Murray Goulburn Co-Operative Co. Limited v Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia - [2014] FWC 5647

[2014] FWC 5647

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.418—Industrial action

Murray Goulburn Co-Operative Co. Limited
v
Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia
(C2014/5434)

COMMISSIONER RYAN

MELBOURNE, 20 AUGUST 2014

Application for an order regarding unprotected industrial action – notice of industrial action – whether s.414 notices contained sufficient specificity - whether notices met the requirements of s.414.

[1] Murray Goulburn Co-Operative Ltd (Murray Goulburn) on 16 July 2014 applied for orders to stop unprotected industrial action being taken by both “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU) and the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (CEPU) pursuant to s.418 of the Fair Work Act 2009 (the Act).

[2] The application was initially heard by the Commission at 10.00am on 17 July 2014.

[3] Both the AMWU and the CEPU applied for a Protected Action Ballot Orders on 21 May 2014. Both applications sought to ballot members of the relevant union who were employed by the Respondent at 6 named sites in Victoria, namely, Leongatha, Koroit, Tangambalanga, Cobram, Maffra and Rochester. Each application identified the same list of industrial action that was subject to the ballot. Both ballots were approved by Deputy President Kovacic on 29 May 2014. 1

[4] In his decision at [3] and [4] the Deputy President noted that Murray Goulburn had made and then withdrawn an application to have the period of notice for the taking of employee claim action extended from 3 to 7 days.

[5] The forms of industrial action identified in the ballot matters were as follows:

“1. An unlimited number of stoppages on the performance of all work for unspecified periods of time?

Yes [ ] No [ ]

2. An unlimited number of stoppages on the performance of all work for specified periods of time?

Yes [ ] No [ ]

3. An unlimited number of indefinite or periodic bans on:

a) Weekend work?

Yes [ ] No [ ]

b) Call backs?

Yes [ ] No [ ]

c) Overtime?

Yes [ ] No [ ]

[6] Prior to 10 July 2014 each of the unions gave notice to Murray Goulburn that industrial action would be taken. Mr McDonald in his oral evidence described events as follows:

“PN63. ...So, we have had one notice prior to this, Commissioner, where we had a 24 hour stoppage on 4 July, and also advice that we would have indefinite bans on callouts and also overtime.”

[7] On 10 July 2014 each of the AMWU and CEPU gave identical notice to the Respondent pursuant to s.414 that members of each union who were employed by the Respondent at the 6 sites would take protected industrial action in the form of “Stoppages on the performance of all work for unspecified periods of time” and that the industrial action would be taken at “all locations where the employees work” and would begin “Wednesday - 16 July 2014 at 6.00am”.

[8] Murray Goulburn contended that the notices did not meet the requirements of s.414 and therefore the proposed industrial action was unprotected.

[9] At the hearing on 17 July 2014 the AMWU came to an agreed position with Murray Goulburn in relation to the amount of detail which Murray Goulburn sought in any notice issued under s.414. As a result of this agreement Murray Goulburn advised the Commission that it no longer sought an order under s.418 against the AMWU.

[10] The CEPU did not attend the hearing on 17 July 2014. Murray Goulburn communicated with the CEPU to ascertain whether the CEPU would agree to the same level of detail in a s.414 notice that the AMWU had agreed to. The CEPU declined the request from Murray Goulburn and contended that the s.414 notice given by the CEPU to Murray Goulburn was valid.

[11] An interim order 2 as required by s.420 was issued on 23 July 2014 against the CEPU with an accompanying decision3.

[12] The application for an order against the CEPU was subject to a hearing on 23 July 2014.

[13] Murray Goulburn led evidence from Mr Mark McDonald, General Manager of Manufacturing and Supply Chain. No evidence was led by the CEPU. Both parties made submissions to the Commission and each party drew the Commission’s attention to a number of authorities relevant to the matter.

[14] I adopt as part of this decision the summary of the key decisions on the role and purpose of a notice of intention to take protected action and the adequacy of the content of such notices which is set out in paras [36] - [46] in the Full Bench decision in EnergyAustralia Yallourn P/L v CFMEU 4(EnergyAustralia).

Contentions of Murray Goulburn

[15] Mr McDonald gave detailed evidence about the operations of Murray Goulburn and the role played by both the mechanical and electrical trades employees who would be entitled to take protected industrial action.

[16] Murray Goulburn is a large milk processor with 7 plants in Victoria, 6 of which are subject to the application in this matter.

[17] Mr McDonald described the time critical aspects of milk processing and the very real and serious consequences for dairy farmers, the Applicant and the environment if milk cannot be processed.

[18] Mr McDonald also clearly described the role of maintenance tradespersons within the milk processing operation and identified the need to have breakdowns of processing machinery fixed quickly so as to maintain the processing operations. In his witness statement, Mr McDonald said:

“25. MGC plants experience faults and breakdowns on a daily basis requiring intervention and support from maintenance to resolve so that processing of milk can continue.

26. In the last year, across all sites, for each hour of operating time, there was on average, 1.8 ‘Priority 1’ notifications requiring immediate trades assistance to correct an issue of safety, or an environmental or operational issue. This assistance is required in order to keep operations running. If MGC’s trades based employees were not available to correct these issues and MGC is unable to utilise appropriate contingency labour, it is highly likely that operations would cease within the first operating shift after the Industrial Action had commenced.

27. MGC also regularly requires its Reliability employees to work overtime. I have received information from MGC’s payroll team that confirms that the average overtime amongst Reliability employees in the last 12 months is approximately 350 hours per week. This is an average of about 3 hours of overtime per employee each week. It is possible that a stoppage of work which effected the performance of overtime (and for which MGC could not utilise appropriate contingency labour) could cause production to be seriously disrupted.

28. Similarly, a stoppage of work on weekends work or call outs could also cause substantial disruptions to MGC’s production capabilities. The impact of these stoppages will vary depending on the circumstances and the time that the stoppage is put in place, however, this has the potential to seriously disrupt, and even stop, MGC’s processing operations.” 5

[19] Mr McDonald also catalogued a number of serious consequences flowing from any industrial action which limited or stopped milk processing:

● Milk is a perishable item which must be processed within 24 - 48 hours
● There is limited capacity to store unprocessed milk on site
● Milk cannot be easily dumped because of EPA requirements.
● Competitors of Murray Goulburn could not easily take unprocessed milk that Murray Goulburn could not process.

[20] Mr McDonald also contended as to the difficulties in planning to deal with industrial action:

“Difficulties associated with contingency planning

46. In my view, the Industrial Action (given the lack of specificity in the Industrial Action Notices) has the potential to shutdown MGC’s processing operations, and would cause MGC to have excess milk that it would be unable to dispose of in a lawful and environmentally friendly way.

47. In order to avoid this, MGC would need to make arrangements to source additional trades and maintenance employees to maintain its processing assets so that at least some of its operations can continue. This would be an extremely difficult task for the following reasons:

a. The trades and maintenance employees have a specific training, skills and experience in dealing with MGC’s assets. It would be difficult to source additional workers with the relevant sknls and experience.

b. Each of the affected processing sites are located in remote locations in Victoria. Even if workers with the relevant skills and experience could be sourced, it would be difficult to arrange for the appropriate numbers in the required locations.

c. The lack of specificity in the Industrial Action Notices means that MGC cannot determine its third party labour requirements with any degree of accuracy whatsoever. For example, MGC would be unable to communicate to its third party providers whether it requires third party labour for one day, three days or months. Similarly, it would be unable to communicate the number of workers required. Further, I am not aware of any third party provider with the capability to provide sufficient third party labour for the most impactful outcome (that is, indefinite stoppages engaged in by all of the relevant employees), particularly given the skillset and location issues I describe above.

48. By being able to properly understand the nature of, and prepare for, the Industrial Action, MGC would be likely to source at least some additional trades and maintenance workers in order to keep some of its operations running. This would allow some of the substantial volumes of milk to be processed, and would minimise the environmental risks associated with the Industrial Action. It would also allow MGC to organise additional transport providers to cart raw milk to alternative sites (including its competitors). Transport assets are usually fully committed by their owners and they would need time to meet their existing obligations before being able to prepare and make their vehicles available for transport of milk.

49. As mentioned above, MGC would also need to be able to plan ahead and notify its competitors if they were to be able to take on excess milk for processing.”

[21] In his oral evidence Mr McDonald gave further details about the number of employees who might be involved in the taking of protected industrial action.

[22] Mr McDonald’s evidence was that there are 116 employees who are to be covered by the proposed enterprise agreement which is currently the subject of bargaining between Murray Goulburn and both the AMWU and the CEPU and about which the CEPU has given notice under s.414 of the Act.

[23] The 116 maintenance employees comprise both fitters and electricians and trades assistants. On Mr McDonald’s evidence there is about a 60:40 split between fitters and electricians. Whilst a 60:40 split would equate to 70 fitters and 46 electricians, Mr McDonald suggested that the number of electricians could be closer to 40. 6

[24] Of the 116 maintenance employees 68 or 58.6% have payroll deductions for union membership, although Mr McDonald did not provide details as to how many of the 68 were members of the CEPU.

[25] Applying the 58.6% to a presumed total of 40 electricians suggests that at a minimum there are 23 electricians who are members of the CEPU and a possible 17 who are not.

[26] Murray Goulburn contended that the notice lacks a necessary degree of specificity that would enable Murray Goulburn to take action to protect itself from some of the effects of the industrial action. Because of the lack of the requisite level of specificity then the notice given by the CEPU on 10 July 2014 is invalid under s.414.

Contentions of the CEPU

[27] The CEPU contended that the notice issued to the Respondent on 10 July 2014 pursuant to s.414 of the Act contained a sufficient degree of specificity to meet the tests laid down in the authorities.

[28] The CEPU also contended that it was relevant that the Respondent never challenged the application for a protected action ballot order which contained proposed industrial action including: “Stoppages on the performance of all work for unspecified periods of time”.

[29] The CEPU also contended that it was relevant that the Respondent did not challenge the s.414 notice when it was first served on the Respondent on 10 July 2014 but rather waited until 16 July 2014 before lodging the s.418 application in this matter.

[30] The CEPU contended that context in which the industrial action is taken is directly relevant. The industrial action is to occur at 6 known sites in Victoria. The industrial action only involves about 60% of the electrical trades employees employed at those 6 sites.

Consideration

[31] The lack of specificity complained of by Murray Goulburn was clarified and put into context through Mr McDonald’s oral evidence.

[32] I note that Mr McDonald accepts that earlier s.414 notices provided sufficient specificity.

“PN63. Mr McDonald: ....We have had definition on the first notice. So, we have had one notice prior to this, Commissioner, where we had a 24 hour stoppage on 4 July, and also advice that we would have indefinite bans on callouts and also overtime. In these occasions, we have had time to consider the action notice and prepare appropriately to defend our business, and we have done so. So, we have to date been able to work through contingency arrangements to support that because of the specific nature of the action notice.”

PN84. Mr Reidy: You said that you have taken the steps, if I understood your evidence correctly, you said before you have taken the steps you could to defend against the industrial action. Is that right?---Mr McDonald: What I said before was that where we have had notice and specific notice, we have put in some measures where we have been able to date counter the industrial action, such as call-outs and overtime, yet rely on our team members to be at work and perform their tasks as they have been doing on the vast majority of the hours a week spent on overtime and call-outs where the industrial action has been prevalent to date, other than the stoppage on 4 July.”

[33] As Mr McDonald concedes, a s.414 notice advising of indefinite bans on call outs and overtime is sufficiently specific.

[34] Mr McDonald explained the difference between a sufficiently specific s.414 notice advising of indefinite bans on call outs and overtime and an insufficiently specific s.414 notice advising of “Stoppages on the performance of all work for unspecified periods of time” and that the industrial action would be taken at “all locations where the employees work” and would begin “Wednesday - 16 July 2014 at 6.00am”, as follows:

“PN64. Mr Pollock: Why is it that this scenario is different with this notice?---Mr McDonald: Commissioner, it doesn’t actually provide any definition. So, for us to speak to any form of contingent arrangement, we couldn’t actually describe what we are seeking from any third party, for example, to come in and support us with. And that is the key difference. So, having a time definition and being specific about the type of action provides us with the opportunity to work through contingent arrangements and make those whether it’s local, maintenance providers, or from elsewhere. It gives us the opportunity to work through the arrangements in a stable, sustained manner.

PN65. Is that the case in terms of the different locations that the sites at which the action might occur?---That’s right. So, being in regional locations some maintenance providers, be them electricians or small business providers, do need notice of what we need from them. If we were to describe the nature of the arrangement being lack of specificity, they wouldn’t know what to provide either or the time requirements against that. So, that’s a key issue in terms of Murray Goulburn being able to defend and protect our business.

...

PN85. Mr Reidy: So, when you received the notice on 10 July for the industrial action to start on 16 July, which is the subject of these proceedings, did you take any steps to defend against the industrial action?---Mr McDonald: The lack of specificity made it very difficult to work through what action would be taken and therefore what contingency could be put in place.

PN86. So, where it said in the notice that it will be a stoppage of all work for an unspecified time, you couldn’t understand what that meant?---I could understand what that meant. The issue is arranging a significant contingency of that nature with that notice.

PN87. So, you did understand what the notice said then?---It lacked the specificity.

PN88. You just told me that you understood what it meant?---It lacked the specificity is what I said.

...

PN106. Mr Reidy: So, when you received the notice on 10 July – sorry, I will just get some notes – that really threw a spanner in the works for your operations, didn’t it?---Mr McDonald: It certainly is concerning for the business to have industrial action of any type. And the lack of understanding of the duration, the number of people involved, was certainly a big concern, yes.

PN107. So, it wasn’t that you didn’t understand the nature of what action was being taken, it was because the type of industrial action, the way it was worded, created uncertainty for you?---It creates a difficult challenge to arrange an appropriate defence. That’s the nature of what that notice provided.

...

PN117. MR POLLOCK: Mr McDonald, just a few further questions to clarify a few points that my friend was asking about. My friend is focusing on the fact that there are approximately 40 electricians who comprise the total number of employees who might be taking protected industrial action, or at least industrial action under that notice. And you described I think the prospect of those 40 electricians taking industrial action as a significant challenge. Given what you say at paragraph 19 of your statement and also at paragraphs 46 through to 49 around the lack of specificity that you see in that notice, what can you say, if anything, about how 40 electricians would impact on your ability to plan contingencies?---Mr McDonald: To go to the market place and seek 40 electricians for an unspecific period of time is a very near impossibility unless you would secure them permanently. You can’t do it on a temporary basis.

...

PN119. Now, my friend also asked you about, or suggested that there was a failure on Murray Goulburn’s part to take defensive action after receiving the notice on 10 July. What can you say, if anything, about how the notice’s lack of specificity, in your eyes, how that impacted on your ability to take those steps, to call those contractors as my friend was suggesting you might?---Commissioner, it does not provide you with any definition about how to engage, when to engage, the time period to engage, and that’s a real challenge as part of any of these processes. So, one would need appropriate time and the numbers to appropriately defend a business like Murray Goulburn.”

[35] It is certainly clear from Mr McDonald’s evidence that Murray Goulburn cannot plan to temporarily replace up to 40 electricians who may engage in employee claim action of stoppages on the performance of all work for an unspecified periods of time.

[36] What Murray Goulburn is seeking is that the CEPU identify the start time and length of any stoppage on the performance of all work. What Murray Goulburn wants is not merely some specificity as to the employee claim action being taken by electricians but rather wants notice of a form of employee claim action which was not included in the protected action ballot. A notice of employee claim action that specified the start time and duration of a stoppage on the performance of all work would not be a notice of employee claim action that was subject to the protected action ballot.

[37] Mr McDonald’s evidence at PN117 is important. Murray Goulburn could respond to the employee claim action of stoppages on the performance of all work for an unspecified period of time by engaging 40 electricians on a permanent rather than temporary basis.

[38] The Act specifically contemplates such a scenario in that it permits Murray Goulburn to engage in employer response action pursuant to s.411 of the Act. The only form of industrial action that can be employer response action is that identified in s.19(1)(d) which is “the lockout of employees from their employment by the employer of the employees.”

[39] Since Murray Goulburn received the first s.414 notice which gave notice of a 24 hour stoppage on 4 July and of indefinite bans on call outs and overtime, Murray Goulburn has had the entitlement to initiate employer response action in accordance with s.411.

[40] The primary contention of Murray Goulburn is that the s.414 notice is so lacking in specificity that Murray Goulburn cannot even take a first step in planning any action to deal with the proposed employee claim action. Mr Pollock for Murray Goulburn described the position variously as:

“a more specific notice would at least give them a fighting chance. At the moment with the current notice, they have got their both hands tied squarely behind their back. They cannot even take the first steps to putting together a sensible contingency plan.” 7

“But as it stands with that lack of specificity, we cannot take the first step.” 8

“we do need at the very least to be able to take a base line level of appropriate defensive measures, and we say that that is just simply not something that is available on the basis of that notice.” 9

[41] Mr Pollock relied on several authorities and distinguished another to contend that the s.414 notice was in the circumstances of the business of Murray Goulburn so lacking in specificity as to fail the tests laid down in the authorities as being a valid notice for the purpose of s.414.

[42] Murray Goulburn contended that whilst it could take some action to mitigate the impact of industrial action even without the level of specificity sought this was different to having the capacity to engage in contingency planning which was dependent upon there being a greater degree of specificity in the s.414 notice:

“PN194. ....But it is not the case that – and Mr McDonald also made this clear – it is not the case that there is no ability to mitigate any of these impacts regardless of specificity. That is not the case at all.

PN195. What is clear is that more specific notice would allow some degree of contingency planning. It may not be enough to reach the highest levels, but it would at least give some degree of ability to plan and to take defensive action in circumstances where that contingency planning wasn’t enough to mitigate any impact and that there perhaps was some degree of shut down or reduction in the ability to process, then there will be challenges. There will be challenges in the ability to dispose of that milk off-site or on-site, or to on-sell it to competitors, but appropriate specificity in the notice allows for appropriate contingency planning which will then lead to at least some of these consequences being able to be managed appropriately.

PN196. So, perhaps some degree of milk may be able to be on-sold, and some degree of milk may be able to be disposed of at an off-site location. But none of that can be appropriately dealt with in circumstances where the notice sits there entirely unspecific. The contingency planning cannot be appropriately managed. They cannot even take the first steps to comprehend where, when, and how this might occur. And so we then flow through to these consequences occurring at their highest point. And it is for that reason, it is for that reason why a notice with the requisite degree of specificity around time, location, and duration is critical. It is not about taking away inconvenience, it is not about wholly mitigating the impact.

PN197. We acknowledge there will be some pain, and if for no other reason then the contingency later is going to cause a significant financial pain. But it does give them a fighting chance to take steps to protect themselves.”

[43] As the authorities make clear the adequacy of a s.414 notice will depend upon the particular circumstances in each case including the nature of the employers business and the nature of the proposed employee claim action.

[44] In the present matter the following are all relevant circumstances

[45] Murray Goulburn has in place contingency arrangements to deal with the indefinite ban on callouts and overtime by contracting with external providers to provide electricians. 10

[46] Murray Goulburn would encourage its electricians to stay at work and support the business rather than engage in any employee claim action. 11

[47] Murray Goulburn has at all times since the application for a protected action ballot was made understood the nature of the industrial action that could be taken as employee claim action.

[48] Murray Goulburn made and then withdrew an application to have the period of notice of the taking of employee claim action extended from 3 days to 7 days.

[49] Murray Goulburn has had the right since the first s.414 notice was given at the end of June 2014 the ability to initiate employer response action.

[50] Murray Goulburn has had the right since the s.414 notice was given on 10 July 2014 to avail itself of the opportunity to make an application under Division 6 of Part 3-3 of the Act to suspend or terminate protected industrial action.

[51] The evidence and contentions of Murray Goulburn as to the inadequacy of the s.414 notice given by the CEPU on 10 July 2014 relates to the inability of Murray Goulburn to engage in contingency planning. However the concept of contingency planning considered by Murray Goulburn appears to be somewhat limited.

[52] At no stage has Murray Goulburn contended or led evidence that the content of the s.414 notice given by the CEPU on 10 July 2014 was so lacking in specificity as to prevent Murray Goulburn from making applications under Division 6 of Part 3-3 or initiating employer response action.

[53] In Telstra Corporation Ltd v CEPU, the Full Bench said:

“...in considering whether the notice meets the requirement to specify the industrial action, it is necessary to have regard to the purpose of the notice requirement and the relevant circumstances, in particular the nature of the employer’s undertaking. As to purpose, there is little doubt that the purpose of the notice requirement is to give the employer the opportunity to respond to the action by making relevant preparations. The response may involve making arrangements to deal with unavailability of labour, including making appropriate arrangements in relation to customers, suppliers and other contractors. Whether the notice is adequate may depend on the nature of the employer’s operations including their size, the number of employees, the number of locations, the time at which the action is to occur and the employees potentially taking the industrial action. The following passage from the reasons for decision in David’s Distribution Pty Ltd v National Union of Workers, a case concerned with the interpretation of s.170MO(5), is apposite:

“[87] We think s 170MO(5) was designed to ensure that industrial disputants who are to become affected by protected action, in relation to which their usual legal rights are significantly diminished, are at least able to take appropriate defensive action. For example, an employer may operate a sophisticated item of equipment that will be damaged if precipitately shutdown. If warned in advance of a ban that might affect the continued operation of that plant, the employer might choose a controlled shutdown during the period of the notice. More commonly, perhaps, an employer might use the notice time to communicate with suppliers and customers, and thereby reduce the consequences for them of the notified industrial action. Very often, the recipient of the notice will respond in a way that has a legal dimension. For example, a union might react to a notice by an employer of intent to lock out some employees by giving notice that all employees will strike indefinitely as from the commencement of the lockout. Similarly, an employer might respond to an employees’ notice of bans by giving notice of a lockout of some or all employees.” 12

[54] There is a degree of emphasis by the Full Bench on the ability of the employer to practically deal with the unavailability of labour through “making appropriate arrangements in relation to customers, suppliers and other contractors.” In the present matter Murray Goulburn has also emphasised issues around the difficulty of practically dealing with the proposed employee claim action. However, the Full Bench’s endorsement of the Court’s decision in David’s Distribution Pty Ltd v NUW clearly shows that the employer’s response to employee claim action can be the lockout of employees.

[55] Any consideration of the adequacy of the CEPU’s s.414 notice must take into account all of the circumstances of the matter including whether the notice provided sufficient specificity so as to permit the employer to consider and take appropriate response action including actions specifically available under the Fair Work Act.

[56] In all of the circumstances of the present matter I am satisfied that Murray Goulburn understood the nature and timing of the proposed employee claim action which was identified in the s.414 notice. Given that Murray Goulburn considered that the 3 day notice period set by s.443(5) was sufficient, I am satisfied that Murray Goulburn had sufficient and proper opportunity to respond to the proposed employee claim action by making relevant preparations.

[57] On the evidence, it does not appear to the Commission that any industrial action which is not protected industrial action is happening or is threatened, impending or probable or is being organised. The application for an order under s.418 of the Act is dismissed.

[58] As this matter has now been finally determined, I will now set aside the interim order issued in this matter on 23 July 2014 [PR553204] on the basis that it has no more work to do.

COMMISSIONER

Appearances:

A. Pollock, for the Applicant.

K. Reidy, CEPU, for the Respondent.

Hearing details:

2014.

Melbourne.

July 17, 23.

1 [2014] FWC 3599.

2 PR553204.

3 [2014] FWC 4932.

4 [2013] FWCFB 3793.

5 Exhibit A1.

6 Transcript at PN77 and PN80.

7 Ibid at PN189.

8 Ibid at PN190.

9 Ibid at PN192.

10 Ibid at PN63 and 64 (Mr McDonald).

11 Ibid at PN143 (Mr McDonald).

12 [2009] FWAFB 1698 at [12].

Printed by authority of the Commonwealth Government Printer