement, the Employer and the Employees recognise and adopt the
following objectives:

(a) An ongoing process to achieve overall cost reductions and improvement in the viability of the business;

…
5.3      The Employer and the Employees are committed to ensuring the ongoing viability of the employment of local seafarers in the Maritime Offshore Oil and Gas Industry”

1. These provisions reflect the industrial context in which the Agreement was made between the parties namely that:

a.the work of OSM was subject to the demands of its clients which were often of a short term project nature;

2. labour demands were highly variable hence a permanency benchmark based on:

i.employment numbers over a five year period; and

ii.the lowest number of employees rather than the average number of employees

3. the nature of the demand for its services did not commercially entice the business to maintain a large permanent workforce hence the Agreement seeking to impose obligations on it to increase the proportion of permanent employees.

1. In this context making every reasonable endeavour could not have been contemplated by the parties to require OSM to offer permanency to Employees in circumstances in which the work flows of the business would not sustain permanent employment.

1. It would appear from the evidence of Ms Hesford that Mr Gakis pragmatically accepted these realities at the 2021 consultative committee meeting.  It is relevant to note that Mr Gakis was not called as a witness to challenge Ms Hesford’s evidence in this regard.

1. No evidence was called by the MUA which might establish that there were other endeavours which OSM could have or should have undertaken to discharge its obligations under the Agreement.

DEPUTY PRESIDENT

Appearances:

Ms S Sayed, for the Applicant.
Mr C Paul, for the Respondent.

Hearing details:

2023
PERTH
14 JULY

[1] Warrell v Walton (2013) 233 IR 335, 341 [22].

[2] Digital Court Book (DCB) 19-20.

[3] Ibid 112-166.

[4] Ibid 113.

[5] Ibid.

[6] Ibid 13.

[7] Ibid 159.

[8] Ibid 160.

[9] Ibid 159.

[10] Ibid 116, see also Ms Hesford’s oral evidence at the Hearing.

[11] Ibid 13.

[12] Ibid; Fair Work Act 2009 (Cth) s.739(6).

[13] DCB (n 2) 13.

[14] Ibid.

[15] Fair Work Act 2009 (Cth) s.739(3).

[16] Ibid S.739(5).

[17] [2015] FCAFC 123; 235 FCR 305.

[18] [2021] FWCFB 1903.

[19] See Kucks v CSR Ltd (1996) 66 IR 182, 184; WorkPac Pty Ltd v Skene [2018] FCAFC 131 at [197]; Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union' known as the Australian Manufacturing Workers Union (AMWU) v Berri Pty Ltd[2017] FWCFB 3005 at [114].

[20] [2013] WASCA 36 (Woodside Case).  

[21] Ibid at [124].

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