PPG Industries Australia Pty Ltd v United Voice

[2012] FWA 4586

[2012] FWA 4586

FAIR WORK AUSTRALIA

DECISION

Fair Work Act 2009
s.240—Bargaining dispute

s.229—Bargaining order

PPG Industries Australia Pty Ltd
v
United Voice
(B2012/512 and B2012/683)

COMMISSIONER GAY MELBOURNE, 14 JUNE 2012

Bargaining dispute and bargaining order.

[1] The following decision, now edited, was given at the conclusion of submissions on 10 May 2012 in Melbourne. The decision brought to a conclusion disputation over matters remaining in contention since prolonged industrial action by PPG employees concluded in May of 2011 with the signing of a comprehensive deed, the payment of a lump sum to each employee and a resumption of normal work. Most regrettably, and notwithstanding repeated efforts in conciliation, it proved necessary to hear the various applications which resulted in the decision which follows.

[2] Mr M Kunkel appeared for United Voice (the union) and Ms S Millen, solicitor, appeared by permission for PPG Industries Australia Pty Ltd (the company).

[3] “I have indicated to the parties during a short break that it is my intention to give a decision now in relation to all the issues that have been raised. I have indicated to the parties – and I will do this in a much shorter compass now – that I propose to deal in a very much truncated way with the issues. It seems to me in the parties’ interests to do that. So I am content to go ahead, even though for someone not closely connected with the case there may be some hieroglyphs involved in the decision but, of course, anyone who has been involved in this exercise since prior to May of 2011 will know that this has been the sort of dispute that you have had to live through to appreciate. But the various contentions and the fine distinctions and submissions that have been put have been closely attended to by each party advocating their case and also given close attention – I hope this has been demonstrably so – by Fair Work Australia.

[4] One should say something, however, to endeavour to make coherent what it is with which Fair Work Australia is presented. In brutally shortened terms; arising from negotiations and a dispute in early 2011 a deed was entered into by the parties. The deed is attached to Mr Welsh’s statement, Exhibit PPG1, marked TW-3. That deed deals in a very thorough way with an agreement reached between United Voice of the one part and PPG Industries Australia Pty Ltd of the other.

[5] The deed sets out in a very thoughtful way what the parties’ intention was in relation to future dealings, because the parties had come to an agreement which meant there was to be a finely wrought industrial consequence at Clayton in relation to the manufacture of paint -which has been performed by these very skilled employees for many years. The agreement was that existing employees were to be covered by essentially the existing agreement with some alterations dealt with in the deed and new employees at a certain time would have their terms and conditions of employment negotiated in a separate way, and the parties set out some things about that in the deed which is not necessarily dealt with by me now.

[6] The deed was thorough because it did – and I should really say that it set out how it was going to be that there would be a negotiation for a new enterprise agreement to cover the new employees. That was set out at clause 4 of the deed, and then at clause 3, which is much travelled in this case – perhaps 2 and 3 – there is content of the existing employees’ agreement provisions and they are very thorough. Then there is a provision which speaks of agreement coverage for the site for the future and really quite detailed legislation for many, many elements, whether it be nine-day fortnight or open sick leave or health care gaps, how coverage of the agreement is fairly chosen, breach, many general provisions and how the deed would be executed and all the things that one would expect.

[7] Nevertheless, there has resulted from what was intended to be a clarifying and unifying exercise a tremendous difficulty which is why it is that the parties are here. There is very substantial controversy about how, most particularly clause 3(b)(ii) of the deed is to operate. It is as well that I comment about this. What I am going to do is very briefly deal with the content of the existing employees’ agreement.

[8] Put simply, a draft agreement was, by the parties compact, to be prepared jointly to contain the issues desired by the parties to form the existing employees’ agreement. The terms of the existing employees’ agreement are known because the parties’ deed identifies them. I hope an accurate description, the EEA, the Existing Employees’ Agreement, comprises the current agreement, other than designated pay increases and a gross one-off payment, an updating of its terms to ensure plain English and with the particular caveat the parties’ intention in any redrafting was not to alter the meaning of the existing agreement unless agreed otherwise. Prepaid overtime was dealt with. There is no need to recite the detail. Weekly hours was dealt with. A genuine need definition for the purposes of prepaid overtime was dealt with, as was long service leave and redundancy entitlement.

[9] That was the agreement which, subject only to the drafting exercise to be carried out by the parties and finalisation of any drafting issues, was to be put to those employees to be covered by the Existing Employees’ Agreement, with the vital stipulation that it was further agreed for United Voice, by which one understands the body of the registered organisation, its officials and employees and the employee bargaining reps, whether notified officially or not who form part of the shop committee, delegate body or negotiating team, that that body, that assemblage, would take all reasonable steps to recommend and promote acceptance of the Existing Employees’ Agreement by those who were to be covered.

[10] I have taken that to mean that the United Voice body of officialdom and all the employees involved, existing employees involved, would wholeheartedly encourage the existing employees’ cohort, that is the current serving employees – and when you are not a current serving person and when you become a new employee is dealt with in the deed – those to be covered by the EEA, that is the existing employees’ agreement, to support the agreement by voting for its acceptance.

[11] I have been advised over a series of occasions that there are very serious 3(b)(iii) unresolved drafting questions as to the above matters and, without wanting to complicate the position, the question is said to arise as to the meaning of 3(b)(iii) itself as it deals with the finalisation of those disputed drafting issues to which I have referred. PPG contends that in its context the term – and I am going to read it very shortly - terms that are not agreed pursuant to 3(b)(iii) will be referred by the agreement, which is reflected by a proper understanding of the deed itself, to Fair Work Australia for arbitration pursuant to section 240.

[12] United Voice contends – and I do not try and put this in any particular way – that the proper understanding of the work to be done by the words cited is that such an arbitration could occur only where there existed, at the time, agreement of each party to refer such an unresolved drafting matter or question to Fair Work Australia for determination.

[13] It is very testing to deal with these issues without the exhibits – for those who do not have the papers in front of them. I will give 3(b) now so that its terms are apparent. Clause 3(b) follows the parties’ very detailed agreement for the site. This is an agreement, I might say, which legislates well into the future. It is not fixed for the current agreement. Legislating right over the horizon for, in one context, six years and, other contexts, for a longer period. So it is a very special agreement. 3(b)(iii), after the particular requirements of the new agreement, has some things to say, but in relation to the content of the agreement, it simply has to be recorded that the existing employees’ agreement, the EEA, will include expiry date, pay rules, the payment I have referred to and the same terms as the current EA, save that the terms will be updated for compliance with the Fair Work Act, at 4B, its terms will be updated to ensure they are in plain English, save that the parties do not intend to alter the meaning of the current EA unless otherwise agreed.

[14] Then I set out some of the points that I have given – there are, I think, four of them – two of them in respect of the paid overtime issue, long service leave and redundancy, finally. So then one gets to 3(b) and it follows all of the things that I have just said. It commences, accordingly:

1) PPG and United Voice will prepare a draft agreement and put that agreement to a vote of employees;

2) United Voice agreed, from the date of this deed, that it will not give PPG written notice of any industrial action in respect of the Existing Employees Agreement;

3) Any unresolved disputes in relation to the drafting of the existing employees’ agreement will, where all reasonable steps have been taken by the parties to resolve the dispute, be referred by agreement to Fair Work Australia for arbitration pursuant to section 240 of the Act. Arbitration will be confined to the specific drafting issues in dispute and will be determined in accordance with law and the terms of this deed.

4) United Voice will take all reasonable steps to recommend and promote acceptance of the existing employees’ agreement to the employees to be covered by that agreement between the date of this deed and the date that the existing employees’ agreement is made.

[15] It is true that there is a great deal of complaint about how the parties have since conducted themselves and I do not propose to have much to say about that. The jurisdiction is said to inhere in Fair Work Australia by virtue of the signed agreement set out at 3(b)(iii); that because all reasonable steps have been taken to resolve the dispute – and I can take notice of that, having been involved in not all of them, but, extensively in many of them - the unresolved disputes in relation to the drafting of the existing employees’ agreement will be referred by agreement to Fair Work Australia for arbitration pursuant to section 240.

[16] So, in the view of the company, that is a specific s.240(4) reference or referral and it provides for the necessary jurisdiction. United Voice take a slightly different approach by saying that their construction of the agreement will lead one to find that that is not so but this requires a tiny matter of agility. They present and participate in the determination of the issue itself. I have, without any reservation, accepted that that is so, that latter fact is so.

[17] The parties are aware that for Fair Work Australia in any form to decide by arbitration as to whether arbitration should occur inside an agreement or an instrument is not without its complexities. In considering the 3(b)(iii) imbroglio I would not want it thought that the exercise embarked upon presently is the determination by Fair Work Australia as presently constituted as to the question “Should, as a matter of policy, the non-agreed drafting issues of the negotiating parties ultimately – that is, after every reasonable effort has been expended by them to find common ground as to some drafting issue – be resolved by Fair Work Australia deciding as to the correct drafting required to capture the specific elements already agreed earlier or as to the common English conversion?” That is an imperfect effort to speak of plain English.

[18] The question is not whether Fair Work Australia considers arbitration a good, best, preferable or peachy way to resolve a drafting issue but, rather, whether the parties agreed themselves within 3(b)(iii), where a drafting issue arises, to finally come to a determination. I think it is very likely that Fair Work Australia, in approaching a question which turns even in part upon Fair Work Australia’s deliberation itself over the desirability of its arbitrating or the matter of conferral of the power to arbitrate, would see Fair Work Australia take a particularly cautious approach. In any event, that is the approach that I have sought to adopt.

[19] This is because there cannot be an impermissible extension of jurisdiction. As a matter of clear public policy, the arbitral power is confined and not to be usurped. The Act makes crystal clear that Fair Work Australia – and indeed is didactic in doing so – must not deal with a matter unless expressly authorised to do so (see s.595(1), (3) and (5)). Equally, of course, one has an obligation to exercise the jurisdiction should it be proper to do so where, as is frequently the case, jurisdictional objections are mounted; very often, but not exclusively, by employers. Care is taken to ensure jurisdiction exists. It is not an exercise of finding jurisdiction where one might wish it exists and even when one, in the view of the justice of a case, might require that it exists. It is a function of whether it does exist as a matter of objective fact.

[20] It is true also that the parties must honour their bargaining obligations and Fair Work Australia must, on appropriate occasions, ensure they do. This, in my view, is one of those occasions because all those considerations arise in some part.

[21] I have accepted in relation to 3(b)(iii) that United Voice is right when it speaks of there being a divergence of views capable of being held by a party in good conscience or legitimately or reasonably or rationally. That position is not compatible with that advanced by the company, because for the company, 3(b)(iii) admits of only one interpretation and that is that the term “by agreement” within 3(b)(iii) means that agreement has already been conferred.

[22] The company contention is that, applying the normal canons of construction, looking at the text in question and looking at its purpose and context and having regard for the evidence of Mr Welsh, there was an agreement, that in a confined way there should be a conclusive, determinative function to be performed by Fair Work Australia. That limited role was where there was an unresolved dispute in relation to drafting of the EEA, and even then only when all reasonable steps had been taken by the parties to resolve the dispute. The parties went on to further confine what it was they sought to capture in that subclause by saying that – perhaps it should have said the arbitration will be confined to the specific drafting issues in dispute and will be determined in accordance with law and terms of the deed, as I did mention a few minutes ago.

[23] Reviewing this issue, given that I think that there is an arguable case to be made in opposition to the position advanced by the company, it is necessary to be ever mindful of what the parties were doing. This is the purposive approach. They were attempting to bring to an end the very serious industrial dispute that had occurred in the first half of last year at the plant.

[24] I have accepted the evidence of Mr Welsh in relation to how it is that arbitration came to be included in 3(b)(iii). I think it is of absolutely no consequence who it was who drafted it but it was drafted and presented in this case to the other side, one expects to Mr Redford. I do not know if there is unanimous evidence on this but I have taken it that there was great care by the principal players to examine what it is that had been set out. Perhaps insufficient care was taken. In my view, there can be no doubt that 3(b)(iii) contains an arbitration capacity and I have found that the term “by agreement” indicates the nature of the reference and is necessary – it could have been put in different terms of course; (will it had), but to make quite clear that it conforms with section 240.

[25] A reason that supports my holding that view is that there is nothing else in the agreement which deals with or takes up what else would happen in the event that there were loose threads, or matters that somehow just flopped off, that were not capable of being dealt with exhaustively. Accepting the union’s contention, it is likely that and one expects – this is speculative but, thinking it through, what does it mean? It would be likely that some aspects of this agreement in respect of the drafting, confined to the drafting role, would be the subject of arbitration. It may be that some would not because, on the union’s contention, permission would be withheld. That is the whole crux of the union’s position.

[26] If that is right one looks to see, well, how did the parties choose to take up such an issue? I do not accept readily a construction of the agreement which would have that happen, that is, that there could be some basket of issues which, after all this is done, could somehow not have been dealt with by those parties to the deed, because I think the deed reflects the parties taking up the issues and taking hold of them effectively so to bring the dispute to an end. Now, there is a lot more that could be said about various aspects of the construction but they are the predominant reasons upon which my conclusion is based.

[27] It then becomes a question of applying aspects of contention which arose some five months later, I do not know, I am not prosecuting, but well after the deed with its close particularisation had been concluded. Without a shred of rancor, the fact is that United Voice have said these issues – and they are the issues to which I now turn – were required to be resolved under the agreement. Of course, one notes that that doesn’t, in the union’s submissions, – or did not until I made that determination a few moments ago – involve arbitration. The company has a diametrically opposed view about that but, notwithstanding that, there have been very close and detailed negotiations as to those late, emerging issues.

[28] There cannot be any doubt, none at all, that really earnest efforts were made on several occasions at Fair Work Australia and possibly elsewhere, and a lot of time went by to try and hack out an agreement. Regrettably, that has not occurred and I certainly do not say anything more about that, because I put out of my mind any considerations that might attach to the unsuccessful conciliation. I mention it because this sequence of events is not complete unless one has that in one’s mind, but it plays no operative role in the conclusion of the matters that I have to deal with.

[29] How then does one conclude as to the paint scheme, the bonus scheme and the dispute settlement provisions? I am going to do this now as quickly as I can. I do not want to be repetitive, but I am mindful at every stage in the considerations which follow that the parties’ agreement is very clear that the existing employees’ agreement has to have – and I quote – “the same terms as the current enterprise agreement” with the exceptions that are set out at 3(a)(iv).

[30] The arbitral role is confined to 3(a)(iv)(B). The parties imposed upon themselves an obligation that the terms of the current enterprise agreement essentially roll over, but with the terms to be updated to ensure that they are in plain English, except the parties do not intend to alter the meaning of the current enterprise agreement, unless they otherwise agree. So that is the prism, or the lens through which 3(b)(iii) operates, that any unresolved disputes in relation to the drafting of the existing employees’ agreement will be referred by agreement.

[31] That requires problems with the plain English to be dealt with. So, if there is a snag about something because it is being moved into plain English, from something to the every-day language, it will be resolved by Fair Work Australia. It really does not get too far down into the parties’ treatment of the paint scheme, the bonus scheme and the dispute settlement procedure because the company of course does not agree that they come within that 3(b)(iii) door; they are not capable of being considered. It is a very strong argument because I am simply not aware of any failed drafting attempts where the parties have attempted to put those things into plain English.

[32] The dispute settlement procedure is perhaps the best one to start because that is wholly and solely a provision in the existing agreement. I am not aware of any difficulty that arises as to one version, which is the existing version otherwise mandated by the agreement, or a plain English version. That is not to be critical of either the union or of PPG. I would not take any step to arbitrate an element of the dispute settlement procedure because I cannot see that there is an unresolved dispute in relation to the drafting which relates to plain English, but it may be that that is too narrow a view. To take a slightly expansive view, 3(b)(iii) could have, as a reasonable scope, that any dispute as to how the drafting of the existing employees’ agreement brings it within 3(b)(iii).

[33] The union argument is that the present dispute settlement procedure does not provide for an arbitral role and can be varied by me. I must say that I cannot see any basis for doing that, because there is not any drafting difficulty, there is no uncertainty in relation to the current provision and it would be to change the provision fundamentally were one to provide for an arbitral role. As the union have sensibly and generously conceded, or acknowledged, it would be entirely contrary to the whole range of Full Benches, starting with Ampol Refineries (NSW) Pty Ltd v AIMPE Print P8620 per Giudice P, McIntyre VP and Raffaelli C, 9 February 1998 and then under the new Act revisited and re-argued before, as I say, several Presidential Full Benches. It is not a submission that can be accepted.

[34] So that can be understood, the authority is quite plain, that for enterprise agreements to be approved and regarded as satisfactory and meeting the statutory test and the obligations of the Fair Work Act, they (each) have to have a dispute settlement procedure, it has to have certain characteristics, and one of them is not that a dispute, even if the parties are genuinely trying to reach agreement and agreement eludes them in conciliation, must ultimately be determined and in that way must be finally settled. It is that obstacle that Mr Kunkel faced which required him to make the acknowledgment that he did.

[35] As to the bonus scheme, to change the obligation from “consultation” to “agreement” is a fundamental alteration. It means the existing provision would have a completely different meaning. Whatever anyone thinks about that, it is an organic change to come to such a position. To make such a change, I think, would be to offend an expressly stipulated term, and that of course means that one runs foul of the deed because the deed does not permit that. In any event I would not do so.

[36] The final matter, other than the further orders that are sought by PPG, is the paint issue. I must say I find this a difficult issue and I am not reluctant to acknowledge that. It is not, in my view, a term or condition of employment which is provided for between ICI Dulux Clayton, PPG Industries Australia Pty Ltd and the LHMU. It is not possible to find, even at its highest, that the paint scheme, the staff benefit which is accorded to employees of PPG by such long practice, is incorporated into the contract of employment. There is an entire insufficiency of evidence for me to find that it is a contractual term; that there would be a breach in the event of a unilateral change by the company.

[37] One knows in fact, that the scheme has been changed. Commonsense says it will be changed from time to time. Are there legal rights in relation to the paint scheme inhering in the parties, particularly in the employees, or if the construction of clause 6 of the existing agreement is given the meaning sought by United Voice, conferred upon the LHMU or United Voice? I accept the submissions – I will not now repeat them all – of Ms Millen, in her closely argued case on this point, as to why it is that the paint scheme is not an agreement and does not have the characteristics of an agreement in the necessary fashion.

[38] In agreeing with that position of the company (that the paint discount scheme does not reflect a meeting of the minds, that it is not an agreement intended to have binding force) in accepting that, it comes very close indeed, in my view, to a custom and practice enjoyed by the employees and having a real value to them, but I am mindful that it can and has been changed. While there no doubt is consultation about it, its terms do not require agreement and is a commercial benefit available to PPG to give the employees in the same way as the concessional travel benefit might benefit people or accommodation benefits might affect, sometimes with a high degree of specificity in the airline operating industry or employees in the hotel industry, but, if some of those benefits change for some reason there would not be an action available to the employee for breach. I cannot see that there would be damages. It is not of that nature.

[39] So that is my finding as to the paint scheme. But I do believe and my understanding is, that there has been close consultation in the past and that that should continue. I would not arbitrate to include the old scheme or the new scheme that is sought to be introduced. They are matters for the company to deal with its employees as it accords what is an important staff benefit.

[40] PPG asked for bargaining orders against Mr Kunkel and also against United Voice generally. I accept Mr Kunkel’s advocacy today with the negotiating team of the employee representatives who are mentioned in these documents. I accept it unreservedly that he presents as genuinely as do Ms Millen, Mr Doyle, Mr Dragwidge and Mr Vidovic. There has been disagreement. It has been brought to a conclusion by the work of the parties, that is the deed of the parties, in the fashion that I have found is agreed.

[41] It remains now for the final form of the agreement, the encapsulation of the agreement, unless there is something that requires further treatment, to be conveniently published, there to be sufficient copies for everyone to have a copy, and for United Voice to present that to its membership for their consideration. The deed is very generous about how it is to be done, in the sense that it sets out that the negotiating teams will support and advance the acceptance of the agreement.

[42] As I have earlier indicated, I will make no order against Mr Kunkel. I have no doubt that he will give full effect to his obligation under the deed. It seems to me however that it would be a very good idea for Mr Redford, because he was so personally involved in the earlier part, to also be involved in the conclusion of the agreement. I do not make that as an order and I do not make it as a recommendation. It seems to me to have a lot of industrial commonsense behind it, because in the same way the shop committee was there, so was Mr Redford through what was a very difficult period and much of which – I do not know whether all of which, Mr Kunkel was present. That concludes my reasons.

[43] I am going to ask you, Mr Kunkel, is there any other impediment to the publication of the material to go to a vote of employees?

[44] MR KUNKEL: Commissioner, we say for the reasons we spoke about earlier today that there are still other outstanding drafting issues which the parties hope to resolve next Friday, but any such move to move into a consultation phase about the agreement that has some (indistinct) terms you’ve found shouldn’t be in the agreement would be premature in the union’s submission.

[45] THE COMMISSIONER: All right. I don’t know whether you want to add anything to that, Ms Millen. That seems to be reasonable. Well, Mr Kunkel, you and Ms Millen know – and Mr Dragwidge and Mr Vidovic and Mr Doyle and the delegates – that if there is some aspect of those drafting tasks that requires further attention and the parties are unable to reach agreement, then in the first instance there’s an obligation on the parties, in my view, even though the draft doesn’t actually say this, to bring them in so that they can be the subject of treatment and then of course there is the resolution of those in the way that we’re all so aware. That concludes this proceeding. I now adjourn.”

COMMISSIONER

Appearances:

M Kunkel for United Voice.

S Millen, solicitor, appeared by permission for PPG Industries Australia Pty Ltd.

Hearing details:

2012.
Melbourne:
April 13;
May 10.

Printed by authority of the Commonwealth Government Printer

<Price code C, PR524527>