Construction, Forestry, Mining and Energy Union v Anglo Coal (Dawson Services) Pty Ltd

[2013] FWC 10241

[2013] FWC 10241

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.739 - Application to deal with a dispute

Construction, Forestry, Mining and Energy Union
v
Anglo Coal (Dawson Services) Pty Ltd
(C2013/1798)

Coal industry
DEPUTY PRESIDENT ASBURY	BRISBANE, 30 DECEMBER 2013

Application to deal with a dispute - redundancies.

[1] The following decision, now edited, was issued during proceedings on 21 November 2013.

Background

[2] The Construction, Forestry, Mining and Energy Union (CFMEU) applies under s.739 of the Fair Work Act 2009 (the Act) for the Fair Work Commission to deal with a dispute in accordance with a dispute settlement procedure in the Dawson Mines Collective Enterprise Agreement 2010 (the Agreement). The dispute relates to redundancies proposed at the Dawson Mine to be implemented by Anglo Coal (Dawson Services) Pty Ltd, from Friday 22 November 2013. Given the urgency of the matter, the CFMEU requested that the matter proceed directly to step 5 in the dispute settlement procedure.

[3] The application seeks relief in the following terms:

• An agreed moratorium on the issuing of redundancy notices to employees pending further discussions between the parties for a specified period; or



• An interim order issued by the Commission to the same effect; or



• A binding determination of the Commission as to the steps the employer is required to take in the present circumstances in satisfaction of its obligations under clause 4.3 of the Agreement.

[4] The CFMEU also sought an Order under s.531 of the Act in relation to an alleged failure on the part of Anglo to notify or consult registered employee associations about the dismissals.

[5] At a conference conducted in the Commission on Monday 18 November 2013, the parties agreed that the matter would be arbitrated by the Commission and that the question for arbitration is:

"In respect to the intention of  Anglo Coal (Dawson Services) Pty Ltd  ('the company') to implement redundancies amongst production employees at the Dawson mine on the following basis:

1. A total of a further 180 operator roles to be removed from site;

2. 111 direct employees to be made redundant (of which 28 are to be voluntary redundancies); and

3. A further 69 contractor roles to be removed from site;

Has the company satisfied the obligations imposed on it under clause 4.2 of the Dawson Mines Collective Enterprise Agreement 2010 having regard to:

(a) the proportion of voluntary redundancies it proposes; and

(b) the contractor positions to be shed?"

[6] The parties also agreed that the arbitration in relation to this question would determine both the application under s.739 and the application under s.531.

[7] Clause 4.2 of the Agreement provides that:

“4.2 Redundancies

4.2.1 In the event that Dawson determines that redundancies are necessary, Dawson will determine its requirements and the number of employees it requires in the affected areas. In doing so, Dawson will attempt to minimise the impact on the permanent workforce.

4.2.2 In any redundancy process, Dawson will seek applications for voluntary redundancies from employees in the affected areas. Dawson will allow a minimum of 25% of the total number of redundancies to be from the volunteer pool. While Dawson will use best endeavours to accommodate volunteers, applications for voluntary redundancy will be considered by Dawson on a case by case basis and will be accepted in line with business needs.

4.2.3 An employee who is made redundant will be paid the statutory period of notice required under the Act; or paid in lieu at the employee’s normal salary payment as prescribed in Clause 2.7.

4.2.4 In addition to the notice payment in accordance with clause 4.2.3 of this Agreement, employees will also be entitled to a redundancy payment, in accordance with the following:

(a) three (3) weeks’ normal salary payment as prescribed in Clause 2.7 for each completed year of service; or

(b) three (3) weeks’ normal salary payment as prescribed in Clause 2.7 if an employee’s service is less than one (1) completed year.”

[8] It is also relevant that clause 2.8.5 provides that Dawson can engage and use contractors on any work as required, to meet the needs of the business.

The proposed redundancies

[9] Mr Puna’s evidence about the economic performance of the mine is not disputed. That evidence is that in August 2013 Dawson Mine was forecasting an operating loss of $153 million, which has been reforecast at $186 million. This equates to a loss of $1 million per day and a total of $30 million in the month of October. Mr Puna agreed that the circumstances of the losses do not relate only to labour costs.

[10] As a result of the economic performance of the mine, a review of operations was conducted and four options for restructuring were considered. The option that was chosen provided significant productivity improvements while minimising the impact on the workforce through redundancies. Option 3 entails:

• Removal of three digging units;



• Removal of all hire equipment;



• Identification of the production areas of the mine that can potentially be mined at a profit;



• Reduction of managerial and supervisory staff positions by 30; and

[11] This option provided for 180 operators to be retrenched.

[12] According to Mr Puna, it was critical to productivity improvements needed for the mine to survive, that the retention of the best operators was prioritised. Dawson management decided that operators would be selected to redundancy by means of a performance assessment process that would rank each operator from a low of 1 to a high of 5. This process was applied to employees of Dawson and to employees of two contractors to the mine - Leightons and WorkPac.

[13] The facts about the manner in which Anglo has gone about implementing the proposed redundancies are not in dispute.

Construction of industrial instruments

[14] The approach generally adopted by the Commission to construction of industrial instruments can be summarised as follows:

• A term in an agreement must be read in context having regard to the agreement as a whole and the legislative background against which it was made; 1

• If the terms of an agreement are clear and unambiguous then the agreement must be interpreted in accordance with those terms. 2

• A narrow pedantic approach to construction should not be taken given that agreements are drafted by persons of a practical bent concerned with expressing intention in ways likely to be understood in the context of the relevant industry or industrial relations environment in which they operate; 3

• Agreements are concerned with matters such as settling disputes present and future, ensuring fair and just treatment and promoting harmony in the workplace and should be construed in a way that operates fairly to both parties if such a construction is reasonably available; 4
• Meanings which avoid inconvenience or injustice may reasonably be strained for; 5
• The nature of an agreement, the manner of its expression, the context in which it operates and the industrial purpose it serves combine to suggest that a meaning should be given that contributes to a sensible industrial outcome. 6

[15] A relevant presumption of construction which is relevant in this case, is that general provisions do not control or derogate from specific provisions.

Conclusions

[16] After considering all of the evidence and the material that the parties have put before me, I have concluded that clause 4.2.1 of the agreement gives Dawson the right to determine that redundancies are necessary, its requirements, and the number of employees it requires in the affected areas. The right for Dawson to determine its requirements, includes the right to determine matters such as whether it wishes to retain employees of contractors or its own employees, and the skills, qualifications, attitudes and aptitudes of the employees it wishes to retain.

[17] The clause also stipulates that in determining that redundancies are necessary, and its requirements in relation to them, Dawson will attempt to minimise the impact on the permanent workforce. The obligation Dawson has to minimise the impact of redundancies on the permanent workforce does not override Dawson's right to determine its requirements in relation to the matters set out above. Clause 4.2.2 then goes on to provide that:

“In determining that redundancy is necessary and its requirements, that Dawson will minimise the impact on the permanent workforce by seeking applications for voluntary redundancies from employees in affected areas.”

[18] In relation to voluntary redundancies, the clause requires that Dawson allow a minimum of 25 per cent of the total redundancies to be from the volunteer pool. In filling that quota, Dawson maintains the right to consider applications for voluntary redundancy on a case by case basis, and to accept volunteers in line with business needs, while using its best endeavours to accommodate volunteers. The provisions in relation to voluntary redundancy in clause 4.2.2 are:

“In addition to the obligation imposed by clause 4.2.1 to minimise the impact of redundancies on its permanent workforce, those provisions in clause 4.2.2 are also expressed as a minimum requirement and must be read in the context of clause 4.2.1 and the right it provides to Dawson to determine its requirements.”

[19] I accept that the term, "attempt to minimise," in clause 4.2.1 should be given its ordinary meaning, and that the clause requires Dawson to make an effort to try to reduce to the smallest possible amount, the impact of redundancies on its permanent workforce. However, the clause also gives Dawson the right to determine its requirements. The term "determine" means that Dawson can settle or decide those requirements by authoritative decision. Any obligation to minimise the impact of redundancies on its permanent workforce is governed by the right to determine its requirements. In my view, this provision puts the decision about Dawson's requirements solely within its discretion. This construction is consistent with the plain meaning of the terms in clause 4.2:

“While Dawson has an obligation to minimise the effect of redundancies on its permanent workforce, this is balanced against the company's right to determine its requirements in relation to how, and by whom, it wishes work to be performed after redundancies are affected.”

[20] It is also consistent with the terms of the agreement read as a whole. In this regard, clause 2.8.5 provides that Dawson can engage and use contractors on any work as required, to meet the needs of the business. To construe clause 4.2.1 as requiring Dawson to give absolute preference to its permanent workforce in relation to redundancies, regardless of the needs of the business, would be inconsistent with the right to engage and use contractors in accordance with clause 2.8.5 and the right for Dawson to determine its requirements in clause 4.2.1.

[21] Further, this construction is consistent with the context in which the agreement was made. Ms Drinkwater's evidence in relation to the negotiations for the agreement establishes that the CFMEU sought a clause that required Dawson to first retrench all contractors, and then to call for volunteers, before retrenching its permanent workforce.

[22] The clause that was included in the agreement is obviously a compromise, and should not be construed in a way that requires Dawson to give preference to its permanent employees in redundancy situations, notwithstanding its business requirements. I am also of the view that the disputes procedure in the agreement operates so that the genuineness and reasonableness of the requirements determined by Dawson can be tested, and the question of whether its obligations have been met can also be tested using such considerations.

[23] The principle that the Commission should not stand in the shoes of the employer and determine whether or not the decision made by the employer was one that the Commission would make, is relevant in cases where a business decision is made by an employer in accordance with its rights to make such a decision as set out in an enterprise agreement.

[24] What is required in this case is for the Commission to determine whether the process followed by Dawson was consistent with its rights and obligations under the agreement. With respect to the redundancy process, it is apparent from the evidence and the material before me that Dawson considered four options to restructure its operations, and that those options included the maintenance of the status quo. That was not an option given the significant losses the mine is making, which are not in dispute. Of the viable options, Dawson chose the option with the least retrenchment impact. The decision by Dawson as to its requirements was that it is critical to productivity improvements needed for the mine to survive, that the best operators are retained and that this should be given priority.

[25] Dawson management decided that the operators would be selected for redundancy by means of a performance assessment process that would rank each operator from a lower 1 to a higher 5. This process was applied to employees of Dawson, and to employees of two contractors to the mine, Leightons and WorkPac. Dawson also determined that only operators with a score of 3 and above would be retained in employment after the redundancies were affected. I accept that the determination that both its permanent workforce and contractors should be ranked to decide the employees in a pool of operators who were to be retained in employment, and who were determined to be the best operators with a score of 3 and above, is a determination that Dawson is entitled to make pursuant to clause 4.2.1 of the agreement. I also accept that Dawson has the right to determine that it wishes to retain operators with a score of 3 and above.

[26] There was no real attack on the assessment process. Some issues were taken with the inclusion of attendance, and whether that criteria could fairly be applied to contractor employees who are casual, as opposed to permanent employees who are not. I am satisfied that this criteria was included under the heading of Disciplinary Matters and not as a simple calculation of the number of days that an employee was absent from the workplace. There is no basis upon which I could find that the assessment process was unfair, or that it was applied in a manner that is inconsistent with Dawson's obligations under the agreement.

[27] I am also satisfied on the evidence before me that the assessment process was explained to members of the SBU and has been followed in other operations of Anglo. When the evidence about the process that was followed by Dawson is considered, it is clear that as it evolved, Dawson took steps to minimise the impact of redundancies on its permanent workforce. Dawson increased the number of applications for voluntary redundancy that it accepted from 28 to 31. This figure represents 28 per cent of total redundancies and exceeds the 25 per cent minimum stipulated in clause 4.2.2. The company also opened voluntary redundancy to dragline operators, notwithstanding that the restructuring option it had selected did not involve the reduction in draglines.

[28] There is also evidence that consideration was given to other proposals put forward by the CFMEU, although these were not accepted by the company. Preference was given to members of Dawson's permanent workforce who scored 3 and above, over contractor employees who also scored 3 and above. In such cases, Dawson selected contractor employees to be removed from the workforce. In this regard, an additional 45 Leightons employees and 12 WorkPac employees were removed in addition to those from both contractors who had scored below 3 in the assessment process. At the conclusion of the assessment process, Dawson has determined to retain 41 contractor employees of WorkPac who are integrated into the permanent workforce, and work under the supervision of Dawson supervisory staff.

[29] Mr Puna maintains that this number cannot be cut further, because the remaining WorkPac employees are casual employees and provide flexibility in terms of the capacity of Dawson to stand them down when work is not available. I have some reservations that this matter was not included in Mr Puna's evidence-in-chief, and emerged only when he was cross-examined. However, I also accept that witness statements were prepared in a very short space of time, and that this flexibility is a valid consideration which is consistent with Dawson's rights under clause 4.2.1 of the agreement to determine its requirements. It is also the case that the pool of Dawson's permanent workforce who scored 3 and above is exhausted, and that to retain any additional members of the permanent workforce would result in operators who are employees of contractors, and who scored 3 and above in the assessment process, being replaced with operators who did not.

[30] The question is not whether Dawson could have done more to retain its permanent workforce, but whether what it has done satisfies its obligations under clause 4.2 of the agreement. I accept that the company could have done more to retain its permanent workforce. At the end of the process where 41 WorkPac operators were to be retained, the company could have considered whether at least some of those operators could be replaced by members of its permanent workforce who were assessed as being at higher increments of level 2. Especially given that there is no evidence that any of those employees were subject to a performance management process. Even at this stage such an assessment could be made.

[31] However, I also accept that the company has satisfied the obligations imposed on it by clause 4.2 of the agreement, having regard to the proportion of voluntary redundancies it proposes, and the contractor positions to be shared.

[32] Accordingly, I have determined that the answer to the question is yes.

DEPUTY PRESIDENT

Appearances:

Mr A. Bukarica and Mr A. Dallas on behalf of the CFMEU.

Mr J Murdoch of Counsel instructed by Ashurst on behalf of the Respondent.

Hearing details:

2013.

Brisbane:

November 20; 21.

 1   Amcor Ltd v Contstruction, Forestry, Mining and Energy Union (2005) 222 CLR 241 at 253 per Gummow, Hayne and Heydon JJ.

 2   Re Clothing Trades Award (1950) 68 CAR 597.

 3   Kucks v CSR Limited (1996) 66 IR 182 at 184.

 4   Amcor op.cit. at 283 per Callinan J.

 5   Kucks v CSR op.cit. at 184.

 6   Amcor op.cit. at 270 per Kirby J.

Printed by authority of the Commonwealth Government Printer

<Price code C, AE880822  PR546380>