Construction, Forestry, Mining and Energy Union v Downer EDI Mining Pty Ltd and Downer Mining Regional NSW Pty Ltd

[2014] FWC 1600

[2014] FWC 1600

FAIR WORK COMMISSION

DECISION

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

Construction, Forestry, Mining and Energy Union
v
Downer EDI Mining Pty Ltd and Downer Mining Regional NSW Pty Ltd
(B2014/33)

SENIOR DEPUTY PRESIDENT HARRISON SYDNEY, 6 MARCH 2014

Proposed protected action ballot by employees of Downer EDI Mining Pty Ltd and Downer Mining Regional NSW Pty Ltd at the Boggabri Open Cut Coal Mine.

[1] This decision relates to an application made by the Construction, Forestry, Mining and Energy Union (CFMEU) against Downer EDI Mining Pty Ltd and Downer Mining Regional NSW Pty Ltd (the Employers) pursuant to s.437 of the Fair Work Act 2009 (the Act). The CFMEU seeks a protected action ballot order with respect to production and engineering employees of the Employers, who are employed at the Boggabri Open Cut Coal Mine in the State of New South Wales. The Boggabri mine is operated by the Employers on a contractual basis with Idemitsu Australia Resources Pty Ltd, which owns the mine.

[2] The application was listed for hearing before me on 26 February 2014. The application was opposed by the Employers. The principal ground was that I should not be satisfied that the CFMEU has been, and is, genuinely trying to reach an agreement with them. There were two other grounds raised by the Employers which I refer to later.

[3] Mr A Walkaden appeared on behalf of the CFMEU and Mr M Connell appeared on behalf of the Employers. On the day of the hearing I advised the parties of my decision 1 to grant the application and issued a protected action ballot order2 and directions3 consistent with the draft order and directions tendered by the CFMEU. These are my reasons for deciding to issue the protected action ballot order.

The relevant legislative provisions

[4] An application for a protected action ballot order can be made pursuant to s.437 of the Act. The circumstances in which the Fair Work Commission (the Commission) must issue such an order are outlined in ss.443(1) and (2) of the Act:

“443 When the FWC must make a protected action ballot order

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

Background

[5] The parties are negotiating a new enterprise agreement to replace the Downer EDI Mining Boggabri Enterprise Agreement 2010 4 (the 2010 Agreement),the nominal expiry date of which is 25 April 2013. Downer EDI Mining Pty Ltd, and its employees at the Boggabri mine site, are covered by that agreement. The CFMEU, having been a bargaining representative for that agreement, and giving notice under s.183 of the Act, is also covered by the agreement.

[6] Negotiations for a new enterprise agreement have taken place against a backdrop of disputation between the parties. In May 2013, over 100 positions were made redundant at the Boggabri mine, of whom 70 were later re-employed. The CFMEU challenged the genuineness of these redundancies by filing applications for an unfair dismissal remedy. In around July 2013, a change was implemented to the rosters at the mine. The CFMEU notified the Commission of two disputes in this regard. Also, at around this same time, the Employers assert that the CFMEU made a complaint to the NSW Mines Inspectorate. Another issue concerned the Employers’ engagement of workers on 457 visas and this was the subject of media attention and a complaint to the Department of Immigration and Citizenship. The Employers believed it was the CFMEU which had made that complaint.

[7] On 26 February 2013, the CFMEU wrote to Mr Jarrett Goos, Group Employee Relations Manager for the Employers. The union sought to formally initiate the bargaining process and proposed to outline its claims for the proposed enterprise agreement at the first meeting. 5 As no notice of representational rights had been distributed and bargaining had not commenced, the CFMEU, on 10 July 2013, filed an application for a majority support determination in accordance with s.236 of the Act. The union claimed that Downer EDI Mining, as the respondent was there named, had refused or failed to agree to commence negotiations. A notice of representational rights was issued on 23 July 2013 and subsequently the CFMEU withdrew its s.236 application. Bargaining then commenced in August 2013.

[8] An application for a protected action ballot order was first filed by the CFMEU on 13 January 2014. That application named Downer EDI Mining Pty Ltd as the respondent. It was opposed by the respondent on the basis that the CFMEU was not genuinely trying to reach an agreement with it. The matter was listed and proceeded by way of a conference before me on 21 January 2014, during which the respondent additionally raised a concern with the terms of the draft order filed by the union. It advised that the proposed enterprise agreement would cover the respondent and Downer Mining Regional NSW Pty Ltd, the latter of which was not named in the application or draft order filed by the CFMEU. The union foreshadowed that it would file a fresh application, having considered the respondent’s argument. The parties also expressed a desire to continue negotiating the terms of the proposed enterprise agreement.

[9] The CFMEU subsequently filed the application that is the subject of this decision. The Employers advised that they opposed the application. They submitted that I could not be satisfied that the CFMEU has been, and is, genuinely trying to reach an agreement with them, as required by s.443(1)(b) of the Act.

The witness evidence and the relevant facts

[10] The CFMEU called Mr Jeffrey Drayton, Vice President of the CFMEU, Mining and Energy Division, Northern Mining and NSW Energy District. Mr Drayton has had primary responsibility for negotiations on behalf of the CFMEU.

[11] The Employers called Mr Jarrett Goos who has led the negotiations on behalf of the Employers for the proposed enterprise agreement. They also called Mr James Hill, Human Resources Area Manager. Mr Hill has participated in every negotiation meeting on behalf of the Employers.

[12] Statements were filed by each of the witnesses called by the parties. Each deponent gave evidence and was cross examined. I have taken into account all of the matters referred to in the statements of the witnesses and in their oral evidence. I should identify the principal facts relevant to the decision I made.

[13] Ten meetings have been held since 27 August 2013, 6 with the most recent meetings being held on 7 and 17 February 2014. Those meetings have been attended by numerous members of senior management of the Employers. The CFMEU bargaining team also consisted of numerous persons including Lodge representatives and delegates. In light of the issues that had arisen at the Boggabri mine which I have earlier referred to at paragraphs [6] and [7], the bargaining commenced against a tense and unhappy background.

[14] At the start of negotiations the CFMEU presented a log of claims. It contained details of its claim for wages, bonuses, rosters, certain leave entitlements, allowances and other matters. The Employers indicated the various terms and conditions they sought as an outcome of the negotiations.

[15] Throughout the course of the negotiations the CFMEU reported back to its members informing them about what had been occurring in the bargaining process and the progress of the claims that each party had made. Although I do not know precisely how long each of the meetings went, the CFMEU did indicate that they had gone for some hours and nothing said by the Employers challenged that assessment.

[16] By the end of 2013, the Employers were frustrated by the bargaining process and did not believe the CFMEU had made any significant concessions on its log of claims or in response to the Employer’s claims. They, the Employers, decided to put the enterprise agreement they proposed to a vote of the employees. Neither the CFMEU nor the other union bargaining representative, the AMWU, supported the Employers doing this. The vote proceeded on 15 and 16 December 2013. The result was 238 employees voting against the agreement and three voting for it. There have been two further meetings since that time. They were on 7 and 17 February 2014.

[17] I should refer to the principal matters that were in dispute. It appears there were several other matters to be resolved, some significant, others less so, but it seems that if the principal matters were agreed it was likely the remaining matters would be agreed soon thereafter.

[18] The wages to be paid over the life of the new agreementhas, at all times, been one of the major matters about which the parties were well apart. They both agreed upon a three year term for the new agreement. The CFMEU’s original claim for increases during the term of the agreement was 5.9%, 4% and 4%. One of its motivations in seeking increases at these levels was to reduce the shortfall in the wages for these employees when compared to wages in other northern district coalfields mines. The CFMEU contended these employees were among the lowest paid of any of the mines which Mr Drayton had responsibility for.

[19] The Employers challenged the validity of comparing wages at the Boggabri mine with other mining companies in the Hunter Valley. In the Employers’ opinion this was evidence that the conditions sought by the CFMEU were not relevant to the Boggabri mine. They maintained the CFMEU needed to modify its claim to reflect more realistic amounts which would acknowledge the need to reduce costs and increase productivity.

[20] By February 2014, the Employers had increased their wages package offer. They were offering a 2.2% increase in the first year and then, in the second and third years, a percentage increase equal to the CPI but provided that it would be not less than 2.5% or more than 4%. The CFMEU had indicated it would compromise on the increases it had originally sought in its log of claims. Mr Drayton had indicated this in a telephone conversation he had with Mr Connell which occurred after the meeting of 7 February 2014. I also note that the union had abandoned its desire to achieve parity with wages paid at other mines it considered comparable. Nonetheless, it sought an increase of 12% over a period of three years.

[21] There was a disagreement between the parties about whether the wage increase the CFMEU had indicated, on 7 February 2014, would be acceptable was then raised in the meeting of 17 February 2014. Mr Drayton said he did raise it and also had referred to it having been earlier proposed on 7 February in a conversation between himself and Mr Connell. Both Mr Goos and Mr Hill had no recollection of the revised wages proposal having been raised. It is not necessary for me to express a preference for one account or the other about this matter. It is adequate to find that the CFMEU had considered the Employers’ wages offer and responded with a reduction in the quantum of its proposal.

[22] Another key claim was about theproduction bonus to be paid and the conditions upon which it would be paid. The CFMEU had originally made a claim in excess of that paid under the 2010 Agreement. The parties had subsequently reached agreement on some aspects of the bonus to be paid but remained apart on an issue about the conditions to apply to its calculation. The CFMEU was concerned that a new proposal that the Employers were seeking would be likely to reduce an employee’s ability to earn a bonus similar to the current level. The Employers wanted to introduce a new component that would be taken into account when calculating the bonus. This was described as the accident damage component. Two components that had previously applied (and would continue to apply) were the production component and the attendance component. The CFMEU was opposed to employees being financially penalised and had suggested to the Employers it was better to control any damage through supervision, retraining and re-skilling. The Employers were critical of the CFMEU’s response to the introduction of the new component and described the union as not having provided a considered constructive response to their proposal.

[23] The Employers had sought to introduce new provisions that would deal with three particular matters. They were described as the engagement of operational employees based on their specific skills, the payment of incentives for employees performing at an advanced level and flexibility regarding working hours to improve continuity of work practices. 7 The Employers said these claims were aimed at improving flexibility and productivity. They described the CFMEU response to these three claims as having been to repeatedly refuse to work constructively with them. The CFMEU challenged this submission. It had considered each of these claims, taken them to its members for their feedback and advised the Employers why they would not agree to them.

[24] The CFMEU described the first claim as being a proposal to pay an allowance for particular skills an employee had, for example, their ability to operate a particular piece of equipment. The CFMEU had taken that claim to its members and had been instructed to oppose it. What it wanted was for more of its members to be trained in additional skills to enable them to operate additional equipment. This was described by the union as the effect of its training clause claim. The Employers were advised that this was the CFMEU view.

[25] In relation to the second claim the CFMEU believed it would only end up being payable to around about 10% of the workforce. It had been discussed with its members. A decision was made to oppose it and the Employers were told this. As for the third claim, this raised issues concerning rosters which had already been the subject of disputation. The CFMEU had taken this to their members and had been instructed to oppose it. The Employers were told this.

[26] It is not necessary for me to detail the various other claims that the parties had made. The ones I have referred to above provide an example of the course negotiations had been taking. As I later note, it appears that agreement was reached on some other claims and concessions were made by both the Employers and the CFMEU on some others.

.

Section 443

[27] I now refer to the s.443(1)(b) of the Act. Each of the parties referred to extracts from decisions of the Commission in which the approach to be taken to whether I should be satisfied the CFMEU has been, and is, genuinely trying to reach agreement were discussed. In this respect they each referred to the Full Bench decisions in Total Marine Services Pty Ltd v Maritime Union of Australia 8and JJ Richards & Sons Pty Ltd v Transport Workers’ Union of Australia9. The parties also referred to National Union of Workers-New South Wales Branch v ACCO Australia Pty Ltd10in which Commissioner Thatcher referred to a number of extracts from decisions concerning the phrase “genuinely trying to reach agreement” and good faith bargaining requirements (which I note are not interchangeable phrases nor enliven the same “tests” that are to be applied). Each party put emphasis on different comments in the various extracts from the decisions. The CFMEU highlighted that hard bargaining was not the same as not genuinely trying to reach agreement nor did it “automatically imply continual movement in the same direction”. The Employers adopted comments that although bargaining in good faith did not require a willingness to make concessions it does “imply a preparedness to consider seriously offers and proposals made by the other side and to take account of arguments;.....”. Again, although the considerations enlivened by the good faith bargaining requirements and the phrase “genuinely trying to reach agreement” are not the same, I took into account whether, in this matter, the CFMEU had shown a willingness to consider seriously the proposals made by the Employers.

[28] The approach I have taken to the phrase “genuinely trying to reach an agreement” is to give it its ordinary and natural meaning. It requires me to make findings of fact by reference to the evidence before me about the circumstances of the negotiations between the CFMEU and the Employers. I am required to consider whether the CFMEU, by its conduct and actions, has satisfied me that it is, and has been, trying to reach an agreement and is genuine in its attempts to do so.

My consideration

[29] The Employers have made a number of concessions from their original proposals. They describe them as being significant. They believe they have given earnest consideration to each of the CFMEU claims. They submit the same cannot be said of the CFMEU. They rely on the fact that other than for the provision of the log of claims the CFMEU has not placed in writing any of its responses during bargaining, has not given genuine consideration to the Employers proposals and has kept insisting upon its log of claims. They refer to Mr Drayton frequently using words to the effect that the employees “won’t cop it” when asked what he thought would be the employees’ reaction. They described Mr Drayton as taking a very hard line in the negotiations.

[30] In the Employers’ opinion the CFMEU has failed to genuinely consider its claims and, it follows, any response the union has given could not be described as a considered response to those claims. In those circumstances, the Employers submit I could not be satisfied that the CFMEU has been, and is, genuinely trying to reach an agreement.

[31] The CFMEU commenced bargaining by presenting its log of claims. It has attended each of the bargaining meetings. It has engaged in discussions and made notes of the matters raised. Throughout the course of bargaining it has reported the progress in those meetings back to its members. Its members have given feedback about the respective claims in issue.

[32] The CFMEU has made some concessions on some of the matters in dispute and some modifications to its claims. For example, it has made concessions on its wages claim, its claim concerning the production bonus and its claim about training skills (described in the proceedings as the four skills or three skills claim).

[33] I should also refer to the latest draft of the agreement proposed by the Employers. This was annexed to Mr Hill’s statement. It seems this document had been prepared after the 17 February meeting. Mr Hill was cross examined about the entries made in it. It contained several track changes which identified the status of bargaining about those matters. It appears from that document there were discussions and agreement reached about the wording of certain clauses together with an indication from the CFMEU in relation to a clause that it believed was not consistent with the Act. It had indicated it would take advice on that clause. It appears the parties also had discussions and agreed about the introduction of an additional step in the dispute/grievance procedure. Although I accept that many of the claims can rightly be considered to be more about minor matters, and understand the Employers’ view that they really do not constitute any concession of substance, nonetheless the document is consistent with the parties, as recently as February 2014, discussing and considering various provisions that may be contained in the new enterprise agreement.

[34] I accept that the Employers did not consider any concessions made by the CFMEU as of any significance. That may be so but is not indicative of the union not genuinely trying to reach an agreement. I was satisfied the CFMEU had shown a willingness to consider seriously the claims made by the Employers and had in fact considered those claims. That the CFMEU did not concede those claims does not suggest otherwise.

[35] Having considered all of the evidence and submissions I was satisfied the CFMEU had been, and is, genuinely trying to reach an agreement with the Employers.

[36] The Employers had initially raised a concern about inaccuracies in the affidavit of Mr Drayton. They had identified certain paragraphs of his affidavit as lodged which they said were out of date and incorrect. What appears to have occurred is that the affidavit of Mr Drayton was largely that which had been earlier filed in support of the first application for a protected action ballot order. It would have been better for Mr Drayton’s affidavit to have been updated to reflect the status of bargaining as it was immediately prior to filing. However, I do note that at the commencement of his evidence in chief he updated some entries and deleted others. Although the Employers expressed disapproval of this aspect of the CFMEU case they did not suggest it constituted a ground of opposition to the protected action ballot order being made. Accordingly, I propose to say no more about this matter.

[37] The Employers raised one issue about the terms of the protected action ballot order sought by the CFMEU as reflected in the draft that was tendered. They had previously described this issue as being that the ballot questions were incomplete. The argument was not directed to any of the terms of the ballot order sought by the CFMEU but rather to an omission from those terms. They sought an additional provision be added. The Employers wanted the consequences of employees taking protected industrial action to be identified and requested that the order refer to ss.470 and 471 of the Act. It was not submitted that it was a requirement of the Act that there be any reference to ss.470 and/or 471 nor any requirement that there be contained in the order any reference to the fact that taking protected industrial action will, or may, result in non-payment of wages or partial payment of wages depending on the nature of the action.

[38] I was not taken to any protected action ballot order which had been made containing the provision sought by the Employers nor any reasons for decision of any Members of the Commission dealing with this consideration. I do note that there are numerous other provisions of the Act which deal with requirements for, and consequences of, engaging in protected action or reacting to such protected action. Examples are found in ss.409 and 413. I also accept the CFMEU submission that it is not only employee action taken by reference to a protected action ballot order that might have some consequences. The Act also provides elsewhere for there to be consequences for employers who may take certain action (e.g. adverse action) in relation to employees undertaking protected industrial action. 11 In any event, both parties are experienced in industrial relations matters, have qualified industrial relations and legal advisers and no doubt can, and will, give advice about the various provisions of the Act relevant to any industrial action that may be taken.

[39] As I was satisfied the CFMEU had been, and is, genuinely trying to reach agreement with the Employers (and that an application had been made under s.437) I was obliged to make a protected action ballot order. No ground was established to make an order other than in the terms sought by the CFMEU. Accordingly, I made an order reflecting that sought by the union.

SENIOR DEPUTY PRESIDENT

Appearances:

A Walkaden for the CFMEU

M. Connell for the Employers

Hearing details:

2014

Sydney

26 February

 1   [2014] FWC 1401.

 2   PR548176.

 3   PR548175.

 4   AE877367.

 5   Exhibit CFMEU3, annexure JMD-2.

 6   27 August 2013, 12 September 2013, 26 September 2013, 1 October 2013, 2 October 2013, 10 October 2013, 22 October 2013, 5 December 2013, 7 February 2014 and 17 February 2014.

 7   Downer EDI 1 para.13.

 8   [2009] FWAFB 368 at paragraphs [31] and [32]. Noting that the reference in the last two sentences of [32] to “at the very least one would normally expect.....” were not followed in the first JJ Richards Full Bench decision (referred to in the next footnote). I also note that the same reservation was expressed in the Full Bench decision in Farstad Shipping (Indian Pacific) Pty Ltd v Maritime Union of Australia[2011] FWAFB 1686.

 9   [2010] FWAFB 9963, commonly referred to as the first JJ Richards Full Bench decision.

 10   [2009] FWA 226 at paragraphs [23] - [25].

 11   CFMEU v Mammoet Australia Pty Ltd [2013] HCA 36 at [24] and [25].

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