Construction, Forestry, Mining and Energy Union v MSS Security Pty Ltd

[2014] FWC 5113

[2014] FWC 5113 [Note: An appeal pursuant to s.604 (C2014/5995) was lodged against this decision - refer to Full Bench decision dated 1 July 2015 [[2015] FWCFB 2872] for result of appeal.]

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.739—Dispute resolution

Construction, Forestry, Mining and Energy Union
v
MSS Security Pty Ltd; MSS Strategic Medical Pty Ltd
(C2014/4395 and C2014/743)

Security services
COMMISSIONER GREGORY	MELBOURNE, 15 AUGUST 2014

Alleged dispute concerning classification, consultation over change and redundancy.

Introduction

[1] MSS Security Pty Ltd; MSS Strategic Medical Pty Ltd (“MSS”) has a contract to provide a range of emergency services to AGL at the Loy Yang power generation and mining site in the Latrobe Valley. The emergency service roles include fire prevention/firefighting, security, rescue and first aid. The employees engaged to provide these services are employed under the terms and conditions contained in the CFMEU MSS Enterprise Agreement 2012 1. The Agreement includes provisions dealing with “Staffing Levels”, “Classifications” and the minimum qualifications required for each classification.

[2] MSS says AGL now wants to have an additional capacity on site to obtain and administer certain types of drugs and medication. This apparently reflects concerns about the number of employees on site at any one time, the age of the workforce, the location of the site, and the amount of time it can take for an ambulance to reach the site. However, the existing Emergency Service Officers (“ESOs”) are not qualified to obtain and administer these drugs under the current regulatory framework.

[3] MSS has therefore decided to employ people qualified as Registered Nurses to work as ESOs. They have already been engaged by MSS and involved in training in the various qualifications required to be held by ESOs. MSS now wants these employees to be rostered to work on the site as ESOs. It has also advised the existing employees this means some will have to be made redundant.

[4] However, the CFMEU submits MSS has acted in breach of the Agreement in seeking to implement these changes. It submits, firstly, it has not acted in accordance with the “Consultation Over Change” requirements in clause 23, concerning both the proposed redundancies and the changes to the minimum classification requirements for ESOs. It also submits it has acted in breach of clauses 15, “Staffing Levels” and 16, “Classifications,” which sets out the minimum qualification requirements for each classification level. Finally, it submits MSS is again in breach of clause 23, “Consultation Over Change,” and clause 24, “Dispute Resolution,” which it submits both contain a requirement for the “status quo” to be maintained until agreement about proposed changes has been reached.

[5] The CFMEU submits that, in all the circumstances, the Commission should find at first instance that MSS is prohibited by the Agreement from doing what it now proposes. It submits, in the alternative, that the Commission should make findings about non-compliance with the consultation and status quo provisions of the Agreement. It also seeks orders that there be no further implementation of any decisions by MSS regarding the changes until the provisions in the Agreement have been complied with.

[6] MSS rejects these submissions and submits the CFMEU is now unreasonably withholding its agreement to the changes. It submits the Commission should accordingly make an order reflecting the changed staffing arrangements and minimum qualification classification requirements it now wants to have in place.

The Issues to be Decided

[7] Is MSS prohibited by the terms of the Agreement from changing the staffing arrangements and qualification requirements for Emergency Service Officers?

[8] Has MSS complied with the requirements of clauses 15, 23 and 24 of the Agreement in all the circumstances of this matter in regard to the various obligations to consult and maintain the status quo?

The Evidence and Submissions

[9] The CFMEU has made two applications in these proceedings. The first concerns what it describes as the announcement by the Respondent companies of “an intention to make five (5) Emergency Service Officer positions redundant at their Loy Yang site, in the Latrobe Valley.” 2 The second application concerns a purported change to the “minimum qualification requirements for classifications of employees.”3 In both cases it submits the relevant consultation processes in the Agreement have not been complied with.

[10] The CFMEU make reference to a number of different provisions in the Agreement in its submissions. The various clauses and the particular provisions it highlights in each case are set out in the following paragraphs.

[11] Clause 3, “Application.” The CFMEU submits this clause indicates that the Agreement applies “to all persons employed by the Company in emergency service roles that are in connection with Loy Yang power generation or mining sites (hereinafter referred to as the "employees"). Emergency service roles include fire prevention/fighting, security, rescue and first aid and exclude managerial roles.” 4 It submits, based on this definition, the Agreement does not apply to people employed as nurses. It also notes that the clause indicates, “This agreement is a comprehensive agreement...”5

[12] Clause 15, “Staffing Levels.” The CFMEU submits this clause “mandates the staffing levels which shall apply under the company's current contract with Loy Yang Power. That minimum staffing level provides that at all times there shall be one team leader, two emergency services officers and one gatehouse officer” on duty at all times. 6 It also notes that the clause indicates, “Should the contract with Loy Yang Power change, the relevant parties shall confer and reach agreement prior to any changes being implemented and such agreement shall not be unreasonably withheld.”7 In its submission the clause draws a connection between the contractual arrangements entered into by MSS and its client, and the number and classification of employees necessary to fulfil that contract. It also notes the classifications referred to in clause 15 are described in more detail in clause 16.

[13] The CFMEU also submits that while the clause has a process that can be triggered “should the contract with Loy Yang Power change” 8 nothing has been given to it, or provided to the Commission, confirming the contractual arrangements have actually changed, although it acknowledges this may have occurred or may occur at some point in the future.

[14] Clause 16, “Classifications.” This clause sets out the classifications covered by the Agreement and the minimum qualifications and typical duties in each case. The CFMEU highlights the fact the clause states “The following table details the minimum qualifications required for each classification and the typical duties associated.” 9 In its submission it describes the minimum qualifications which entitle a person to be employed in the respective classifications set out in the clause, and MSS is not entitled to add other minimum qualifications in addition to those already set out. It also notes nothing in the clause requires a necessary qualification to be that of registered nurse.

[15] Clause 23, “Consultation Over Change.” The CFMEU submits this clause requires the parties to consult over change. In its submission there are a number of aspects of the clause of particular relevance in the circumstances of this matter.

• The obligation to consult does not enable or allow MSS to vary matters expressly provided for in the Agreement, including staffing levels and classifications.



• The obligation to consult is imposed on MSS before a decision is made to implement a major change.



• The obligation is to consult with any employees who will be affected by the proposed decision, including any representatives nominated by those employees.



• The matters to be the subject of consultation include the introduction of change, the effect of the change, and measures to avert or mitigate any adverse affects for the employees.



• For the purposes of consultation MSS is obliged to provide all relevant information about the change, and the expected effects, and any other matters likely to affect the employees.



• It also requires MSS to give prompt and genuine consideration to matters raised by the employees in response.



• It also imposes an obligation on MSS to act in good faith and sets out what this requires.

[16] The CFMEU also submits:

“The obligation to consult and the consultation process is a process by which no party will be adversely affected by the obligations. That is, the agreement provides for parties involved in consultation process to act reasonably and further, that the process will not be disrupted or aborted because of the imposition of the obligation on the parties to respect the status quo during the consultation process.” 10

[17] Clause 24, “Dispute Resolution.” The CFMEU notes that the clause contains a further “status quo” provision, indicating “normal work shall continue” from when a dispute first arises until it is resolved. It also notes normal work is defined in the clause as “work normally performed by an employee. In circumstances where there is a dispute concerning proposed changes, the work or management practices in place immediately before the introduction of those changes will remain in place until resolution of the matter under this disputes procedure.” 11

[18] The CFMEU makes various submissions against the background of these provisions. It submits, firstly, if MSS has employed a new class of employee in taking on employees with Registered Nurse Qualifications, it still remains bound to maintain the staffing levels provided for in the Agreement. Secondly, if it has not employed a new class of employee the Agreement does not contemplate changing the minimum qualifications for ESOs. Thirdly, the Agreement doesn’t enable MSS to change the minimum qualification requirements causing certain employees to be made redundant. It also submits MSS has failed to consult about the changes, and has not provided relevant documentation and details about the rationale for their introduction, as required by the Agreement. In moving to employ new employees with Registered Nurse Qualifications as ESOs it has also failed to comply with the status quo obligations in both clauses 23 and 24.

[19] In terms of the particular circumstances relevant to the determination of this matter the CFMEU submits in September last year MSS made application to the Department of Health for a permit to obtain and administer various drugs on the site. However, after further discussion with the Department it came to the conclusion it would be unable to obtain a permit, given the qualifications of the existing employees. It therefore began investigating the option of employing ESOs with Registered Nurse Qualifications. In this context it notes that in October last year MSS referred to this possibility in correspondence to AGL, and thanked it for the opportunity to provide a proposal about this option. It submits at this point there was already a significant proposal for change being considered, which should have been a trigger point for the consultation processes required by clause 23.

[20] However, it submits MSS did nothing at this point to comply with its consultation requirements under the Agreement and the evidence of Mr Shields confirms it was not raised at tool box meetings in October and November last year, or in January this year. It also points to the emails exchanged between AGL and MSS in February which confirm an almost certain decision to go down the path of employing staff with Registered Nurse Qualifications at the site. It also notes that despite the significance of these events to this matter MSS did not provide evidence from its key personnel involved in these discussions, nor was a representative from AGL called as a witness. It also makes reference to an email circulated by Mr Matt Luddington in February to various key personnel at MSS and AGL making reference to a decision dealing with circumstances similar to those involving the engagement of the nurses at the Loy Yang site.

[21] However, in its submission the first time the employees or the CFMEU were provided with any detail about the proposed changes was on 19 March when Mr Luddington provided details in writing to the employees. This document makes reference to the consultation with the Victorian Department of Health that took place in September 2013 and indicates “there will be changes to the qualification requirements for five (5) Emergency Service Officer’s (ESO) roles,” 12 and that change “will be upgraded to include an additional Registered Nurse Qualification requirement.”13 In its submission the tenor of this notice also indicates the decision had already been made by MSS at this point, without involving any consultation in accordance with the requirements of clause 23. It also notes the notice makes reference to consultation about the selection process of employees to be made redundant, confirming it involves consultation about the implementation of changes MSS has already decided to implement.

[22] It also submits that in this situation MSS is in breach of the “status quo” obligations in the Agreement, as evidenced by the fact it has already employed five people with Registered Nurse Qualifications and began to train them as ESOs. The evidence of Mr Shields, in its submission, confirms these people were in fact employed in late April. The CFMEU acknowledges MSS is entitled to employ and train people in this way, however, it is not entitled to avoid obligations that otherwise exist under the terms of the Agreement.

[23] In regard to the obligation to consult the CFMEU also made reference to various decisions of this Commission and the Federal Court. It, firstly, referred to the decision of Commissioner Smith (as he then was) in Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Optus Administration Pty Ltd 14(Optus Administration), and his conclusions about what consultation requires when he stated at paragraph 37 (references omitted):

“It may be convenient to examine the purpose of the disclosurefirst, so that this may be understood in the context of when a decision is taken. The purpose of disclosure is for relevant persons to know the reasons and intention of the employer so that consultation shall take place on:

‘(i) measures to avert the termination, or avert or minimise the terminations; and

(ii) measures (such as finding alternative employment) to mitigate the adverse effects of the termination or terminations.’” 15

[24] It also made reference to another decision of then Commissioner Smith in CPSU, the Community and Public Sector Union v Vodafone Network Pty Ltd 16 (Vodafone) when he stated at paragraph 25:

“[25] In deciding whether or not to make the orders sought I have considered the importance of consultation. Consultation is not perfunctory advice on what is about to happen. This is common misconception. Consultation is providing the individual, or other relevant persons, with a bona fide opportunity to influence the decision maker. Section 170GA(1)(b) of the Act speaks of measures to avert or minimise terminations or to mitigate the adverse effects of the terminations. Consultation is not joint decision making or even a negative or frustrating barrier to the prerogative of management to make decisions. Consultation allows the decision making process to be informed, particularly as it may effect the employment prospects of individuals. The opportunity to seek to avoid or mitigate the effects of a termination can not be underestimated by those who wield power over those and their families who will the subject of the exercise of that power.” 17

[25] It finally made reference to the decision of Logan J in Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v QR Limited 18 (QR Limited) where His Honour had regard to decisions of the Australian Industrial Relations Commission, including that those of Commissioner Smith. He continued to note, in particular, at paragraph 44:

“They serve to confirm an impression as to the content of an obligation to “consult” evident from the dictionary meaning of the word. A key element of that content is that the party to be consulted be given notice of the subject upon which that party’s views are being sought before any final decision is made or course of action embarked upon. Another is that while the word always carries with it a consequential requirement for the affording of a meaningful opportunity to that party to present those views. What will constitute such an opportunity will vary according the nature and circumstances of the case. In other words, what will amount to “consultation” has about it an inherent flexibility. Finally, a right to be consulted, though a valuable right, is not a right of veto.” 19

[26] The CFMEU concludes, in summary, MSS is firstly trying to do something the Agreement precludes it from doing in acting to vary the minimum qualifications for ESOs. While it may want to employ people with Registered Nurse Qualifications, the staffing levels and the minimum qualifications for ESOs set down in the Agreement, have to be maintained. Secondly, MSS is in breach of the consultation requirements in the Agreement, and the associated status quo requirement, in both the consultation and dispute resolution clauses.

[27] MSS states that it provides security, first aid and other emergency assistance pursuant to a contract with AGL at the Loy Yang site. It is a complex site with an ageing workforce, and there can be significant wait times before an ambulance can reach an injured person at the site.

[28] MSS submits it was advised by AGL on 5 March 2014 it would, in future, require the provision of a higher standard of clinical care on site, including a requirement that certain types of medications be held and administered, when necessary, at the site. These medications could not be obtained and administered by the existing ESOs under the current regulatory framework.

[29] It also submits it applied to the Department of Health last year with a proposal for existing ESOs to be able to control and administer these drugs, however, this permit application was refused by the Department in October 2013.

[30] MSS submits it accordingly informed the ESOs in a meeting on 19 March 2014 that five ESO positions would be upgraded to include an additional Registered Nurse Qualification requirement, and it now intended to enter into a process of consultation about these changes. A “communiqué” providing further details was distributed later in the day and subsequently emailed to all ESOs.

[31] It has now proceeded to employ five people with Registered Nurse Qualifications and they have also been involved in training about the other ESO qualification requirements.

[32] MSS submits clause 15 of the Agreement contemplates the contract with AGL may change in regard to the minimum numbers and classification requirements. It also submits clause 16 must be read in conjunction with clause 15, and the CFMEU’s agreement to any necessary changes cannot be unreasonably withheld. It submits the key players in this context are AGL and MSS, as the contracting parties. The involvement of the CFMEU is only triggered when AGL and MSS decide to make changes to the contract. The CFMEU then has an entitlement to be consulted about the nature of those changes.

[33] MSS also submits it is important to focus on what the dispute is actually about; that being the replacement of existing ESOs with five ESOs with Registered Nurse Qualifications. It acknowledges this is a significant change, but submits it has been involved in consultation about this since March. It also submits any other possible options to respond to the requirements of its client have been exhausted, and ESOs with Registered Nurse Qualifications can be employed under the terms of the Agreement. This does mean a change to the minimum qualification requirements of five of those positions, but this can occur by agreement between the parties. In its submission this is evident because clause 15 makes reference to the minimum number and classification of personnel, and therefore the change provisions extend to both staffing levels and the classification levels of those staff.

[34] MSS also rejects the CFMEU’s contention that the status quo requirement has been disregarded. In its submission the employment of employees with Registered Nurse Qualifications does not affect the status quo in circumstances where clause 15 only prescribes the minimum number and classification of personnel on rostered duty. It also submits the existing ESOs are continuing to carry out the work they would normally perform, and there is no evidence of any change in that work.

[35] It also submits it has not acted with disregard for the status quo and normal work obligations. At this stage it has not moved to make any employee redundant, and the employees with Registered Nurse Qualifications have been engaged over and above the existing minimum requirements. It also submits the ESOs are continuing to carry out their work as normal.

[36] MSS submits consultation commenced with the employees on 19 March and further updates were provided on 23 May, 4 June and 19 June, as detailed in the witness statement of Mr Matt Luddington. It also submits the earlier application to the Department of Health for a permit was discussed in the monthly team leader meetings in October and November 2013 and January 2014, as described in the witness statement of Mr Jason Shields. It also submits consultation commenced with the CFMEU on 4 April 2014 and has continued since, including in the conciliation processes in the Commission.

[37] MSS also makes reference to particular extracts from the document provided by Mr Luddington to the employees on 19 March. It states, “There’s going to be a change to the current MSS contractual operations.” 20 It also sets out, the reason why the changes are going to be made. It states, “A Registered Health Practitioner is required to be on site in order to continue to provide a high standard of clinical care for the workforce and to enable the administration of certain drugs and treatments.”21 It also notes it continues to indicate, “The positions will be upgraded but it's not something that can be done within a reasonable timeframe to upskill the workforce.”22 It concludes, “So in accordance with our consultation requirements we have set out why there is a change being made, so for high standards of clinical care to ensure a compliance with the legislative scheme and what the change specifically is going to be.”23

[38] In its submission the information provided, and the way it has been provided, is entirely consistent with the extract relied upon by the CFMEU in the decision in Optus Administration and, in its submission, there has been no failure on its part to prevent an agreement being reached between the parties about implementation of the changes.

[39] It continues to submit there have been ongoing discussions and negotiations since 19 March with further updates provided since by MSS to the employees. It also notes, as part of this process of consultation, the CFMEU made enquiries on its own behalf, and this included correspondence from Mr Dyke to MSS and to the Department of Health. This was designed to explore any possible options whereby the existing ESOs could carry out the changed requirements AGL was wanting to implement. It also submits the issues to do with the need to be able to obtain and administer the additional medication on site were made known to the CFMEU in October 2013 when the issue was raised regularly in team meetings. However, it also submits the discussions in October canvassed various options, and nothing had been confirmed until the proposals put by MSS were accepted by AGL. It was not until February/March of this year that it was confirmed that recruitment of employees with Registered Nurse Qualifications was going to be an acceptable outcome for AGL. It then became necessary to begin to consult with the employees and the CFMEU about these changes.

[40] MSS also submits genuine consideration has been given to matters raised by the CFMEU and the employees, and the application for a licence to enable the existing ESOs to carry out the new work requirements has been refused, despite extensive efforts to enable this to occur. It also submits it has continued to consult and negotiate in good faith and points to the extract from the update provided by Mr Luddington to the employees on 4 June, which indicates in the third paragraph, “MSS would like to take this opportunity to ask you directly, whether you as a group or as individuals, can think of any alternative to the proposed redundancy solution. If you have any ideas, thoughts, comments or questions you are encouraged to contact Matt Luddington...or Jason Shields...” 24 It submits, “The information provided in these updates, their regularity, the evident bona fide attempts that MSS has gone to, to try and mitigate these redundancies, is a matter that should be taken into account by the Commission, and there is no basis, we say, for a finding that there has not been proper consultation with either the employees or the CFMEU.”25 It also submits the proposal for the employees with Registered Nurse Qualifications to be rostered, in addition to the existing ESOs, is not commercially viable.

[41] It submits, in summary, it has consulted with both the employees and the CFMEU, and relevant information has been provided to the extent its consultation obligations have been met. It also submits it has acted in good faith and done all it can to avert any possible redundancies, but given the current legislative scheme in Victoria regarding the obtaining and administration of the proposed medications, and the requirements of its client, it is now entitled to proceed with implementation of the changes.

[42] MSS submits, in summary, the CFMEU is unreasonably withholding its agreement to the rostering of the employees with Registered Nurse Qualifications, and the consequent redundancy of some existing ESOs, given that:

• the changes are being implemented at the request of AGL who contracts to have the services provided;



• the objective is to provide a higher level of clinical care for all persons on the site;



• it is not possible to up skill the existing ESOs within a reasonable time frame;



• it is not financially viable to maintain the employment of an additional number of employees in the longer term; and



• it has exhausted all possible avenues to enable a higher level of clinical care to be provided at the site by existing ESOs. The current proposals are therefore the best means of implementing the changes in all the circumstances.

[43] It submits, in conclusion, the outcome it seeks can be implemented under the existing Agreement with the agreement of the parties. However, the CFMEU is now unreasonably withholding its agreement. In its submission the Commission should now make orders providing for a change to the existing staffing arrangements provided for in the Agreement to provide that one ESO, and one ESO Registered Nurse be rostered at any one time, with a new classification included in the Agreement reflecting the new Registered Nurse Qualification requirement. It submits the Commission should now make these orders because the CFMEU is, at this point, unreasonably withholding its agreement to these changes.

Consideration

[44] There are a number of things that can be said at the outset in the circumstances of this matter. Firstly, AGL appears to be acting with good intentions in wanting to have an enhanced level of medical support in place at the Loy Yang site. It wants to enable certain types of drugs and medication to be able to be obtained and administered, if required, on site. This appears to be motivated by a combination of factors. The site is a large and complex one, and has an ageing workforce. Its location also means there can be some time delay before an ambulance is able to get to the site in case of medical emergency. The changes are accordingly proposed to enable additional medical support to be provided on site in all those circumstances.

[45] I am also satisfied the existing Emergency Service Officers are not able to provide the level of medical support AGL now wants to have on-site, and are not able to gain the qualifications required, within a reasonable time frame, to enable that level of support to be provided. This is not to suggest or imply any criticism of them. Their inability to carry out these roles is simply an outcome of the existing regulatory framework administered by the Department of Health in Victoria. This has been confirmed by the fact both MSS and the CFMEU have variously made approaches to the Department, without success, to have the existing ESOs carry out these tasks.

[46] MSS in responding to its client requirements has therefore decided the best way to provide the level of support AGL wants to have in place is to employ people with Registered Nurse Qualifications, and to provide them with the additional training and other qualifications ESOs are required to have. It then intends to roster these employees as ESOs in place of some existing employees. The unfortunate consequence of what are otherwise well intentioned changes is the possibility of some existing ESOs being made redundant. This is an obvious concern for any employees who might be impacted in this way and is clearly at the heart of the matters in dispute.

[47] I make no comment about the merits or otherwise of the decision by MSS to employ ESOs with Registered Nurse Qualifications in response to what AGL wants. This statement should not be interpreted as implying either support for or criticism of that decision. MSS is entitled to manage its business as it sees fit, and it is not my role to “second-guess” its decision-making processes. However, in dealing with the current applications I am required to consider that decision in the context of the Enterprise Agreement that covers the parties.

[48] Neither party made submissions about the way industrial instruments, such as the present Enterprise Agreement, are to be considered and interpreted. However, the authorities and the approach to be applied are well known and established. They are to be interpreted, at first instance, based on the plain and ordinary meaning of the words used. Where the terms of an industrial instrument are clear and unambiguous then that instrument should be interpreted in accordance with that clear and unambiguous meaning. In addition, regard must first be had to the natural and ordinary meaning of its words. I have adopted this approach in considering the terms of the Agreement that covers the parties in this matter.

[49] The CFMEU’s principal submission is that MSS is precluded from doing what it now intends. It submits MSS cannot vary the minimum qualification requirements for ESOs set out in the Agreement, and must maintain the existing specified staffing levels. It relies on the provisions in clauses 3, 15 and 16 in support of this submission, for the reasons referred to already. In its submission if MSS wants to employ ESOs, who are also qualified as registered nurses, it can only do so by employing them over and above the staffing levels already mandated in the Agreement.

[50] MSS rejects this submission. It refers, in particular, to the words in clause 15, “Staffing Levels” in the following terms, “Should the contract with the Loy Yang Power change, the relevant parties shall confer and reach agreement prior to any changes being implemented and such agreement shall not be unreasonably withheld.” 26 It submits this enables both the staffing levels and classifications to be varied by agreement, because the clause continues to make reference to both in the following terms, “The minimum number and classification of personnel present on rostered duty at any time shall be...”27

[51] I am satisfied that the interpretation placed on these clauses by MSS is to be preferred. I accept the CFMEU’s submission that clause 3 indicates the “...Agreement shall apply to all persons employed by the Company in emergency services roles...” and that it “is a comprehensive agreement.” 28 It also contains in clause 15 and clause 16 detailed prescriptions about staffing levels and classifications, which also prescribe minimum qualification requirements. The CFMEU also submits that none of these provisions make any reference to the employment of nurses.

[52] However, clause 15 of the Agreement also contemplates the precise situation that has eventuated in the current circumstances; a change in what AGL requires. In this context the specific words in the Agreement are “Should the contract with Loy Yang Power change...” It is perhaps unclear as to what this precisely requires, and the CFMEU questions whether this trigger has actually been activated. However, I am satisfied it has been common knowledge now for at least nine months that AGL wanted MSS to somehow provide the enhanced level of medical support it wants on site, and this has been well known and understood by all concerned. In these circumstances it is ducking the real issue to dwell on what must actually occur to constitute the precondition, “Should the contract with Loy Yang Power change...” I have no reason to doubt, based on the evidence and submissions, that Loy Yang Power (AGL) want something different in place on the site and the relevant players have been well aware of this intention.

[53] As indicated, I am therefore satisfied the submissions of MSS are to be preferred and it is not precluded by the terms of the Agreement from entering into the prescribed processes to endeavour to reach agreement about these changes. I have reached this conclusion again, as indicated already, because clause 15 contemplates this eventuality. It also makes sense for such a proviso to be included in an agreement of this kind where MSS, as the employer, is ultimately at the whim of the principal it has contracted to provide services to. When those requirements change it makes sense for the service provider to have the ability to make changes to its employment arrangements as a consequence of what its client requires of it.

[54] However, there is also an issue about what changes might be able to be agreed upon. The relevant words about the contract changing are contained in the Staffing Levels clause 15. MSS contends that because the clause refers to “...The minimum number and classification of personnel present on roster duty at any time...” it intends that the scope of change potentially extends to both staffing levels and the classifications in place at the site (and presumably the qualifications required in respect of those classifications.) I am again satisfied this is a logical interpretation of what the clause intends, given the plain and ordinary meaning of its words. They suggest proposals for change could potentially go to both the numbers of employees and the classification requirements of those employees.

[55] In addition, while I am not sure what, if anything, turns on this point I do not consider that MSS is now acting to employ nurses, as the CFMEU contends. It wants to continue to employ employees to carry out the duties of ESOs, however, one aspect of those duties now requires those employees to have Registered Nurse Qualifications or something similar.

[56] The next set of considerations go to the extent to which MSS has complied with its obligations to confer and consult prior to any changes being implemented. These obligations arise, firstly, from clause 15 when it states:

“Should the contract with Loy Yang Power change, the relevant parties shall confer and reach agreement prior to any changes being implemented and such agreement shall not be unreasonably withheld.” 29

[57] However, they also derive from the broad obligations contained in clause 23, “Consultation over Change.” A number of aspects of this clause are relevant. It states at the outset, “For the avoidance of doubt, this clause does not allow the Company to vary matters expressly provided within this agreement.” 30 I am satisfied for the reasons already indicated, this does not preclude changes to the matters dealt with in clauses 15 and 16 because clause 15 already contemplates such changes.

[58] Clause 23 continues to indicate in paragraphs 2, 3 and 4:

“If the Company is seriously considering a major change that is likely to have a significant effect on employees covered by this Agreement, the Company must consult with any employees who will be affected by the decision inclusive of any representative(s) nominated by the employees.

As soon as practicable the Company must discuss with the relevant employees (inclusive of any representative(s) nominated by the employees) the introduction of the change; and the effect the change is likely to have on the employees. The Company must discuss measures to avert or mitigate the avert or mitigate the adverse effect of the change on the employees.

For the purposes of the discussion the Company will provide the relevant employees (inclusive of any representative(s) nominated by the employees) in writing: (i) all relevant information about the change including the nature of the change proposed; and (ii) information about the expected effects of the change on the employees; and (iii) any other matters likely to affect the employees. However, Company is not required to disclose commercially confidential information.” 31

[59] The next two paragraphs, firstly, require MSS to give prompt and genuine consideration to any matters raised by the employees and to act in good faith in relation to the consultation process.

[60] The next paragraph importantly states:

“Until consultation has been completed and written agreement is reached between the Company and the relevant employees (inclusive of any representative(s) nominated by the employees), the Company and the relevant employees will respect the status quo. In respect to this process, agreement shall not be unreasonably withheld.” 32

[61] There is no dispute between the parties that the changes MSS wants to implement trigger the obligations to confer in clause 23. As indicated, in the circumstances involved in this matter there is also a further obligation to consult in clause 15. It requires, in the first place, that the parties confer and reach agreement before any changes are implemented, subject to any such agreement not being unreasonably withheld. The consultation obligations in clause 23 are triggered if MSS is seriously considering a major change that is likely to have a significant effect on employees covered by the Agreement. As indicated, the CFMEU submits MSS has not complied with this obligation and any consultation that has occurred has only taken place after it decided to employ ESOs with Registered Nurse Qualifications in place of some existing employees. It also submits MSS has failed to provide all relevant information about the changes to the employees and the Union.

[62] The CFMEU also highlights paragraph 7 and the requirement for the status quo to be maintained until such time as consultation has been completed and written agreement reached. There is, of course, no such agreement in place at this time. The CFMEU also relies on the decisions referred to at an earlier point in this decision in support of its submission proper consultation has not been engaged in.

[63] MSS submits the ESOs at the site have been aware since late last year that AGL wanted to have in place an enhanced level of medical support at the site. It submits they were also aware MSS was investigating how this might be able to be achieved. However, it also acknowledges the process of consultation, as required by the Agreement, actually commenced on 19 March with the information provided to the employees by Mr Luddington. It submits it has been open and transparent since that time and consulted “uphill and down dale” 33 to try and get an agreed position with the employees and the CFMEU.

[64] Mr Luddington’s evidence indicates that on 19 March he attended a meeting arranged by the Emergency Response and Security Site Manager at the site, Mr Jason Shields, with the ESOs and Team Leaders. Mr Nick Prass from MSS also attended. Mr Luddington said approximately 16 employees were present, representing the majority of the operational staff employed at the site. He said he read verbatim from the first page of a document, which was attached to his witness statement as ML1 and headed, “Staff Meeting, Loy Yang 19 March 2014 – Key notes.” He said he and Mr Shields and Mr Prass then responded to various questions raised by the employees. A copy of the document, which also included a Q & A section, was then handed out to the employees at the meeting. Copies were subsequently emailed to all employees by Mr Shields on 21 March.

[65] The first page of the document is set out in full at this point.

“Following consultation with MSS Medical Directorate and the Victorian health Department, our client AGL Loy Yang is going to make a change to the current MSS contractual operations. This is required to continue to deliver a high standard of clinical care on site whilst ensuring compliance with the Drugs, Poisons and Controlled Substances Act 1981.

A Registered Health Practitioner is required to be on site in order to continue to provide a high standard of clinical care for the workforce and to enable the administration of certain drugs and treatments. A Registered Health Practitioner is defined as being a registered health professional with the Australian Health Practitioners Registration Council (APHRA). As such, there will changes to the qualification requirements for five (5) Emergency Service Officer's (ESO) roles, with the proposed changes effective from 1 July 2014.

Five ESO positions will be upgraded to include an additional Registered Nurse Qualification requirement. As it is not possible for incumbent ESOs to attain a Bachelor of Nursing and complete an internship to become Registered Nurse in a reasonable timeframe, five ESO positions are required to be made redundant.

In accordance with Clause 23 of the CFMEU MSS Enterprise Agreement 2012, MSS Strategic Medical will consult with employees and their nominated representative(s). The selection process will be fair and equitable for all parties concerned and applications for voluntary redundancy will also be considered.

As such, we will arrange to have a meeting in early April 2014 to discuss t he full impact of the proposed changes requested by our client and to undertake additional consultation as to the plan and the process to manage the changes.

In the meantime, as per the above clause, we remind you of your responsibility to respect the status quo and continue to deliver a professional service to AGL Loy Yang and their staff and contractors.

MSS understands that this news will come as a surprise to employees and is likely to cause concern and uncertainty. If you would like to discuss any concerns that you have, please speak with Jason Shields, Matt Luddington or make use of the Employee Assistance Program (EAP). This service is available to all employees and eligible immediate family members. This service is confidential and allows you to discuss the current situation. The contact number for this service is 1300 361 008.” 34

[66] The Q & A section that follows repeats most of the information on the first page, although some additional information is contained in the following exchanges.

“Q. Has MSS Strategic Medical considered any options other than redundancy?

A. Yes. MSS Strategic Medical has looked at up-s killing existing employees, which would take too long (Up to years), or providing additional headcount which is not commercially viable.

Q. Will the five Registered Nurse/ESOs have the same qualifications currently required on site for emergency response duties?

A. Yes. The difference will be that they also hold the qualification of a Registered Nurse. More information will be supplied in the consultation process.” 35

[67] Mr Luddington’s evidence then makes reference to various meetings and discussions with the CFMEU and the employees that occurred from that time. It notes the CFMEU also made investigations on its own behalf about the requirements of the Drugs, Poisons, and Controlled Substances Act, presumably to ascertain what other options might be available in response to what AGL was wanting to have in place at the site.

[68] The submissions on behalf of MSS also make reference to a further communication from Mr Luddington to the employees in early June as a further example of its commitment to consult and negotiate in good faith when it indicated:

“MSS would like to take this opportunity to ask you directly, whether you as a group or as individuals, can think of any alternative to the proposed redundancy solution. If you have any ideas, thoughts, comments or questions you are encouraged to contact Matt Luddington...or Jason Shields...” 36

[69] However, it does appear that at least by 19 March, given the tenor of the document Mr Luddington gave to the employees at the time, MSS had reached a decision about what was going to be implemented in response to the demands of its client. This is confirmed by the fact that at about this time, or shortly after, it began advertising to recruit employees with Registered Nurse Qualifications to be trained as ESOs, and these processes of recruitment and training continued from this point.

[70] The following extracts from the document of 19 March are relevant in concluding that MSS had reached a decision about what was to happen. Firstly, paragraph 2 concludes by indicating:

“As such, there will changes to the qualification requirements for five (5) Emergency Service Officer’s (ESO) roles, with the proposed changes effective from 1 July 2014.” 37

[71] The next paragraph states, “Five ESO positions will be upgraded to include an additional Registered Nurse Qualification requirement. As it is not possible for incumbent ESOs to attain a Bachelor of Nursing and complete an internship to become Registered Nurse in a reasonable time frame, five ESO positions are required to be made redundant.” 38 The balance of the document then continues to deal with the consequences of those decisions and how they are proposed to be dealt with.

[72] As indicated, I am satisfied MSS had made a decision at this point about the changes it was going to put in place at the site. Having come to this decision it was then entering into a process of consultation about how the consequences stemming from that decision might be dealt with and resolved.

[73] The CFMEU in its submissions made reference to the decision of Commissioner Smith, as he was then, in Vodafone. Extracts from the decision have already been set out in this decision and are not restated now in full detail. However, Commissioner Smith stated in part, “Consultation is not perfunctory advice on what is about to happen” 39, and “Consultation is providing the individual, or other relevant persons, with a bona fide opportunity to influence the decision maker.”40 He continued to indicate it was not intended to be joint decision-making, or a frustrating barrier to the prerogative of management to make decisions but:

“Consultation allows the decision making process to be informed, particularly as it may effect the employment prospects of individuals. The opportunity to seek to avoid or mitigate the effects of a termination can not be underestimated by those who wield power over those and their families who will the subject of the exercise of that power.” 41

[74] The CFMEU also made reference to the decision of Logan J in QR Limited when he stated, “A key element of that content is that the party to be consulted be given notice of the subject upon which that party’s views are being sought before any final decision is made or course of action embarked upon.” 42 It is also noted that His Honour concluded by indicating, “Finally, a right to be consulted, though a valuable right, is not a right of veto.”43

[75] I have already made reference to what clause 23 of the Agreement requires. Its essence is captured in paragraph 2 of the clause. The next paragraph continues to set out what follows from that point. A further obligation also arises in the context of this matter in clause 15, given the rationale for the changes MSS now wants to introduce, and what follows as a consequence. It requires that “the relevant parties shall confer and reach agreement prior to any changes being implemented”, subject to the proviso that such agreement “shall not be unreasonably withheld.” 44

[76] The clause does not contain any reference to what “confer” requires, but it clearly envisages processes of discussion and negotiation with the objective of reaching agreement about the changes before they are implemented. Given that the changes involved in the present matter are agreed to be “a major change that is likely to have a significant effect on the employees covered by this Agreement” 45 they must also be considered in the context of what clause 23 requires.

[77] In conclusion, and having considered all the circumstances, I am satisfied that MSS has not complied with all of the obligations contained in clause 23, in particular, because it only commenced a process of consultation after it had made its decision about how AGL’s changed requirements would be met.

[78] MSS submits any deficiencies at the outset in the consultation process have been effectively overcome by what has occurred since, including the various conference processes in the Commission. In its submission the Commission should now make orders providing for a change to the existing staffing arrangements because the CFMEU is, at this point, unreasonably withholding its agreement to these changes.

[79] I am not prepared to make orders to that effect at this time. On one hand any such order would effectively be rewarding MSS in circumstances where it has not complied with its obligations under the Agreement. I am also satisfied the CFMEU has raised legitimate issues in the context of this application, as it is entitled to do, about whether MSS has the ability to do what it now proposes, given the terms contained in clauses 15 and 16 of the Agreement. This decision has now dealt with those issues.

[80] It is obviously not possible to “unscramble the egg”, or return the parties to the position they might have been in six, nine or even twelve months ago. However, I am satisfied it is appropriate for the parties to now be directed to confer in accordance with clause 23 and clause 15, against the background of this decision, in an endeavour to reach a written agreement about the implementation of changes that respond to the requirements of MSS’s client. That process is obviously subject to the proviso that agreement should not be unreasonably withheld, and if any party believes the process is being abused and delay is the primary motivation, then it would be at liberty to bring the matter back to the Tribunal.

[81] In coming to this decision the Commission is obviously mindful of the fact the changes are being implemented at the request of AGL with the laudable objective of providing a higher level of clinical care for employees on the site. It is also acknowledged that it is not a viable option for MSS to continue the employment of an additional number of employees in the longer term. To this end it is proposed that the parties focus during the next 10 – 15 working days on the processes of consultation, as directed by this decision, and in accordance with what the Agreement requires.

[82] The CFMEU also raises issues to do with the failure of MSS to observe the “status quo” requirements in clauses 23 and 24. It is to be expected that this obligation will be observed during the further processes of consultation that follow as a consequence of this decision. This means the employees on rostered duty at any time shall be as presently provided for in clauses 15 and 16 of the Agreement. It follows that there should be no further implementation of any decisions by MSS to change the existing arrangements until such time as the consultation provisions in the Agreement have been complied with.

COMMISSIONER

Appearances:

Mr E White of Counsel and Ms C Kazakoff of Slater and Gordon appeared on behalf of the Applicant.

Ms R Sweet of Counsel appeared on behalf of the Respondent.

Hearing details:

2014.

Melbourne:

21 and 23 July.

 1   AE895899

 2 F10 application submitted on 2 May 2014 at page 2

 3 F10 application submitted on 12 May 2014 at page 2

 4   Outline of Submissions of the Applicant at para 5

 5   Above n.i at cl.3

 6   Above n.iv at para 7

 7   Above n.i at cl.15

 8   Ibid

 9   Ibid at cl.16

 10   Above n.iv at para 17

 11   Above n.i at cl.24.1(d)

 12   Exhibit CFMEU1, Annexure 1 at para 2

 13   Ibid at para 3

 14   [2001] AIRC 1291

 15   Ibid at [37]

 16   [2001] AIRC 1189

 17   Ibid at [25]

 18 [2010] FCA 591

 19   Ibid at [44]

 20   Above xii at para 1

 21   Ibid at para 2

 22   Transcript at PN1327

 23   Ibid at PN1328

 24   Exhibit MSS2, annexure ML5 at para 3

 25   Transcript at PN1370

 26   Above n.i at cl.15

 27   Ibid

 28   Ibid at cl.3

 29   Above n.i at cl.15

 30   Ibid at cl.23

 31   Ibid

 32   Ibid

 33   Transcript at PN1293

 34   Above n.xii at page 1

 35   Ibid at page 3

 36   Above n.xxiv

 37   Above n.xii at para 3

 38   Ibid

 39   Above n.xvi at [26]

 40   Ibid

 41   Ibid

 42   Above xviii at [44]

 43   Ibid

 44   Above n.i at cl.15

 45   Ibid at cl.23

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