Delta Coal Mining Pty Limited v Construction, Forestry, Mining and Energy Union

[2016] FWC 9146

[2016] FWC 9146

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s 418 - Application for an order that industrial action by employees or employers stop etc.

Delta Coal Mining Pty Limited
v
Construction, Forestry, Mining and Energy Union
(C2016/7338)

DEPUTY PRESIDENT SAMS SYDNEY, 21 DECEMBER 2016

Application for an order that industrial action stop, and not be organised – persons no longer employees of applicant – majority of employees sick or unfit for work – wider industrial campaign – whether absences constitute industrial action – persons are and remain employees of applicant – continuing absences constitutes unprotected industrial action – orders must be made.

THE APPLICATION

[1] This edited ex tempore decision will set out my reasons for issuing orders on Friday 16 December 2016 (PR588682) sought by Delta Coal Mining Pty Limited (‘Delta Coal’ or the ‘applicant’), pursuant to s 418 of the Fair Work Act 2009 (the ‘Act’) in respect to alleged unprotected industrial action being taken by employees engaged at the Appin mine site in New South Wales. The decision is issued without the benefit of the transcript of proceedings of that day.

[2] This application was filed in the Fair Work Commission (the ‘Commission’) at 12.05pm on Wednesday 14 December 2016 and at the request of the applicant, Delta Coal, was listed for hearing the following day, 15 December 2016. The application was accompanied by an application for an Order of Substituted Service directed towards employees who are members, or who are eligible to be members of the Construction, Forestry, Mining and Energy Union (‘CFMEU’) engaged at the Appin Mine and whose work is covered by the DC Enterprise Agreement 2014 (PR551446) (‘DC Agreement’). The Order for Substituted Service was granted.

[3] At the hearing, Mr B Cross, of Counsel appeared for the applicant, instructed by Corrs Chambers Westgarth and Mr A Bukarica, Legal Counsel appeared for the CFMEU with Mr G South of the CFMEU. Mr Cross was granted permission to appear, pursuant to s 596 of the Act.

[4] The Commission received uncontested evidence from:

● Mr Neville McAlary, Managing Director and CEO of Delta SBD; and
● Ms Biljana Jovanovski, Health Safety Environment Community & HR Coordinator for Delta SBD.

BACKGROUND

[5] The factual background to the application may be shortly stated as follows.

[6] Delta Coal is a subsidiary, together with Delta Mining Pty Limited (‘Delta Mining’) of Delta SBD. The Delta SBD Group supplies labour to mines in Appin, Helensburgh and Wongawilli in New South Wales and other mines in Queensland. It has been contracted to the Appin mine operated by South32 Limited (South32) for over a decade. South32 also sources labour from other contractors, including labour hire companies.

[7] In April 2016, South32 sought tenders for the provision of mining services at the Appin Mine. Delta Coal won three new packages for work which were:

1. Unit rate out-bye works, back bye and dusting;
2. Methane drainage and development supplementary labour; and
3. Roadway Development - two panels.

Although retaining an existing contract at Appin, the other subsidiary company, Delta Mining, unsuccessfuly tendered for other work.

[8] Delta Coal employs 106 employees at the mine under the DC Enterprise Agreement which has an expiry date of 4 June 2018.  The workforce comprises:

● 22 employees on a full-time, fixed-task basis; and
● 84 casual employees. 

Delta Mining employs 136 employees under an expired agreement Delta Mining Pty Limited South Western District Contractors Workplace Agreement 2012 (‘DMEA’). This workforce comprises:

● 75 permanent employees; and
● 61 casual employees.

[9] The Delta Coal Agreement contains four classes of employees identified at subclauses 4.1 to 4.4. These are in order, full-time, part-time, casual and fixed-term or fixed-task. I quote the subclauses below:

4.1 Full time

A full time Employee is an Employee whose average ordinary hours of work will be 35 hours per week.

4.2 Part time

A part time Employee is an Employee who works an agreed number of ordinary hours per week, such hours to be less than 35 ordinary hours per week and who receives on a pro rata basis, equivalent pay and conditions to those of full time Employees who do the same kind of work.

4.3 Casual

In addition to the ordinary hourly rate of pay, Casual Employees will be paid an additional 25% of the base rate of pay for all ordinary hours worked. This 25% loading is in lieu of all leave entitlements (excluding Long Service Leave) and severance and retrenchment payments. This loading does not apply when a casual Employee works overtime.

4.4 Fixed term or fixed task Employees

Employees can be employed for a specific period of time (a "fixed term" Employee} or for the duration of a specific project (a "fixed task" Employee). These Employees can be either full time, part time or casual Employees. They will be entitled to the same benefits as other Employees, except they will not receive any severance and retrenchment payments. Average ordinary hours could be 35 or less hours per week.

[10] From 29 November to 2 December 2016, both entities conducted presentations with employees to update them of the outcome of the recent tender processes and likely consequences for employees. Seemingly the work scope includes work for 220 persons with no forced or voluntary retrenchments being planned. This information is extracted from Exhibit B.

[11] From 30 November 2016 the vast majority of employees of both entities began to report in as sick or unfit for work. It is not disputed that with a few minor exceptions, the applicant's employees have continued to be absent from work and remain so at the date of the hearing. It was said by Delta Coal that this conduct constituted industrial action as defined in section 19 of the Act and for the requisite purposes, unprotected industrial action for the purposes of s 418 of the Act.

[12] The CFMEU argued that as the vast majority of the applicant's workforce was either casual or fixed term employees, their contracts of employment ended around 2 December 2016 and therefore there could be no industrial action, protected or otherwise, being undertaken by former employees. Accordingly, there was no jurisdictional foundation for s 418 orders, either on interim or final basis; see: Age Co Ltd v Communications, Electrical, Electronic, Energy, Information, Postal, Plumbling and Allied Services Union of Australia (2004)133 IR 197 and Busicom Solutions Pty Ltd v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union[2007] AIRC 287.

[13] I shall return to these competing threshold arguments shortly; suffice to observe at this point, that it seems to me that the determination of this application may involve a four step process:

1. Is there an ongoing employment relationship between Delta Coal and its employees?
2. If the answer to this question is yes, does the conduct of not reporting for work constitute unprotected industrial action.
3. If so, is the industrial action happening, threatened, impending or probable, and being organised by the CFMEU, its officers, delegates or members?
4. If any of the above circumstances in point 3 are established, the Commission must make a s 418 order.

[14] This brings me to the legislative scheme dealing with applications of this kind. Section 418 of the Act provides as follows:

“418 FWC must order that industrial action by employees or employers stop etc.

(1) If it appears to the FWC that industrial action by one or more employees or employers that is not, or would not be, protected industrial action:

(a) is happening; or

(b) is threatened, impending or probable; or

(c) is being organised;

the FWC must make an order that the industrial action stop, not occur or not be organised (as the case may be) for a period (the stop period) specified in the order.

Note: For interim orders, see section 420.

(2) The FWC may make the order:

(a) on its own initiative; or

(b) on application by either of the following:

(i) a person who is affected (whether directly or indirectly), or who is likely to be affected (whether directly or indirectly), by the industrial action;

(ii) an organisation of which a person referred to in subparagraph (i) is a member.

(3) In making the order, the FWC does not have to specify the particular industrial action.

(4) If the FWC is required to make an order under subsection (1) in relation to industrial action and a protected action ballot authorised the industrial action:

(a) some or all of which has not been taken before the beginning of the stop period specified in the order; or

(b) which has not ended before the beginning of that stop period; or

(c) beyond that stop period;

the FWC may state in the order whether or not the industrial action may be engaged in after the end of that stop period without another protected action ballot.”

[15] The meaning of industrial action is set out at section 19 of the Act as follows:

“19 Meaning of industrial action

(1) Industrial action means action of any of the following kinds:

(a) the performance of work by an employee in a manner different from that in which it is customarily performed, or the adoption of a practice in relation to work by an employee, the result of which is a restriction or limitation on, or a delay in, the performance of the work;

(b) a ban, limitation or restriction on the performance of work by an employee or on the acceptance of or offering for work by an employee;

(c) a failure or refusal by employees to attend for work or a failure or refusal to perform any work at all by employees who attend for work;

(d) the lockout of employees from their employment by the employer of the employees.

Note: In Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union v The Age Company Limited , PR946290, the Full Bench of the Australian Industrial Relations Commission considered the nature of industrial action and noted that action will not be industrial in character if it stands completely outside the area of disputation and bargaining.

(2) However, industrial action does not include the following:

(a) action by employees that is authorised or agreed to by the employer of the employees;

(b) action by an employer that is authorised or agreed to by, or on behalf of, employees of the employer;

(c) action by an employee if:

(i) the action was based on a reasonable concern of the employee
about an imminent risk to his or her health or safety; and

(ii) the employee did not unreasonably fail to comply with a direction of his or her employer to perform other available work, whether at the same or another workplace, that was safe and appropriate for the employee to perform.

(3) An employer locks out employees from their employment if the employer prevents the employees from performing work under their contracts of employment without terminating those contracts.

Note: In this section, employee and employer have their ordinary meanings (see: section11).”

OTHER EVIDENCE

[16] Mr McAlary gave evidence of a conversation with Mr Bob Timbs, District Vice President of the CFMEU on 6 December 2016 in which Mr Timbs offered to ‘get the guys back to work’ if he, Mr McAlary, would give commitments about securing further contracts from South32. There was a rally of employees on 8 December at Stuart Park North Wollongong, which the Union said was to ‘keep pressure on South32, the contract companies and maintain media interest.’

[17] Mr McAlary also provided correspondence between the Union's and Company's solicitors in which the Union sought undertakings concerning the transfer of Delta Mining employees to Delta Coal with new offers of employment. The Union alleged a number of breaches of the Act and claimed that Delta Mining was forcing employees to accept less favourable terms and conditions than those under the Delta Mining Agreement. It sought the withdrawal of an Offer of Employment Form recently sent to employees, which required their agreement and signature.

[18] Delta clarified its position in a letter to the Union’s solicitors Slater & Gordon, dated 8 December 2016, in which it was said:

1. Delta's employees who have received the Information Pack distributed to the Appin Mine on 5 December are not required to sign the forms enclosed.

2. Delta will not process any completed induction pack forms received from Delta employees to date.

3. a failure to sign the form in the Information Pack will not result in the termination of DM employees' employment at the Appin Mine or the termination of their contract with Delta. These contracts remain operative and ongoing until further notice from Delta.

4. subject to the possibility of shift and roster changes in accordance with the terms of the Delta Mine EA and DC Enterprise Agreement 2014, Delta's employees will continue to work at the mine in accordance with their existing terms and conditions until further notice.

[19] These arrangements were confirmed to the affected employees in a Notice issued on 8 December 2016. The following day, Mr McAlary sent letters to the employees directing them to attend work at the mine. Further lawyer to lawyer exchanges followed.  The employees continued to not attend work from 10 December 2016.

[20] Mr McAlary's evidence also included updates from the Union to its Appin contract members which advised:

● the suspension of organised rallies and marches in the week of 12 December 2016;
● an intention to file an application for a Protected Action Ballot Order (This Order was approved by the Commission on 15 December 2016; and
● a family Christmas party on 22 December 2016.

Mr McAlary also annexed to his statement various media reports of the Union's protest rallies and demonstrations in support of the industrial campaign against the companies.

[21] Ms Jovanovski provided evidence of her involvement in the communication sessions held with employees from 28 November 2016 and the preparation and distribution of an information pack sent to all affected employees after 5 December 2016.

[22] Ms Jovanovski had been advised by the payroll section that in the period 28 November to 4 December 2016:

● 11 Delta Coal employees were on annual leave;
● 1 employee was on long service leave; and
● 81 were on sick leave.

In the period 5 December to 11 December 2016;

● 3 Delta Coal employees were on annual leave;
● 4 were on long service leave; and
● 54 were on sick leave.

(I note a similar pattern of absences for Delta Mining employees).

[23] Ms Jovanovski gave evidence of recent conversations she'd had with a number of Delta Mining employees. As these employees are engaged by a different entity to the applicant here before the Commission, these conversations are only relevant to the broader industrial dispute.

[24] Ms Jovanovski further deposed that both permanent and casual employees of Delta Coal are allocated a set roster with three 12 hour shifts a week. These rosters do not change unless a new package of work is introduced or to fill in for other employees on other shifts. Ms Jovanovski said that employees do not call each day or each week as they know their work is regular and consistent and does not change until they are given specific notice otherwise.

[25] In oral evidence, Ms Jovanovski said that no employee of Delta Coal has accepted an offer of ongoing employment because they have not been at work.

CONSIDERATION

[26] It must be stressed that the CFMEU brought no evidence to challenge or contradict the evidence of Mr McAlary or Ms Jovanovski, despite my proposal to adjourn the proceedings until the following day should the Union required time to do so. Accordingly, there is no evidentiary or factual conflict to be resolved. Given these circumstances, the applicant's evidence must be accepted by the Commission.

[27] While I acknowledge that the requisite jurisdictional precondition to the making of s 418 orders must be the existence of an employment relationship between Delta Coal and its employees; see: The Age Co Ltd v CEPU (2004) 133 IR 197, I do not agree with Mr Bukarica that the employment relationship no longer exists, given the facts and circumstances of this case.

[28] For the following reasons, I am satisfied that the persons subject to this application are, and continue to be employees of Delta Coal.

1. Delta Coal has not terminated the employment of any of the employees.  Nor has Delta Coal engaged in a course of conduct which expressly or impliedly has resulted in the termination of any of the employees' employment.  Indeed, the opposite is the case.  At all times the employer has conducted itself and represented its position as the continuing employer of the employees and has made it patently clear that it continues to be the employer.

2. The relevant employees have conducted themselves on the basis of a continuing employment relationship with Delta Coal.  If it were otherwise, it is difficult to understand why a small cohort of them would attend for work and perform work in the usual way. For the vast majority, it does not make logical sense why they would continue to take annual leave, long service leave or sick leave and provide medical certificates, if they believed their employment relationship had ended.

3. Shortly stated, both parties to the employment relationship (and initially the CFMEU) have, and continue to conduct themselves, as if the employment relationship remains ‘on foot’.

4. The evidence is that the Union has sought to engage with Delta Coal after 30 November 2016 as to the ongoing terms and conditions of the employees within the broader industrial dispute between Delta SBD and the Union. It is difficult to understand why this would be so if the Union believed that on 2 December 2016 the employment relationship had ended.

5. 84 of the 106 employees of Delta Coal are casual employees who work regular and systematic shifts. I agree that the traditional indicia of casual employment is that each casual shift constitutes a ‘stand-alone’ contract of employment with a commencement and an end point. However, that does not necessarily mean that there is not an ongoing employment relationship between the employer and the employees, which as a consequence, confers certain rights and obligations on both of them. For example, a casual employee who has regular and systematic engagements, indeed in some cases over many years, have unfair dismissal rights and for some casual employees, in some industries, long service leave entitlements. I note that I was not informed whether the Union, or any of the employees, have filed s 394 Unfair Dismissal applications, if their contention is that their employment was terminated unfairly, some time on or around 2 December 2016.  I suspect that no such applications have been lodged.

6. In Broadspectrum (Australia) Pty Ltd v AMWU[2016] FWC 8383, Gooley DP recently dealt with a similar claim by the AMWU as to unprotected action taken by casual employees. Her Honour said at paragraph 42 to 44 of that decision:

I do not accept the submission that because the employees were casual they were not required to attend for work. This submission relied upon a matter before Senior Deputy President Watson. However, no decision was issued in that matter and therefore does not support the submission made by the AMWU.

The employees were bound by their employment contract and that contract provided that their hours of work would be in accordance with the agreement.  That contract provided that the employees' hours of work will be arranged by management in accordance with those contract and the agreement, the Broadspectrum employees were required to attend work on 21 November 2016.

7. The fact that an employer loses a contract does not automatically mean the employees no longer work for the employer.  Here the employer has not changed and has not dismissed any employee.  This has been a regular feature of this mine for years and in the industry generally. 

[29] In my opinion, the Union's threshold submission must fail. It does not reflect the true legal or practical position that exists between the affected employees and Delta Coal. An ongoing employment relationship exists between the employees and Delta Coal which has not been severed. The employees and Delta Coal continue to be covered by the DC Enterprise Agreement and are bound by its terms and conditions.

[30] I find accordingly.

[31] Does the employees' conduct constitute unprotected industrial action? The Delta Coal Agreement has not passed its nominal expiry date, that is, being the date of 4 June 2018. Therefore, any industrial action which is happening, pending or probable is likely to be unprotected. As mentioned earlier, the Union does not dispute that its members are calling in sick, advising of being unfit for work, or simply not turning up for work, having been directed to do so by Delta Coal.

[32] There is a curious air of unreality, if not fantasy with a proposition that apart from a very small number, including those on annual or long service leave that the vast majority of 106 employees have been sick or unfit for work since 30 November 2016. Does anyone seriously suggest, or expect me to believe that this is a mere unfortunate coincidence?

[33] In my view, given all the accompanying media reports and explicit acknowledgement of coordinated Union activities, this conduct is a central feature of an organised industrial campaign against South32, Delta SPD, Delta Mining and Delta Coal to exert pressure on the companies in respect to ongoing wages and conditions at the Appin Mine.

[34] To submit that such an overt, public and media industrial campaign involving ‘failure or refusal by employees to attend for work’ is semantic nonsense. I am reminded of recent comments of Commissioner Hunt in Lendlease Building Pty Ltd v Construction, Forestry, Mining and Energy Union[2016] FWC 7198 where the Commissioner said at paragraph 96 to 97:

I am satisfied that 450 subcontractor employees across six work sites spread across Queensland did not all have a meeting of the minds at around 6.30am on a single day and decide that they individually did not wish to cross a CFMEU established picket line.  The pattern of behaviour across all six States is remarkably similar.

Even without direct evidence of organisation being undertaken, I would find that the surrounding circumstances, as per Richard SDP in Lend Lease v CFMEU, have been met on this occasion to draw the relevant inference that the size and breadth of the industrial action was organised by the CFMEU and its officials and employees.

[35] To my mind it is utterly implausible and fanciful that 81 employees were sick or unfit for work in the period 28 November to 4 December 2016 and 54 employees were sick in the period 5 December to 11 December 2016. The truth is that this action is part of a coordinated media, political and public industrial campaign organised by the CFMEU, its officials, delegates and members. The Union did not advance any evidenced to refute this proposition, although I accept Mr Bukarica's focus was on the threshold issue I have earlier determined.

[36] It follows that I am satisfied that the refusal of the employees to attend for work is industrial action within the meaning of s 19 of the Act and such action is unprotected industrial action for the purposes of s 418 of the Act.

[37] I am also satisfied that the unprotected industrial action is happening and is likely to continue. I am further satisfied, from the uncontested evidence, that the unprotected industrial action is being orchestrated and organised by the CFMEU, its officers and delegates.

[38] Given these findings, the Commission must make an Order that industrial action stop, not occur and not be organised, and I do so for a period of one month from 16 December 2016.  I confirm my Orders made that day in this matter.

DEPUTY PRESIDENT

Appearances:

Mr B Cross, Counsel for the applicant

Mr A Bukarica, for the Union

Hearing details:

2016

December

15

Sydney

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