National Union of Workers v Interlloy Pty Ltd
[2013] FWC 5479
•9 AUGUST 2013
[2013] FWC 5479 |
FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.238 - Application for a scope order
National Union of Workers
v
Interlloy Pty Ltd
(B2013/869)
COMMISSIONER WILSON | MELBOURNE, 9 AUGUST 2013 |
Scope order application relating to warehouse workers at Interlloy Pty Ltd.
[1] By application dated 8 May 2013, the National Union of Workers seeks a scope order pursuant to section 238 of the Fair Work Act 2009 (the Act) “that there be a separate agreement covering warehouse workers” employed by Interlloy Pty Ltd (“Interlloy”).
LEGISLATION
[2] Section 238 of the Act enables bargaining representatives to make an application for a scope order and prescribes as follows;
238 Scope orders
Bargaining representatives may apply for scope orders
(1) A bargaining representative for a proposed single-enterprise agreement may apply to the FWC for an order (a scope order) under this section if:
(a) the bargaining representative has concerns that bargaining for the agreement is not proceeding efficiently or fairly; and
(b) the reason for this is that the bargaining representative considers that the agreement will not cover appropriate employees, or will cover employees that it is not appropriate for the agreement to cover.
No scope order if a single interest employer authorisation is in operation
(2) Despite subsection (1), the bargaining representative must not apply for the scope order if a single interest employer authorisation is in operation in relation to the agreement.
Bargaining representative to give notice of concerns
(3) The bargaining representative may only apply for the scope order if the bargaining representative:
(a) has taken all reasonable steps to give a written notice setting out the concerns referred to in subsection (1) to the relevant bargaining representatives for the agreement; and
(b) has given the relevant bargaining representatives a reasonable time within which to respond to those concerns; and
(c) considers that the relevant bargaining representatives have not responded appropriately.
When the FWC may make scope order
(4) The FWC may make the scope order if the FWC is satisfied:
(a) that the bargaining representative who made the application has met, or is meeting, the good faith bargaining requirements; and
(b) that making the order will promote the fair and efficient conduct of bargaining; and
(c) that the group of employees who will be covered by the agreement proposed to be specified in the scope order was fairly chosen; and
(d) it is reasonable in all the circumstances to make the order.
Matters which the FWC must take into account
(4A) If the agreement proposed to be specified in the scope order will not cover all of the employees of the employer or employers covered by the agreement, the FWC must, in deciding for the purposes of paragraph (4)(c) whether the group of employees who will be covered was fairly chosen, take into account whether the group is geographically, operationally or organisationally distinct.
Scope order must specify employer and employees to be covered
(5) The scope order must specify, in relation to a proposed single-enterprise agreement:
(a) the employer, or employers, that will be covered by the agreement; and
(b) the employees who will be covered by the agreement.
Scope order must be in accordance with this section etc.
(6) The scope order:
(a) must be in accordance with this section; and
(b) may relate to more than one proposed single-enterprise agreement.
Orders etc. that the FWC may make
(7) If the FWC makes the scope order, the FWC may also:
(a) amend any existing bargaining orders; and
(b) make or vary such other orders (such as protected action ballot orders), determinations or other instruments made by the FWC, or take such other actions, as the FWC considers appropriate.
BACKGROUND
[3] Interlloy is a steel supplier with branches located in Melbourne, Albury, Sydney, Brisbane, Mackay, Perth and Adelaide. 1 The company employs about 133 full-time employees in these branches and presently the Interlloy Collective Agreement (2009) (“the Current Agreement”) applies to their employment.
[4] The Current Agreement comprises the content of two documents; the agreement originally submitted to the Workplace Authority 2, and a Variation Agreement3.
[5] The Current Agreement is expressed as commencing on “the seventh day after the date of issue of the notice of the Workplace Authority that this agreement meets the no disadvantage test” 4 and “shall remain in operation for a period of 3 years from the commencement date (the “nominal expiry date”)”.5 The evidence includes that the Workplace Authority issued its notice on 21 July 2009,6 so consequently, the Current Agreement is past its nominal expiry date.
[6] The Current Agreement is binding on Interlloy and all employees employed by the company in the job classifications set out in the Schedule to the agreement. The Schedule to the Current Agreement indicates 16 job classifications by title only and the Current Agreement does not define or describe these classifications in any respect. The Current Agreement’s job classifications cover office based classifications, managerial positions, sales positions, and relevant to this application, warehouse employees.
[7] The process for an agreement to replace the Current Agreement commenced in August 2012, when Ms Genevieve Maguire, Interlloy’s National HR Manager wrote to the company’s warehouse managers advising that she had been given “the authorisation to start the negotiation process” and inviting nominations of staff representatives to participate in negotiations. 7 The Notice of Employee Representational Rights for a new agreement (“the Proposed Agreement”) was distributed to all employees by Ms Maguire on or around 11 September 2012.8
[8] The Notice of Employee Representational Rights so distributed set out as follows;
“[Interlloy] gives notice that it is bargaining in relation to an enterprise agreement ([Interlloy Collective Agreement 2009]) which is proposed to cover all employees who are currently covered by the agreement.”
[9] Initially, bargaining progressed without the involvement of external bargaining representatives. Ms Maguire’s evidence is that meetings with bargaining representatives were held by the company on 11 and 18 September 2012, 30 October 2012 and 7 February 2013. 9 In February 2013, the NUW sought to become involved in the bargaining process.
[10] The National Union of Workers' (NUW) submissions in this matter include the following;
“2. The National Union of Workers (NUW) represents the industrial interests of about 30 employees who work as warehouse employees at Interlloy.
...
5. The employee bargaining representatives are the NUW, who represent warehouse employees, and approximately five other bargaining representatives, who predominately represent administration and sales employees.
...
17. Warehouse employees are currently bargaining with two classes of employees (administrative and sales) who, because of their operational and organisational distinction, warehouse employees cannot form a commonality of interests with.
18. It is a relevant consideration that a significant number of the terms and conditions of the current proposed agreement apply exclusive to warehouse employees. The entirety of these employees employment is governed by the terms of the current agreement. The other classes of employees, administrative and sales employees, derive significantly less of their employment conditions from the current agreement.
19. Separating agreements would therefore avoid the unfairness of a proposed agreement being voted on by a near majority of other classes of employees whom have no particular concern for issues pertaining to specific work of warehouse employees and to whom the proposed enterprise agreement applies in only a limited way.
20. Warehouse employees have a ‘real, legitimate and understandable concern’ that their interests will be overwhelmed by other employees. This has happened during past negotiations and there is a real possibility that this will happen again.
21. Fairness in bargaining would also be enhanced by the making of the scope order because it would ensure that warehouse workers have a real ability to take protected industrial action. The ability of employees to take protected industrial action in support of their claims has been held to be an essential part of bargaining under the Act.” (references omitted) 10
[11] The NUW submitted that the application met the legislative requirements for the Fair Work Commission to make a Scope Order.
[12] In contrast, Interlloy submitted firstly the relevant legislative tests for the granting of a scope order had not been made out by the NUW, and secondly that the Proposed Agreement should apply to all employees, other than senior management employees. 11 Interlloy’s submissions included the following;
“3. Whilst the size of Interlloy’s branches and the mix of employees employed at the various branches varies, at each of the branches’ warehouse, managerial, sales and clerical employees:
(a) are working out of the same facility and have access to common lunch rooms and the like; and
(b) are required to work cooperatively and on occasion, side by side in order to service customers.
4. In addition, as the material filed by Interlloy shows, there have been examples of employees who have transitioned from one part of the business to another and where employees are engaged to perform a combination of warehouse and non-warehouse functions.
...
7. Interlloy opposes the application. Interlloy’s position is that the proposed Interlloy Enterprise Agreement (the “Proposed Agreement”) should cover all Interlloy employees who are employed in clerical, sales and warehouse classifications.” 12
[13] In the proceedings, the NUW relied upon its written and oral submissions and the evidence of a site delegate, Mr Andres Carlos.
[14] Interlloy rely on its written and oral submissions and the evidence of Ms Maguire.
CONSIDERATION
ss.238(1) – Bargaining representatives may apply for scope orders
[15] The NUW submitted that it meets the threshold requirements set out in section 238(1) of the Act and its grounds for the application refer to it being a bargaining representative; that it holds “concerns that bargaining for the agreement is not proceeding efficiently or fairly”; and that “the reason for this is that the bargaining representative considers that the agreement will not cover appropriate employees, will cover employees that it is not appropriate for the agreement to cover”.
[16] In these regards, the NUW submits that it represents about 30 employees who would prefer to work under an enterprise agreement that does not cover other employment classifications. It submits that incorporating other employees into the enterprise agreement serves to reduce the extent to which the conditions of the agreement relate directly to the NUW members, thereby disadvantaging them.
[17] Although the contention of the NUW of the extent of its membership at Interlloy was not corroborated directly in these proceedings, and there is evidence that at least some warehouse members have resigned their membership of the NUW 13, I am satisfied from the evidence there is a significant legitimate interest on the part of the NUW in bargaining at Interlloy.
[18] I note also that Deputy President Hamilton made a Protected Action Ballot Order on 5 June 2013 in relation to Interlloy’s employees. 14
[19] As a result, I am satisfied from the material and evidence before me, that the requirements in s.238(1) have been met by the NUW.
ss.238(2) – No scope order if a single interest employers authorisation is in operation
[20] The NUW submits there is no single interest employer authorisation operating in relation to the agreement. 15 I accept that this is the case and that consequently there is no bar from subsection 238(2) on the NUW in making this application.
ss.238 (3)– Bargaining representative to give notice of concerns
[21] The Act requires in subsection 238 (3) that a bargaining representative may only apply for a Scope Order if it has complied with the notice requirements set out in the subsection; namely that they have taken all reasonable steps to give written notice of their concerns to the relevant bargaining representatives; that they have given the relevant bargaining representatives a reasonable time within which to respond to those concerns; and that the initiating bargaining representative considers that the bargaining representatives to whom the written notice has been provided have not responded appropriately.
[22] In relation to these matters, the application to the Fair Work Commission by the NUW reveals that the requisite notice was given to Interlloy by email dated 29 April 2013. The notice stated that bargaining, in the opinion of the NUW, was not able to proceed fairly and efficiently given the company’s proposed scope. In the notice the NUW said that the then proposed scope of the agreement, covering warehouse employees, sales and clerical employees and senior management was oppressive because those categories were operationally and organisationally distinct. The correspondence from the NUW required a response from the company at the next bargaining meeting which was indicated in the notice as being set for 30 April 2013. A response to the NUW’s notice was provided by Ms Maguire later on the same day.
[23] I note that Interlloy did not submit the requirements set out in subsection 238 (3) had not been met.
[24] As a result, I am satisfied these provisions have been met.
ss.238(4) – When the FWC may make scope order
[25] The provisions of section 238 set out conjunctive conditions of which the Commission must be satisfied before it can issue a scope order, and there are four such conditions within ss.238(4).
[26] Each of these conditions is considered in turn.
Good faith bargaining requirements
[27] The first of the conditions in subsection 238(4) requires the FWC be satisfied that the bargaining representative who made the application has met, or is meeting, the good faith bargaining requirements, (which in turn, are set out in section 228 of the Act).
[28] Interlloy submits that the NUW has not met the good faith bargaining requirements particularly because of two circumstances as follows:
- The content of a NUW flyer, provided on or around 5 March 2013 to Interlloy warehouse employees in Adelaide, Melbourne, Brisbane and Sydney, is said by the company to be misleading; 16 and
- Allegations made by Interlloy about the conduct of an NUW representative in the course of a bargaining meeting with the company in April 2013. 17
[29] The NUW flyer contrasts wages said to apply at Interlloy against those at two other companies and asserts to readers that “Interlloy distribution workers are expected to perform as the best in the business. But Interlloy wages and conditions do not meet the same industry standard.” 18
[30] It is said in relation to the NUW flyer that the wage rates shown contained “factual inaccuracies” 19 in that the wages shown disregard a written variation to the original agreement filed at the time the agreement was approved “that significantly increased minimum employment conditions paid under the agreement; and annual condition increases awarded to employ staff since 2009”.20
[31] The reference to a “written variation” that was not taken into account in the flyer is a reference to a Variation Agreement to the original agreement lodged with the Workplace Authority in 2009.
[32] The Variation Agreement increased wages for 3 classifications (Leading Hand, Warehouse Supervisor and Warehouse Manager); and shows the non-rotating shift rate loading for an Interlloy worker is 20% (whereas the flyer shows a 15% penalty, with no indication of whether that is for rotating or non-rotating shift workers).
[33] The Schedule to the Current Agreement contains 2 columns of wage rates for each classification (being an hourly rate and an annual salary). Each column applies from the commencement of the Agreement. There are not scheduled wage increases for all employees, or even for just one or more classifications. Instead, wage increases for employees flow from the mechanisms set out in the Current Agreement and chiefly from those in clause 25, which says;
“25. WAGE REVIEWS
25.1 Wage reviews are conducted periodically.
25.2 The conduct of a wage review will not impose an obligation on Interlloy to increase your Wage Rate, unless such an increase is necessary in order to comply with Clause 20.3.
25.3 lnterlloy may, however, increase your Wage Rate after taking into account relevant factors, including your performance and prevailing market conditions both generally and relating to the operational requirements of the business.”
[34] In addition to this review mechanism, Clause 20 provides that employee wages shall be no less than the relevant minimum rate of pay forming part of the Australian Fair Pay and Conditions Standard 21 and Clause 22 provides other protection for apprentices and trainees.
[35] The company’s evidence about increases to warehouse employee wage rates since 2009, over and above the original rates in the Current Agreement is, at best, unclear with the following responses from Ms Maguire about wage rises since 2009 for warehouse employees;
“Has everyone in the organisation received an annual increase since 2009?---Has everybody received an annual increase?
Yes?---I couldn't answer that, I'm sorry.
So is it true that the wage rates for a storeperson in the current agreement would come to about $644.23?---Are we saying
On what's published in ?---Okay. Well, these are minimum, so we don't pay anybody at these rates, no.
But if you multiplied the minimum by 38 hours, it would be around ?---If I had a calculator, I could work it out, but not off the top of my head.
So the minimum rate in there for a storeperson is recorded - is it $16?---$16.67 for a storeman.
Is it also true that the wage increases in the current agreement, that agreement, they're dependent on company review?---That's correct.” 22
[36] Interlloy indicated that enforcing a wage rate might be in two parts: a statutory enforcement mechanism pertaining to the wage rates set out in the agreement as varied; and a contractual enforcement mechanism for what has been agreed between the parties. 23
[37] These exchanges indicate that while the wage rates published in the Current Agreement may not be the wage rates actually applying to currently employed warehouse employees, what does apply is not publicly available. For new employees, Interlloy’s obligation would be to pay the minimum rates in the Current Agreement. Although there is, of course, nothing unusual about this situation, since an agreement’s wage rates are only minimum payments, it does mute a claim, as made here, that a union distributed flyer drawing attention to the Current Agreement’s wage rates is wrong and, because it is wrong, misleading. If the flyer was incorrect in respect of minimum wage rates, it was incorrect in relation to the three classifications referred to in the Variation Agreement, namely the classifications of Leading Hand, Warehouse Supervisor and Warehouse Manager.
[38] Despite the strong terms in which the company complained to the NUW about the flyer, Interlloy does not consider it received a sufficient or appropriate response on the complaint.
[39] The evidence and submissions before me in relation to the flyer go to its inaccuracies and the company’s response. While it is unfortunate the NUW did not address Interlloy’s concerns as soon as they became apparent, the evidence does not establish its publication amounted to capricious or unfair conduct. 24
[40] In considering whether the jurisdictional pre-requisite (of whether the NUW has met, or is meeting, the good faith bargaining requirements) has been met in relation to the complaint over the flyer, while Interlloy was within its rights to complain about the factual errors in the document, and after taking into account the content of the Current Agreement, including how it prescribes minimum wages, I do not find the flyer in and of itself to be a breach of the good faith bargaining requirements.
[41] In relation to the alleged conduct of an NUW representative, the evidence I have includes exhibit NUW 6, which is a chain of correspondence between Interlloy and the NUW. This correspondence indicates that on 19 April 2013 Ms Maguire wrote to Ms Beynon relaying what she said was a “report of disturbing behaviour” on the part of the NUW officer concerned. In the email, Ms Maguire relates that an Interlloy manager had complained to her the following about events on the previous day. The manager’s email to Ms Maguire said in part;
“Yesterdays meeting with the NUW representative [T] was indeed an eye opener and stressful experience, his change in demeanour we experienced was very un-nerving and something that cannot be tolerated. He changes during discussions to aggressive and loud and that can be construed as threatening and this behaviour [D] has seen on every visit to date.
Yesterday he stormed out into our office loudly yelling upsetting the sales of staff after he refused to answer a question I asked him.” 25 (names omitted)
[42] Ms Maguire said in her correspondence to Ms Beynon that the officer concerned “is not to attend our site in Sydney again, nor any of our sites in future”. 26 There was subsequently correspondence back and forth between the parties on the subject. In the course of these exchanges, Ms Beynon referred to “the rough and tumble of bargaining where voices may be raised or behaviour becomes pointed”, and an NUW Organiser, Mr Pegg, reminded the company of its obligations under the Act in relation to the officer as a bargaining representative.27 Minutes of bargaining meetings tabled by Ms Maguire in her witness statement indicates the NUW officer complained about attended bargaining meetings with the company after she made the complaint about him.28
[43] There is no direct evidence of the actual behaviour complained about, or its causative factors, and there is no evidence before me, and no submissions were made, that the NUW officer’s behaviour remained at a level the company considered unacceptable.
[44] I find there is insufficient evidence for me to form the view that the conduct of the NUW officer was a failure by the NUW to meet the good faith bargaining requirements.
[45] Interlloy submit that these two allegations contradict the NUW submission contained in its Outline of Submissions filed in the FWC on 11 June 2013 that;
“13. No allegations have been made to date that the NUW is not meeting the good faith bargaining requirements.” 29
[46] Interlloy submit in relation to this statement;
“Now, that proposition, Commissioner, is simply inaccurate. There has been at least two allegations going to good faith bargaining conduct by the NUW or the lack thereof. Those allegations are firstly the allegations that are referred to in the email chain which is exhibit 6 that at a meeting in order to discuss the proposed agreement an NUW representative behaved inappropriately and in a threatening way. In my submission that conduct, whilst it may be capable of being explained, is conduct that is capable of falling within the descriptor in 228(1)(e); namely, it could be seen as capricious or unfair, that it undermines freedom of association or collective bargaining because people who participate in collective bargaining shouldn't be subjected to threatening behaviour by anybody, let alone union officials. It also is conduct that is inherently unfair.” 30
[47] Interlloy invite the finding that the NUW, as a bargaining representative has not met, or is not meeting the good faith bargaining requirements.
[48] A finding that a bargaining representative has not met, or is not meeting the good faith bargaining requirements requires consideration of the matters contained in s.228 of the Act, which provides as follows;
228 Bargaining representatives must meet the good faith bargaining requirements
(1) The following are the good faith bargaining requirements that a bargaining representative for a proposed enterprise agreement must meet:
(a) attending, and participating in, meetings at reasonable times;
(b) disclosing relevant information (other than confidential or commercially sensitive information) in a timely manner;
(c) responding to proposals made by other bargaining representatives for the agreement in a timely manner;
(d) giving genuine consideration to the proposals of other bargaining representatives for the agreement, and giving reasons for the bargaining representative’s responses to those proposals;
(e) refraining from capricious or unfair conduct that undermines freedom of association or collective bargaining;
(f) recognising and bargaining with the other bargaining representatives for the agreement.
(2) The good faith bargaining requirements do not require:
(a) a bargaining representative to make concessions during bargaining for the agreement; or
(b) a bargaining representative to reach agreement on the terms that are to be included in the agreement.
[49] For the reasons set out above, I do not make this finding. I have decided this after taking into account all of the relevant circumstances and noting that the question of whether a party is not meeting the good faith bargaining requirements will rarely be decided by reference to one action or series of actions. 31 I am not persuaded publication of the flyer amounted to capricious or unfair conduct on the part of the NUW or was in breach of the other good faith bargaining requirements, and I do not have sufficient evidence before me in relation to the conduct of the NUW officer to form a view that his conduct amounted to capricious or unfair conduct, or was otherwise in breach of the good faith bargaining requirements in s.228 of the Act.
Fair and efficient conduct of bargaining
[50] Sub-paragraph 238(4)(b) requires the FWC to be satisfied “that making the order will promote the fair and efficient conduct of bargaining”.
[51] The FWC Full Bench said about this requirement that“[t]he implication is that the tribunal should be satisfied that if an order is made the bargaining will at least be fairer or more efficient or both than it would be if no order were to be made.” 32
[52] In this regard, the NUW evidence and submissions includes the following;
- The Current Agreement covers all employees (including senior management); 33
- “The employee bargaining representatives are the NUW, who represent warehouse employees, and proximally five other bargaining representatives who predominantly represent administration and sales employees”; 34
- Warehouse employees are currently bargaining with two other classes of employees (administration and sales) who are operationally and organisational instinct from warehouse employees; 35
- “A significant number of the terms and conditions of the current proposed agreement apply exclusively to warehouse employees. The entirety of these employees employment is governed by the terms of the current agreement. The other classes of employees, administrative and sales employees, derive significantly less of their employment conditions from the current agreement.” 36
- “Warehouse employees have a ‘real, legitimate and understandable concern’ that their interest will be overwhelmed by other employees.” The NUW asserts that this has happened during past negotiations and there is a real possibility that this will happen again. 37
[53] The NUW also advanced that the proposed agreement dealt with warehouse employees in materially different ways than other employees. Extensive material was provided which compared the operative effect of clauses in both the current agreement and the proposed agreement. Comparisons were made about whether clauses applied to all employees; just warehouse employees; or only to people who are not warehouse employees. Reference was made to the descriptors and classification criteria for the classifications applicable to warehouse employees within the proposed agreement, which are demonstrably more extensive than classification descriptors for similar classifications in the current agreement. The NUW argued that this raised a level of complexity in defining and implementing classifications for warehouse employees which might work to their detriment.
[54] Interlloy’s evidence and submissions about the fairness and efficiency of bargaining included the following;
- Employees at each branch share the same facilities; work cooperatively together side by side;
- There are examples of employees who have transitioned from one part of the business to another;
- The company has endeavoured to be responsive to the needs and concerns of warehouse employees, both as to the detail contained within the agreement on particular issues, and in relation to certain claims by warehouse employees.
[55] The proposition that bargaining will be fairer as a result of granting the application stems from the NUW’s submissions that warehouse employees will have their interests overwhelmed as a result of the agreement attending to the interests of the other groups of employees at Interlloy, to the possible detriment of the warehouse employees. This is said to have happened previously and is possible for the current negotiations. The NUW referred to the matter of AMWU and others v Shinagawa Refractories Australasia Pty Ltd 38 in which Deputy President Sams referred to such considerations in making a scope order.
[56] This argument has several limbs, the most significant of which are that without a scope order as the NUW seeks;
- warehouse employees will not be able to take protected action to further their industrial interests;
- warehouse employees will be unable to adequately or properly have their interests represented in negotiations;
- warehouse employees will be unable to have the content of the agreement reflect their special needs or wants.
[57] In relation to the first limb, there is no evidence before me about the propensity or otherwise of non-warehouse employees to either vote for a protected action ballot order or to participate in protected industrial action in the event that such action was authorised.
[58] In relation to the second limb, there is evidence before me which indicates the NUW is able to effectively and capably represent the interests of its members in negotiations. There is a level of engagement and participation in bargaining meetings by the NUW and its members that indicates members’ interests will be looked after. In addition, there is uncontested evidence before me which indicates not all warehouse employees wish to be represented by the NUW, indicating the warehouse employees themselves may not be a homogenous group.
[59] In relation to the third limb, Interlloy’s submissions and evidence included that bargaining to date has resulted in agreement on at least 5 clauses that relate wholly or mainly to warehouse employees. These included provisions relating to the warehouse spread of hours; provisions associated with shift work; warehouse junior employees; shift penalties for warehouse employees and the warehouse classification system. 39
[60] Notwithstanding the position put by the NUW, the evidence in the form of responses to a petition circulated by Ms Maguire suggests employees as a whole are not against an agreement that covers all groups of employees (other than senior managers),. The responses, on Ms Maguire’s evidence, indicate that 30 warehouse employees and 50 “office” “employees were not in favour of the NUW’s scope order application” 40from a potential pool of 58 warehouse employees and 62 “office” employees.41 The proposition put to employees in the petitions was:
“I would like the new proposed Interlloy Enterprise Agreement to apply to all Warehouse, Clerical, Sales and Administration staff. I do not want the Enterprise Agreement separated as has been discussed. The minimum terms and conditions of employment should be the same for all staff across the business.” 42
[61] The Fair Work Commission Full Bench has held that the views of employees are a matter that, whilst not determinative, can be taken into consideration in determining whether or not to grant a scope application. 43 The Full Bench relevantly said;
“It must be said, however, that while weight should be given to the views of the employees potentially affected, it may be that a proper consideration of the matters specified in ss.238(4) and (4A) in a particular case may make it appropriate to make a scope order contrary to the views of the employees potentially affected.” 44
[62] In this matter, the employees potentially affected are not uniform in their views.
[63] The interests of the NUW and its members in regard to this issue are in relation to the warehouse employees being able to more effectively bargain with their employer (including through the use of protected industrial action, if approved) and in turn to be able to ensure their terms and conditions of employment are more relevant to them or are materially advanced, and that these things can occur because of the granting of the order.
[64] The interests of the employer in regard to the fairness and efficiency of bargaining are potentially in building its business in an integrated manner in the way that it sees as important; in ensuring the process of bargaining does not put it to greater time or effort; and that the administration of any resulting agreement is not unduly increased as a result of there being an additional industrial instrument to administer.
[65] In reviewing the available evidence and material, there is demonstrably a capacity of employees to bargain effectively. Warehouse employees were involved in bargaining prior to the involvement of the union; they formulated and discussed and negotiated logs of claim. When warehouse employees got to a point where they needed assistance, they involved the NUW who were accepted into the bargaining process (although initially some low-level concerns were expressed by non-warehouse employees about the involvement of the NUW).
[66] It is also the case that, on the basis of Mr Carlos’ evidence, the affected employees did not even know their agreement covered other employees in the workplace until relatively recently. 45
[67] I therefore do not hold the view that bargaining will be fairer if the order is made.
[68] In considering the question of the efficiency of bargaining, I take into account that the company submits there is no proper basis for disturbing the status quo or for overriding the preference of the majority of Interlloy’s employees (including a majority of the warehouse employees; and that the negotiations to date have resulted in agreement to most of the substantive terms of the proposed agreement. 46
[69] The NUW argued in relation to efficiency of bargaining, that making the order would do no more than possibly inconvenience the employer highlighting the approach taken by the tribunal in AMWU v Shinagawa Refractories in which a scope order application is granted. However, that case concerned a markedly different background to the current case. It concerned an employer operating with 64 employees in a single site in New South Wales, with 49 employees in production roles and 15 in maintenance roles. The proposition before the tribunal at that time related to an application for there to be a Scope Clause by 2 of the 3 unions represented in the business. 47
[70] The evidence in this matter indicates that Interlloy is a national company, but not a large one, with a total of 133 full-time employees in 7 branches. Interlloy employs 56 warehouse employees; 34 sales employees; 28 clerical employees; and 11 senior managers. The company has branches in 5 States and in only 2 of those States (New South Wales and Queensland) is there more than one branch. Requiring a company of this relative size and geographic footprint to bargain separately for warehouse employees is unlikely to be more efficient than if the order is not made, and may well be less efficient.
[71] The relative inefficiency from this prospect outweighs the possibility of the bargaining being fairer in the event that the order is granted (which, in any event, I have not found).
[72] After consideration of all of the evidence and submissions before me, I am not persuaded that making the proposed order will promote the fair and efficient conduct of bargaining, or that an eventuality of making the order as sought will be that “the bargaining will at least be fairer or more efficient or both than it would be if no order were to be made.” 48
Whether group of employees was fairly chosen
[73] Pursuant to paragraph 238(4)(c), consideration needs to be given to whether the group of employees who will be covered by the agreement proposed to be specified in the scope order was fairly chosen. The context of the paragraph is consideration by the FWC of whether the group selected by the bargaining representative (in this case, the NUW) was fairly chosen for exclusion from the bargaining processes already way.
[74] The order proposed by the NUW goes only to “warehouse workers” without further description or definition as to the affected employees or classifications. Interlloy make the valid point that employees other than the stores workers represented by the NUW also work in the warehouse.
[75] Consideration of “fairly chosen” includes that the selection of the group was not arbitrary or discriminatory with selection of the group according to criteria such as date of employment, age or gender, or in a way that has the effect of undermining collective bargaining or other legislative objects. 49 In the case before me, I am satisfied the selection of the group was not arbitrary or discriminatory.
[76] Interlloy’s submissions referred to the ExplanatoryMemorandum of the Fair Work Bill 2008, which expands on how an assessment of “fairly chosen” might be made by the tribunal albeit within the context of the tribunal’s assessment of whether an agreement can be approved rather than in the context of a scope order application;
- the way in which the employer has chosen to organise its enterprise; and
- whether it is reasonable for the excluded employees to be covered by the agreement having regard to the nature of the work they perform and the organisational and operational relationship between them and the employees who will be covered by the agreement.” 50
“777. It is intended that in assessing whether the group of employees covered by the agreement is fairly chosen, FWA might have regard to matters such as:
[77] In contrast, the NUW submitted in relation to the test of “fairly chosen” that;
“A number of potential groupings of employees in any one case may be fair. FWC has held that there is no need for the group chosen by the proposed scope to be any more or less fair than any other potential group; it is sufficient only that the group is fairly chosen.”
[78] The Full Bench in UFUA v MEFSB considered this issue and held;
[55] ... The relevant consideration under s.238(4)(c) is whether the specified group is fairly chosen. It may be that a number of groupings might be fair – what this criterion requires is that the group which is included in the scope order is fairly chosen. This issue is also dealt with in s.238(4A), which we discuss shortly.
[56] We disagree with the UFUA’s suggestion that as a matter of statutory construction preference ought to be given to agreements that cover as much of an enterprise as possible. Section 238 permits a scope order which does not apply to the whole enterprise. In such a case the tribunal, in deciding whether the group is fairly chosen, must take into account whether the group is distinct in one of three specified respects. It may follow that if the group is not distinct in one of those respects it may not have been fairly chosen, but it does not necessarily follow in all circumstances. For present purposes it is not necessary to speculate upon the circumstances in which the conclusion might not follow. 51
[79] Because the scope order proposed by the NUW will not cover all Interlloy’s employees, the Commission’s consideration of “fairly chosen” for the purposes of paragraph 238(4)(c) requires taking into account the provisions of ss.238(4A). This requires that in considering whether the group of employees who will be covered by the agreement proposed specified in the scope order was fairly chosen, the FWC must “take into account whether the group is geographically, operationally or organisationally distinct”.
[80] The meaning of “geographically, operationally or organisationally distinct” was considered in the Full Bench decision in UFUA v MEFSB. In that decision, not only did the Full Bench indicate the construction referred to above, but it also referred to the extent which the groups of workers in dispute attended to operational responsibilities and drew a qualitative difference between the duties of the groups. As a consequence, the Full Bench saw the disputed group as constituting “a distinct organisational group for the purposes of s.238 (4A)”. 52
[81] The Full Bench also considered the following;
[70] On the material and submissions in this case a great deal of weight should be attached to the fact that the Commanders and ACFOs occupy senior management positions in the MFESB and for that reason their interests are distinct from, and in some respects in conflict with, the interests of the ranks below them. Despite the views expressed by and on behalf of all ranks up to ACFO, we have concluded that a scope order specifying a group comprised of employees in the ranks from Recruit to Senior Station Officer would promote the fair and efficient conduct of bargaining and that it would be more likely to be effective in that regard than a scope order specifying a group comprised of employees in the ranks from Recruit to ACFO. A group comprised of the ranks from Recruit to Senior Station Officer would also be fairly chosen. Such a group has distinct interests related to the primarily operational nature of their roles. Senior management employees, such as Commanders and ACFOs, have many interests in common with the other ranks and enjoy many of the same conditions, but the principal differentiating characteristic of their roles, rendering them a distinct group in the sense provided for in s.238(4A), is its senior management character. Given the troubled history surrounding the negotiation of conditions for Commanders and ACFOs and the negative effect that it is having on attempts to negotiate a new agreement, it is desirable that Fair Work Australia exercise its powers under s.238 and make an appropriate order. Such an order would also support attempts by the MFESB, referred to in the evidence, to improve organisational efficiency and productivity by promoting better understanding of managerial roles.
[82] The NUW submitted that “[w]arehouse employees are organisationally and operationally distinct”. 53 It said they are organisationally distinct because Interlloy is structured in such a way that the employees who will be covered by the proposed scope order have lines of reporting that are distinct from other administrative and sales employees.54 In this regard, the NUW also relied upon what it said was limited organisational interaction between the different classes of employees and the physical layout of the Melbourne premises which has separate office warehouse, lunchroom and toilet facilities. The NUW also referred to differences between classes of employees in relation to staff induction training and different treatment under both the current agreement in the proposed agreement. The NUW submitted that the employees are operationally distinct because they perform inherently different work and have significantly different patterns of work from administrative and sales employees.55
[83] Interlloy's views on this subject were markedly different. The company’s evidence and submissions indicated there is frequent interaction between the different groups and that there have been job progressions from the warehouse by a number of people throughout the company, in different parts of the country, including its current National General Manager who commenced working as a storeman in Melbourne. 56
[84] The evidence includes that “the warehouse” comprises employees other than those in classifications represented by the NUW is important. Mr Carlos’ evidence indicates that in Melbourne, there are 15 sales and clerical staff including three who work in the warehouse, namely the warehouse manager and two dispatch administrators.
[85] While Interlloy is geographically dispersed in 7 centres across Australia, the evidence does not include that warehouse employees are a geographically distinct group in every centre. Accordingly, I find that the warehouse employees are not a geographically distinct group.
[86] In relation to operational distinctiveness, the evidence of both Ms Maguire and Mr Carlos is that there are routine interactions between warehouse and other employees. The one group is dependent on the other for the purpose of the successful performance of their own. Sales and administrative employees will undertake duties in the warehouse. After taking into account the submissions of both parties and the evidence of Ms Maguire and Mr Carlos, I therefore find the warehouse employees were not operationally distinct.
[87] In relation to organisational distinctiveness, Ms Maguire evidence (accepted by Mr Carlos) is that there were no barriers to social interaction and that the company promoted it; that Interlloy included staff from different groups in key events; that job changes for warehouse employees to positions outside of the warehouse were not uncommon; and that changes to the company’s bonus system affected equally warehouse and other employees. After taking into account the submissions of both parties and the evidence of Ms Maguire and Mr Carlos, I therefore find the warehouse employees were not organisationally distinct.
[88] Even though I have found the warehouse employees group is not geographically, operationally or organisationally distinct, it does not mean that the group is not fairly chosen, 57 although such finding could be “a significant consideration militating against a finding that the proposed grouping is fair”.58
[89] Having decided above that the selection of the group specified in the NUW application is not arbitrary or discriminatory, and having now taken into account the provisions of ss.238(4A), regarding the distinctiveness of the group, the question arises whether there are any other characteristics of the chosen group that might mean it has either been fairly or unfairly chosen.
[90] Commissioner Hampton decided in APESMA v Australian Red Cross Blood Service & Ors 59, in relation to the refusal to grant a scope order application for separate bargaining for medical scientists, that countervailing factors to some relevant matters were the history of industrial regulation within the workplace and the same modern award coverage.60 The relevant matters referred to included the professional nature of the positions in dispute; aspects of broad-banding and grouping effects of the classification structure and an employee petition identifying concerns about the classification structure. The Commissioner decided the proposed group was not geographically, operationally or organisationally distinct61 and that on balance he was not satisfied the group of employees was fairly chosen62
[91] In deciding the subject of whether the warehouse group was fairly chosen, I take into account not only the above analysis, but also the construction set out by the Full Bench in Cimeco v CFMEU. Relevantly, I take into account that deciding whether a group was “fairly chosen” involves a degree of subjectivity or value judgement 63; the absence of geographical, operational or organisational distinctiveness “would be a factor telling against a finding that the group was fairly chosen”64 and that;
... It is also appropriate to have regard to the interests of the employer, such as enhancing productivity, and the interests of employees in determining whether the group of employees was fairly chosen. In this regard, it is not only the interests of the employees covered by the agreement that are relevant; the interests of those employees who are excluded from the coverage of the agreement are also relevant. ... 65
[92] Following this construction, I take into account both the interests of the employer as submitted to the Commission, which are for a single, integrated agreement, as well as the interests of the employee groups, which are demonstrably split between those who wish to remain under a single agreement and those who wish to have a separate agreement for the warehouse group. I take into account that, on the basis of the petition’s referred to in Ms Maguire’s evidence that at least a significant portion of the warehouse group employees apparently wish to remain under a single agreement.
[93] As a result, having found that firstly that the choice of the warehouse group was not arbitrary or discriminatory and secondly that it is not a geographically, operationally or organisationally distinctive group, and after considering all of the circumstances before me relating to Interlloy’s workplace, on balance I am not satisfied that the group of employees who will be covered by the agreement proposed to be specified in the scope order was fairly chosen.
Whether reasonable in all the circumstances to make the order
[94] After considering all the circumstances of the matter, and on the basis of the findings I have made in relation to sections 238(4)(b) and (c) of the Act, there is no basis to make the order as sought and the discretion contemplated by s.238(4)(d) does not arise.
CONCLUSIONS
[95] For the reasons outlined above, the application must be dismissed and I so order.
COMMISSIONER
Appearances:
Ms I Beynon for the NUW
Mr C O’Grady (of Counsel) with Mr C Ni (solicitor) for Interlloy Pty Ltd
Hearing details:
2013
Melbourne:
June 24
1 Interlloy's Outline of Submissions, 18 June 2013, paragraph 2
2 Agreement ID: AC327633
3 Agreement ID: AC324179
4 Clause 3.4
5 Clause 4.1
6 Genevieve Maguire, witness statement, paragraph 4
7 Witness Statement of Genevieve Maguire, 18 June 2013 paragraph 8 and Annexure 2
8 Genevieve Maguire, witness statement, paragraph 9
9 Genevieve Maguire, witness statement, paragraphs 12 - 15
10 NUW - Outline of Submissions, undated, filed 13 June 2013
11 Interlloy's Outline of Submissions paragraph 11(h)
12 Interlloy's Outline of Submissions
13 Genevieve Maguire, witness statement, annexure 9
14 National Union of Workers v Interlloy Pty Ltd, 5 June 2013, PR53796
15 NUW Outline of submissions, paragraph 10
16 Dealt with in paragraph 16 and annexure 8 of Ms Maguire's witness statement
17 Exhibit NUW 6, email chain
18 Genevieve Maguire witness statement, annexure 8
19 Genevieve Maguire witness statements, paragraph 16
20 Genevieve Maguire witness statements, annexure 8, correspondence to NUW dated 6 March 2013
21 Clause 20.3
22 Transcript, PN 584 - 590
23 Transcript, PN 806
24 See Construction, Forestry, Mining and Energy Union-Mining and Energy Division v Tahmoor Coal Pty Ltd, [2010] FWAFB 3510, Giudice J, McCarthy DP, Larkin C, at [24]; Liquor, Hospitality and Miscellaneous Union v Foster’s Australia Ltd, [2009] FWA 750, Kaufman SDP, at [13]
25 Exhibit NUW 6, chain of emails - from email sent by Tony Green to Genevieve Maguire, 19 April 2013, 9.38 AM
26 Ibid
27 Ibid
28 Genevieve Maguire witness statement; for example see annexure 18 (refers to bargaining meeting on 30 April 2013) and annexure 20 (refers to bargaining meeting held 10 May 2013)
29 NUW outline of submissions, paragraph 13
30 Transcript, PN 794
31 CFMEU v Tahmoor Coal Pty Ltd, [2010] FWAFB 3510, at [24]
32 United Firefighters Union of Australia v Metropolitan Fire and Emergency Services Board, [2010] FWAFB 3009, Giudice J, Lawler VP, Gay C, at [55]
33 NUW Outline of Submissions, paragraph 4
34 NUW Outline of Submissions, paragraph 5
35 NUW Outline of Submissions, paragraph 17
36 NUW Outline of Submissions, paragraph 18
37 NUW Outline of Submissions, paragraph 20
38 [2011] FWA 5935, at [27]
39 Interlloy outline of submissions, paragraph 26
40 Maguire, paragraph 26
41 Maguire, paragraph 7
42 Maguire, annexure 22
43 United Firefighters’ Union of Australia v Metropolitan Fire & Emergency Services Board, [2010] FWAFB 3009 at [53]
44 Ibid
45 Transcripts, paragraph PN 344
46 Interlloy submissions, paragraph 9
47 [2011] FWA 5935, at [2]
48 CFMEU v Tahmoor Coal Pty Ltd, at [24]
49 Cimeco Pty Ltd v Construction, Forestry, Mining and Energy Union & Ors, [2012] FWAFB 2206, Ross J, Hamilton DP, Spencer C, at [21]
50 Fair Work Bill 2008, Explanatory Memorandum
51 [2010] FWAFB 3009, from [55]
52 [2010] FWAFB 3009, at [60]
53 NUW outline of submissions, paragraph 34
54 NUW outline of submissions, paragraph 36
55 NUW outline of submissions, paragraph 35
56 Genevieve Maguire witness statements, paragraph 34 (f)
57 UFUA v MEFSB[2010] FWAFB 3009, at [56]
58 Association of Professional Engineers, Scientists and Managers v Australian Red Cross Blood Service & Ors[2011] FWA 2914, Hampton C, at [82]
59 Ibid
60 Ibid, at [84]
61 Ibid, at [80]
62 Ibid, at [86]
63 Cimeco v CFMEU [2012] FWAFB 2206, at [8]
64 Ibid, at [19]
65 Ibid, at [21]
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