Mr Wayne Chadwick v Woodside Energy Limited
[2011] FWA 2890
•12 MAY 2011
[2011] FWA 2890 |
|
DECISION |
Fair Work Act 2009
s.394 - Application for unfair dismissal remedy
Mr Wayne Chadwick
v
Woodside Energy Limited
(U2011/4869)
DEPUTY PRESIDENT MCCARTHY | PERTH, 12 MAY 2011 |
Termination of employment - Breach of Golden Safety Rules - Performing work subject to a permit whilst permit suspended - Not complying with terms of permit - Objects of relevant Part of Act.
Background
[1] Mr Wayne Hilton Chadwick (the Applicant) was employed by Woodside Energy Ltd (Woodside) in the Engineering Department of the Onshore Gas Karratha Division prior to the termination of his employment.
[2] The Applicant was a Maintenance Technician at the Karratha Gas Plant (KGP) and had been employed there in that or similar capacities for about 15 years. The Applicant's remuneration package was over $220,000p.a. when his employment was terminated. He also had the benefit of Woodside's Employee Share Plan which provided substantial benefit to the Applicant. He had expected that his remuneration would increase to over $230,000 per year and to change to a fly-in fly-out arrangement as a consequence of a planned transfer to the Pluto Onshore Gas Plant.
[3] The Applicant's employment with Woodside was terminated for breaching the Integrated Safe System of Work (ISSoW).
The Integrated Safe System of Work (ISSoW)
[4] The KGP is a hazardous facility. Woodside operates what is described as an Integrated Safe System of Work (ISSoW) at the KPG. The purpose of the ISSoW is to create a safe working environment by providing management control over potentially hazardous activities. The ISSoW incorporates risk assessment, isolation management and permit to work. It provides a methodical approach to identifying hazards, assessing risks, creating and supporting permits to work and associated certificates.
[5] A permit to work system (the Permit System) is one of the safety management controls in a hazardous facility such as KGP. A permit is always supported by a Hazard Identification Risk Assessment (HIRA). The aim of the Permit System is to ensure that:
(i) the risks associated with maintenance activities are assessed and controlled;
(ii) the appropriate people authorise the work to take place;
(iii) competent people put controls in place; and
(iv) competent people execute the work.
[6] Woodside explained the levels of authority that operate in the ISSoW at KGP as:
(i) Performing Authority (e.g. the fitters, electricians and scaffolders);
(ii) Isolating Authority (people who put process or electrical isolations in place);
(iii) Area Authority (the Operations Technician accountable for an area of the facility);
(iv) Issuing Authority's Representative (coordinates the preparation of risk assessments, isolations and permits);
(v) Issuing Authority (reviews and approves conditions for certain activities, issues and surrenders permits, approves isolations to be implemented or removed); and
(vi) Site Controller (reviews and approves conditions for higher risk activities).
[7] Permits are issued and signed off electronically. Permits are, however, printed off and provided to the person who is going to perform the work. The printed permit is provided to the Performing Authority. The Performing Authority provides the printed permit to the persons responsible for the area where the work is to be performed (the Area Authority) who will sign the printed permit (this is referred to as wet signing).
[8] Under the ISSoW, maintenance employees are not authorised to issue permits. The Issuing Authority must do this. The Area Authority is accountable for a particular area of the plant (e.g. Storage and Loading). The Area Authority will inspect the equipment and site before any work commences under a permit issued by an Issuing Authority.
[9] A seven (7) day limit is set on the validity period for permits. Permits can be suspended by the Issuing Authority or by the Area Authority if conditions change or non-compliance is observed. The Performing Authority may call for a suspension of the Permit for a number of reasons, including if the work schedule requires a break in activity. The Issuance Authority changes the permit status to “suspended.” Work is not permitted to restart until clearance has been obtained.
[10] Where a permit is suspended the permit is returned to the PCC. The PCC (often referred to as the Permit Hut) is the location from which permits are administered, either for a facility or specified area within a facility. The Issuing Authority must re-issue suspended permits changing the status of the permit from “suspended” to “issued” before the work covered by the Permit can recommence.
[11] Woodside prohibits the type of work involved here and in the area concerned here from being performed without an issued permit. Work is also prohibited from being performed unless all the steps required have been taken and the Performing Authority has a printed copy of the permit with him that has been wet signed by the Area Authority. Any steps or actions specified on the permit must also be complied with.
[12] The Permit System forms part of Woodside's “Golden Safety Rules” (GSR).
The Incident on 31 January 2011
[13] The facts of this matter are in the main uncontroversial. I find them to be those described in following paragraphs [14 to 21].
[14] A Permit to Work was issued on Monday, 24 January 2011. It was a Hot Work Permit that expired on Monday, 31 January 2011, at 12.48pm (theFirst Permit). Hot Work is work which involves a potential source of ignition.
[15] The Applicant was named as the Performing Authority. A condition on the First Permit was for there to be liaison with the Control Room Panel Operator to ensure that the work could be performed safely. It is clear that under that condition that the work was not permitted to commence until that liaison had occurred. As the work was to continue beyond one day, and thus required a break in the activity, the permit was suspended each day at the end of the work that was subject to the permit being performed. The requirements of the ISSoW are that work could not restart until the status of the permit changed from “suspended” to “issued.”
[16] The work involved was to investigate/repair an Enraf level gauge fault on LNG Tank 3. The Applicant worked on work subject to the first permit on Monday, 24 and Tuesday, 25 January 2011. Andrew Glover, 1 another Maintenance Technician, worked with him. At the conclusion of work on both of those days the First Permit was suspended.
[17] On 31 January 2011, at about 9.50am, the Applicant and Mr Glover arrived at the Worksite. They realised they did not have with them a copy of a permit and knew that the Permit Hut was closed and would not open until after midday. They did not contact the Area Authority to obtain permission prior to commencing work and did not liaise with the panel operator in accordance with the First Permit.
[18] The Applicant proceeded to perform work. He intended to get the permit later when the Permit Hut was open.
[19] The Applicant asserts that he knew the conditions of the First Permit. He considered that he could meet the conditions of it and all requirements, without exposing himself or Mr Glover or other people or the plant to any danger.
[20] He proceeded to perform the work subject of the First Permit until about 11:30am. The work involved disassembling, testing and reinstalling a level gauge. They planned to return to check the functionality of the work later.
[21] At 12.30pm he went to the Permit Hut with Mr Glover to get the First Permit. The Applicant states that they then found out that the permit needed re-authorising by the Site Controller and RPE (Responsible Person Electrical) because the seven (7) day period of the First Permit had expired. A Permit was issued shortly afterwards and had no changes to any conditions or requirements.
The Contentions
[22] Woodside contends that the Applicant:
(i) breached the ISSoW, in that he performed work without an “issued” permit;
(ii) did not comply with the requirement of the permit to liaise with the panel operator; and
(iii) performed work subject to a permit without having it wet signed.
[23] The Applicant accepts that working without the permit is a breach of the GSR and an important part of the process for creating a safe working environment. However, he says that he had no intention of breaching the GSR. He claims he forgot about picking up the First Permit because he had spent the morning trying to track down spare parts so that he could fix the fault on the level gauge on LNG Tank 3.
[24] The Applicant asserts that he continued working on the Enraf fault under the terms of the existing Permit (meaning the First Permit), on the basis that he had previously worked on the same piece of equipment under the same Permit, and knew the conditions of the First Permit. He also asserts that he and Mr Glover decided not to contact the Panel Operator because they believed there would be no impact for the Operator from the work being conducted.
[25] The Applicant submits that there was no valid reason for the termination and that it was harsh, unjust and unreasonable. The Applicant also claims that the procedures that Woodside undertook in investigating and discussing the conduct with the Applicant were unfair.
The Act
[26] Part 3-2 of the Fair Work Act 2009 (the FW Act) provides for Unfair Dismissals. The FW Act provides that a person has been unfairly dismissed if Fair Work Australia (FWA) is satisfied that the person has been dismissed and the dismissal was harsh, unjust or unreasonable.2 A number of matters must be taken into account by FWA in considering whether it is satisfied that the termination was harsh, unjust or unreasonable, including whether there was a valid reason. Other matters also must be considered which in the main mainly relate the procedures of the employer prior to the employer’s decision to terminate and to the fairness afforded to the employee in involved.3
[27] In Byrne & Frew v Australian Airlines Ltd 4, the High Court referred to the phrase harsh, unjust and unreasonable in the following terms:
“It may be that the termination is harsh but not unjust or unreasonable, unjust but not harsh or unreasonable, or unreasonable but not harsh or unjust. In many cases the concepts will overlap. Thus, the one termination of employment may be unjust because the employee was not guilty of the misconduct on which the employer acted, may be unreasonable because it was decided upon inferences which could not reasonably have been drawn from the material before the employer, and may be harsh in its consequences for the personal and economic situation of the employee or because it is disproportionate to the gravity of the misconduct in respect of which the employer acted.”
[28] In Bostik (Australia) Pty Ltd v Gorgevski,5 the phrase was referred to as follows:
“These are ordinary non technical words which are intended to apply to an infinite variety of situations where employment is terminated. We do not think any redefinition or paraphrase of the expression is desirable. We agree with the learned trial judge's view that a Court must decide whether the decision of the employer to dismiss was viewed objectively, harsh unjust or unreasonable. Relevant to this are the circumstances which led to the decision to dismiss and also the effect of that decision on the employee. Any harsh effect on the individual employee is clearly relevant but not conclusive. Other matters have to be considered such as the gravity of the employees misconduct.”
[29] In Australian Meat Holdings v MacLauchlan, 6the Full Bench of the Australian Industrial Relations Commission stated:
“A termination may be unjust because, on the evidence before the Commission, the employee was not guilty of the misconduct on which the employer acted. Further, a termination may be unreasonable because it was decided on inferences which could not reasonably have been drawn from the material before the employer. Even where the findings of an employer's enquiry are reasonable the Commission may conclude that a termination of employment on the basis of those findings was harsh because the penalty was disproportionate to the misconduct.”
[30] The approach to my considerations is guided by the Objects of Part 3-2. In s.381(1)(a) it states that the Part is intended to provide a framework for dealing with unfair dismissals that balances (i) the needs of business (including small business); and (ii) the needs of employees. In s.381(1)(b) it states that an Object of the Part is to establish procedures for dealing with unfair dismissals that: (i) are quick, flexible and informal; and (ii) address the needs of employers and employees.
Golden Rules of Safety
[31] It was explained by Mr Buren, Vice President of the KGP, that the concept of Golden Rules of Safety of Woodside is derived from those developed in the oil and gas industry following the Piper Alpha disaster in 1988. That disaster caused the death of 165 men. It is universally acknowledged that the disaster involved an accumulation of management errors, including a failure of the “permit-to-work system” that did not ensure proper communications.7
[32] GSR have been adopted and applied on a widespread basis. They invariably involve systematic approaches to risk assessment, isolation management and permit to work with an audit trail of authorisation and performance of the work.
[33] Mr Buren also explained that there are different requirements for personal safety as compared to process safety. Process safety is directed at ensuring all parts of the operations and personnel involved in those parts are aware of work being conducted in other areas or parts. Permission to start work is not within the employee’s realm of responsibility. The only judgement allowed, and indeed required, is that the employee may refuse to start work if he or she forms a view about safety requirements that should required and are not included in the permit or if something appears to have changed since the permit was issued.
[34] Mr Buren evidenced that compliance with the rules relating to permits are not tolerated. Woodside’s approach is that compliance with the rules cannot be compromised regardless of the consequences for efficiency and productivity.
[35] It is obvious why there are compelling reasons for the Golden Rules of Safety and compliance with them at a hazardous facility such as KGP.
Consideration
Was there a valid reason for the termination of the Applicant’s employment?
[36] I find that the Applicant performed work that required an “issued” permit to be in existence for that work to be permitted to be performed. The Applicant knowingly performed that work without having such a permit. Whilst I accept that the Applicant may have forgotten to get the permit prior to the Permit Hut closing, I do not accept that the Applicant forgot about the permit prior to commencing the work concerned. His own evidence supports that finding. I also find that the Applicant performed that work without fulfilling one of the conditions of that permit, viz, to liaise with the Control Operator.
[37] As a consequence of the Applicant not having a permit, he also performed work without the Area Authority “wet signing” the permit.
[38] The evidence establishes clearly that the decision to terminate was taken in the context of the employee’s conduct and based upon Woodside's assessment of operational requirements of their business. There was no capriciousness, fancifulness, spitefulness or prejudice involved in the decision to terminate the Applicant’s employment. The decision was also sound, defensible or well founded.8
[39] The ISSoW that Woodside has established removes the right for the employee to have any judgment as to whether the employee commences the work. The only discretion the employee has is to not start the work if he or she has reason to believe that despite complying with and having permission to work, he or she should not start or continue performing that work if it has been started. Mr Buren described this as the “Step back five x five” approach.
[40] Thus here the conduct involved is not just a question of a poor judgement in the starting and the performance of work by the Applicant but rather a breach of an obligation to not start work. Furthermore the Applicant breached an obligation of the permit to liaise with the Panel Operator.
[41] I find that these breaches are a valid reason for the termination of the Applicant’s employment.
Was the Applicant notified of that reason? Was there any unreasonable refusal by the employer to allow the Applicant to have a support person present to assist at any discussions relating to the dismissal and was the Applicant given an opportunity to respond to any reason related to his conduct?
[42] I find the following facts concerning the procedures adopted and meetings held prior to the Applicant’s termination of employment.
[43] On 2 February 2011, the Applicant attended a meeting with Mick Mostratos, the Maintenance Superintendent. He was told that he would be stood down on full pay immediately pending an investigation into a permit breach and that he was required to attend an interview with an investigation team at 7.00am the following day.
[44] He attended that meeting. Mr McKeon and Mr Cawthray were also present. The meeting was conducted as an interview. It was clear that the meeting involved an investigation into the alleged permit breach. The Applicant gave an honest account of events at the meeting.
[45] A further meeting was held with the Applicant at 7.30am on Friday, 4 February 2011. Mr Goimil and others were present at that meeting. The Applicant was accompanied by his supervisor, Shannon Byers, as his support person.
[46] The Applicant says that there was no mention of any termination of employment or any disciplinary action at the meeting, although he evidenced that he had been advised of the meeting the previous afternoon and that it could lead to disciplinary action being taken. I accept the Applicant’s account of this meeting and the advice he received about it. However, I also find that the Applicant was advised that there was an investigation as to his conduct and that it could lead to disciplinary action. It is clear the purpose of the meeting was to assist in the ascertaining of the circumstances regarding the conduct so that Woodside could decide on any disciplinary action that it might take.
[47] The Applicant was told at that meeting that he would be required to attend a further meeting at 3pm that day and says that he was told that the purpose of that meeting was to discuss investigation outcomes. It is clear from this that the Applicant was to be advised of the decision of Woodside regarding the conduct and the action they proposed to take.
[48] At 3pm on Friday, 4 February 2011, the Applicant attended a further meeting which Mr Goimil and others. Ms Byers again attended as the Applicant’s support person.
[49] The Applicant asserts that at that meeting he was told that his employment was to be terminated on 8 February 2011. The Applicant had until that time to show cause as to why that decision should be reversed. He asserts that he was told that his employment was being terminated for breaching a Golden Safety Rule by working without a valid permit. I accept the Applicant’s account of this meeting.
[50] The Applicant met with Mr Buren on Tuesday, 8 February 2011. He provided Mr Buren with a written document in support of his desire to keep his job. Mr Buren advised the Applicant that the termination of employment would stand.
[51] The Applicant complains that he was not given any documentation before, at or after any of the meetings he attended, inferring that he was at a disadvantage as a consequence. The inference is also made that the procedures of Woodside were tainted as he was not afforded a proper opportunity to respond to the allegations or put his views about any consequences that might arise from Woodside’s deliberations. I do not accept this criticism by the Applicant. It is clear that the Applicant knew what the meetings were about and that there was likely to be consequences for him. Whilst he did not anticipate the outcome, that was not as a result of any failure on Woodside’s part.
[52] I find from the above facts that the Applicant was notified of the reason for his termination of employment, he was given an opportunity to respond and he was allowed to have a support person present.
Was the Applicant warned about that unsatisfactory performance before the dismissal?
[53] Woodside terminated the employment of the Applicant for his conduct. The Applicant asserts he was terminated for unsatisfactory performance and consequently, the Applicant was not warned and he should have been. Woodside assert that the Applicant was dismissed because of his conduct. I agree with Woodside. Even if the termination was for a reason or reasons that could be related to unsatisfactory performance, the nature of the reasons did not lend themselves to the giving of a warning or warnings.
[54] Woodside is a large organisation with dedicated human resource management specialists or expertise and I am satisfied that the procedures adopted were thorough and fair.
Are there any other matters that FWA considers relevant?
Consideration of alternatives to termination of employment
[55] A breach of a GSR does not automatically involve termination of employment. Mr Buren explained that a number of considerations are taken into account before a decision is taken regarding any action they may take against the employee concerned. He explained that there are two broad considerations.
[56] Firstly, the circumstances of the action taken by the person concerned are considered such as:
(i) whether the particular aspect of permit to work that was breached was clear to the person involved and would be clear to all the other people that would do similar activities on site;
(ii) whether the person is properly trained in their permit to work; and
(iii) whether an error was made, so a misunderstanding or a mistake arose, or was it wilful
[57] The second aspect, Mr Buren explained, includes any personal or other circumstances of the individual concerned. These considerations include:
(i) impacts in personal life that could have led to a temporarily lower level of awareness;
(ii) a push from the supervisors to execute the job such that a person was pressured to do the work;
(iii) the previous safety record of the person involved; and
(iv) the general performance over the past years and professionalism in the job.
[58] These are sound and appropriate considerations for Woodside to take prior to deciding to terminate a person’s employment. I find that they were taken into account here by Woodside in making the decision to terminate the Applicant’s employment.
[59] Mr Goimil, the Maintenance Manager, gave evidence that he was the person who made the decision to terminate the Applicant’s employment but was required to have that decision considered and approved by others. He stated that prior to making the decision to terminate the Applicant’s employment, he considered other previous breaches of the Permit System as he wanted to ensure that Woodside was applying a consistent approach.
[60] Mr Goimil referred to an incident in January 2010, which involved a breach of the Permit System. That breach lead to:
(i) the termination of an Operations Technician Level 2's employment;
(ii) a Lead Operator receiving a first and final written warning;
(iii) an Operations Technical Level 1 receiving a first written warning; and
(iv) a Lead Operator receiving a diarised note.
[61] The circumstances of that incident he stated were that the consequences (and potential consequences) of the breaches were not as significant as it involved a water pump rather than a hydrocarbons pump. In the above case, operations had issued a permit and isolated the pump. Before returning the equipment to service, it needed to be de-isolated. The Operator assumed the work had not been started on the pump and removed the isolation tags and returned the pump to service without checking. The other people involved in the breach did not challenge or review the permit to work following the pump being started. The others were disciplined because they failed to check the work and stop the pump being started.
[62] A second incident he referred to occurred in May 2010. There was an Electrical employee who mistakenly worked on the wrong permit. He received a written warning for what was deemed a non-deliberate mistake.
[63] It is clear that in making the decision to terminate the Applicant’s employment, Woodside considered alternatives. I do not consider that it is now my role to put myself in the shoes of the employer and revisit alternative disciplinary actions that Woodside might have decided upon. Nor is it my role to substitute what my decision may have been for Woodside. Rather, my task is to consider whether the decision that Woodside made, and the consequences of it for the Applicant, resulted in a termination of employment that was harsh, unjust or unreasonable. 9
What was the Applicant's attitude to the conduct and his honesty with Woodside?
[64] The Applicant was contradictory in his responses about his conduct. He appeared to be contrite and cognisant of its seriousness, yet he appeared to be critical of the safety systems Woodside had in place. He also appeared to accept that he had breached the safety protocols, yet he submitted that he complied with the safety requirements.
[65] I find that the Applicant was honest in the discussions he had with Woodside in that he did not endeavour to hide from the facts of what had occurred, nor did he not disclose any relevant elements of the incident.
[66] I formed the view that the Applicant was certainly contrite because of the consequences for him but he did not appear to me to sufficiently appreciate Woodside's right to insist on compliance with the ISSoW. Woodside clearly took the view that there was a risk of the Applicant not complying with the ISSoW in the future. From the evidence before me I consider Woodside’s view was soundly based and the same view I have formed.
The consequences of the termination for the Applicant
[67] It would be very rare for a termination of employment not to be harsh when considered solely in relation to its effects on the dismissed employee. Here the employee is over 50 years of age, had been employed for about 15 years and had a very good record. The income already lost as a result of the termination is significant. The effect of the loss of continued permanent employment with Woodside and the expectations that comes with that would no doubt be devastating for the Applicant. The effect of losing not just the level of income but a range of benefits of working with Woodside in the capacity the Applicant was working is substantial.
[68] There are likely to be a number of consequences for the Applicant that were not raised or are unknown at this juncture that will have harsh effects on him.
The business needs of Woodside
[69] Woodside's case relied substantially on the needs of the business in respect of the integrity of the ISSoW.
[70] The needs of the business of Woodside include a need to ensure that its operations are safe and that it has a safe system of work. Indeed that obligation is a directed by statute. Woodside is entitled to ensure that it can be confident that its employees will comply with the obligations and rules for safe systems of work. Here the safe system of work is comprehensive and it is clear. It includes a prohibition of certain work being undertaken without the existence of a current Permit to Work. Further work must be undertaken in accordance with the terms of any permit. I have found above that both of those requirements were breached by the Applicant.
Was the termination for serious misconduct?
[71] The Applicant asserted that the termination was for serious misconduct. The Applicant in effect was asserting that the termination was a summary dismissal because of serious or gross misconduct. However, this was not a matter involving serious or gross misconduct that might be involved in a case of summary dismissal. The Applicant was given notice of termination but paid out in lieu of that notice. That does not turn the termination from one of misconduct to one of summary dismissal.
Consideration of Harshness etc
[72] It remains to decide whether the termination of employment was harsh, unjust or unreasonable.
[73] I find that the termination of employment was not unreasonable. The decision of Woodside was not an unreasonable response in dealing with the misconduct.
[74] I also find that the termination of employment was not unjust. The conduct clearly occurred and Woodside provided the Applicant with substantial opportunity to explain why the conduct occurred.
[75] This application unsurprisingly turns on whether I consider that the termination was harsh. The termination of employment of the Applicant here undoubtedly has harsh consequences for him. However, I have also found that the business needs of Woodside include compliance with and reliance on compliance with their ISSoW.
[76] In considering whether the termination was harsh I have had regard to a broad range of issues including the following:
- The procedures employees are obliged to comply with are important;
- The Applicant was directly involved in the conduct;
- The Applicant deliberately breached the rules;
- The conduct involved was serious;
- The Applicant was aware of the procedures;
- Woodside enforced the policy and procedures on previous similar incidents;
- Woodside applied the policy and procedures consistently;
- The policy and procedures were not applied or enforced in a discriminatory fashion;
- There were no other reasons for the dismissal;
- The Applicant’s length of service was substantial;
- The Applicant’s service record was good;
- There is no history of other safety breaches involving the Applicant;
- The financial loss suffered by the Applicant is substantial; and
- The personal impact on the Applicant is substantial.
[77] In balancing those considerations I find that the gravity of the misconduct is such that termination of employment was not a disproportionate consequence.
[78] Thus in the particular circumstances of this matter, whilst dismissal had harsh consequences for the Applicant, the termination of employment was not harsh.
[79] Therefore, I find that the termination of employment of the Applicant was not harsh, unjust or unreasonable. The application is dismissed.
DEPUTY PRESIDENT
Appearances:
Ms A McKay for the Applicant
Mr N Harrington with Ms J McMinn for Woodside
Hearing details:
2011.
Perth:
May, 3, 4.
1 Mr Glover was also dismissed and has lodged an unfair dismissal claim
2 s.385(a) & (b)
3 s.387
4 (1995) HCA 24
5 (1992) 41 IR 452 as per Sheppard and Heery JJ at 459
6 (1999) 84 IR 1
7 see Learning from the Piper Alpha Accident: A Postmortem Analysis of Technical and Organizational Factors;
M. Elisabeth Pate-Cornell Rkk Analysk, Vol. 13, No. 2, 1993 citingThe Hon. Lord Cullen, The Public Inquiry into the Piper Alpha Disaster, Vols. 1 and 2 (Report to Parliament by the Secretary of State for Energy by Command of Her Majesty, November 1990)
8 see North J in Selvechandron v Petersen Plastics (1995) 62 IR 371 at 373
9 See for example British Leyland (UK) Ltd v Swift [1981] IRLR 91, per Lord Denning, MR at paragraph 11
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