Philip Skein v VIP Electrical Pty Ltd

[2013] FWC 7612

[2013] FWC 7612

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.739—Dispute resolution

Philip Skein
v
VIP Electrical Pty Ltd
(C2013/5388)

SENIOR DEPUTY PRESIDENT O’CALLAGHAN ADELAIDE, 30 SEPTEMBER 2013

Application to deal with a dispute - jurisdiction to arbitrate under the terms of an enterprise agreement.

[1] On 1 August 2013 Mr Skein lodged an application pursuant to s.739 of the Fair Work Act 2009 (the FW Act) with respect to a dispute with VIP Electrical Pty Ltd (VIP) about the operation of the VIP Electrical Enterprise Agreement 2010 (the Agreement).

[2] Mr Skein's application was the subject of an extensive conciliation conference on 16 August 2013. This conference concluded with the development of a settlement proposal which Mr Skein agreed to consider and obtain advice on before a further conference on 29 August 2013. At the conclusion of this initial conference I issued a Statement which summarised the matters in dispute in the following terms:

The brief background to the matter is that Mr Skein is pursuing workers compensation and/or disability insurance payments for a continuing workplace absence from November 2012. The specific matter raised in this dispute notification goes to his assertion that clause 36 of the Agreement establishes payment obligations directly applicable to VIP. The VIP position is that clause 36 refers to an insurance obligation.

The parties have identified that two distinct approaches are possible in this matter.

Firstly, Mr Skein could elect to pursue this dispute. This would initially require agreement or determination of whether the matter could be arbitrated. Depending on this conclusion, the matter may be the subject of an arbitration.

Secondly, Mr Skein could elect to pursue his current workers compensation claim, possibly with the assistance of the WorkCover Ombudsman. He could simultaneously engage the dispute resolution provisions of the insurance contract to press for payment of insurance monies. VIP has indicated it would support his claim in this regard.

Mr Skein is going to seek advice on these options.

VIP has agreed that, by close of business 23 August 2013, it will advise Mr Skein of its position about:

1. whether it considers Mr Skein has any outstanding leave entitlements and, if so, whether and when those payments would be made; and

2. its preparedness to confirm that Mr Skein’s employment would not be terminated before either a nominated date, and/or event.” 1

[3] Consistent with the position it put at this conference, on 21 August 2013, VIP confirmed the total leave amounts available to Mr Skein and agreed to pay him those entitlements. Secondly, VIP agreed to defer any decision to terminate Mr Skein’s employment until the 29 August 2013 conference. Finally, VIP indicated it would support Mr Skein's claim for insurance payments from its nominated insurer.

[4] On 27 August 2013 Mr Skein confirmed that, whilst he was pursuing his insurance claim, he also sought that the Fair Work Commission (FWC) arbitrate the dispute he had with VIP about the operation of clause 36 of the Agreement.

[5] The matter was the subject of a further conference on 29 August 2013. At this conference the issue in dispute was defined as "Whether Clause 36 of the Agreement establishes specific and direct payment obligations on VIP or whether this clause refers to an insurance obligation."

[6] The VIP position was that the FWC could only arbitrate the matter under the terms of the Agreement dispute resolution process if both parties agreed to this. VIP advised that it did not so agree.

[7] I advised the parties that I would determine this initial jurisdictional issue before considering the matter in dispute and would do so on the basis of material to be provided to me by nominated dates.

[8] I have subsequently received written submissions from both parties, together with written submissions in reply. Before summarising these provisions I have set out the quite substantial dispute resolution provisions in Clause 8 of the Agreement.

“8. Dispute Settlement Procedure

The following procedure for the avoidance or resolution of disputes shall apply. The mechanism and procedures for resolving industrial disputes will include, but not be limited to the following:

• The employee/s concerned will first meet and confer with their immediate supervisor. The employee/s may appoint another person to act on their behalf and where a representative is involved he/she shall be allowed the necessary time during working hours to interview the employees and the supervisor.

• If the matter is not resolved at such a meeting, the parties will arrange further discussions involving more senior management as appropriate. The employer may also invite into the discussions an officer of the employer Organisation to which the employer belongs.

• If the matter remains unresolved the matter the parties shall jointly or individually refer the matter to the Australian Industrial Relations Commission, or its successor, for assistance in resolving the matter.

The party with the grievance must notify the other party at the earliest opportunity of the problem. Throughout all stages of the procedure all relevant facts must be clearly identified and recorded.

Sensible time limits must be allowed for completion of the various stages of discussion. However, the parties must co-operate to ensure that the dispute resolution procedures are carried out as quickly as possible.

While the parties are attempting to resolve the matter the parties will continue to work in accordance with this agreement and their contract of employment, unless the employee has a reasonable concern about an imminent risk to his or her health or safety. Subject to relevant provisions of the Occupational Health, Safety and Welfare Act 1986 as amended even if the employee has a reasonable concern about an imminent risk to his or her health or safety, the employee must not unreasonably fail to comply with a direction by the company to perform other available work, whether at the same enterprise of another enterprise, that is safe and appropriate for the employee to perform.

While these processes are being followed the parties shall be committed to avoid stoppages of work; lockouts or other bans or limitations on the performance of work and the company shall ensure that all practices applied during the operation of the procedure are in accordance with safe working practices and consistent with established custom and practice at the enterprise.

Conciliation regarding disputes and potential disputes arising out of the operation of this clause will be dealt with by the Australian Industrial Relations Commission, or its successor, or as otherwise agreed between the parties.

In the event that the parties agree to seek arbitration, the Arbitrator's decision shall be binding on all parties

The parties agree that one of the prime aims of this Agreement is to eliminate lost time in the event of a dispute. Further that it is in the best interest of both parties to achieve prompt resolution of disputes.

The most effective procedure to achieve this is for the responsibility for resolution to remain as close to the source as possible. It is with uppermost in mind that the parties agree to strictly adhere to the dispute settlement procedure as follows: -

• In the first instance of a dispute the employee and direct supervisor shall make every effort to genuinely resolve any matter prior to the involvement of a third party.

• Work shall continue without interruption whilst the employee discusses the dispute with the employer's site representative and both parties shall attempt to reach agreement.

• A dispute shall not be referred to a higher level until a genuine attempt to resolve the matter has been made between the above parties.

• Either party has the option to seek third party assistance prior to the involvement of the Australian Industrial Relations Commission (AIRC) or its successor.

• Failing a satisfactory settlement being achieved from the above process, either party may refer the dispute to the AIRC or its successor. Where such industrial disputes are brought before the AIRC, or its successor, conciliation is the preferred resolution process. However, if parties agree to seek arbitration, the Arbitrator's decision made shall be binding on all parties.

Whilst subject to this procedure the status quo occurring immediately prior to the dispute shall remain until the matter is resolved

All employees agree to avoid becoming involved in any disputes that do not directly concern the company.”

(the emphasis is mine)

[9] Mr Skein's position is that clause 8 defines the required procedure for the settlement of the matter in that "in signing off on this Enterprise Agreement both parties have agreed they will seek assistance from the FWC (whether jointly or individually), to resolve such disputes". 2

[10] Mr Skein’s submission continued, to state:

“I believe that the reason for the compulsory action of both parties seeking assistance from the FWC is for the purpose of allowing the FWC to resolve the dispute. Both parties agreed to seek such action if necessary, by virtue of agreeing to, and signing off on the Enterprise Agreement, therefore allowing the FWC to make a decision regarding this matter that would be binding on both parties.” 3

[11] Mr Skein continued, to state:

“.... I also believe that by the act of signing off on the Enterprise Agreement, both parties have already agreed to and accepted the process of allowing the ‘Fair Work Commission’ to resolve an unresolved dispute (which of course includes this current dispute). Logically this would mean that the FWC does have jurisdiction to use whatever means it sees fit to resolve this dispute (including arbitration) and therefore any decision by the FWC would be binding on both parties.” 4

[12] Mr Skein asserted that the requirement in clause 8 of the both parties to cooperate to ensure the dispute resolution process was carried out extended to ensuring an arbitrated outcome was pursued if the matter could not be agreed. 5

[13] Finally, Mr Skein asserted that an agreement to seek FWC assistance essentially created a de facto agreement to arbitration. 6

[14] Accordingly, Mr Skein argued that FWC had the authority and the imperative to arbitrate the matter in dispute.

[15] The VIP position was that section 739(4) of the FW Act establishes that the FWC capacity to arbitrate the matter is dependent on the terms of the relevant Agreement. Further, that clause 8 of this Agreement required that the parties "agree to seek arbitration". 7

[16] Further, that the referral of the matter for arbitration was optional. VIP referred me to various decisions of the Fair Work Commission in support of its position that FWC did not have the jurisdiction to arbitrate the matter.

Findings

[17] Clause 2 of the Agreement clearly establishes that the Agreement operates to the exclusion of any Award provisions that would otherwise apply.

[18] Section 595 states:

“595 FWC’s power to deal with disputes

(1) The FWC may deal with a dispute only if the FWC is expressly authorised to do so under or in accordance with another provision of this Act.

(2) The FWC may deal with a dispute (other than by arbitration) as it considers appropriate, including in the following ways:

(a) by mediation or conciliation;

(b) by making a recommendation or expressing an opinion.

(3) The FWC may deal with a dispute by arbitration (including by making any orders it considers appropriate) only if the FWC is expressly authorised to do so under or in accordance with another provision of this Act.

Example: Parties may consent to the FWC arbitrating a bargaining dispute (see subsection 240(4)).

(4) In dealing with a dispute, the FWC may exercise any powers it has under this Subdivision.

Example: The FWC could direct a person to attend a conference under section 592.

(5) To avoid doubt, the FWC must not exercise any of the powers referred to in subsection (2) or (3) in relation to a matter before the FWC except as authorised by this section.”

[19] Sections 738 and 739 state:

“738 Application of this Division

This Division applies if:

(a) a modern award includes a term that provides a procedure for dealing with disputes, including a term in accordance with section 146; or

(b) an enterprise agreement includes a term that provides a procedure for dealing with disputes, including a term referred to in subsection 186(6); or

(c) a contract of employment or other written agreement includes a term that provides a procedure for dealing with disputes between the employer and the employee, to the extent that the dispute is about any matters in relation to the National Employment Standards or a safety net contractual entitlement; or

(d) a determination under the Public Service Act 1999 includes a term that provides a procedure for dealing with disputes arising under the determination or in relation to the National Employment Standards.

739 Disputes dealt with by the FWC

(1) This section applies if a term referred to in section 738 requires or allows the FWC to deal with a dispute.

(2) The FWC must not deal with a dispute to the extent that the dispute is about whether an employer had reasonable business grounds under subsection 65(5) or 76(4), unless:

(a) the parties have agreed in a contract of employment, enterprise agreement or other written agreement to the FWC dealing with the matter; or

(b) a determination under the Public Service Act 1999 authorises the FWC to deal with the matter.

Note: This does not prevent the FWC from dealing with a dispute relating to a term of an enterprise agreement that has the same (or substantially the same) effect as subsection 65(5) or 76(4) (see also subsection 55(5)).

(3) In dealing with a dispute, the FWC must not exercise any powers limited by the term.

(4) If, in accordance with the term, the parties have agreed that the FWC may arbitrate (however described) the dispute, the FWC may do so.

Note: The FWC may also deal with a dispute by mediation or conciliation, or by making a recommendation or expressing an opinion (see subsection 595(2)).

(5) Despite subsection (4), the FWC must not make a decision that is inconsistent with this Act, or a fair work instrument that applies to the parties.

(6) The FWC may deal with a dispute only on application by a party to the dispute.”

[20] It is clear from section 739(3) and (4), that the capacity for the FWC to arbitrate a dispute pursuant to an agreement is dependent on the provisions of the dispute resolution process in the agreement.

[21] In this Agreement the dispute resolution provisions establish, firstly, that an unresolved matter shall be referred to the FWC "for assistance in resolving the matter". In the context of the overall clause, that represents a statement of purpose or intent. It does not establish specific powers.

[22] The Agreement dispute resolution provisions establish obligations on the parties in terms of their respective behaviours while a matter is in dispute. It establishes a specific power available to the FWC to conciliate but is then equally specific in placing a condition precedent on any power to arbitrate by stating "In the event that the parties agree to seek arbitration".

[23] Clause 8 is then even more specific in saying:

“— Failing a satisfactory settlement being achieved from the above process, either party may refer the dispute to the AIRC or its successor. Where such industrial disputes are brought before the AIRC, or its successor, conciliation is the preferred resolution process. However, if parties agree to seek arbitration, the Arbitrator's decision made shall be binding on all parties.”

[24] On its plain words, the clause must be interpreted as establishing the jurisdiction to conciliate with subsequent agreement by both parties to seek arbitration as an essential precursor to any jurisdiction to that effect. In this respect the clause must be differentiated from other dispute resolution provisions which establish an unfettered or even a sequential jurisdiction for arbitration by the FWC.

[25] VIP has not agreed to arbitration and consequently the jurisdiction of the FWC to arbitrate the matter in dispute is not established.

[26] This leaves Mr Skein’s dispute unresolved. Given the extent of the issues already addressed in the conciliation process there may not be any real benefit to be gained from a further conciliation conference. Nevertheless, I will keep the Commission’s file in the matter open until 13 October 2013. Absent a request for a further conciliation conference the file will be closed shortly after that date.

 1   Statement, 16 August 2013, paras [2] - [7]

 2   Mr Skein’s submission of 11 September 2013

 3   Ibid

 4   Ibid

 5   Mr Skein’s submissions of 23 September 2013

 6   Ibid

 7   VIP submission, 13 September 2013

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