Construction, Forestry, Mining and Energy Union v Norske Skog Paper Mills (Australia) Pty Ltd

[2016] FWC 2800

[2016] FWC 2800

FAIR WORK COMMISSION

REASONS FOR DECISION

Fair Work Act 2009
s.437—Protected action

Construction, Forestry, Mining and Energy Union
v
Norske Skog Paper Mills (Australia) Pty Ltd
(B2016/77)

Australian Workers’ Union, The
v
Norske Skog Paper Mills (Australia) Pty Ltd
(B2016/480)

“Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU)
v
Norske Skog Paper Mills (Australia) Pty Ltd
(B2016/481)

Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia
v
Norske Skog Paper Mills (Australia) Pty Ltd
(B2016/484)

COMMISSIONER LEE MELBOURNE, 10 MAY 2016

Proposed protected action ballots of employees of Norske Skog, Boyer Hill.

[1] This matter involves an application by the Construction, Forestry, Mining and Energy Union (CFMEU), The Australian Workers’ Union (AWU), the “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU) and the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (CEPU) (the Applicants) for protected action ballot orders in relation to certain employees of Norske Skog Paper Mills (Australia) Pty Ltd, Boyer Hill (the Respondent), pursuant to section 437 of the Fair Work Act 2009 (the Act).

[2] In separate decisions 1 on 29 April 2016 I granted the applications for protected action ballot orders for the CFMEU, the CEPU and the AWU. In a further decision2 on 2 May 2016 I issued a decision granting the application for a for a protected action ballot order for the AMWU.

[3] In the decisions at paragraphs 3 and 4 I noted as follows:

“[3] On 26 April 2016, my Chambers was advised by the Respondent that it did not object to the application. However, the Respondent advised that they wished to make an application pursuant to s.443 (5) of the Act to extend the period of notice referred to in s.414 (2)(a) of the Act from 3 working days to 7 working days. The Applicant opposed the extension of the period of notice.

[4] In order to deal with the application to extend the period of notice, I conducted a hearing on 28 April 2016 in Hobart. The matter was listed with three related protected action ballot order applications B2016/480, B2016/481 and B2016/484. At the conclusion of the hearing, I was not satisfied, that there were exceptional circumstances to justify an extension of the notice period specified in s.414 (2)(a) of the Act to 7 working days. I delivered an ex tempore decision not extending the period of notice. I will provide written reasons for my decision on that point in due course.”  3

[4] What follows are my written reasons for my decision to not extend the period of notice.

Background to the applications

[5] The applications for protected action ballot orders submitted by the Applicants seek authorisation for a range of types of industrial action ranging from bans on the reading of emails through to periodic and indefinite stoppages of a range of durations. I note that the questions to be put to the employees to be balloted are in identical terms. The initial application to extend the notice period sought that it applies to all types of industrial action and in respect to all four of the applications. However, during the hearing Mr Izzo for the Respondent amended that position and clarified that they sought to exclude from the application for extension questions 2, 3, 8, 11, 13, 14, 16 and 22 in the respective draft orders.

The evidence

[6] Evidence in support of the application was provided by Mr Rod Bender, General Manager for the Respondent. No reply evidence was called by the Applicants.

[7] In summary, the evidence of Mr Bender was as follows: The Boyer Mill (the Mill) is the only pulp and paper mill in Tasmania and only one other pulp and paper mill for newsprint grades exists in Australia which is the Mill in Albury, also operated by the Respondent. However, it is only the Boyer Mill that makes Light Weight Coated Paper (LWCP) which is used to print catalogues and magazines and High White Paper (HWP) which is used to make newspaper inserts and some catalogues. The Albury Mill (and other mills in Australia) do not make these products. The Mill also produces book grade paper, though it was not clear on the evidence if the Mill was the only producer of that type of paper in the country.

[8] There is an alternative supply of both LWCP and HWP by way of imports from Europe. However, Mr Bender’s evidence is that the timeframes for supply from overseas (8-10 weeks) are a significant factor, with the Boyer Mill able to supply product on an “as needed basis”. An example was given of an order to allow printing of Mother’s Day catalogues by Myer having a two week turnaround time which the company was able to meet within 8 days. The evidence of Mr Bender is that in response to this speed of supply, the customers of the Mill had altered their previous practice of maintaining large warehouses of stock and relying on the “as needs” ability of the Mill to deliver. His evidence was that the major customers had reduced their stocks of HWP to be sufficient for about 3-4 weeks.

[9] It emerged from the evidence that it was only in the last two years that the Boyer Mill had shifted its production to making LWCP. It did so in response to the significant contraction in demand for newsprint paper that is occurring globally. Mr Bender also made clear the change in the operation of the Mill was a significant investment that was supported financially by both the State and Federal Governments.

Stopping and starting the machines

[10] There are two large paper machines at the Mill for production, PM2 and PM3 machines. To stop either machine takes approximately 4 hours and to restart either machine takes 10-12 hours. The start-up of the machines has associated risks. An example given was a recent start-up of PM2 machine where damage occurred resulting in costs to the company of approximately $100,000. This incident was described as “not uncommon”. Both PM2 and PM3 machines are shut down for scheduled maintenance once a month for around 10 hours each. On cross examination, Mr Bender was tested on how common or uncommon it was for the machines to break down. His evidence was in part:

“Well again, I don’t want to argue about what’s common - what’s a definition of common and uncommon. We - you know, as general manager I would have been heard before saying we routinely have these things happen, to try and emphasise to employees at the mill that are responsible for those plants, that we should make it less routine. But it isn’t uncommon but we try every day to prevent them”. 4

[11] Ultimately, Mr Bender was asked if factoring in scheduled and unscheduled shut downs of the machines, it was fair to say there was at least one every two weeks. His answer was as follows:

“I would say that there is at least one every week or two, yes, at the mill and they are random in nature so it doesn’t fall - we don’t have them - they’re not routinely happening every week or every two weeks, but on average that would be a reasonable estimate”. 5

[12] Mr Bender conceded that the 3 day notice period would not impact on the shut downs but he emphasised that faults occur on start up. His evidence is that there is damage 30% of the time to pulping plant restarts with costs of $30,000 and the shutdown period being consequently extended by 4-12 hours. There is also damage “sometimes” on paper machine restarts.

[13] There is also the prospect of loss of unused pulp and coating materials and the prospect of the materials “going off” leading to a need for a purge of the system. This could lead to losses of between $50,000 and $20,000 “…when the machines are shut down unexpectedly or on short notice. The greater the notice period, the greater our ability to reduce the unnecessary wastage of pulp and coating materials, as well as to minimise the risk of entire pulp/water circuit bacterial contamination”. 6 However, Mr Bender’s evidence during cross examination was “it’s always the case we have unused pulp, coating and other materials that end up being lost when the shutdown periods are longer than 24 to 48 hours”. 7

[14] It is evident that the relationship between the longer notice period sought and the ability to avoid the losses from the pulp going off would be by virtue of the fact that the Respondent would be able to avoid shutting down the machines or at least to shut down the machines less frequently.  8

Defensive action

[15] There are two aspects to the defensive action that the Respondent anticipated taking. The first is the sourcing of an alternate labour supply. In order to run the Mill safely and depending on the action taken, the Mill may need to source alternative or additional skilled workers. The types of workers and their numbers are set out in the supplementary statement of Mr Bender. 9 Mr Bender’s evidence is that in order to ensure continued production at the Mill it may be necessary to engage non-local skilled workers to operate the Mill and that to put this in place would likely involve the engagement of Albury Mill workers and the complexity of arranging for these staff to get there would take longer than three days. Mr Bender did not particularise how much longer than 3 days it would take to get the staff in place. Mr Bender agreed on cross examination that the distance of Boyer from the Hobart Airport is 55 minutes. Mr Bender also agreed that a number of the trade’s employees are available locally but that the majority would not be available locally. It is in that context that Mr Bender considers the Mill to be “remote”.

[16] The second component of defensive action is that there would be additional notice time for the company to give its customers of a likely impact on supply. Mr Bender agreed when questioned by Mr Pill that in terms of the largest clients of the Mill that they are around 13 in number and notifying them would require 13 phone calls. However, Mr Bender sought to emphasise the impact on the commercial relationship was his concern, not making the phone calls per se.  10

Impact of the action

[17] Mr Bender anticipates that the impact of the action if the company is not able to reorganise its workforce so as to allow it to keep the mill operating would have substantial financial consequences as well as significant commercial and reputational impact on its valued customers. Alternately, Mr Bender’s evidence is that “the increased notice period sought would likely enable Norske Skog to keep the mill operating, ensuring Australian customers demand for short term supply of LWC paper and demand for high white newsprint can continue to be met.”  11 In these circumstances, the impact of the action on the company would appear to be limited to the cost of supplying the alternate labour and speculation from Mr Izzo of a possible shut down of the machines after some longer time as the Respondent may not be able to maintain staffing in the long run, taking into account the need for fatigue management of employees.12

Law to be applied

[18] S. 443(5) is in the following terms:

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

(5) If the FWC 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.”

[19] The Respondent’s outline of submissions filed 27 April 2016 set out a useful summary of previous consideration of the meaning of exceptional circumstances which I reproduce below:

“The meaning of ‘exceptional circumstances’

2.4 Numerous decisions of the Commission have considered the proper interpretation and application of the phrase "exceptional circumstances", within the context in which it appears in section 443(5) of the FW Act.

2.5 The seminal decision which outlines the approach uniformly adopted by the Commission in interpreting and applying the phrase "exceptional circumstances" within the present context is that of Vice President Lawler in CEPU v Australian Postal Corporation [2007] AIRC 848. In this case, Vice President Lawler cited with approval the decision of Rares J of the in Ho v Professional Services Review Committee No 295 [2007] FCA 388 as follows:

“[10] 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.

[11] 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.”

2.6 The Vice President went on to state:

“[21] Essentially, what is required in determining whether exceptional circumstances justify an extension of the required notice 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 diminutions 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.

[22] The first example provided in Davids Distribution provides an illustration of where exceptional circumstances may justify an extension of the required notice period. A sophisticated piece of plant, such as a smelter, may take many days to shut down without damage. The employer is exposed to wholly disproportionate damage if it is prevented by too limited a notice period from undertaking an orderly shutdown of the plant. ..”

[20] Representatives for both the AMWU and the Respondent referred me to a number of previous decisions where exceptional circumstances were found or not found to have arisen.

Consideration

[21] There is the question of whether the Boyer Mill is what might be considered “remote”. It is clear that the Mill is less than a one hour drive from Hobart and Hobart Airport. This could hardly be considered to be a remote location. However, there was a focus on the logistics of a possible alternate labour supply to the particular location. On that score, it is apparent that a number of trade related employees could be located locally, though beyond establishing that this would include electricians there is little detail on that point. Irrespective, the evidence establishes that it will be likely the Respondent will need to bring a significant number of staff who possess the skills to operate the machines in from Albury. The evidence is that to do so would be complex and take longer than three working days to put in place. The evidence does not establish how much longer it would take other than establishing that if 7 days’ notice was provided that it would be likely the Respondent could keep the machines operating and avoid shutting them down.

[22] Mr Izzo sought to draw a parallel between this case and the case dealt with by Senior Deputy President Richards in “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU) v Clyde Babcock-Hitachi (Australia) Pty Ltd (Hitachi) 13. In Hitachi, there was a consideration of the remote location of the sites making the bringing in of a large alternative workforce impossible. However, it is not clear from the decision where or how remote the locations were. I also note that the consideration of remoteness was not a factor that stood alone; it was clearly linked to the totality of the circumstances, including the consequences of managing plant shut downs. 14

[23] I accept that there is a risk or even likelihood that there will be a need to shut down one or both machines if particular forms of industrial action are taken. This requires a consideration as to what occurs or is likely to occur when the machines are shut down. There will be circumstances where the impact of a shutdown of machinery will be of such consequence that it is an exceptional circumstance. The example cited in Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Australia Postal Corporation 15 is that of a smelter which may take many days to shut down without damage. This was a factor in The Australian Workers’ Union v Alcoa Portland Aluminum Pty Ltd16 where Commissioner Lewin accepted that a shutdown of the pot lines in an aluminium smelter would have the consequence of resulting in an extended shut down for “weeks or possibly months” leading to a finding that there were exceptional circumstances.

[24] In this matter, the two machines can be shut down in a matter of hours. Mr Bender is rightly concerned about the risk of damage caused when the machines start up. However, that risk occurs every time there is a start up after the shut downs that occur now. On the evidence, planned and unplanned shutdowns are not an exceptional event. The machines are shut down either for planned shut downs or unplanned shut downs at least once every week or two. As a result of the industrial action there may well be more machine shut downs. However, the fact that there is a shutdown of the machines is not exceptional.

[25] There are also losses of raw material that occur whenever there is a shut down for longer than 48 hours. However, there was no evidence as to how long the shut downs that occur on average once a week went for nor whether a shutdown of longer than 48 hours was unusual or exceptional.

[26] The Respondent will with relative ease, be able to notify their customers of the prospect of industrial action. The number of customers who use the bulk of the product from the Mill are relatively small in number and in that respect informing them will be relatively straightforward. The customers will be able to order substitute supply from Europe if they desire to reduce the impact on them from the effects of any industrial action. While this is less than ideal from their perspective, they do have that option available.

[27] I have considered the evidence of Mr Bender that the Mill has been supported by the State and Federal Governments as part of an economic strategy for the state. Across the country, there are a number of industries that are supported by governments for various reasons. This does not constitute an exceptional circumstance.

[28] Taking into account the evidence, I am satisfied that depending on the industrial action taken there may well be an impact on the Respondent which will affect its profitability and potentially its relationship with its customers. However, it is often the case that industrial action has such an impact. That does not necessarily mean that there are exceptional circumstances within the meaning of that term consistent with its consideration in previous decisions of this Commission. In this case, I am not satisfied on the evidence that the impact will be disproportionate. Overall, considering the totality of the evidence, I am not satisfied that there are exceptional circumstances in existence in this matter. As the circumstances are not exceptional there is no basis to justify an extension of the notice period as sought by the Respondent.

[29] While I am not satisfied that there are exceptional circumstances even if I was to reach an alternate view, I do think this is a case where there is justification for the extension of the notice period. Determining if an extension of the required notice period is justified involves “…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 diminutions in the effectiveness of the employees' bargaining power that results from such an extension.”  17 If a 7 day notice period was allowed, this is likely to allow the plant to avoid the additional shutdowns associated with the industrial action. While there will still be an impact on the Respondent it will substantially diminish the impact of the industrial action. I agree with Senior Deputy President Richards in Hitachi when he said “the structures of the bargaining provisions of the Act generally are not predicated upon the tribunal shielding or…insulating the employer from the effects of protected industrial action. Nor should the leverage of parties in a bargaining context be disturbed lightly.” 18

[30] It follows from the consideration above that I am not satisfied that there are exceptional circumstances that would justify an extension of the notice period specified in s.414 (2)(a) of the Act to 7 working days in respect to the action specified in the application of the Respondent as amended at the day of the hearing. It is for these reasons I declined to grant the extension sought.

COMMISSIONER

L Izzo on behalf of Norske Skog Paper Mills (Australia) Pty Ltd

W Ash on behalf of the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia

H Pill on behalf of “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU)

K Midson on behalf of The Australian Workers’ Union

L Dooley on behalf of the Construction, Forestry, Mining and Energy Union

Hearing details:

2016.

Hobart by video link to Melbourne and Brisbane:

April 28.

Final written submissions:

28 April 2016.

 1   [2016] FWC 2692, [2016] FWC 2701, [2016] FWC 2699

 2   [2016] FWC 2716

 3   [2016] FWC 2692

 4   PN136

 5   PN142

 6   Exhibit 2, Supplementary Statement of Mr Rob Bender, [5(b)]

 7   PN151

 8   PN193-PN200

 9   Exhibit 2, Supplementary Statement of Mr Rob Bender, [1] – [2]

 10   PN167

 11   Exhibit 1, Statement of Rod Bender, [33]

 12   PN297-PN298

 13   [2011] FWA 2291

 14   [2011] FWA 2291 [6]

 15 167 IR 4

 16   [2014] FWC 2289 [14]

 17 167 IR 4 [21]

 18   [2011] FWA 2291 [7]

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