Construction, Forestry, Mining and Energy Union v Asurco Contracting Pty Ltd

[2010] FWA 5335

Note: An appeal pursuant to s.604 (C2010/4458) was lodged against this decision - refer to Full Bench decision dated 18 August 2010 [[2010] FWAFB 6180] for result of appeal.

[2010] FWA 5335

FAIR WORK AUSTRALIA

DECISION

Fair Work Act 2009
s.437 - Application for a protected action ballot order

Construction, Forestry, Mining and Energy Union
v
Asurco Contracting Pty Ltd
(B2010/3188)

DEPUTY PRESIDENT BARTEL ADELAIDE, 19 JULY 2010

Proposed protected action ballot by employees of Asurco Contracting Pty Ltd.

[1] This decision concerns an application by the Construction, Forestry, Mining and Energy Union (CFMEU) for a protected action ballot order pursuant to s. 437 of the Fair Work Act 2009 (the FW Act).

[2] The relevant employees to be balloted are those employees of Asurco Contracting Pty Ltd (the employer or Asurco) for whom the CFMEU is the bargaining representative and who are currently covered by the Asurco Contracting Pty Ltd Collective Bargaining Agreement 2007.

[3] The CFMEU relied on a written statement from Michael McDemott,¹ CFMEU Organiser, who has been involved in the negotiations as bargaining representative of employees to be covered by the proposed agreement. Asurco relied on a written statement from Des Pawelski,² Managing Director who has similarly been involved in the negotiations. Two documents were attached to the statement of Mr Pawelski: the first was a copy of his notes from a meeting with the CFMEU on 4 March 2010 and is not contentious. The second attachment, Annexure B, contains clauses sought by the CFMEU in relation to the engagement of independent contractors. This matter is the source of some of the grounds on which Asurco opposes the granting of the protected action ballot and will be discussed shortly.

[4] Neither Mr McDermott nor Mr Pawelski were cross-examined. The facts of the negotiations between the parties are broadly agreed – the parties have met on at least six occasions in the period March to June 2010, inclusive, during the course of which both parties have compromised on their initial wages positions. As at the date of the hearing on 12 July 2010, the outstanding issues in dispute include the picnic day, restriction on the Building Industry Redundancy and Superannuation Trust (BIRST), wage rates and supplementary labour.

Submissions

[5] Mr Earls, of the Master Builders Association (MBA) on behalf of the employer, opposed the granting of the order sought by the CFMEU on the basis that the union was not genuinely trying to reach agreement with the employer.

[6] Section 443 of the FW Act prescribes, inter alia, the circumstances in which FWA must make a protected action ballot order. The relevant subsections provide:

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

…

(5) …”

[7] The grounds on which Mr Earls argues that the CFMEU are not genuinely trying to reach agreement can be summarised as follows. Firstly it is submitted that the demands are not capable of being agreed to by the Asurco in the context of the competitive environment in which it operates. Acceding to the CFMEU demands was said to place Asurco in a position where its labour costs would be significantly higher than its competitors. In the alternative, Mr Earls argued that the CFMEU’s demands are in the nature of ambit claims in which case the major claims at least have not been clearly articulated. This was said to be a requirement in order to be genuinely trying to reach agreement, and Mr Earls contended that Total Marine Services Pty Ltd v Maritime Union of Australia,³ (Total Marine) was authority for this proposition.

[8] Secondly Mr Earls argued that the CFMEU’s claim concerning supplementary labour and contractors (“the supplementary labour provisions”) was not a permitted matter as defined in s. 172(1) of the FW Act, which relevantly provides that:

“(1) An agreement (an enterprise agreement) that is about one or more of the following matters (the permitted matters) may be made in accordance with this Part:

(a) matters pertaining to the relationship between and employer that will be covered by the agreement and that employer’s employees who will be covered by the agreement;

(b) matters pertaining to the relationship between and employer or employers, and the employee organisation or employee organisations that will be covered by the agreement;

…

(d) …”

[9] Mr Earls relied on Australian Postal Corporation v Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union, (Australia Post) where it was confirmed that provisions restricting or qualifying the employer’s right to use independent contractors are not matters pertaining to the employment relationship.⁴

[10] The clauses sought by the CFMEU are in the following terms:

“19 EMPLOYMENT SECURITY, STAFFING LEVELS, MODE OF RECRUITMENT AND REPLACEMENT LABOUR

The employer recognises that in certain circumstances the use of contractors and labour hire may affect the job security of employees covered by this agreement.

19.1 USE OF CONTRACTORS

(a) If the company wishes to engage independent contractors to perform work that might be performed by current or future employees under this agreement, the company must first consult in good faith with potentially affected employees and their union.

(b) If, after consultation, the company decides to engage bona fide contractors, these contractors must be afforded the same terms and conditions of engagement (or terms no less favourable) as they would receive if they were engaged as employees under this agreement performing the same work. The use of sham sub-contracting arrangements would constitute a breach of this agreement.

19.2 SUPPLEMENTARY LABOUR HIRE

Where there is a need for supplementary labour to meet temporary/peak work requirements, such labour may be accessed from bona fide labour hire companies following consultation with the Joint Consultative Committee and/or workplace delegate. If labour hire is to be used the company shall ensure that any workers engaged through a supplementary/labour hire arrangement and who are under the direction and control of the company performing work that, had it been done by direct employees of the Company would have been covered by this Agreement, shall receive wages, allowances and conditions not less than those contained in this Agreement.”

[11] Finally Mr Earls opposed the granting of the protected action ballot order on the basis that the supplementary labour provisions that are sought by the CFMEU are unlawful. As I understand the argument put forward, it was contended that the supplementary labour provisions were objectionable terms⁵ because they require or have the effect of requiring a contravention of Part 3-1 of the FW Act, which deals with general protections.

[12] Mr Earls stated that if these provisions were agreed and the supplementary labour was entitled to the same wages as that paid to Asurco’s direct employees, the employer would be induced to take “adverse action” against an existing or prospective independent contractor and/or its employees, in breach of s 340(1) of the FW Act, which provides:

“(1) A person must not take adverse action against another person:

(a) because the other person

(i) has a workplace right; or

(ii) has, or has not, exercised a workplace right; or

(iii) proposes or proposes not to, or has at any time proposed or proposed not to, exercise a workplace right; or

(b) To prevent the exercise of a workplace right by the other person.”

[13] Mr Earls submitted that under the CFMEU’s supplementary labour provisions, independent contractors and their employees would be denied the benefit of their existing industrial instruments (the workplace right) and that an independent contractor may be denied a contract with Asurco if they refuse to pay their employees in accordance with the (proposed) agreement. This was said to constitute adverse action.⁶

[14] Mr Roberts, CFMEU Assistant Secretary appeared on behalf of the CFMEU. He stressed that the union was genuine in trying to reach agreement with the Asurco. Mr Roberts submitted that while Asurco now complains that the union is seeking wages in excess of that paid by its competitors, had the CFMEU pursued identical claims across the board it would stand accused of pursuing pattern bargaining.

[15] He stated that the claims were genuinely advanced by the CFMEU; were broadly consistent with that sought in negotiations in the industry; and that the CFMEU remains, “ready, willing and able” to enter into further negotiations with the employer.

[16] In addition, he submitted that the CFMEU had at all times acted in good faith and had reported back to its members at the conclusion of each negotiation session with Asurco. He submitted that the parties had reached a stalemate in negotiations and his members were pursuing their legitimate right to seek a ballot regarding industrial action in furtherance of their claims.

[17] Mr Roberts advised that the supplementary labour clauses now objected to by Asurco had been contained in several agreements approved by FWA.⁷

Consideration

[18] I will address the employer’s objections in the order set out above. It is an unusual submission to suggest that because a union is prepared to negotiate an outcome below its initial claim that it is not genuinely trying to reach agreement. In Total Marine, the union was held to be not genuinely trying to reach agreement specifically because it refused to articulate or negotiate a substantive claim with the employer.⁸

[19] In the present matter the CFMEU has articulated its claims and negotiated with the employer. That the outcome of the negotiations to date is not to the satisfaction of the employer does not bear on the genuineness of the CFMEU. The consequences of accepting the current demands on the competitive position of the employer is a consideration that most if not all employers will entertain in the course of negotiations for a new agreement and no doubt guides their negotiating strategy as it has in the present matter.

[20] The supplementary labour provisions as advanced by the CFMEU against Asurco are contained in identical or similar terms in a range of agreements approved by Fair Work Australia.⁹ Mr Earls submitted that the relevant clauses were not the subject of specific consideration in the respective approval decisions. This is a relevant point in so far as it goes to the weight that should attach to the fact of those approved clauses, if I were to make a determination on whether the supplementary labour provisions are permitted content. However, at the very least, the approval of the relevant agreements goes to the reasonableness of the CFMEU’s belief that the matters are permitted content.

[21] If a bargaining agent reasonably believes that the claims it is advancing at the time it seeks a protected action ballot order are only about permitted matters then that is sufficient to deal with any opposing claims that the provisions are not permitted.¹⁰ Whether a belief is reasonably held will depend on the circumstances of the case and the person concerned.¹¹ In the circumstances of this matter I find that the CFMEU has a reasonable belief that the supplementary labour provisions are permitted content.

[22] As to the argument that the supplementary labour provisions are unlawful, it is sufficient for the purposes of this decision to rely on the above finding. It is not the role of Fair Work Australia to make a determination on these issues in the context of an application for a protected action ballot order.¹² As the Full Bench stated in the second Australia Post Appeal decision;¹³

“To suggest that the time at which a union can commence to genuinely try to reach agreement with an employer is the time at which it makes a claim that in Fair Work Australia’s view does not contain prohibited content is to inject an unwarranted degree of artificiality and technicality into what is intended to be ‘a fair, simple and democratic process to allow a bargaining representative to determine whether employees wish to engage in particular protected industrial action for a proposed enterprise agreement.’”14

[23] The Explanatory Memorandum confirms that the process established under the FW Act for obtaining protected action ballot orders is not intended to delay or frustrate the taking of protected industrial action by employees.¹⁵

[24] The CFMEU has complied with the requirements of ss. 437, 440 and 443. The application for a protected action ballot order is granted and will be issued with this decision in PR999452. There being no objection by the employer to the terms of the draft order provided by the CFMEU, the order will be made in those terms, save for one matter. The date for the close of the ballot is identified in the draft order as 30 July 2010. In view of the delay in finalising this matter the order will provide that the ballot will close at 5.00pm on 6 August 2010.

DEPUTY PRESIDENT

Appearances:

Mr Darren Roberts, for the CFMEU

Mr Tom Earls of the Master Builders Association for Asurco Contracting Pty Ltd

Hearing details:

Adelaide

2010

July 12

¹ Ex CFMEU 1

² Ex A1

³ [2009] FWAFB 368

⁴ [2009] FWAFB 599 at PN [56]

⁵ S. 12 of the FW Act

⁶ Items 3 and 4 of s.342(1)

⁷ Active Workforce SA Pty Ltd/CFMEU Collective Agreement 2009, [2010] FWAA 518; Adelaide Reinforcing Specialists Pty Ltd/CFMEU Collective Agreement 2010, [2010] FWAA 4422; Decor Ceilings Pty Ltd/CFMEU Collective Agreement 2009, [2010] FWAA 1087; SA Structural Hire Pty Ltd/CFMEU Collective Agreement 2010 [2010] FWAA 1715

⁸ Supra, at PN [35], [36]

⁹ Active Workforce SA Pty Ltd/CFMEU Collective Agreement 2009, [2010] FWAA 518; Adelaide Reinforcing Specialists Pty Ltd/CFMEU Collective Agreement 2010, [2010] FWAA 4422; Décor Ceilings Pty Ltd/CFMEU Collective Agreement 2009, [2010] FWAA 1087; SA Structural Hire Pty Ltd/CFMEU Collective Agreement 2010 [2010] FWAA 1715

¹⁰ Alcoa of Australia Limited v Australian Workers’ Union – Western Australia Branch [2010] FWAFB 4889 at PN [17]-[19]

¹¹ Explanatory Memorandum to the Fair Work Bill 2008 at para 1642

¹² Australia Post at PN [28] (First decision)

¹³ Australian Postal Corporation vCommunications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia - Communications Division [2010] FWAFB 344 at PN [48]

¹⁴ S. 436 of the FW Act

¹⁵ At para 1755

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