Construction, Forestry, Mining and Energy Union v Loy Yang Power Management Pty Ltd

[2012] FWA 3042

[2012] FWA 3042

FAIR WORK AUSTRALIA

REASONS FOR DECISION

Fair Work Act 2009
s.437—Protected action

Construction, Forestry, Mining and Energy Union
v
Loy Yang Power Management Pty Ltd
(B2012/643)

COMMISSIONER BISSETT MELBOURNE, 11 APRIL 2012

Proposed protected action ballot by employees of Loy Yang Power Management Pty Ltd.

[1] This is an application pursuant to s.437 of the Fair Work Act 2009 (the Act) by the Construction, Forestry, Mining and Energy Union (CFMEU) for a protected action ballot by employees of Loy Yang Power Management Pty Ltd (LYP).

[2] On 3 April 2012 I issued an order granting the application of the CFMEU. In doing so I granted LYP’s application for an extended notice period of seven days to apply to some of the resulting industrial action pursuant to s.443(5) of the Act. In making that order I indicated that I would separately issue my reasons for granting the longer notice period. These are my reasons.

[3] LYP do not argue that the CFMEU has not met the requirements of s.437 of the Act or that the CFMEU is not genuinely trying to reach agreement. In this respect I can be satisfied that the requirements of the Act are met and that an order for a protected action ballot of the relevant employees should issue.

[4] LYP, however, seeks that the order issued by me specify the period of written notice of the proposed industrial action, as referred to in s.414(2) of the Act, be seven working days. 1 During the hearing LYP amended its application so that the extended notice period would apply to some, but not all, of the proposed industrial action arising from the ballot.

Statutory context

[5] The Act specifies the circumstances under which the Tribunal must issue a protected action ballot order:

443 When FWA must make a protected action ballot order

(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).

(3) A protected action ballot order must specify the following:

(a) the name of each applicant for the order;

(b) the group or groups of employees who are to be balloted;

(c) the date by which voting in the protected action ballot closes;

(d) the question or questions to be put to the employees who are to be balloted, including the nature of the proposed industrial action.

(4) If FWA decides that a person other than the Australian Electoral Commission is to be the protected action ballot agent for the protected action ballot, the protected action ballot order must also specify:

(a) the person that FWA decides, under subsection 444(1), is to be the protected action ballot agent; and

(b) the person (if any) that FWA decides, under subsection 444(3), is to be the independent advisor for the ballot.

(5) If FWA is satisfied, in relation to the proposed industrial action that is the subject of the protected action ballot, that there are exceptional circumstances justifying the period of written notice referred to in paragraph 414(2)(a) being longer than 3 working days, the protected action ballot order may specify a longer period of up to 7 working days.

[6] Section 414 sets out the notice requirements for employee claim action:

414 Notice requirements for industrial action

Notice requirements—employee claim action

(1) Before a person engages in employee claim action for a proposed enterprise agreement, a bargaining representative of an employee who will be covered by the agreement must give written notice of the action to the employer of the employee.

(2) The period of notice must be at least:

(a) 3 working days; or

(b) if a protected action ballot order for the employee claim action specifies a longer period of notice for the purposes of this paragraph—that period of notice.

Notice of employee claim action not to be given until ballot results declared

(3) A notice under subsection (1) must not be given until after the results of the protected action ballot for the employee claim action have been declared.

The proposed questions to be put to ballot

[7] The CFMEU propose (and the order issued by me provides) that employees who would be covered by the proposed agreement who are members of the CFMEU be asked the following questions:

Question 1: Do you, for the purposes of advancing claims in the negotiation of an enterprise agreement with LYP, authorise industrial action in the form of stoppages of work, including consecutive stoppages of work, of between one (1) and twenty-four (24) hours in duration?

Question 2: Do you, for the purposes of advancing claims in the negotiations of an enterprise agreement with LYP, authorise industrial action in the form of bans on the working of higher duties?

Question 3: Do you, for the purposes of advancing claims in the negotiation of an enterprise agreement with LYP, authorise industrial action in the form of bans on the working of overtime?

Question 4: Do you, for the purposes of advancing claims in the negotiation of an enterprise agreement with LYP, authorise industrial action in the form of bans limiting the output of individual generators (unless it is unsafe to do so)?

Question 5: Do you, for the purposes of advancing claims in the negotiation of an enterprise agreement with LYP, authorise industrial action in the form of bans limiting the output of individual dredgers to no more than 2,500 tonnes per hour?

Evidence

[8] Insofar as this decision deals with the application of LYP for a longer notice period for any industrial action, evidence was given for LYP by Mr Nigel Browne, Manager Station Operations at LYP.

[9] Mr Browne’s evidence is that LYP produces about 47% of Victoria’s power needs and about 10% of the needs of the south-eastern seaboard comprising Queensland, New South Wales, South Australia and the Australian Capital Territory.

[10] Mr Browne gave evidence with respect to the minimum staffing (and qualification) levels, relief staffing arrangements (to ensure minimum staffing levels are met), minimum notice periods for leave and minimum notice periods for alteration of relief rosters pursuant to the Loy Yang Power Workplace Agreement 2008 (the Agreement). These restrictions and the provisions of the Agreement do not allow for any variation in or capacity to meet minimum staffing or notice requirements in circumstances where staffing levels are affected by industrial action and the notice of such action is no more than the statutory minimum.

[11] Mr Browne’s evidence is that the industrial action proposed by the ballot questions may result in LYP needing to shut down one or more generator units. 2 Under cross examination, however, Mr Browne agreed that the industrial action specified in questions 4 and 5 of the protected action ballot would not require or result in the shutdown of a generator.

[12] Mr Browne’s evidence is that at least seven days notice is required of industrial action to ensure the minimum staffing requirements are met, and hence the terms of the Agreement are not breached, or for the generator units to be safely shut down.

[13] Mr Browne agreed that he had no evidence of any need for any additional notice of industrial action beyond the statutory three days for any work associated with the mining operations of LYP.

[14] The CFMEU did not call any evidence on this matter.

Submissions

[15] Mr Follett for LYP indicated that it no longer pressed its application of extended notice for action arising from questions 4 and 5. He further submits that there is no jurisdictional bar to applying an extended notice period for any action taken pursuant to questions 1, 2 and 3 and allowing for the statutory notice period with respect to action taken pursuant to questions 4 and 5.

[16] Mr Follett put that, in seeking an extended notice period for industrial action under s.443(5) of the Act, there is a requirement both that there be exceptional circumstances and that these circumstances justify the extended notice period.

[17] Mr Follett submits that exceptional circumstances are in existence with respect to LYP because:

• it provides 47% of Victoria’s power needs and 10% of the needs of the south-eastern seaboard;



• the size and complexity of the generator units means that they cannot be quickly switched on and off; and



• minimum staffing and qualification requirements of the Agreement must be adhered to.

[18] Further, he submits that these exceptional circumstances justify an extension of the notice period pursuant to s.443(5) because of:

• the risk to power supplies and the notification requirements related to the National Electricity Market operated by Australian Energy Market Operator;



• the nature of the generation unit equipment, which must be shut down in a controlled manner;



• the capacity, within a seven day period, for LYP to consider the likely impact of the industrial action, determine if it wishes to make an application to have the industrial action suspended or terminated under the Act and to have such an application determined within the statutory time periods in the Act; and



• the inability to meet the requirements of the Agreement with respect to staffing levels with less than seven working days notice.

[19] Mr Follett submits that the circumstances justify a longer notice period for industrial action as LYP requires the additional time to ensure power delivery to customers and to safely close down generator units.

[20] Mr Bakri for the CFMEU submits that LYP has failed to adduce any evidence to support an extension of the statutory notice period. He submits that the construction of the provisions allowing for an extension of the notice period indicate that an extension should not be given lightly. Further, he submits that any action taken by workers at LYP would not have an immediate effect, but rather a gradual effect on electricity supply.

[21] Mr Bakri submits that the Act gives an employer the right to make an application to have industrial action stopped or suspended in certain circumstances and that there is no logical basis on which to argue that the period of notice given for industrial action is for the purpose of an employer making some assessment of whether or not they wish to make such an application.

[22] Mr Bakri submits that there are mechanisms within the Agreement that would allow the employer to adjust staffing levels and provide relief without breaching the provisions of the Agreement, whilst retaining a three working day notice of industrial action.

Consideration

[23] There are a number of matters for consideration with respect to this application. The first is if there are ‘exceptional circumstances;’ the second is if those circumstances ‘justify’ a longer notice period of industrial action beyond the three days required by s.414(2) of the Act; and the third is if it is within my power to grant a longer notice period for some, but not all, of the action arising from the ballot question.

[24] In Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Australian Postal Corporation 3 (Australia Post) his Honour Vice President Lawler considered the meaning of the phrase ‘exceptional circumstances justifying’ as used in s.463(5) of the Workplace Relations Act 1996. After considering a range of authorities his Honour found:

In this passage his Honour was concerned with the ordinary meaning of the expression “exceptional circumstances” and the approach identified is, in my view, equally applicable to the use of that expression in s.465(3). In summary, the expression “exceptional circumstances” requires consideration of all the circumstances. To be exceptional, circumstances must be out of the ordinary course, or unusual, or special, or uncommon but need not be unique, or unprecedented, or very rare. Circumstances will not be exceptional if they are regularly, or routinely, or normally encountered. Exceptional circumstances can include a single exceptional matter, a combination of exceptional factors or a combination of ordinary factors which, although individually of no particular significance, when taken together are seen as exceptional. It is not correct to construe “exceptional circumstances” as being only some unexpected occurrence, although frequently it will be. Nor is it correct to construe the plural “circumstances” as if it were only a singular occurrence, even though it can be a one off situation. The ordinary and natural meaning of “exceptional circumstances” includes a combination of factors which, when viewed together, may reasonably be seen as producing a situation which is out of the ordinary course, unusual, special or uncommon.

However, it is important to note that when considering whether to make an order pursuant to s.463(5) the Commission is not simply concerned with determining whether there are exceptional circumstances. There must be exceptional circumstances “justifying” the specification of a longer notice period. The notion of justification is critical and calls for a consideration of the purpose of the notice required by s.441. 4

[25] His Honour then went on to consider the purpose of the notice required to be given of protected industrial action:

The predecessor of s.441 of the current Act was s.170MO of the pre-reform Act. A majority of the Full Court of the Federal Court in Davids Distribution Pty Ltd v National Union of Workers held that s.170MO of the pre-reform Act and, in particular, s.170MO(5)

“...was designed to ensure that industrial disputants who are to become affected by protected action, in relation to which their usual legal rights are significantly diminished, are at least able to take appropriate defensive action.”

This was a statement of the purpose or intent of the pre-reform Act in providing for a period of notice before protected action could be taken being notice that specified the nature of the intended action and the day when it will begin. The majority provided examples that explained the notion of “appropriate defensive action”:

“For example an employer may operate a sophisticated item of equipment that will be damaged if precipitately shut down. If warned in advance of a ban that might affect the continued operation of that plant, the employer might choose a controlled shut down during the period of the notice. More commonly, perhaps, an employer might use the notice time to communicate with suppliers and customers, and thereby reduce the consequences for them of the notified industrial action.”

As the clear successor of s.170MO, this reasoning is equally applicable to s.441 of the Act and must therefore be relevant to s.463(5), concerned, as it is, with an extension of the required notice period referred to in s.441(2) and (3).

Reading s.441 and s.463(5) together suggests that the legislature intended that the period of 3 working days specified in s.441(3)(a) was an appropriate period to allow an employer faced with protected action to undertake “appropriate defensive action” unless there are “exceptional circumstances justifying” a longer period, up to a maximum of 7 working days.

(Footnotes Omitted)

[26] The language of the legislation has not changed, such that the observations of his Honour in Australia Post are equally applicable in this matter. It can be taken then that there must be ‘exceptional circumstances’ that ‘justify’ the extension of time but any extension of time should not be lightly given. I adopt the approach of the Vice President in this matter.

[27] I have outlined above the exceptional circumstances that LYP say exist. Whilst almost any employer, in seeking an extension of the notice period required for taking industrial action, could find unique characteristics of their business, unique characteristics alone do not make the circumstances exceptional.

[28] In this case I am satisfied that there are exceptional circumstances. LYP is in a unique position with respect to the proportion of the state’s electricity that it supplies and its contribution, although not to the same degree, to the electricity needs of the eastern seaboard. This is not a common position for a company to be in. The complexity of the generator units and the attention that must be given to shutting them down safely, along with the strict requirements set out in the Agreement with respect to staffing levels and the qualifications of staff, contribute to these exceptional circumstances. These are not circumstances ordinarily found and, in my opinion, significant regard should be had to safeguards the industrial parties have found good cause to include in a workplace agreement around staffing and safe operation of equipment.

[29] As to whether these exceptional circumstances ‘justify’ an extension of the notice requirements for taking industrial action Mr Follett took me to an extract from Davids Distribution Pty Ltd v National Union of Workers 5 cited above in the decision in Australia Post.

[30] Mr Bakri referred me to a further passage from the decision of Vice President Lawler in Australia Post where his Honour observed that:

Essentially, what is required in determining whether exceptional circumstances justify an extension of the required notices period is a weighing of the interests of the employer and third parties in the employer having a greater opportunity to take appropriate defensive action as against the diminution in the effectiveness of the employees’ bargaining power that results from such an extension. The fact that the legislature has seen fit to condition the ordering of an extension of the required notice period on the presence of exceptional circumstances justifying it, as distinct from merely conferring a simple discretion to extend the required notice period, indicates that ordinarily there should be no extension. 6

[31] Mr Bakri suggests that there were means by which LYP could get around the apparent staffing limitations of the Agreement but he did not provide any specific submissions to enable me to make some alternative assessment of the matter other than that put by Mr Follett.

[32] LYP only press an extension of the notice period with respect to that action which it says will have an immediate effect (that is, a stoppage and/or a ban on higher duties and/or a ban on overtime) on its capacity to generate electricity as required or alternatively safely operate or shut down the generator units.

[33] On the evidence before me a failure to properly control the shutdown of the generator units may pose some significant risk to LYP not just in terms of the cost of loss of production but in potential adverse effects on the generator units themselves. The evidence is clear that a safe shutdown of a unit takes up to seven straight calendar days.

[34] The potential impact and cost of an improper shut down on equipment should the employees take industrial action that means the units cannot be safely operated is high. The position of LYP with respect to the industrial action is not much different to that envisaged by the Federal Court in the decision in Davids Distribution as set out above. That is the notice period will allow LYP to safely operate or shut down as required the generator units. However, three days is not sufficient to do so given the complexity of the shut down and the requirements of the Agreement. The generator unit is a ‘sophisticated item of equipment [that] will be damaged if precipitately shut down.’ I find that this alone provides justification to extend the written notice period of the intent to take industrial action with respect to questions 1, 2 and 3 to seven working days as defined in s.12 of the Act.

[35] I accept (and it was not refuted) that any industrial action of members of the CFMEU would have a gradual impact on electricity supply. Little was put to me to explain how quickly or otherwise the industrial action would affect supply except that it would depend on demand placed on the network at the time. I am not convinced that LYP’s arguments of a need to notify the Market Operator or consumers of any risk to power supplies justifies any extension of the notice required to be given under s.414(2) of the Act.

[36] LYP further argues that an extension of time is justified as it will provide the employer with adequate notice within which it might decide to seek orders from Fair Work Australia to suspend or terminate protected industrial action under the relevant provisions of the Act. This, in my opinion, is not the purpose of the notice of industrial action required to be given to the employer. To grant an extension for this reason would have the effect of stopping the action before it is taken. This would effectively neuter the employees’ capacity to place industrial pressure on the employer. Any interest the employer has in terminating or suspending industrial action is already catered for by the Act. The Parliament has determined in the Act how quickly such applications should be dealt with by Fair Work Australia. The notice period required for the taking of industrial action should not be used to impose some other restriction on industrial action whilst Fair Work Australia is exercising powers to suspend or terminate such action. The desire to be able to have an application to suspend or terminate industrial action dealt with during the notice period for such action does not justify any extension of the notice period.

[37] Having considered all of the material and the submissions put to me I am satisfied that there are exceptional circumstances that justify an extension of the notice period required to be given under s.414(2) of the Act but only in respect of the action taken pursuant to questions 1, 2 and 3 of the protected action ballot.

[38] As mentioned above LYP do not press their initial claim for the extension of the notice period for industrial action taken pursuant to questions 4 and 5. The matter to be determined is if the order can be made extending the notice period for industrial action only in respect of some of the action that might be taken as a result of the ballot.

[39] Section 443(5), set out above, allows Fair Work Australia to extend the notice period ‘in relation to the proposed industrial action subject of the protected action ballot.’ The industrial action proposed by this ballot application is, in fact, a series of different types of industrial action (as it is in almost all such applications made to Fair Work Australia).

[40] It is well established that not all of the industrial action subject to the ballot must be taken or that it all needs to be taken at the same time. Following from this it can be concluded that the notice period under s.414(2) of the Act and any extension of that operates on each part of the action separately. This being so, there is no logical reason as to why a different notice period cannot operate on different parts of the industrial action that has been subject to the same ballot of employees.

[41] Such an outcome is consistent with what is often seen as ‘escalating’ proposed industrial action specified in a ballot application. Such applications regularly contain proposals for action ranging from minor bans on (for example) paperwork through to indefinite stoppages. Only some, but not all, of the proposed action may generate the exceptional circumstances justifying an extension of the notice period. To impose an extended notice period in all circumstances is therefore unnecessary and may be beyond power.

[42] For these reasons I find that there is no impediment - in fact it may well be necessary - to consider each of the types of action to be taken to determine if that action creates the exceptional circumstance justifying an extension of the notice period. In this case I find that only the action taken pursuant to questions 1, 2 and 3 will result in exceptional circumstances justifying the extension of the written notice to be given under s.414(2) of the Act to seven working days (as defined in the Act).

[43] The order issued by me reflects this.

COMMISSIONER

Appearances:

Y. Bakri for the Applicant.

M. Follett for the Respondent.

Hearing details:

2012.
Melbourne:
April 2.

 1   A working day is defined in s.12 of the Act.

 2   Exhibit LYP1, paragraph 45-51.

 3   [2007] AIRC 848.

 4   [2007] AIRC 848 [10]-[11].

 5 (1999) 91 FCR 463.

 6   [2007] AIRC 848 [21].

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