Liquor, Hospitality and Miscellaneous Union v MSS Security Pty Ltd

[2010] FWA 4470

Note: An appeal pursuant to s.604 (C2010/4262) was lodged against this decision - refer to Full Bench decision dated 25 August 2010 [[2010] FWAFB 6519] for result of appeal.

[2010] FWA 4470

FAIR WORK AUSTRALIA

DECISION

Fair Work Act 2009
s.437 - Application for a protected action ballot order

Liquor, Hospitality and Miscellaneous Union
v
MSS Security Pty Ltd
(B2010/3071)

COMMISSIONER CLOGHAN PERTH, 21 JUNE 2010

Proposed protected action ballot by employees of MSS Security who work on the Transperth Train Operations system as Revenue Protection Officers, Patrol Officers and Aboriginal Liaison Officers .

[1] On 8 June 2010, the Liquor Hospitality and Miscellaneous Union (“the Applicant”) made an application to Fair Work Australia (“FWA”) for a Protected Action Ballot Order pursuant to s.437 of the Fair Work Act 2009 (“the Act”).

[2] The group of employees to be balloted are members of the Applicant employed by MSS Security (“the Employer”) in the Transperth Train Operations system (part of the Public Transit Authority) as Revenue Protection Officers (including seniors and supervisors), Patrol Officers and Aboriginal Liaison Officers.

[3] The Employer opposed the application and objected to the issuing of an order in its entirety. The Employer’s secondary position is, that if the Tribunal’s determination was to make an order, consideration should be given to limiting the Order to Revenue Protection Officers only.

[4] Mr Jason Walter, External Organiser and Ms Kari Pnacek, Senior Organiser, gave evidence for the Applicant. Mr Ian Patrick, General Manager, Western Australia gave evidence for the Employer.

[5] The employees to be balloted were previously the subject of an application for a majority support determination under s.236 of the Act in which an Interim Decision was made by the Tribunal, as presently constituted, on 20 January 2010.

[6] Subsequent to the Interim Decision of the Tribunal, the parties met in conference. The conference concluded with the Applicant and Employer agreeing to give notice of representational rights and commencement of bargaining at a future date.

[7] As a result of this agreement in conference, no further intervention of the Tribunal was requested in relation to the majority support determination to cover these employees.

STATUTORY FRAMEWORK

[8] The relevant provisions of the Act relating to this application are as follows:

Section 437 - Application for a protected action ballot order

Who may apply for a protected action ballot order

(1) A bargaining representative of an employee who will be covered by a proposed enterprise agreement, or 2 or more such bargaining representatives (acting jointly), may apply to FWA for an order (a protected action ballot order ) requiring a protected action ballot to be conducted to determine whether employees wish to engage in particular protected industrial action for the agreement.

(2) Subsection (1) does not apply if the proposed enterprise agreement is:

(a) a greenfields agreement; or

(b) a multi-enterprise agreement.

Matters to be specified in application

(3) The application must specify:

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

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

(4) If the applicant wishes a person other than the Australian Electoral Commission to be the protected action ballot agent for the protected action ballot, the application must specify the name of the person.

Note: The protected action ballot agent will be the Australian Electoral Commission unless FWA specifies another person in the protected action ballot order as the protected action ballot agent (see subsection 443(4)).

(5) A group of employees specified under paragraph (3)(a) is taken to include only employees who:

(a) will be covered by the proposed enterprise agreement; and

(b) are represented by a bargaining representative who is an applicant for the protected action ballot order.

Section 443 - When FWA must make a protected action ballot order

(1) FWA must make a protected action ballot order in relation to a proposed enterprise agreement if:

(a) an application has been made under section 437; and

(b) FWA is satisfied that each applicant has been, and is, genuinely trying to reach an agreement with the employer of the employees who are to be balloted.

(2) FWA must not make a protected action ballot order in relation to a proposed enterprise agreement except in the circumstances referred to in subsection (1).

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

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

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

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

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

(4) …

BACKGROUND

[9] It was not contested and I am satisfied that the provisions of sections 437, 438 and 440 have been met by the Applicant. It should be noted that later in this Decision, I will address argument in relation to s.437(5)(a).

[10] The Employer objected to the Tribunal making a Protected Action Ballot Order in its entirety on the grounds that the Applicant has not and is not genuinely trying to reach an agreement with MSS Security in accordance with s.443(1)(b) of the Act. Further, if the Tribunal is to make an order, it is appropriate to consider whether the group of employees to be balloted should include Patrol Officers and Aboriginal Liaison Officers as sought in the application.

[11] Before going to the facts surrounding the negotiations relating to the proposed enterprise agreement, it is appropriate to acknowledge the Object of Division 8 Protected Action Ballots of Part 3-3 of the Act and that is:

“…to establish a fair, simple and democratic process to allow a bargaining representative to determine whether employees wish to engage in particular protected industrial action for a proposed enterprise agreement.”

NEGOTIATIONS TO DATE

[12] Simply put, the facts relating to negotiations between the Applicant and the Employer are as follows:

• on 8 March 2010, the Applicant formulated and subsequently provided to the Employer, on a without prejudice basis, a log of claims of 21 items 1;



• the first meeting of the parties representatives occurred on 24 March 2010 2;



• the second meeting on 7 April 2010 had to be rescheduled due to no workplace delegates attending 3;



• a further four meetings between 23 April and 3 June 2010 occurred 4;



• each meeting lasted for approximately two hours 5;



• there was an exchange of documentation between the parties and “possibly” and exchange of information 6;



• the Employer has agreed, in principle, to certain claims which include: uniforms; rosters; consultation and a fifth week of annual leave for shift workers 7;



• the parties are aware of each others position regarding the term of the proposed agreement. For the Applicant – two years, and for the Employer – three years 8;



• movement by the Employer in relation to its initial position concerning a wage increase 9; and



• discussion on a further possible claim relating to shift swaps 10.

[13] By way of submission, the Applicant characterised their conduct during negotiations as follows:

“…At all times the applicant has demonstrated that its conduct has been consistent with genuinely trying to make an agreement. The applicant has attended all negotiation meetings and made attempts to try to resolve the outstanding claims. At all times the applicant has demonstrated a willingness to negotiate, and possessed the ability to make decisions and respond with adjustments in position to all acceptable and reasonable offers by the respondent. The applicant is still genuinely trying to reach an agreement despite acceptable and reasonable offers not being forthcoming.” 11

[14] The Employer did not agree with the Applicant’s characterisation of negotiations and for Mr Patrick, “it's just like talking to a wall” 12. I am satisfied that based on all the material and evidence provided to the Tribunal, the truth lies somewhere between these positions.

BARGAINING CONTEXT

[15] Counsel for the Employer readily conceded that the parties are in a “complex bargaining environment” 13. There is no doubt, in my view, that the interconnecting complexities relating to the bargaining, have led, in part, to MSS Security to oppose the application; in making this observation, I am not being critical of the Employer, but acknowledging the difficulties which it faces in these negotiations.

MSS Security contract

[16] The Employer provides a contract for services to the Public Transit Authority (PTA). The contract was entered into in April 2007 and expires in April 2011 14.

[17] The principal task of the contract is for the Employer’s employees to inspect passenger tickets either on trains or at fare gates on platforms; if passengers are not carrying a valid ticket, infringement notices are issued 15.

[18] The contract is described by Mr Patrick as “a casual services contract…we actually charge our services on an hourly rate basis…there’s no fixed fee for a fixed scope…the contract allows for…full flexibility with variations when and how they [the PTA] please… the PTA can effectively ring us up today and say, ‘Right, as of tomorrow we want to increase services or decrease services’. They've absolute control”. 16

[19] While it may be an overstatement to say that the Employer is at the “mercy” of the PTA, it appears that it finds itself contractually in a difficult commercial position.

[20] This contractual situation does have an impact in other interconnected areas of bargaining, leading to its complexity, as described by the Employer.

Bargaining parameters

[21] Mr Patrick summarised the Employer’s position relating to the cost of the outcome of any agreement as follows:

“Certainly the guiding principles we put forward were simply that we have to maintain our competitiveness in the market place. Any increase must be recoverable from our client. We operate in an industry that, you know, it was a competitive tender only two years ago. It's a very price sensitive industry we operate within, so we don't have a lot of fat, to use that term, to play with, or to simply say - to absorb cost increases. So any cost increase in our business is principally labour costs, must be recovered from our customer. We had to be respectful of our client's environment…” 17

[22] This position of the Employer was summarised in slides of a power point presentation at a negotiation meeting as follows:

“Guiding Principles

- We must maintain competitiveness in the market place

- Any increase must be recoverable from our customer

- We must be respectful of our clients environment

- We must deliver an outcome that is fair for our Employees and the Company” 18

[23] In this respect, Mr Patrick advised that although the contract provided for an increase in the contractual hourly rate “we would have to either convince the client that it's a justifiable increase, and obviously gain their acceptance of it, or absorb it. And it would cut into our bottom line, yes, that's correct” 19.

[24] Simply put, if an industrial tribunal awarded an improvement in conditions of employment which has cost implications for the Employer, that additional cost has a greater chance of recovery from the client (PTA). A negotiated settlement between the parties brings with it the uncertainty for the Employer in justifying an increase in its hourly rate of pay to the PTA, and if not entirely recoverable, eroding its “bottom line”.

[25] The Employer emphasised through its own witness and cross examination of the Applicant’s witness, the State Government’s Wages Policy (“the Policy”). Put simply, the Employer wished to highlight to the Tribunal that the Policy provided for an 8% wage increase over three years for agreements to be negotiated in 2010. While not explicitly using these words, the Employer wanted both the Applicant and the Tribunal to infer that, in some respects, its “hands were tied” to a certain extent by the Policy.

[26] It is not the purpose of these proceedings to determine the appropriateness of the State Government’s Wages Policy or its relationship to the Employer’s bargaining parameters. However, I think it is useful to make two observations. Firstly, the State Government’s Wages Policy is a decision of State Cabinet to assist its departments and agencies in negotiations on public sector employee wage outcomes. Second, the fact that a bargaining representative for employees in the private sector, does not frame its claim within these parameters, does not illustrate that it is not genuinely trying to reach agreement on a proposed enterprise agreement.

[27] The Employer provided a financial analysis of the Applicant’s log of claims. The analysis was provided to the Applicant at its most recent meeting and contends that, if the Employer agreed to those claims which had a financial impact, the average pay increase for all employees in the first year would be 25.8%. The conclusion that I was being asked to reach, is that an increase of this magnitude, compared with increases provided for in the State Government’s Wages Policy, means that the Applicant was not, and is not, genuinely trying to reach agreement with the Employer.

[28] I have already made an observation on the State Government’s Wages Policy and would add, in relation to this cost assessment, that it is normal, prudent and appropriate to cost claims in any proposed enterprise agreement. However, to expect the Tribunal to then conclude by that figure, the Applicant is not genuine in trying to reach agreement, is the equivalent of saying, because somebody would like a Mercedes but can only afford a Commodore, they do not need a motor vehicle .

[29] I am not persuaded that the optimum cost outcome, even though significant at first blush, demonstrates that the Applicant has not, or is not, genuine in attempting to reach agreement. Further, as happens in the normal course of negotiations, the eventual outcome usually is less than the optimum amount portrayed in the financial analysis.

Public safety

[30] While Revenue Protection Officers do not have specific security functions, it was uncontested that they have an “observe and report” 20 role. Consequently, when the Officers observe unruly passengers or inappropriate behaviour, they radio the PTA and transit Officers are despatched to deal with the matter.

[31] For the Employer, any industrial action would have an impact on its relationship with the PTA and “threaten the safety of the community” 21. Put simply, the removal of a uniformed Revenue Protection Officer has the potential to escalate harm to the safety of the public.

Economic loss to PTA

[32] In respect to a question from the Employer’s Counsel, Mr Patrick described this complexity of bargaining succinctly as follows:

“If industrial action was taken would it cause harm to the client?---I think certainly economic harm. I think there's no question the trains would keep running. The - it wouldn't stop the trains from running but what it would do is send the message out there to the general public that, you know, they can avoid paying fares. If, you know, the people that are there to keep the public honest and check the tickets aren't on the trains there would be a good chance of economic loss in that regard.” 22

AUTHORITIES CITED

[33] Counsel for the Employer directed my attention to the decision of Williams C in The Australian Workers’ Union v Alcoa World Alumina Australia Ltd[2009] FWA 796. Specifically, Counsel put the proposition that, “an applicant can’t be granted where the employees concerned are not subject to some agreement to be part of the bargaining process. In this case, only notices have been issued about bargaining rights in relation to revenue protection officers”. 23 The reasons set out by Williams C, I am sure, were appropriate, but the circumstances in this application are different.

[34] While it is an old adage, “clean hands” is still useful regarding contested matters. As set out in the following paragraphs, in my view, the Employer’s actions have compromised its ability to rely on Williams C’s finding.

[35] The Applicant, in application B2009/11195 referred to in paragraph [5] sought a majority support determination. The employer and the employees to be covered by the proposed agreement in that application, are the self same employer and employees subject to this application. This application is effectively an extension of the bargaining process involving the Tribunal in application B2009/11195.

[36] In my Interim Decision in B2009/11195 on 20 January 2010, I determined that, based upon the evidence, I was unable to make a majority support determination as sought by the Applicant, but would conduct a conference to seek the parties’ views on the most appropriate course of action going forward. At the conference on 22 January 2010, the Employer, for its own good reasons, wished to delay a notice initiating bargaining. The Applicant agreed. Subsequently, I received a copy of an email sent to the Employer on 25 January 2010 as follows:

“Dear Jody,

We wish to confirm that the LHMU accepts your offer that you will send all employees a Notice Initiating Bargaining on or by 8 March 2010, on the condition that your offer is put in writing to us asap.

We also confirm that you will be writing to all employees on 27^th January 2010 confirming when the Notice will be sent to employees.

Regards,

Sophie Holt”

[37] This confirms my recollection generally of the conference on 22 January 2010.

[38] On this issue, two matters remain should be addressed. Firstly, the fact that the Employer did not give notice of representational rights to all employees to be covered by the agreement in this application, cannot now be used as a reason to limit the application only to revenue protection officers. Second, the Applicant, in this hearing, gave evidence that it had sent an email to the Employer approximately three weeks prior to the hearing seeking to confirm that Revenue Protection Officers, Patrol Officers and Aboriginal Liaison Officers would be covered by the proposed agreement. The Employer did not respond. This evidence was not disturbed in cross examination or refuted by way of submission.

[39] For these reasons, I am satisfied that the circumstances which confronted Williams C in [2009] FWA 796 are not applicable. However, it is of interest that in that decision, in relation to negotiation around monetary claims, Williams C decided as follows:

“[40] …the evidence about the negotiations around the monetary claims is sparse. The evidence is limited to what the claims advanced by the AWU are, that these have not been reduced, what Alcoa believes these amount to in terms of total labour costs, that Alcoa have made a counter offer and that the AWU says the monetary claims are negotiable.”

and

“[42] As the AWU points out often in negotiations the monetary claim is the last matter to be finalised between the parties. The evidence presented is not sufficient for me to conclude that the claims by the AWU for wage increases and increases in various allowances are not genuine. I do not accept that the monetary claims and the AWU’s approach to these demonstrate that the AWU is not genuinely trying to reach an agreement. The respondent has not made out this ground of objection to the application.”

[40] I concur with the view that often wage increases are often the last matter to be finalised in negotiations. Further, that on wages, employee organisations hold firm and adopt the view that “nothing is agreed until all is agreed”. Such an approach is not dissimilar to commercial contractual negotiations, and is not demonstrable, of a party not genuinely trying to reach agreement.

[41] Counsel also directed my attention to Total Marine Services Pty Ltd v Maritime Union of Australia [2009] FWAFB 368 and, in particular, paragraph [32] which states:

“[32] We agree that it is not appropriate or possible to establish rigid rules for the required point of negotiations that must be reached. All the relevant circumstances must be assessed to establish whether the applicant has met the test or not. This will frequently involve considering the extent of progress in negotiations and the steps taken in order to try and reach an agreement. At the very least one would normally expect the applicant to be able to demonstrate that it has clearly articulated the major items it is seeking for inclusion in the agreement, and to have provided a considered response to any demands made by the other side. Premature applications, where sufficient steps have not been taken to satisfy the test that the applicant has genuinely tried to reach an agreement, cannot be granted.” (the emphasis reflects that part of the paragraph highlighted by Counsel).

[42] Again, I take the view that the circumstances are different in this application. The circumstances, as concluded by the Full Bench in that application, are succinctly set out in paragraph [36]:

“[36] In this conclusion we believe that the Commissioner fell into error. It is clear on the evidence that the negotiations involved limited face to face meetings and limited articulation of many of the claims. Certain matters were being dealt with in concurrent industry negotiations. Many items were only set out in a list of headings and were not explained or discussed. The wage claim had not been specified. There is nothing to suggest that in taking the steps that it did, the MUA was other than genuine. Nevertheless, in our view it cannot be said in these circumstances that the MUA had genuinely tried to reach an agreement. The steps it had taken were preparatory to developing an agreement but in our view insufficient to satisfy the test its application needed to meet. The error made by the Commissioner involves both a mistake of fact and an error of principle.”

[43] In this application, the Employer has not made or set out the same assertions as made in the above application. While there was some difficulty in understanding the composite rate of pay, no concessions to date by the employees, and a belief that the wages offer is unreasonable, could not, on a matter of fact or principle, lead to the conclusion that the employees are not genuinely trying to reach agreement in the same way as described by the Full Bench of the Maritime Union of Australia.

[44] Finally, Counsel referred to McCarthy DP in Minister for Health and ors v Australian Nursing Federation PR954110. This decision is, for Counsel, illustrative in determining whether a party had genuinely tried or is trying to reach agreement. As disclosed to Counsel, I was Chief of Staff to the Minister for Health at the time of the application and subsequently have recalled, a witness in the proceedings. For these reasons, my comments will reflect the concepts enunciated by McCarthy DP, rather than make any statements regarding the circumstances of that application.

[45] Counsel took me to the comments at paragraph [38] relating to the observations of Munro J in Munro in Australian Industry Group v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union & Ors (T1982) which had been adopted by the Full Bench in Media, Entertainment and Arts Alliance v North Coast News Pty Limited & Ors (PR928033):

“[38] Such questions of fact and degree obviously need to be answered by reference to evidence and details of particular facts. The more the negotiation conduct can be categorised as evidencing a refusal to allow agreement other than on an all or none basis, the greater the likelihood that it should be found to fail the genuinely try to reach agreement with the other negotiator test. However, there are variations and permutation of demands, conduct, and character of negotiating parties that must be assessed.” (underlining added)

[46] It is noticeable that Counsel specifically put to the Applicant’s witness, that the LHMU was adopting an “all or nothing claim” 24. The witness, who I suspect knew nothing of the significance of such a question, responded before any intervention by the Applicant’s representative, “not necessarily”25.

[47] The fact that parties to this application have reached agreement in principle on some parts of the log of claims, not agreed on others, together with all the other evidence provided, does not represent an “all or nothing” approach to bargaining or a refusal to allow agreement on this basis only.

[48] Counsel also took me to paragraph [55] and I have emphasised that part which was brought to my attention in final submissions:

“[55] The content of the ANF's claims should be examined and considered against how realistic and achievable they are in the circumstances. In this regard the Australian culture of unrealistic ambits, whilst being a practice engaged in relating to the findings of disputes for the purpose of ensuring new disputes do not regularly need to be found in order for awards to be able to be issued and varied, have no real place in the context of bargaining for new agreements. That is not to say that claims are not able to be ambitious, but rather that when objectively assessed against industry practice and standards they should not be fanciful. Indeed there is nothing about a fanciful starting point for a claim in negotiations that renders the entire process not genuine, and there is always a chance that the claimant might be unexpectedly successful. However, where there is clearly no likelihood of progress on the initial claim, especially where it is ambitious, a claimant's genuineness could be evidenced by either compromise or serious reconsideration of its initial claim.” (the emphasis reflects that part of the paragraph highlighted by Counsel)

[49] While not categorising the employees’ claims as “fanciful”, my understanding of Deputy President McCarthy’s comments is that “ambitious” or “fanciful” claims are a feature of bargaining in the industrial relations landscape of Australia, however, this position, of itself, does not “render the entire process not genuine”. In this application, the employees have stated in relation to the wage claim, “it’s not adequate” 26 and in the context of all the claims, the Employer’s position is not “a reasonable offer”27.

[50] The Applicant cited the National Union of Workers v ACCO [2009] FWA 206 and in particular the views of Hancock SDP in Australian Rail, Tram and Bus Industry Union [1999] FCA 310 as appropriate to this application:

“…bargaining in good faith does not require a willingness to make concessions. It is consistent with adopting 'a hard line'. Equally, it does not imply moderation of demands. It does imply a preparedness to consider seriously offers and proposals made by the other side and to take account of arguments; but if, having done these things, a bargaining party is unmoved, it may still be bargaining in good faith. The inability of parties to reach an agreement is not evidence that either is acting in bad faith. The adoption of a hard line or the making of extravagant demands may evince an underlying intention of obstructing agreement. This tactic would constitute bad faith, but in few cases, if any, could its existence be inferred from the bargaining stance alone.” (emphasis added)

CONCLUSION

[51] For the Tribunal to issue the Protected Action Ballot Order, as sought by the Applicant, I have to be satisfied of two conditions, namely:

• the Applicant has standing to make the application; and



• I am satisfied that the Applicant has been, and is, “genuinely trying to reach agreement” with the employer of the employees to be balloted.

[52] It is uncontested that the Applicant has standing to make the application.

[53] With regard to the second condition, my determination should take into account the facts as demonstrated by the log of claims, behaviour and actions of the Applicant and apply that to the ordinary meaning of “genuinely trying to reach agreement”.

[54] The Employer, while not stating explicitly that I should apply to the application “good faith bargaining” tests, stated that they tend to overlap but conceded that the “concepts are different” 28.

[55] In daily life, we read and hear sentences without much regard to their verification. We understand the words and their grammatical structure. Verification or understanding, however, is necessary, on occasions, where we need to consider such sentences in a context. In the Act, there is no definition of “genuinely trying to reach an agreement” because no definition could accurately and completely cover all possibilities. As a result of this incompleteness, and to avoid vagueness, it is necessary to understand the sentence in context. That context is, bargaining over wages and conditions of employment. In my experience, as I have said previously, observed negotiations are not always conducted in a genteel atmosphere.

[56] It is not unnatural in the bargaining process that expectations will differ. However, that does not mean because the employees’ expectations are not aligned with the Employer, the Applicant is not genuinely trying to reach agreement, and consequently, should be excluded from accessing, as it is entitled to do so, a Protected Action Ballot Order.

[57] Finally, I make this observation that while the Employer finds itself in a complex bargaining situation for the reasons I have already set out, it would be wrong to impose a third condition, that I must consider the consequences of an order, before making such an order. The Act specifically provides the suspension or termination of protected industrial action, should that eventuate and the Tribunal considers appropriate.

[58] Having considered all the material presented to the Tribunal, excluding submissions post the hearing, I am satisfied that the Applicant has met the requirements of s.443(1)(b) and the order as sought by the Applicant will issue.

[59] I order accordingly [PR998431].

COMMISSIONER

Appearances:

Ms S Holt and Mr T Clark on behalf of the applicant

Mr T McDonald, Moray & Agnew Solicitors for the respondent

Hearing details:

2010

Perth:

9 June

 1   Exhibit R1

 2   Exhibit A1

 3   Exhibit A1

 4   Exhibit A1

 5   PN 38

 6   PN 40

 7   PN 319

 8   PN 321

 9   PN 321

 10   PN 313

 11   PN 18

 12   PN 345

 13   PN 429

 14   PN 307

 15   PN 300

 16   PN 308

 17   PN 331

 18   Exhibit R3

 19   PN 338

 20   PN 301

 21   PN 433

 22   PN 310

 23   PN 434

 24   PN 195

 25   PN 198

 26   PN 254

 27   PN 204

 28   PN 425

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