Orora Packaging Australia Pty Ltd t/a Orora Bag Solutions v “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers' Union

[2020] FWC 60

[2020] FWC 60

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.418—Industrial action

Orora Packaging Australia Pty Ltd t/a Orora Bag Solutions
v
“Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union
(C2020/11)

DEPUTY PRESIDENT COLMAN MELBOURNE, 7 JANUARY 2020

Application for order under s 418 to stop industrial action – expected transfer of business – whether industrial action against current employer taken for requisite purpose – timing of transfer – action still protected

[1] This decision concerns an application made under s 418 of the Fair Work Act 2009 (Act) by Orora Packaging Australia Pty Ltd (company) for orders that unprotected industrial action stop or not occur. The orders sought were directed at the Australian Manufacturing Workers’ Union (AMWU) and employees of the company who are members of the union and employed at the company’s facility at Thomastown in Victoria, at which the company manufactures bags for food and industrial products. The employment of the employees is covered by the Orora St Regis Bates Keon Park Enterprise Agreement 2015 (2015 Agreement). The AMWU is covered by the Agreement. The nominal expiry date of the Agreement was 30 June 2019.

[2] I heard the application on Monday 6 January 2020, concurrently with another application lodged by the company under s 425 of the Act, which asked the Commission to suspend protected industrial action. The two applications relate to the same industrial action and were brought as alternatives. The company’s primary position was that the relevant industrial action was in fact protected action, and that the Commission should grant its application under s 425 and suspend the action for a ‘cooling off’ period. Its alternative position was that the industrial action had become unprotected, and that the Commission should order that the action stop or not occur under s 418 of the Act.

[3] At the hearing of the two matters, Mr Greg Aldous, the company’s general manager, gave evidence, as did Mr Dean Griffiths, the AMWU organiser responsible for members and bargaining at the Thomastown site. The parties rely on the evidence of these witnesses in relation to their respective positions in both applications.

[4] It is appropriate that I deal first with the s 418 application, as the Act requires the Commission to determine such applications expeditiously. Determining the status of the industrial action will also address a threshold question concerning the s 425 application, as a suspension order under that provision is available only in relation to protected industrial action.

[5] The relevant background is largely uncontentious and is set out in the company’s application and the witness statement of Mr Aldous. Since the nominal expiry date of the 2015 Agreement in June 2019, the company and the AMWU, as bargaining representative for relevant employees, have been negotiating a new enterprise agreement. They have met on some 18 occasions. The main areas that remain in dispute are the proposed removal of certain paid meal breaks, the classification structure, and wage increases.

[6] On 15 August 2019, the AMWU obtained an order from the Commission that a protected action ballot be conducted in respect of the negotiations for a new agreement. The ballot occurred on 13 September 2019, and employees authorised the taking of protected industrial action in support of a new agreement. Following the protected action ballot, the AMWU organised, and employees commenced to engage in, industrial action. On 22 October 2019, employees commenced an indefinite ban on overtime. On 12 November 2019, employees on night shift, day shift and afternoon shift engaged in a one-hour stoppage of work. Employees also engaged in a ten-minute ban on scanning for dispatch of finished goods at 4.00pm.

[7] Since 20 November 2019, the same action that was taken on 22 October 2019 has occurred daily. Employees on night shift, day shift and afternoon shift have engaged in a one-hour stoppage of work commencing at 6.35am, 2.35pm and 10.35pm respectively, and there has been a ban on scanning for dispatch of finished goods for ten minutes starting at 4.00pm each day.

[8] On 29 November 2019, the company formed the view that negotiations had reached an impasse and decided to take its proposed enterprise agreement to a vote of employees. The ballot occurred on 11 December 2019. A majority of employees voted not to approve the agreement, by a margin of 59 to 7.

[9] Of critical significance to the present matter is the pending sale of Orora’s Australasian fibre business, including the Thomastown site, to the Nippon Paper Group (Nippon). The sale was announced on 10 October 2019 and the company subsequently commenced consultation with the union and employees. Under the sale agreement, Nippon has agreed to offer employment to all employees of Orora employed in its Australasian fibre business, including those employed at the Thomastown facility. From 6 January 2020, Nippon commenced making offers of employment to employees of the company, although the date for their commencement of employment has not yet been fixed. The contractual sale completion date is 31 January 2020. However, the sale remains subject to regulatory approvals from the Foreign Investment Review Board (FIRB), and the Australian Competition and Consumer Commission (ACCC).

[10] It is common ground that the sale will entail a transfer of business by means of asset transfer pursuant to ss 311(1) and 311(3) of the Act. If a new enterprise agreement is approved by the Commission and covers employees in their employment with Orora before employees commence employment with Nippon, that agreement will be a transferrable instrument. It will cover Nippon, as the new employer, and transferring employees of Orora in their new employment with Nippon.

[11] The company acknowledges that the industrial action that is presently being organised and engaged in was previously protected action. However, it contends in its s 418 application that this action has become unprotected in the context of the impending sale completion date, because the action no longer meets the threshold requirements for protection set out in s 409 of the Act. This section provides as follows:

‘(1) Employee claim action for a proposed enterprise agreement is industrial action that:

(a) is organised or engaged in for the purpose of supporting or advancing claims in relation to the agreement that are only about, or are reasonably believed to only be about, permitted matters; and

(b) is organised or engaged in, against an employer that will be covered by the agreement, by:

(i) a bargaining representative of an employee who will be covered by the agreement; or

(ii) an employee who is included in a group or groups of employees specified in a protected action ballot order for the industrial action; and

(c) meets the common requirements set out in Subdivision B; and

(d) meets the additional requirements set out in this section.’

[12] The company contends that the industrial action is no longer legitimate employee claim action, because it is not being organised and engaged in for the purpose of advancing claims in relation to an agreement, as required by s 409(1)(a), but instead for an extraneous purpose. Further, the company says that as a result of the imminent sale completion, employees will become employed by Nippon, and that therefore the industrial action is no longer being organised or engaged in against an employer that will be covered by the agreement (s 409(1)(b)).

[13] The AMWU contends that the industrial action in which employees are engaging remains protected industrial action for the purposes of Part 3-3 of the Act. It recognises that, if the regulatory approvals for the sale are forthcoming and employees’ date of commencement of employment at Nippon is fixed, there will come a point at which there is no realistic prospect of any new enterprise agreement with Orora being approved by the Commission in time for it to have any application to employees in their employment with Orora, and that industrial action taken against Orora from that point would not be protected. The union says however that this point has not yet been reached.

Consideration

[14] Section 409(1)(a) is concerned with the purpose of employee claim action. That purpose must be to support or advance claims in relation to the proposed agreement, and the claims must be about permitted matters. Section 172(1) relevantly defines ‘permitted matters’ partly by reference to the identity of the relevant employer, namely as ‘matters pertaining to the relationship between the employer that will be covered by the agreement and that employer’s employees who will be covered by the agreement.’

[15] It is quite clear that, in order for employee claim action to be protected, it must be organised or engaged in for the purpose of reaching an agreement with the employer of the employees in question. This goes hand in glove with the common requirement that a person organising or engaging in industrial action must be genuinely trying to reach an agreement (s 413(3)).

[16] The company contended that the current purpose of the union and employees in organising and engaging in industrial action so close to the sale completion date was not to advance bargaining for a new agreement with Orora, but to be ‘oppositional’, and to cause harm. It said that employees were aggrieved at the company, particularly because of its decision not to grant annual leave over the Christmas period in connection with the backlog of work caused by the industrial action.

[17] I do not accept the company’s contention that industrial action currently being engaged in by employees and organised by the AMWU lacks the requisite purpose or genuineness. I also reject the contention that the company is not ‘an employer that will be covered by the agreement’, as required by s 409(1)(b).

[18] The union and employees have been engaged in negotiations with the company for a new enterprise agreement to replace the 2015 Agreement for over six months. One of the matters that remains in dispute is the question of wage increases. According to Mr Griffiths’ evidence, employees’ current position is that they are seeking a 3.5% per annum increase over three years, whereas the company’s current offer is an increase of 1.6% per annum over three years. I accept Mr Griffiths’ evidence about what his members are striving to achieve through a new enterprise agreement with Orora. The company does not dispute that reaching an agreement has been the objective of employees and the union until recently. In my assessment, it remains their objective now, and the industrial action that is happening and being organised is still for the purpose of supporting or advancing their claims for that agreement.

[19] The company contended that the union and employees were reluctant to negotiate with Orora and preferred instead to negotiate with Nippon after the sale completion. It said that this indicated that the industrial action was no longer for the purpose of supporting or advancing claims in relation to a future agreement with Orora. However, the evidence does not establish that employees or the union have a preference for negotiating with Nippon. There is no basis to draw an inference that this is their preference. In order for employees to bargain with Nippon under the Act, negotiations will need to be reset. There will need to be a new notification time, a new log of claims and meetings with the new employer in genuine pursuit of a new agreement with that entity. A new protected action ballot order would need to be obtained before protected industrial action could be taken against Nippon. The conclusion of an enterprise agreement with Nippon, and associated wage increases for employees, faces the potential for delay associated with these processes.

[20] The company submitted that the union had not made any recent approaches to it or sought further negotiations. But this does not speak to lack of permissible purpose or genuineness on the part of the union or employees. Mr Griffiths gave evidence that the door to further discussions remained open, and that the union had participated in bargaining-related conciliation in the Commission on 23 December 2019. It is also relevant to note that the company submitted its proposed agreement to a vote of employees on 11 December 2019, and employees rejected it. There is no reason to conclude that it is up to employees or the union to make the next move in the negotiations. There is also no onus on the company in this regard. Further, to negotiate genuinely and take industrial action for the requisite ‘protected’ purpose does not require the making of concessions, nor does it preclude hard bargaining.

[21] The company pointed to Mr Aldous’ evidence that on 23 December 2019, during a discussion with delegates, it was indicated to him (it is not clear by whom) that, given employees’ current frame of mind, they were likely to say ‘no’ to any offer that was put to them by the company. However, evidence about the opinion of a delegate does not provide a sufficient foundation to conclude that the industrial action is not being taken for the required purpose and in furtherance of genuine efforts to reach agreement. There have been lengthy negotiations for a new enterprise agreement since the expiry of the 2015 Agreement. The parties remain apart on various issues, including wages. But there is no evidence to suggest that the current claims of the union and employees are not genuinely maintained, or that industrial action which the employer acknowledges was previously protected has become infected by an illegitimate retaliatory or other extraneous purpose.

[22] The company contended that there is not enough time for any enterprise agreement that might be struck now to be approved by the Commission prior to the sale completion on 31 January 2020 and for it to cover and apply to employees in their employment with Orora. It says that this fact must bear on the genuineness of the ‘purpose’ of employees and the union in continuing to take and organise industrial action. This contention is premised on a completion date of 31 January 2020. However, the evidence of Mr Aldous was that the sale remains subject to regulatory approval by the FIRB and the ACCC. The evidence does not establish how likely these approvals are. It was not suggested that the approvals are a foregone conclusion. Unless the approvals are given, the sale cannot be concluded.

[23] Further, it remains uncertain when employees will cease employment with Orora and commence employment with Nippon. The evidence of Mr Aldous was that, from 6 January 2020, Nippon has been writing to employees of Orora offering them employment with Nippon ‘from early 2020’. He said that the precise date of the commencement of their employment with Nippon would be the subject of further communication.

[24] Therefore, there remains an element of uncertainty about the sale and the future employment arrangements of relevant employees. The earliest date by which the sale completion and the transfer of employees can occur is 31 January 2020, but a later date is also possible, and it cannot be excluded that the sale might not proceed at all.

[25] In my opinion, even reckoning by the narrowest of the possible ‘windows’ for an agreement to be made, there is still time for employees and Orora to make an enterprise agreement, for that agreement to be approved by the Commission, and for it to cover and apply to employees in their employment with Orora.

[26] The voting requirements in Part 2-4 of the Act place certain minimum timing requirements on the making of new agreements. Section 180 requires particular steps to occur by the start of or during the ‘access period’ for the proposed agreement, which is defined in s 180(4) as ‘the 7-day period ending immediately before the start of the voting process referred to in s 181(1). This has been interpreted in Full Bench authority to mean the 7-day period ending on the day before the start of the vote. It contemplates a period of seven clear days. An application for the Commission to approve the agreement under s 185, together with the employer F17 and union F18 statutory declarations, could potentially be filed on the same day as a successful vote, setting out comprehensive information to allow the Commission to reach a speedy conclusion as to whether the approval requirements in the Act have been met. I accept that the applicant would probably need to request from the Commission special, prioritised consideration of the application to approve the agreement. I note also that an enterprise agreement commences to operate from 7 days after the agreement is approved by the Commission (s 54(1)). In my view, the commencement of operation of a new Orora enterprise agreement before 31 January 2020 remains possible. But not for long.

[27] If 31 January 2020 is ultimately confirmed as the date on which Orora employees will take up employment with Nippon, then with each passing day the protected status of the current industrial action will become more and more doubtful, as the possibility of any agreement ever applying to employees in their employment with Orora quickly diminishes, before finally disappearing.

[28] Nevertheless, as matters stand on 7 January 2020, the employees are employed by Orora. They are engaging in industrial action against the company in support of their claims for a proposed new enterprise agreement, and Orora will be covered by that agreement, if it is made. It is not known exactly when the employees will become employed by Nippon. The industrial action that is currently happening is for the purpose prescribed by s 409 and is being taken against the employer that will be covered by the proposed agreement.

[29] What of the ongoing action that is scheduled to take place in the near future? The notices of protected industrial action issued late last year provide for ongoing overtime bans and daily one-hour stoppages on each shift. Further action is therefore ‘threatened’. Is such future action unprotected?

[30] The union acknowledged at the hearing that there will come a time when the improbability of having any enterprise agreement approved by the Commission in time for it to actually apply to employees in their employment at Orora will render ongoing industrial action unprotected. It confirmed at the hearing that, if and when regulatory approvals are given, it will assess the protected status of any industrial action still being taken pursuant to its current notices and advise the employer of any ‘cut off’ date for such industrial action. In light of this, I do not consider that the union and employees are presently threatening to take unprotected industrial action. However, if the circumstances change, and the industrial action continues, the analysis may be very different, and this may prompt a further application by the company under s 418.

[31] I have concluded that the industrial action that is currently happening and being organised remains for the time being protected industrial action for the purposes of Part 3-3 of the Act. Further, it does not appear to me that unprotected industrial action is presently threatened, impending or probable.

[32] The company’s application under s 418 was in furtherance of an alternative position it advanced in respect of the present industrial circumstances. Its primary position is that the action is protected, and that I should suspend that protected action under s 425. I will determine that application in a separate decision.

[33] As I have concluded that the requirements for the making of an order under s 418 are not met at this time, the company’s application under s 418 is dismissed.

DEPUTY PRESIDENT

Appearances:

R. McMahon for the Orora Packaging Australia Pty Ltd

J. Gardner for the AMWU

Hearing details:

2020

Melbourne:

January 6

Printed by authority of the Commonwealth Government Printer

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