Construction, Forestry, Mining and Energy UnionvEnergy Australia Yallourn Pty Ltd

[2017] FWC 1070

[2017] FWC 1070

FAIR WORK COMMISSION

INTERIM DECISION

Fair Work Act 2009
s.739 - Application to deal with a dispute

Construction, Forestry, Mining and Energy Union
v
Energy Australia Yallourn Pty Ltd
(C2017/491)

COMMISSIONER ROE MELBOURNE, 23 FEBRUARY 2017

Resolution of dispute in accordance with the dispute resolution procedure of the EnergyAustralia Yallourn Enterprise Agreement 2013. Dispute concerning warning issued to Mr Aitken pursuant to Clause 29 of the Agreement. Meaning of status quo in Clause 28 Dispute Resolution Process of the Agreement.

Introduction

[1] This dispute is about a verbal warning issued to Mr Aitken pursuant to Clause 29 of the EnergyAustralia Yallourn Enterprise Agreement 2013 (the Agreement). Following a conciliation conference it was agreed that it was necessary to determine the following preliminary questions prior to any further proceedings in respect to the dispute:

a. What does the status quo mean in respect to the warning letter issued to Mr Aitken?

b. Is the dispute properly categorised as a Category 1 or Category 2 matter pursuant to Clause 28 of the EnergyAustralia Yallourn Enterprise Agreement 2013?

[2] It is not necessary to resolve disputed facts in order to determine these two questions. The facts necessary for the determination of these two questions relate to the nature and history of the dispute and they are adequately set out in the documents provided with the application and tabled at the conciliation conference on 6 February 2017. Therefore the parties agreed that these two questions will be determined by the Fair Work Commission on the basis of written submissions.

[3] The relevant clauses of the Agreement are as follows:

“28 DISPUTE RESOLUTION PROCESS

The DRP process is to be used to assist in resolving any matter or dispute pertaining to the employment relationship.

For matters that are in dispute, that go to the application or interpretation of this Agreement or with matters arising under the National Employment Standards (NES), this clause facilitates access to the Fair Work Commission for conciliation and, if necessary, arbitration ('category 1 matters').

For all other matters pertaining to the employment relationship that do not go to the application or interpretation of the Agreement or are not matters arising under the NES ('category 2 matters'), the steps set out below shall apply, except that the Fair Work Commission shall only be empowered to exercise conciliation powers.

28.1 INITIAL PROCESS

(a) In the event of any dispute arising the following procedure will apply.

STEP 1 The matter will, in the first instance, be discussed between the employee(s), and the Team Leader involved.

If the matter remains unresolved it shall be elevated to STEP 2 as soon as practicable;

STEP 2 The matter may be referred in writing, by the employee(s) to the relevant Line Manager. The Line Manager will provide a written response to the issue within three working days.

If the matter remains unresolved;

STEP 3 It will be referred for discussion between the appropriate Union Official or other employee representative and the Executive Manager Yallourn, or their nominated delegate. The Executive Manager Yallourn will provide a response to the issue as soon as practicable.

If the matter remains unresolved;

STEP 4 It may be referred to the Fair Work Commission (FWC) for conciliation or arbitration (for 'category 1 matters') or conciliation only (for 'category 2 matters').

Employees may bring a support person or the appropriate union representative to any meeting held under this clause with the Parties being able to elect to bring representatives of their own choosing to any matter referred to conciliation or arbitration.

(b) The dispute may be referred to FWC at any stage by agreement of the parties in the interest of speedy resolution of the dispute.

(c) For 'category 1 matters', during the entire period, from the time when the dispute first arises until the time of its resolution (whether by discussion or negotiation, or by proceedings before the FWC), the status quo or 'normal work' shall continue, unless the maintenance of status quo or performance of normal work would place at risk the health or safety of the employee(s) concerned. No party to the dispute shall suffer any prejudice as to the resolution of the matter by reason only that normal work continues as required by this paragraph.
(d) In respect to category 2 matters, either party may notify the FWC of a dispute and seek to have the matter dealt with on an expedited basis, provided that the notifier has satisfied steps 'l and 2 of the initial process. The status quo shall apply to category 2 matters in the same way as category 1 matters unless one party argues successfully before FWC that the status-quo should be altered or removed. Any such application shall not occur until at least 14 days has elapsed since the first conciliation hearing of the notified matter. The dispute and status-quo provision ends when the FWC determines that the conciliation process is concluded.

(e) 'Normal work' means the work normally performed by an employee and "status quo " means the circumstances existing immediately prior to the change or circumstance leading to the proposed change which resulted in the dispute arising.

29 DISCIPLINE PROCEDURE

The discipline procedure will be invoked in cases where unacceptable employee performance and/or conduct require follow-up action.

The discipline procedure aims to correct / address poor conduct, work behaviour or performance.

Disciplinary action can be commenced at any of the four steps after an investigation has been conducted.

This clause does not prevent summary dismissal on account of serious misconduct.

STEPS	LOCATION	WHO’S INVOLVED	PAPERWORK	EFFECTIVE FOR
1. Oral Warning	Workplace or Office	Employee* Team Leader	Diary notes.	Up to 3 months
2. First Written Warning	Office	Employee* Team Leader	Note to file, signed by both employee and Team Leader, detailing the reason for the disciplinary action. An employee may refuse to sign note.	Up to 12 months
3. Final Written Warning	Office	Employee* Team Leader Line Manager	Note to file, signed by both employee and Team Leader, detailing the reason for the disciplinary action. An employee may refuse to sign note.	Up to 24 months
4. Dismissal	Office	As above plus Senior Manager	Note to file detailing the reasons for dismissal.

Written documentation will be recorded on file and will include dates for the disciplinary action to be reviewed. Reviews shall occur at 3 monthly intervals if required. The parties will determine whether a future review date is required. If no further review is required, a note will be placed in the employee's file stating that the disciplinary letter in question, no longer has effect.

The employee may choose to involve his or her support person/representative at any or all the steps of this Discipline Procedure. The Company shall allow reasonable advance notice of any meetings or interviews to allow the employee to arrange for their support person to attend but will not unnecessarily delay proceedings if such support cannot be arranged.”

[4] Neither party argues that the disputes settlement clause (Clause 28) provision in respect to status quo or normal work is ambiguous or uncertain. Neither does any party argue that Clause 29 in respect to Category 1 and Category 2 is ambiguous or uncertain.

What does the status quo mean in respect to the warning letter issued to Mr Aitken?

[5] The CFMEU argues as follows:

“6. Paragraph 28(1)(c) of the Agreement, which applies to “Category 1 matters”, provides that the “status quo” or “normal work” shall continue during the entire period from the time when a dispute first arises until its resolution.

7. Paragraph 28(1)(d) of the Agreement, which applies to “Category 2 matters”, states that “the status quo shall apply ... in the same way as a category 1 matter unless one party argues successfully before FWC that the status-quo should be altered or removed”.

8. The terms “status quo” and “normal work” are defined by paragraph 28(1)(e) of the Agreement:

(a) “‘Normal work’ means the work normally performed by an employee”.
(b) “‘Status quo’ means the circumstances existing immediately prior to the change or circumstances leading to the proposed change which resulted in the dispute arising”.

9. In the context of a dispute over the First Written Warning provided to Mr Aitken, the application of the subclause 28.1 is clear. The Agreement requires that “normal work” or the “status-quo” shall continue. With respect to the definition of status quo, the change or circumstances leading to the proposed change which resulted in the dispute arising, is the warning given to Mr Aitken. The status quo is therefore the “circumstances existing prior to the change”, that is, the circumstances where Mr Aitken had not received the warning.

10. Therefore the practical effect of the subclause can only be that the operation of the warning is suspended pending the earlier of:

(a) the resolution of the dispute; or
(b) in the case of Category 2 matters, if the matter were a Category 2 matter, one party arguing successfully before the Commission that the status-quo should be altered or removed in accordance with clause 28.1(d) of the Agreement.”

[6] Energy Australia argues as follows:

“8. Clause 28(c) of the Agreement provides that, in respect of "category 1 matters", the "status quo or normal work" (our emphasis) will continue until the dispute is resolved, except in certain circumstances.

9. Clause 28(d) of the Agreement states that "the status quo shall apply to category 2 matters in the same way as category 1 matters" until such time as a party successfully applies to the Commission to alter or remove the status quo, recognising that (in the absence of the Commission being able to arbitrate the dispute) there may be no definitive end to the process of conciliation.

10. Clause 28(e) of the EnergyAustralia Yallourn Enterprise Agreement 2013 (Agreement) defines "normal work" and "status quo" to mean:

"'Normal work' means the work normally performed by an employee and 'status quo' means the circumstances existing immediately prior to the change or circumstance leading to the proposed change which resulted in the dispute arising". (our emphasis)

11. The Applicant summarises the effect of these provisions by concluding that the status quo is the "circumstances existing prior to the change" and that the "change" in this instance is the warning issued to Mr Aitken. However, this conclusion ignores the words of clause 28(e) emphasised above, in particular the words "proposed change".

12. It is submitted that on a plain reading of the definition in clause 28(e), the application of the status quo can only pause the implementation of change that has been announced but has not yet taken effect (i.e. is "proposed"). It can be imagined that this would apply in a situation where, for example, the Respondent announced that some change in the work or conditions of its employees would take effect from a certain future time and a dispute was subsequently notified.

13. Perhaps in recognition of the fact that these circumstances would not be applicable to every dispute, clause 28(c) of the Agreement also requires that "normal work" should continue while a dispute is on foot.

14. In this case, the warning is not a step along the way to some "proposed change" that is the subject of the dispute. The warning itself is the subject of the dispute and it has been issued, it is not merely "proposed". Accordingly, having regard to the definition in clause 28(e) of the Agreement, there is no basis to reverse the issuance of the warning to Mr Aitken while this dispute remains on foot.

15. The status quo or "normal work" that should apply is that Mr Aitken should continue to perform his normal duties. This is what is currently occurring.

16. It is noted that the warning does not impact on the work that Mr Aitken is performing or the conditions afforded to him in any way.

17. In the alternative, if the application of the "status quo" means that the warning is treated as not having been issued while this dispute remains on foot, the Respondent submits that the limitation on the "effective for" period in clause 29 of the Agreement could not be said to commence running until the warning is confirmed.”

[7] I agree with the alternative submission of Energy Australia that the limitation on the "effective for" period in Clause 29 of the Agreement could not be said to commence running until the warning is confirmed.

[8] Energy Australia argues that the words “the change” in the definition of status quo must be read down as meaning “the proposed change”. This is a strained and unnatural reading of the phrase: “'status quo' means the circumstances existing immediately prior to the change or circumstance leading to the proposed changewhich resulted in the dispute arising.” If the construction urged by Energy Australia was to be adopted then the words “immediately prior to the change” add little to the words “leading to the proposed change”. Considered in context of a disputes settlement clause which has very broad application – “any matter or dispute pertaining to the employment relationship” – the very narrow reading urged by Energy Australia is incongruous. It is unusual and unnatural to read down the meaning of the first phrase by reason of the second phrase. If this was the intention of the authors then the words “proposed change” would have been used when “change” was first referred to. I do not consider that much significance can be attached to the use of the definite article prior to the words “the change” and “the proposed change”. I do not accept that the use of the definite article means that the authors intended that it was necessarily the same particular change that was being referred to in the first and second phrase. There are many proposed and actual changes which can cause a dispute to arise; I consider that the use of the definite article is simply a reference to the particular change or proposed change involved.

[9] If the reading urged by Energy Australia were to be adopted then there would be a perverse incentive for the employer to implement change in order to avoid the status quo provisions of the disputes settlement procedure. There would then also be a tension between the concept of “normal” work and the “status quo”. The reading urged by the CFMEU removes any inconsistency between the two concepts. In the main the requirement for “normal work” means that where there is a desire on the part of one party to change current practice and this is in dispute no change can occur, pending resolution of the dispute, unless it would risk health and safety or if it would prejudice the resolution of the matter. In the main the requirement for the status quo means that one party cannot achieve the implementation of the change which is disputed whilst the matter is in dispute and prior to the resolution of that dispute. In some circumstances the two concepts are the same but in others they are different. The fact that the two concepts are complementary but not the same is illustrated by the fact that Mr Aitken is and would be performing “normal work” despite the existence of the warning but if Energy Australia relied upon the existence of the warning when taking further disciplinary action against Mr Aitken the status quo that existed prior to the warning would not be applied.

[10] The concept of “normal work” and the concept of the “status quo” involve some inconvenience to the parties during the period of resolution of a dispute. In some circumstances this may provide an incentive for the speedy resolution of disputes. The inconvenience is acknowledged by the requirement in the clause that the status quo or normal work shall continue for the “entire period, from the time when the dispute first arises until the time of its resolution (whether by discussion or negotiation, or by proceedings before the FWC)” “unless the maintenance of status quo or performance of normal work would place at risk the health or safety of the employee(s) concerned”. There is a further recognition in the provision that “no party to the dispute shall suffer any prejudice as to the resolution of the matter by reason only that normal work continues as required by this paragraph.”

[11] I am satisfied that there is no uncertainty or ambiguity in the meaning of the status quo in respect to this dispute. I am satisfied that the plain meaning of the words considered in context of the Clause as a whole means in the circumstances of this dispute that during the operation of the disputes resolution process pursuant to Clause 28 of the Agreement Energy Australia cannot rely upon the first written warning issued to Mr Aitken.

Is the dispute properly categorised as a Category 1 or a Category 2 matter pursuant to Clause 28 of the EnergyAustralia Yallourn Enterprise Agreement 2013?

[12] The Agreement provides for two types of disputes:

● Category 1 matters are matters that “go to the application or interpretation of this Agreement or with matters arising under the National Employment Standards”
● Category 2 matters are “all other matters pertaining to the employment relationship that do not go to the application or interpretation of the Agreement or are not matters arising under the NES.”

[13] The CFMEU argues that the dispute concerning the issuing of a First Written Warning to Mr Aitken is a dispute which goes to the application or interpretation of Clause 29, Discipline Procedure, of the Agreement.

[14] Energy Australia points to the letter from Mr Kentish of the CFMEU dated 19 December 2016 which stated “the CFMEU believes that issuing Mr Aitken with a First Written Warning was unreasonable”. The letter requests that “the First Written Warning purportedly provided in accordance with Step 2 of the disciplinary procedure to Mr Aitken on 14 December 2016 be withdrawn.” Mr Kentish then set out the grounds upon which the CFMEU believed the warning was unreasonable.

[15] In the dispute application made by the CFMEU the CFMEU describes the dispute as being about the issuing of the warning on or around 14 December 2016 “pursuant to Clause 29 of the Agreement”. It notes that Clause 29 contains a disciplinary procedure which includes the issuing of a warning. It notes that Clause 29 expressly provides that the warning must be given at the office and that this did not occur. Energy Australia note in their submission that this point was not raised in the earlier letter concerning the dispute.

[16] Energy Australia argues that the mere fact that they sought to follow the disciplinary procedure set out in Clause 29 is not sufficient to bring its discretionary decision to issue Mr Aitken with a warning within Category 1. They argue that simply because the clause has been complied with does not mean that a dispute about a matter touched upon by a clause is a matter which goes to the application or interpretation of the Agreement.

[17] Energy Australia submits that Clause 29 regulates the taking of disciplinary action but it does not impinge upon the employer’s discretion to take disciplinary action when it considers this to be appropriate. They argue that the clause is confined to the procedural steps and it does not require that the steps be followed sequentially or impose any criteria for moving through the steps or for using a particular step. The clause specifically allows for action to be commenced at any of the four steps after an investigation has been conducted and it does not prevent summary dismissal. Energy Australia says that the Agreement does not regulate why disciplinary action may be taken.

[18] Energy Australia submit that if merely touching upon the subject matter of a clause is sufficient to bring a dispute within Category 1 then very few disputes would be in Category 2 and that this could not have been the objective intention of the parties.

[19] The proper characterisation of a dispute is not confined to the contents of an initial letter notifying an employer of the dispute. The nature of a dispute can evolve as the parties proceed through the steps of the disputes settlement procedure. The disputes settlement procedure is specifically required to be facilitative and there is no requirement in notifying a dispute for every possible ground in relation to the subject of a dispute that may subsequently be relied upon to be identified and particularised.

[20] Energy Australia in its written submission states that:

(a) The questions posed by the Commission require an “interpretation” of Clause 29. 1

(b) EnergyAustralia “(quite properly) sought to follow the procedure set out in Clause 29”. 2

(c) EnergyAustralia has “applied”, “or, more accurately in this case, complied with” Clause 29. 3

(d) Clause 29 “applies” to any disciplinary action that EnergyAustralia wishes to take against Mr Aitken. 4

[21] I agree with the CFMEU that in such circumstances and given that the warning itself specifically refers to Clause 29, it is difficult to see how a dispute over the issuing of a “First Written Warning” to Mr Aitken is not a matter which goes to the application or interpretation of the Agreement. The dispute is not peripheral to, or merely “touching on” a matter in Clause 29, the issuing of a First Written Warning is central to the application of that clause.

[22] I am satisfied that the dispute concerning the First Written Warning issued to Mr Aitken is a Category 1 dispute.

Next steps

[23] In the event that this matter does proceed to arbitration I will have to consider conflicting submissions of the parties as to the extent to which, given Clause 28 and 29 of the Agreement, I can review the reasonableness of the decision to issue the first written warning to Mr Aitken. The matters raised by Energy Australia are relevant to this consideration. This is a Category 1 matter because it goes to the application and interpretation of Clause 29. The extent to which a Category 1 matter can be arbitrated is constrained by Section 739 of the Fair Work Act 2009. That is, the arbitrated outcome cannot be inconsistent with the terms of Clause 29 of the Agreement. Furthermore, it cannot be inconsistent with the limitations imposed by the terms of the disputes settlement procedure; Clause 28 categorises the disputes in order to limit arbitration to disputes which go to the application or interpretation of the Agreement. Energy Australia is correct that these two considerations may constrain the possible outcomes from arbitration of this dispute.

[24] The CFMEU is directed to advise within seven days of the decision if they wish for the matter to now proceed to arbitration. If they do wish to proceed to arbitration the CFMEU will then have seven days in which to provide an outline of submissions and evidence upon which they rely and Energy Australia will then have seven days in which to provide an outline of submissions and evidence in response. The matter will be listed for hearing if required at 10am on 27 March 2017.

COMMISSIONER

Final written submissions:

Applicant submissions received 10 February 2017

Respondent submissions received 17 February 2017.

Applicant submissions in reply received 20 February 2017.

 1   Energy Australia submission at para 5.

 2   Energy Australia submission at para 25.

 3   Energy Australia submission at para 25.

 4   Energy Australia submission at para 26.

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