Maritime Union of Australia, The v Patrick Stevedores Holdings Pty Ltd

[2014] FWC 2962

[2014] FWC 2962

FAIR WORK COMMISSION

REASONS FOR DECISION

Fair Work Act 2009
s.739—Dispute resolution

Maritime Union of Australia, The
v
Patrick Stevedores Holdings Pty Ltd
(C2014/3370 and C2013/7789)

Stevedoring industry
COMMISSIONER CRIBB	MELBOURNE, 20 MAY 2014

Alleged dispute concerning the respondent’s intention to employ an additional 20 supplementary employees; alleged dispute concerning the respondent’s intention to implement significant change including a reduction in workforce numbers.

1. Background

[1] In terms of this decision, the Maritime Union of Australia (union) has lodged two applications to deal with disputes between itself and Patrick Stevedores Holdings Pty Ltd (Patrick, the company). The first dispute (C2013/7789) concerns the company’s proposal to hire casual employees at Webb Dock. The dispute notification referred to a dispute in relation to clause 9.6 (order of pick) and clause 10.2 (Part A) (intention to minimize casual employment). The second dispute (C2014/3370) is in respect of the selection criteria for redundancy and the number and categories of employees to be made redundant. As neither dispute was resolved through conciliation, the union elected for the disputes to be arbitrated by the Commission.

[2] For the sake of completeness, it should be noted that the union has lodged a third dispute (C2014/3419). This dispute is about the meaning of clause 17.3 (Part B) of the Patrick Bulk and General Melbourne Enterprise Agreement 2012 (the Agreement). A separate decision 1 and reasons for decision2 have been issued in respect of the third dispute.

[3] A directions conference was held on Friday 4 April 2014 to settle the process for dealing with arbitration of the three disputes. There was a pressing matter which was the union’s application for interim restraining orders in respect of the first two disputes. The company objected on the grounds that the Commission did not have jurisdiction to deal with either of the two disputes. Agreement was reached that the company’s jurisdictional objections and the union’s application for interim orders would be dealt with urgently in two stages. The first stage (on 8 April 2014) was a hearing and determination by the Commission of the company’s objections ie. whether the Commission has jurisdiction to deal with the disputes. A decision was issued by the Commission after the hearing on 8 April 2014. 3 The second stage, dependent on the outcome of the first stage, was a hearing and determination of whether the Commission would exercise its discretion and issue the interim orders sought by the union. This hearing took place on Thursday 10 April 2014 with a decision issued in transcript that night. Written reasons for that decision will be issued shortly, and separately, to this decision.

[4] These reasons for decision, therefore, concern the first stage ie. whether the Commission has jurisdiction to deal with the two dispute applications by the union. As indicated above, on Tuesday 8 April 2014, after the conclusion of the hearing, by email the Commission advised the parties in the following terms:

“With respect to the jurisdictional objections by the Respondent heard today, I am satisfied that I have jurisdiction to deal with these disputes, for reasons I will give later”. 4

[5] Set out below, are the reasons for this decision.

2. Company’s submissions

[6] It was stated that it was the company’s understanding that, in terms of the union’s dispute notification - C2013/7789 (the first application), the union is relying on section 739 of the Fair Work Act 2009 (the Act), clause 10.2 (Part A) of the Agreement, clause 9.6 (Part B) of the Agreement, and Schedule 1 of the Agreement, to assert that the Commission has jurisdiction to deal with the application. 5

[7] In terms of the second dispute notification filed by the union (C2014/3370), it was indicated that the company understands that the union relies on s.739 of the Act, clause 15.5 (Part A) of the Agreement and Schedule 1 of the Agreement. 6

[8] Ms Millen submitted that the Commission only has power to deal with a dispute if it is expressly authorised to do so under a provision of the Act (section 595(1)). Section 739 was said to apply when a term of an enterprise agreement allows the Commission to deal with a dispute (section 738(1) of the Act). It was also stated that there are limitations on what the Commission could do - set out in ss.739(3) - (5). Section 739(5) provides that the Commission must not make a decision that is inconsistent with the Agreement. 7

[9] The company argued that it is well established that, in exercising power under a dispute resolution procedure, the Commission acts as private arbitrator between the parties. The nature and scope of the Commission’s powers is derived from the agreement of the parties. It was therefore said that it is necessary to interpret the relevant provisions of the Agreement in order to identify the nature and scope of the Commission’s jurisdiction. 8

(a) Schedule 1 of Agreement

[10] It was stated that Schedule 1 only empowers the Commission to deal with a dispute that meets certain criteria:

• arises in the workplace



• be in regard to the Agreement or the National Employment Standards (NES)



• the relevant steps of the procedure have been followed.

Ms Millen indicated that, in terms of these matters, the NES is not relevant and the relevant steps in the process have been followed. 9

(b) Does the Commission have jurisdiction to deal with the first application?

[11] Ms Millen contended that, to answer this question, it was first necessary to characterise the dispute. It was recalled that the union has described this application as a dispute about the new labour model proposed by Patrick at Webb Dock East. It was said that the union disagrees with the model as set out in Mr Ian Bray’s (Assistant National Secretary of the union) letter to Mr Gary Tobin (Southern Regional Manager of Patrick) dated 31 March 2014 and confirmed by the union on 4 April 2014. 10

[12] It was noted that, in the union’s outline of submissions, the dispute is characterised entirely differently. It was argued that it is improper for the union to now press the later characterisation when the union had made clear their position on 4 April 2014. However, the company indicated that, if this was part of the union saying the dispute is about the new labour model and the number and categories of employees that Patrick should employ moving forward, then the company would deal with that in the context of a dispute about the proposed new labour model moving forward. 11

[13] Patrick submitted that it is clear from the terms of the Agreement that the parties agreed that Patrick has the absolute discretion to determine and implement a labour model which it considers most appropriate for its business. This was said to be evident from a number of clauses in the Agreement. These clauses were 7.3, 9.1, 9.4, 10.1, 10.3, 17.1 and 18.1 of Part A and clause 2.1 of Part B. 12

Clause 10.2 (Part A)

[14] With respect to clause 10.2 (Part A) (the first substantive clause on which the union relies), it was argued that it does not in any way, fetter or derogate from Patrick’s absolute discretion to determine and implement a labour model it considers most appropriate for its business. The clause was described as merely aspirational in nature and does not create any obligation on Patrick to implement a particular labour model. The Commission was taken to the decision in Construction, Forestry, Mining and Energy Union v Hay Point Services Pty Ltd 13 (Hay Point Services) in support of this contention.14

[15] Further, the company submitted that, as a general statement of intent, clause 10.2 must yield to specific provisions which afford Patrick the absolute discretion to determine its labour model. The Ansett Pilots Association and Ansett Australia Limited case 15 (Ansett) was referred to in this regard.16

Clause 9.6 (Part B)

[16] This is the second substantive clause on which the union relies and it was stated by the company that this clause has no relevance to the determination of a labour model. The company indicated that the clause only operates once Patrick has, in its absolute discretion, determined and implemented a labour model. At that point, it was said to give provisional priority to full time employees over other categories of employees in relation to the allocation or rostering of work on any given day, in the normal circumstances of day-to-day rostering. The last sentence of the clause was described as making it clear that Patrick retains absolute discretion to change its labour model. 17

[17] In summary, in respect of the first application, Patrick argued that:

• None of the clauses relied upon by the union gives rise to a right of the union to dispute the future labour modelling of Patrick.



• It is clear from the language used by the parties in the Agreement that it was intended that Patrick retain the absolute discretion to determine the labour model. 18



• The dispute is a pursuit of a new term by the union and therefore is outside the jurisdiction of the Commission. The Ansett case was highlighted in respect of this argument. 19



• The dispute is not about whether a term of the Agreement gives rise to a right for the Commission to interfere with Patrick’s absolute discretion to determine and implement a labour model as the union has been unable to identify any clause that does. 20



• The dispute was said to be a request for the Commission to arbitrate on a labour model for Patrick’s business moving forward.



• Having regard to the words of the dispute settlement procedure and to the clause which provide for Patrick’s absolute discretion to determine its labour model, it is not a matter which can be the subject of a dispute under Schedule 1 and therefore the Commission does not have jurisdiction to deal with it. 21



• In the alternative, the outcome sought by the union is beyond the power of the Commission because the union is seeking that the Commission override Patrick’s absolute discretion by determining for itself what the appropriate numbers and categories of employees are moving forward. As this is entirely inconsistent with the express terms of the Agreement, by virtue of section 739(5) of the Act, it is not open to the Commission to make such an order. 22



• Finally, the company submitted that, as the events relied on by the union, post-date the application, there is no evidence before the Commission that the union has followed the steps set out in Schedule 1 of the Agreement. 23

(c) Does the Commissioner have jurisdiction to deal with the second application?

[18] Ms Millen stated that the second application concerns a dispute about the relative weightings of the proposed selection criteria for selecting employees for compulsory redundancy; the use of shift supervisors to rate the employees and the absence of an agreed position in relation to reciprocal redundancies/re-deployment.

[19] It was indicated that the union relies on clause 15.5 (Part A) and Schedule 1 of the Agreement to provide jurisdiction for the Commission to deal with the dispute. The company argued that clause 15.5 does not expand the types of disputes which may be dealt with under Schedule 1. A dispute must be in relation to the application of the Agreement or the NES and the relevant steps of the procedure have to be complied with. 24

[20] The company contended that, to read clause 15.5 as providing jurisdiction, was to ignore substantial parts of the clause, namely, “subject to the provisions of this clause”, “subject to there being no rejection of implementation of change” and “in accordance with the Avoidance of Disputes procedure set out in Schedule 1”. 25 It was argued that, in conjunction with clause 15.3, clause 15.5 makes it clear that Patrick retains absolute discretion to implement significant change, on 21 days notice, where it has complied with its consultation obligations.26

[21] Further, the company submitted that clause 15.5 requires the dispute to be about something other than the decision to implement a significant change or the implementation of that change. This is because a dispute about the change and the implementation of the change equates to a rejection of the implementation of that change. The union disagreeing with how people will be selected for redundancy was said to be rejection of the implementation of the change. If clause 15.5 is read as the union contends, the company argued that it effectively undermines the right that is given to the company in clause 15.3. 27

[22] With respect to “in accordance with the Avoidance of Disputes Procedure set out in Schedule 1 to this Agreement”, it was contended that the criteria for enlivening Schedule 1 still have to be met. The company argued that clause 15.3 is not intended to expand either clause 15.3 or the dispute settlement procedure (Schedule 1). Its purpose was said to concern a situation where if the change is rejected by the union and employees with a stoppage of work, the union loses the avenue to arbitrate the matter, thereby operating as a restriction. 28 The company argued that the situation is that the union is rejecting the implementation of the change by pursuing the status quo in relation to the change. This was said to be what the clause says that the union cannot do, thereby depriving the Tribunal of jurisdiction.29

[23] In summary, Patrick submitted that the critical question is whether the Agreement commits the Commission to dealing with a dispute in relation to a decision to implement a significant change. Did the parties intend that, if consultation did not result in agreement on a specific change to the implemented, would the Commission be able to deal with and resolve the disagreement? Viewed objectively, the answer was said to be “no”. This was because of the terms of clause 15.3, the absence of clear words providing for such intervention and the fact that there is no other similar term in the Agreement. Rather, the company submitted that clause 15.5 must be read as limiting and not expanding the circumstances in which a dispute about a significant change can be dealt with under Schedule 1. 30

[24] Finally, in the alternative, the company argued that the issues in dispute are matters of company policy which, even if the Commission finds it has jurisdiction, it does not have the power to arbitrate under clause 1.3 of Schedule 1. It was stated that the selection criteria for redundancy are not in the Agreement and that it involves the exercise of management discretion. Ms Millen argued that the company has made a decision about how it will implement the change and how it will select people for redundancy. It was said to have exercised its managerial prerogative and discretion to do that. 31

[25] In terms of what constitutes “company policy”, the Commission was referred to the Macquarie Dictionary definition and to the decision of Riverwood International Australia Pty Ltd v McCormick 32 (Riverwood). It was argued that company policy is something not dealt with in the Agreement and is the exercise of managerial discretion in relation to a course of action to achieve a certain outcome. The issues in dispute are squarely company policy and so it is not open to the Tribunal to arbitrate these issues on the basis of clause 1.3 of Schedule 1 of the Agreement.33

[26] The decision in Riverwood was highlighted where it was found that the proposition that “company policies and practices” refers to things which fit the description of a “policy or practice”, whether contained in a document or not. It was argued, therefore, that company policy is something about the exercise of management discretion - which is what is occurring in this case. 34

[27] With respect to the issue of rejection of the change, it was argued by Patrick that clause 1.1(e) of Schedule 1 contains a good behaviour requirement in terms of no industrial action before the matter, subject to clause 1.3, can be referred to the Commission. Therefore, Ms Millen contended that, on the union’s argument, clause 1.1(e) is meaningless. If it is merely about industrial action, there was said to be no need for clause 15.5. Clause 15.5 has to have work to do so therefore it must be more than what the union contends because it is already dealt with in clause 1.1(e) of Schedule 1. The company submitted that there is no obligation on the union to seek a status quo order. The union was said to have a choice and that, in doing so, was rejecting the implementation of change. Therefore, arbitration is not available to the union under clause 15.5. In addition, Schedule 1 is not accessible by the union in relation to the change decision and implementation of that change. 35

[28] In terms of the decision in United Firefighters’ Union of Australia v Metropolitan Fire and Emergency Services Board 36 (MFB) which was referred to by the union, Ms Millen stated that it has no bearing on the decision to be made by the Commission. This is because it was a case dealing with a situation where the parties could not reach agreement about certain matters during bargaining and had reserved them for the Commission to arbitrate. The Commission was given the capacity to arbitrate something new (a new allowance) outside of the agreement which was said to be an entirely different situation to this matter.37

[29] The company also made submissions in regard to the decision in CEPU v Thiess Pty Ltd 38(Thiess), raised by the union. It was argued that the dispute settling clause is much broader in terms of the matters that can be dealt with under that clause. Further, the company contended that it is clear that clause 9.6 of Part B and clause 10.2 of Part A are not engaged. As well, it was stated that, to argue that those clauses have any relevance, is a fatal flaw in the union’s argument.39

[30] Patrick contended that, even if the Commission found that “application” means “arising” and therefore the Commission can deal with these issues, there was then a question of what the Commission can do. It was said that the union’s argument is that management prerogative disappears once there is a right to arbitration as it then becomes a question of fairness. This was argued to be at odds with Thiess where it was said that the Court accepted that it would not be open to the Tribunal to arbitrate an outcome that was inconsistent with the company’s express right to make changes. It was therefore contended that, even if the Commission found that there is a relevant dispute under the Agreement, the Commission’s powers are limited. To arbitrate this matter was said to have no utility because what the union is asking for is contrary to the express rights of the company, particularly under clause 10.3 of the Agreement. The company contended that, through arbitration, the Commission is unable to change the absolute discretion of the company in regard to changing the size and composition of the workforce (clause 10.3 of the Agreement). 40

[31] In terms of the CEPU v Telstra Corporation Limited 41 (Telstra) decision referred to by the union, the company contended that there is a contrary indication, in the dispute settlement procedure and other parts of the Agreement, to the Commission being able to exercise its powers under section 111 of the Act.42

[32] Further, Patrick submitted that clause 1.1(g) of Schedule 1 is far from a classic status quo clause. There was said to be nothing in that clause which intended to operate as a status quo provision in relation to the implementation of change. Rather, it was described as the first contrary indication that interim orders were not intended to be available to the Commission. Support for this contention was shown to be in the previous agreement’s dispute procedure which the current Schedule 1 replaced. It was stated that, in the 2012 agreement, the parties agreed to a complete removal of the status quo. This was said to mean that the parties must have intended for the status quo not to be available whilst disputes were being dealt with in accordance with the dispute settlement clause. The result of this was stated to be that, the interim orders sought by the union, are not available under Schedule 1 or any other part of the Agreement. This proposition was supported, in the company’s view, by clause 10.3. In addition, clauses 15.3 and 15.5 were said to mean that Patrick should be able to implement the decision without delay and that there cannot be a rejection of the implementation of the change. The parties, therefore, had clearly intended that the status quo would not be available. 43

3. Union’s submissions

Company policies

[33] It was stated by the union that the company’s proposition that this is a dispute about the application of particular company policies had not been foreshadowed as a ground of their objections. Mr Fetter indicated that this is a dispute about the application of the Agreement, specifically clause 15.5. It was argued that the union disagrees with the decision itself and the implementation of the decision. The proper construction of clause 15.5 is that, in the event of such a dispute, the matters in dispute can be referred, by the union, to the Commission for arbitration. 44

[34] Further, the union submitted that the company’s assertion, that what it is doing is policy and therefore the Commission cannot arbitrate, must be rejected as the parties cannot have intended that the company can contract out of the disputes clause in that way. 45 It was argued that, given the industrial context in interpreting the Agreement, what is being dealt with in this dispute are matters treated in the Agreement and not in a formal policy.46 They could be distinguished from a formal written policy on workplace behaviours, for example, whether these matters are not dealt with in the Agreement. In such a situation, it was acknowledged that it could not be said that it was a dispute that the Commission could hear.47

Nature of the disputes

[35] The union’s primary position was said to be that all of the three dispute notices are in totality, a dispute about how the company is embarking on a process of change following the decision to close Webb Dock East. It was acknowledged that the union had added a further clause that needs to be looked at (clause 32). However, this was said to not distract from what the union seeks arbitrated - the course of decision making relating to the Webb Dock East closure and the way in which it is implemented. 48

C2013/7789

[36] In terms of the union’s first application (C2013/7789), it was explained to the Commission that, until late last year, there were 45 Full Time employees, 53 Permanent Guaranteed Employees (PGE) and 66 A Supplementaries and 60 B Supplementaries. It was indicated that the number of employees at the commencement of the Agreement (December 2012) was 45 Full Time employees,, 53 PGE’s and 66 A Supplementaries (clause 2 Part B of the Agreement). 49

[37] The chronology of events was said to have been:

• September 2013 - the company notified the union that Webb Dock was closing and that there would be redundancies.



• The company then hired 20 Part B Supplementaries resulting in an increase from 60 - 80 (the subject of C2013/7789). 50

[38] The company’s action was described as putting pressure on the jobs of the full time employees and PGE’s as they are all in the pool when the decision is made as to who is kept on and who goes. 51 It was indicated that the union’s response to the company was that, if additional short term labour was needed, the company could temporarily draw on permanent employees at the other terminals whose jobs are not at risk.52

[39] It was stated that the other concern for the union is the labour model going forward and the union’s view is that the Commission can arbitrate this issue. The company’s labour model was said to be 15 full time employees; 24 PGE’s; 45 Part A Supplementaries and 66 Part B Supplementaries. Currently, as a proportion of the workforce, the casuals amount to 56%. Under the proposed labour model by the company, this figure increased to 74%. 53

[40] The union’s labour model was described as also resulting in a reduction in labour but with less emphasis on casuals. If the dispute is arbitrated, the union said that the Commission will be asked to decide whose labour model, or some other model, should prevail. 54

C2014/3370

[41] The second application concerns the numbers and categories of redundancies, the selection criteria to be used and the identity of the assessors. 55

[42] In the terms of clause 15.5 of the Agreement, the union indicated that it disagrees with the decision, the content of the decision and the way it has been implemented. 56

C2014/3419

[43] The third dispute was described as being about the money that has been made available by the Victorian Government to the Parent Company/respondent (clause 17.3). 57 The union argued that no discussions, as required by clause 17.3 (Part B) have taken place as the company has never revealed what compensation it has received.58

[44] It was also indicated that the company had not raised a jurisdictional objection in regard to this dispute. 59

[45] It was submitted by the union that the Commission has to be satisfied that the matters in dispute are tolerably clear. In terms of the Hay Point dispute, referred to by the company, the Commission was taken to the appeal decision. 60 It was said to be authority for the proposition that it is sufficient that the nature of the dispute is made clear to the Commission and respondent, without having been defined with a high degree of legal precision and technicality.61

Jurisdiction

[46] Mr Fetter submitted that the starting point is the statute and the minimum requirement there is that any dispute “arising under” an agreement has to be referable to the Commission or a third party. 62

[47] Further, it was argued that the Act does not require one clause to contain all references to the Commission. It was stated that, in the Agreement, clause 15.5, as well as Schedule 1, contain empowering provisions giving the Commission jurisdiction to hear and resolve disputes. 63

Schedule 1

[48] It was stated that the introductory wording of Schedule 1 is very broad because it refers to disputes regarding the “application” of the Agreement. The Commission was referred to the decision of Tracey J in Thiess. It was said that Tracey J had found that “arising under” means that there can be a direct or indirect link between a dispute and the clauses of an agreement and still have a dispute arising out of the Agreement. 64 The union argued that “application” has got to be at least as broad as “arising under” otherwise the Agreement could not have been certified. This is because the statutory requirement is, at the minimum, that disputes in relation to matters arising under the agreement are referable to a third party.65

[49] Further, the union referred to Tracey J’s decision where His Honour said that “application”, in its ordinary meaning, conveys a sense of putting into operation or implementing some provision of the Agreements so that it covers disputes about how Patrick has made use of or applied a provision of the Agreement. 66

[50] Secondly, the union argued that Tracey J found that the word “application” in the disputes settling procedure extended to a decision by the company to terminate the rostering arrangement. “Application” is also Schedule 1 of the Agreement and it was said that Tracey J had accepted that the union could be in dispute about the company exercising what would appear to be an unfettered prerogative. 67 His Honour was said to have reinforced this conclusion when, at paragraph 65, he referred to other clauses in the Agreement (clause 17.2) where the parties had thought ahead to questions of the jurisdiction of the Commission and managerial prerogative and removed the Commission’s power to arbitrate.68 This was said to also be the situation in this case because clause 1.3 of Schedule 1 cuts down the Commission’s jurisdiction to deal with a dispute about company. The union argued that clause 1.3 would only have work to do if it is accepted that the starting proposition is that a dispute in regard to the application of the Agreement might traverse matters that were also dealt with in company policy. Because the covering clause of Schedule 1 is so broad, the parties need to excise parts of it. If the covering words were narrow, it was contended that this would not be necessary as there would be an easy argument that a particular dispute about company policy did not directly relate to the Agreement.69

[51] It was also submitted by the union that, in the event the Commission did not accept the arguments about clause 15.5, Schedule 1 still allows the Commission to hear and arbitrate the dispute. Therefore, it is possible to have a dispute about the application of the Agreement which is a dispute about the way in which an employer has exercised a power or discretion, even if the Agreement confers that power or discretion in unlimited terms. 70

[52] The union argued that the Thiess decision supports this proposition. This was on the basis that, although the clause in question in that case, purported to give the employer unqualified power to cease a four by four roster, it was found that there could be a valid dispute about it (the application of the agreement). 71

[53] The union further contended that the Act provides for a compromise in that, once an agreement is made, employees lose their rights to take protected industrial action to resist changes or decisions they oppose. In return, if the employer makes a decision which is directly or indirectly made under an agreement which has a disputes procedure then the parties can have the matter arbitrated by the Commission. 72

[54] It was also contended that, when the Commission is arbitrating a dispute, it is not acting as a court. Rather, it is conducting a “fairness” arbitration. 73 The union argued that, in this case, it is a private arbitration and it is open to the parties to tell the Commission the sort of arbitration they want. In conducting a private arbitration, unless the parties have withdrawn these functions, it was stated that the Commission is bound by the ordinary rules guiding its functions (sections 577 and 578 of the Act).74

[55] If the parties confer upon the Commission jurisdiction to arbitrate a dispute and that dispute is in regard to the application of the agreement, it was submitted that the parties are asking the Commission to come to a decision in accordance with equity, good conscience and the merits of the case. In the context of this dispute, it was said that the Commission was to choose between competing labour models, rather than do what a court would do which would be to check that the company has complied with all of the procedural requirements about redundancy. 75 The union rejected the company’s contention that the Commission could not get involved with the substance of the decision and say whether one labour model or the other is preferred. It was submitted that the Commission is not required to act like a court. Rather, private arbitrations were said to proceed on the assumption that the merits of decisions can be reviewed and altered by the Commission (a fairness arbitration). This was subject to the caveats decided by the other parties and section 739(5) of the Act. The Commission was referred to the decision in the MFB case in this regard.76

Clause 15.5

[56] Mr Fetter agreed with Ms Millen’s contention that the critical question is what this clause means and whether the Agreement permits the Commission to deal with this dispute. It was acknowledged by the union that the Agreement contains various provisions purporting to give the employer discretion to do things. These provisions containing employer discretion were described as concerning the ordinary running of the business. However, things become different when the employer proposes significant change. At that point in time, whatever is pre-existing, is altered because clause 15.5 reserves, to the union, the ability to refer a dispute about a decision to introduce change and/or about the way it is implemented, to the Commission for arbitration. If this were not the case, the clause would have no work to do and the parties could just rely on Schedule 1. However, the company would then object on the basis of clause 15.3 - which was why the union had struggled for and achieved clause 15.5. 77

[57] The MFB case was again referred to and it was argued that clause 15.5 is analogous to the “reserved matter” in that agreement. Clause 15.5 was said to be an exception to the normal rule that disputes are to be progressed under Schedule 1. 78

[58] The purpose of clause 15.5, on the company’s construction, was described as it resulting in either, having no work to do or, being a restriction on the union’s ability to progress a dispute. The union submitted that the first part of the clause should be read as: where the company wishes to exercise its rights under the earlier parts of the clause and the union disagrees with either the decision or the implementation….. 79

[59] It was accepted that there are preconditions to the union invoking this clause. The preconditions were said to mean that the union has not organised a stoppage of work or ban/slowdown which is designed to frustrate or reject the implementation of the change. That is, that the union does not organise industrial action against the employer to resist the change. 80 If it did, this would represent rejection of the change.81 The union argued that, if the clause is read that way, there is a quid pro quo - if the union behaves itself in the workplace, it can have its dispute arbitrated. If it does not behave itself, it does not have clause 15.5 to rely on, rather, only Schedule 1.82 The role of clause 15.5 was said to overcome clause 15.3 which, in the absence of clause 15.5, would prevent the Commission from arbitrating the dispute.83 In the alternative, it was submitted that once Schedule 1 is read broadly, it covers disputes over any decision to introduce change and/or whether the implementation of that decision is fair.84

[60] The union argued that the fundamental proposition is that, in the ordinary running of the business, the Agreement gives a lot of discretion to the employer. The result of this was described as: in this situation, if there was a challenge to a decision, there might be a limit on what could be achieved from an arbitration. This was said to be due to s.739(5) of the Act which prohibits any decision which is inconsistent with the Act or the Agreement. The regime in the Agreement was stated to be very different in that, where significant change is proposed, on condition of good behaviour by the union, it can have its disagreement arbitrated. 85

[61] In terms of the last few words of clause 15.5, the union argued that they are there to make it clear that the process in Schedule 1 should apply in the sense of there being different steps. It was also contended that, importantly, it picks up clause 1.1(e) of Schedule 1 which contains the word “arbitrate”. This reflects the requirement in s.595(3) for the Commission only being able to arbitrate if it is expressly authorised to do so under the Agreement.

[62] The union stated that, assuming the Commission finds that it has jurisdiction to deal with the dispute, the Commission can exercise any of its normal statutory powers considered appropriate. The only limitation is if the terms of the Agreement withdraw that. It was submitted that there is nothing in the Agreement which says that the Commission cannot make an interim order. 86

[63] It was stated that the union is relying on the Commission’s power to make interim decisions, as is provided for in s.589 of the Act. These powers were said to be available in a private arbitration. 87

[64] Further, the union submitted that interim decisions extend to making orders to preserve the status quo until a decision on the merits of the dispute can be made. Such orders protect the jurisdiction of the Tribunal so that the Tribunal does not end up in a situation where, by the time of the arbitration, the horse has bolted. The purpose of the orders is to freeze matters in the interests of preserving the Commission’s jurisdiction. 88 Mr Fetter highlighted the Full Bench decision in Telstra where it was found that section 111(1) includes the power to make an interim order, in so far as they are capable of application and subject to any contrary indication in the agreement clause itself. This case was said to stand for the proposition that the Commission can make the interim restraining orders requested. The only question then, was said to be, is there anything in the Agreement that is inconsistent with the orders? The answer was stated as “no” with clause 1.1(g) of Schedule 1 being said to be the ordinary status quo provision.89

[65] In terms of clause 15.5, the union submitted that if provides that of, after 21 days, the company is still determined to proceed, then the dispute can be referred to the Commission. As part of dealing with the dispute, the Commission can restrain the company from implementing any change while it arbitrates. Further, it was argued that there is nothing in the Agreement which says that nothing can stop the changes. Rather, clause 15.5 says that, if a dispute comes to the Commission, the Commission can use all of its powers to deal with it including its ordinary power to put a hold on things pending an arbitration. 90 This was said to be the purpose of the clause - to allow the union in the event of significant change only - to disagree with a decision and implementation and to have the Commission arbitrate.91

[66] Finally, in respect of the company’s submissions regarding the status quo, the union clarified its argument as not being one about clause 1.1(g) and the status quo. Rather, it was said to be about s.739(3) of the Act. It was stated that there are two dispute resolution terms in the Agreement - clause 15.5 and Schedule 1. Whichever term it is, the union argued that the question is whether they limit the power of the Commission to make interim orders. The union stated that the parties have not turned their minds to this question. There was nothing in clause 1.1(g) which takes that power away. 92

CONSIDERATIONS AND CONCLUSIONS

[67] I have carefully considered the submissions of the parties. The company submitted that the terms of the Agreement provide the company with the absolute discretion to determine and implement a labour model which it considers most appropriate for its business. Nothing in the Agreement was said to provide the union with a right to dispute the company’s labour model going forward. Determining the labour model is not a matter which can be the subject of a dispute under Schedule 1 given the nature of the dispute settlement procedure together with clause 10.3 of the Agreement.

[68] In addition, the company argued that neither clause 15.5 nor Schedule 1 of the Agreement provide jurisdiction for the Commission to deal with the dispute. Clause 15.5 was said not to expand the types of disputes which may be dealt with under Schedule 1. As well, under Schedule 1, a dispute must be in relation to the application of the Agreement or the NES and the relevant steps of the procedure have to be complied with.

[69] Further, clause 15.5 was stated as requiring the dispute to be about something other than the decision to implement significant change as disagreeing with the decision or its implementation equates to a rejection of either or both. This clause was to be read as limiting rather than expanding the circumstances in which a dispute about a significant change can be dealt with under Schedule 1.

[70] Finally, in the alternative, the company argued that the issues in dispute are matters of company policy. Therefore, even if the Commission finds it has jurisdiction, it does not have the power to arbitrate under clause 1.3 of Schedule 1. It was contended that, to arbitrate the matter would have no utility because, what the union is asking for is contrary to the express rights of the company, particularly clause 10.3. Therefore, the Commission is unable to alter the company’s absolute discretion to change the size and composition of the workforce.

[71] On the other hand, it was the union’s argument that clause 15.5 is another dispute settling term in the Agreement, in addition to Schedule 1. Clause 15.5 was said to provide the Commission with the ability to arbitrate a dispute when the union disagreed with the decision and/or implementation of significant change and had behaved itself industrially.

[72] Further, Schedule 1 of the Agreement is to be read broadly such that it provides the Commission with jurisdiction in respect of disputes regarding the application of the Agreement. The Thiess decision was referred to in this regard.

[73] As well, it was contended by the union that there was nothing in the Agreement which prevented the Commission using all of its normal powers, including making interim orders. Such orders should be made to preserve the jurisdiction of the Commission until it is able to arbitrate the merits of the dispute.

[74] I accept the union’s submissions that the Commission has jurisdiction to deal with the two disputes by virtue of clause 15.5 (Part A) of the Agreement or, in the alternative, by Schedule 1 of the Agreement.

[75] The clause 15.5 sits at the end of the clause headed “Consultation and Change”. The preceding sub sections (clause 15.3 and 15.4) reflect the standard approach to consultation and change clauses in agreements. Clause 15.5, however, is not a standard clause. What it appears to provide for is:

• where a company exercises its rights to implement significant change (as set out in clause 15.3); and



• the employees and the union disagree with that decision and the implementation of the change; and



• subject to there being no stoppage of work or other industrial action (equating to rejection of the implementation of the change);



• the union may refer the matter in dispute to FWA (now the Commission);



• in accordance with Schedule 1 of the Agreement.

[76] I accept the union’s submissions that this clause is another dispute settlement clause in the Agreement, in addition to Schedule 1 which it refers to. I have not been convinced that it narrows the union’s ability to dispute significant change and/or its implementation. Rather, it makes it abundantly clear that, subject to good behaviour, the union, if it disagrees with the company’s decision and/or implementation, may refer it to the Commission. The clause also states that this ability only applies to significant change; once the company has exercised its rights to implement significant change and; subject to good behaviour by the union. The clause skips the preamble and the first couple of steps of the dispute settlement procedure in Schedule 1 by specifically referring the matter to the Commission. In accordance with the powers set out in Schedule 1, the Commission has the power to arbitrate a dispute between the parties over the significant change decision and/or its implementation. As these two disputes are premised on a disagreement by the union about how the company is implementing a significant change, I therefore find that I have jurisdiction to deal with the disputes on the basis of clause 15.5 of the Agreement.

[77] In reaching this conclusion, I accept the union’s submissions that the Commission has the power to protect and preserve its jurisdiction until a decision on the merits of the dispute can be made. These principles were first set out in the majority decision of the High Court of Australia in Re Media, Entertainment and Arts Alliance and Others Ex Parte the Hoyts Corporation Pty Limited and Others 93(Hoyts).

[78] At paragraph 28, the majority stated that:

“The steps that may be taken and the orders that may be made in the course of arbitration are not necessarily coextensive with what may be done by way of a final award. So much is expressly recognized by s.111(1)(t) of the Act which, as has already been noted, confers a general power to ‘give all such directions, and do all such things, as are necessary or expedient for the speedy and just hearing and determination of (an) industrial dispute’. Although there might be questions as to the validity of a final award having effect of the kind that cl.31.1 has in relation to matters not dealt with in the Interim Award, an interim provision of that kind may well be necessary or expedient for the speedy and just hearing and determination of a dispute, particularly if, as was suggested in this case, there is a possibility that conditions will be altered so as to render the Commission's decision irrelevant or so as to defeat its jurisdiction. And that is so even if the provision operates in a wider area than that to be regulated by the final award, for it may be necessary or desirable to consider all aspects of existing employment practices and arrangements before determining the provision that should be made with respect to the matters in dispute.”

[79] Since the Hoyts decision, the Commission has followed this approach in dealing with applications for interim orders. 94 I propose to do the same.

[80] In addition, the Full Bench in Telstra found that section 111(1) allowed the Commission to make an interim order insofar as they are capable of application and subject to any contrary indication in the clause itself. 95 I have not been persuaded that there are other parts of the Agreement, including Schedule 1, which are such contrary indications.

[81] I further rely on the decision in Thiess. I accept the union’s submissions that Thiess stands for the proposition that, despite the company having an unfettered discretion, the dispute settlement procedure is still available to the union. 96 In that case, there was no equivalent clause to clause 15.5 of this Agreement which, I have already found, is another dispute settlement clause in the Agreement. The Court in Thiess found that, despite a clause setting out managerial discretion to abolish the roster, the union could validly notify a dispute under the relevant disputes settlement clause, even if arbitration may not abrogate, against their will, the company’s unfettered discretion.97 What Justice Tracey was saying in Thiess was that, even if the outcome of an arbitration (disputes settlement procedure) may not cut across the company’s unfettered to cancel the roster, it does not mean that the dispute settlement procedure is not intended to or does not operate in these circumstances.

[82] Therefore, as per Thiess, in these matters, the company (in clause 10.3) has absolute management discretion to change the size and composition of the workforce. The union has notified a dispute in respect of the exercise and implementation of this discretion. The union has the ability to access the disputes settling procedure even though the company has absolute management discretion to do what the union disagrees with. In these matters, this conclusion (Thiess) is reinforced, as there is another dispute settlement clause which gives the union access to the Commission, separate to the principal dispute settlement clause (Schedule 1).

[83] In the alternative, I accept the union’s broad characterisation of Schedule 1 such that it allows the Commission to hear and arbitrate the dispute, as found by Tracey J in Thiess. I have been persuaded that “application” is as broad as “arising under” and “application” has a broad construction as found by His Honour. 98 In the context of these matters, I accept that “application” means putting into operation or implementing some provision of the Agreement. As was the case in Thiess, there are other clauses in the Agreement which cut down the jurisdiction of the Commission eg 1.3 of Schedule 1. This is a reflection of the broad nature of the dispute settling clause because, if it is narrow, there would be no necessity to excise parts of it.

[84] Accordingly, for these reasons, on the basis of clause 15.5 (Part A) or, in the alternative Schedule 1, I find that I have jurisdiction to deal with these two disputes.

Appearances:

Mr J Fetter, of counsel for the MUA

Ms S Millen, of Herbert Smith Freehills for the respondent

Hearing details:

2014.

Melbourne:

8 April.

 1   Email to parties dated 17 April 2014

 2   Confidential Decision [2014] FWC 2918, 6 May 2014

 3   Email from Commissioner Cribb to parties, 8 April 2014, 6.46pm

 4   Ibid

 5   Transcript PN 23 - 24 and Outline of Submissions on the Question of Jurisdiction, dated 8 April 2014, at paragraphs 1 - 2

 6   Ibid PN 25 and ibid at paragraphs 3 - 4

 7   Ibid PN 26 and ibid at paragraphs 5 - 7

 8   Ibid PN 27 and ibid at paragraph 8

 9   Ibid PN 28 and ibid at paragraph 9

 10   Ibid PN 29 and ibid at paragraph 10

 11   Ibid PN 30

 12   Ibid PN 31 - 47 and Outline of Submissions on the Question of Jurisdiction, dated 8 April 2014, at paragraph 11

 13   [2012] FWA 4604

 14   Transcript PN 47 - 65 and Outline of Submissions on the Question of Jurisdiction, dated 8 April 2014, at paragraph 12

 15   R8525

 16   Transcript PN 65 - 70 and Outline of Submissions on the Question of Jurisdiction, dated 8 April 2014, at paragraph 12

 17   Ibid PN 71 - 75 and ibid at paragraph 13

 18   Ibid PN 76

 19   Ibid PN 77 - 95

 20   Ibid PN 77 and Outline of Submissions on the Question of Jurisdiction, dated 8 April 2014, at paragraph 14

 21   Ibid PN 96

 22   Ibid PN 97

 23   Ibid PN 98

 24   Ibid PN 100 - 101 and Outline of Submissions on the Question of Jurisdiction, dated 8 April 2014, at paragraphs 18 - 19

 25   Ibid PN 101 - 102 and ibid at paragraph 19

 26   Ibid PN 102 and ibid

 27   Ibid PN 102 and 104 and ibid

 28   Ibid PN 130 - 144

 29   Ibid PN 142 - 144

 30   Ibid PN 145 and Outline of Submissions on the Question of Jurisdiction, dated 8 April 2014, at paragraph 20

 31   Ibid PN 146 and ibid at paragraph 21

 32 [2000] FCA 889

 33   Transcript PN 158

 34   Ibid PN 250

 35   Ibid PN 247 - 248

 36   [2012] FWA 8838

 37   Transcript PN 251 - 252

 38 212 IR 327

 39   Transcript PN 253 - 254

 40   Ibid PN 256 - 270

 41   PR940569

 42   Transcript PN 327

 43   Ibid PN 325 - 334 and 341 - 342

 44   Ibid PN 164

 45   Ibid PN 160

 46   Ibid PN 161

 47   Ibid

 48   Ibid PN 166

 49   Ibid PN 167 - 168

 50   Ibid PN 169 and Applicant’s Outline of Submissions on Jurisdiction and Power to make Interim Orders, dated 8 April 2014, at paragraph 2(b)

 51   Ibid PN 169 - 171

 52   Ibid PN 175

 53   Ibid PN 172 - 174

 54   Ibid PN 176

 55   Applicant’s Outline of Submissions on Jurisdiction and Power to make Interim Orders, dated 8 April 2014, at paragraph 2(a)

 56   Transcript PN 177

 57   Ibid PN 178

 58   Applicant’s Outline of Submissions on Jurisdiction and Power to make Interim Orders, dated 8 April 2014, at paragraph 2(c)

 59   Transcript PN 177

 60   [2012] FWAFB 9173

 61   Ibid at [12] and Transcript PN 178

 62   Applicant’s Outline of Submissions on Jurisdiction and Power to make Interim Orders, dated 8 April 2014, at paragraph 3 and Transcript PN 181 and 193

 63   Ibid at paragraph 6 and ibid PN 193

 64   Ibid at paragraph 4 and ibid PN 182 - 188 and 196

 65   Ibid PN 197

 66   Ibid PN 197 and Applicant’s Outline of Submissions on Jurisdiction and Power to make Interim Orders, dated 8 April 2014, at paragraph 10

 67   Ibid PN 189 - 191

 68   Ibid PN 191

 69   Ibid PN 198 and Applicant’s Outline of Submissions on Jurisdiction and Power to make Interim Orders, dated 8 April 2014, at paragraph 11

 70   Ibid PN 199 and ibid at paragraph 12

 71   Ibid PN 200 and ibid at paragraph 13

 72   Ibid PN 201

 73   Ibid PN 202

 74   Ibid PN 203 - 211

 75   Ibid PN 203 - 214

 76   Ibid PN 212 - 221 and Applicant’s Outline of Submissions on Jurisdiction and Power to make Interim Orders, dated 8 April 2014, at paragraph 14

 77   Ibid PN 225 - 228 and ibid at paragraph 21

 78   Ibid PN 228 - 229

 79   Ibid PN 230 - 231

 80   Ibid PN 231 - 232

 81   Ibid PN 237 - 240

 82   Ibid PN 231 - 233 and Applicant’s Outline of Submissions on Jurisdiction and Power to make Interim Orders, dated 8 April 2014, at paragraph 20

 83   Ibid at paragraph 19

 84   Ibid at paragraph 18

 85   Transcript PN 234

 86   Ibid PN 310 and Applicant’s Outline of Submissions on Jurisdiction and Power to make Interim Orders, dated 8 April 2014, at paragraph 24

 87   Ibid PN 311 and ibid at paragraph 25

 88   Ibid PN 311 - 313 and ibid at paragraph 26

 89   Ibid PN 316 - 318 and ibid at paragraphs 26 - 30

 90   Ibid PN 321 - 322

 91   Ibid PN 322 - 323

 92   Ibid PN 338 - 340

 93 67 ALJR 723

 94   See PR938271 and PR920954

 95   PR940569 at [47]

 96 212 IR 327 at [70]

 97   Ibid

 98   Ibid at [64]

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