Svitzer Australia Pty Ltd v Australian Institute of Marine and Power Engineers, The

[2015] FWC 7137

[2015] FWC 7137

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.739 - Application to deal with a dispute

Svitzer Australia Pty Ltd
v
Australian Institute of Marine and Power Engineers, The
(C2015/5189)

COMMISSIONER CAMBRIDGE SYDNEY, 16 OCTOBER 2015

Dispute settlement procedure - particular terms of enterprise agreement providing for determination of reasonableness of employer’s proposals to address changed circumstances -dispute regarding compliance with consultation requirements of enterprise agreement - dispute as to crewing and rostering arrangements of tug crews - application granted - terms of any Order to be determined if required.

[1] This Decision is made in respect of an application that was taken under section 739 of the Fair Work Act 2009 (the Act) for the Fair Work Commission (the Commission) to deal with a dispute in accordance with a Dispute Settlement Procedure (DSP). The application was lodged at Sydney on 21 August 2015, and it was made by Svitzer Australia Pty Ltd (Svitzer or the employer), and taken against the Australian Institute of Marine and Power Engineers (AIMPE) and the Australian Maritime Officers Union (AMOU) and the Maritime Union of Australia (MUA). The application was subsequently amended to delete the AMOU and the MUA as respondents and it was confined to disputation with the AIMPE.

[2] The Commission is empowered to deal with this matter by virtue of a DSP which is found at clause 10 of the SVITZER Australia Pty Limited and AIMPE Towage Enterprise Agreement 2013 (the Agreement). Additionally, clause 13 of the Agreement provides for the Commission to determine the subject matter of the dispute in this instance.

[3] The dispute was unable to be resolved by conciliation and the matter has proceeded to arbitration involving a Hearing conducted in Sydney on 23 and 25 September 2015. Svitzer was granted permission pursuant to s.596 of the Act, to be represented by Mr M Easton, of Counsel, who introduced evidence from a total of four witnesses.

[4] The AIMPE was also granted permission to be represented by Mr W McNally, solicitor, who adduced evidence from four witnesses.

Background

[5] The question in dispute in this instance has arisen from a significant expansion of the employer’s business operation involving the provision of towage services in the ports of Sydney, Melbourne and Newcastle (the three ports). On 21 July 2015, Svitzer announced that it had entered into a Service Level Agreement (SLA) with Smit Lamnalco Pty Ltd (Smit) which would essentially mean that from 1 September 2015, Svitzer would take over all towage services previously undertaken by Smit in the three ports.

[6] The SLA meant that on and from 1 September 2015, Svitzer would be the sole provider of towage services in the three ports. The significant expansion of Svitzer’s towage services in the three ports involved an increase in the number of tugs and associated tug crews required to undertake all towage services including those that had previously been undertaken by Smit.

[7] The work of tug crews employed by Svitzer in, inter alia, the three ports is governed by three separate but similar enterprise agreements made between Svitzer and each of the AIMPE, the AMOU and the MUA. Each of these enterprise agreements contains terms which specify consultation arrangements that are to apply in circumstances where there are significant changes to port operations. It should also be noted that the crew of each tug comprises three individuals, a tug officer or master (AMOU), a tug engineer (AIMPE) and a tug general purpose hand (MUA).

[8] Following the announcement of the SLA on 21 July, Svitzer engaged in consultations with the AIMPE, the AMOU and the MUA about the proposed rearrangements that would apply in respect to the significant expansion of towage work in the three ports. The proposed rearrangements essentially involved the number of tugs and tug crew rostering arrangements that would apply to those tugs, as part of the expanded operations in each of the three ports. These consultations ultimately led to agreement being reached between Svitzer and the AMOU and the MUA. However, agreement was not reached with the AIMPE.

[9] In the absence of agreement with the AIMPE, Svitzer has activated the DSP in conjunction with other terms of the Agreement which provide for the rearrangements arising from the expansion of the employer’s business to be the subject of determination by the Commission as to whether these arrangements are reasonable. Consequently, the Commission has been required to examine the rearranged tug operations and associated tug crew rostering arrangements applying in the three ports, and make a determination as to the reasonableness of the changed circumstances.

The Svitzer Case

[10] At the Hearing, Mr Easton who appeared on behalf of Svitzer, made submissions which elaborated upon written outlines of submissions which had been filed on behalf of the employer.

[11] Mr Easton submitted that the central task for the Commission was to decide whether the proposal put by Svitzer to accommodate the expanded operations in the three ports was reasonable. Mr Easton urged that the Commission should find that Svitzer’s proposal was reasonable, and that the Orders proposed should be made so as to give effect to the rearrangements in accordance with clause 13 of the Agreement.

[12] The submissions made by Mr Easton also rejected the assertion made by AIMPE that the matter had not come before the Commission properly and in accordance with the consultation requirements of the relevant terms of the Agreement. Mr Easton submitted that any criticism of alleged inadequate consultation with AIMPE only arose because of a strategic decision taken by that organisation to refuse to participate in certain meetings. In this regard, Mr Easton said that it was an entirely unsatisfactory situation where the AIMPE actively sat on its own hands for about three weeks and refused to participate in the consultation process.

[13] The submissions of Mr Easton criticised the approach taken by the AIMPE as he said it ultimately led to a loss of opportunity for its members to pursue enhanced early retirement packages as part of the restructuring associated with the expansion of towage operations in the three ports. According to the submissions of Mr Easton, the commercial arrangement that was made between Svitzer and Smit provided for funds to enhance voluntary redundancy packages however those opportunities had now ceased to exist.

[14] In further submissions, Mr Easton articulated the consequential alterations that would apply in respect to Port Operating Procedures (POPs). Mr Easton acknowledged that there was a requirement for changes to be made to the POPs which applied in respect of each of the three ports. Mr Easton submitted that the changes that would be required to the respective POPs in each port involved port specific issues that logically would need to be addressed following what Svitzer hoped would be a finding of the Commission that the rearrangements satisfied the reasonableness test required by clause 13 of the Agreement.

[15] Mr Easton made further submissions which examined evidence provided in respect of the particular rearrangements that were to apply in each of the three ports. In each case, Mr Easton said that the proposal for tug operations and associated tug crew rostering was reasonable. Mr Easton made submissions which rejected criticism of particular aspects of crewing configuration and rostering arrangements. In particular, Mr Easton rejected criticism of what was described as split shift rostering arrangements, as he said those particular arrangements had operated in Sydney for some time.

[16] Mr Easton also submitted that issues such as fatigue management and emergency procedures would be properly and more appropriately addressed by the port specific discussions that would occur as part of the requirement to establish new POPs for each port. Mr Easton said that in many respects the evidence of opposition from various of the AIMPE delegates to the rearranged tug operations and tug crew rostering, represented a preference for an alternative rather than a basis upon which to establish any unreasonableness.

[17] In summary, Mr Easton submitted that the rearrangements that Svitzer had proposed as the means to address the expanded towage operation in each of the three ports was reasonable. Mr Easton acknowledged that the fact that Svitzer had reached agreement with both the AMOU and the MUA in respect of the rearrangements did not establish reasonableness. However, Mr Easton submitted that the agreement with the other Unions was a factor that the Commission could have appropriate regard for when examining the evidence of the particular circumstances of the rearrangements as would apply in each of the three ports. Mr Easton urged that the Commission make a determination that the rearrangements proposed by Svitzer were reasonable and that the Orders as sought should be made.

The AIMPE Case

[18] Mr W McNally appeared on behalf of the AIMPE at the Hearing and he relied upon written submissions which had been filed on behalf of the AIMPE. Mr McNally made further oral submissions in elaboration of the earlier filed material and in response to the submissions made on behalf of Svitzer.

[19] The submissions made by Mr McNally referred to Marine Order 28 which was made pursuant to the Navigation Act 2012. Mr McNally submitted that the rearrangements proposed by Svitzer which involved the working of split shifts would contravene the minimum hours of rest prescribed by clause 14 of Marine Order 28. The submissions made by Mr McNally asserted that the introduction of split shifts was a very exceptional alteration to the established arrangements that applied in Newcastle and Melbourne, notwithstanding that apparently such arrangements had operated in Sydney. Mr McNally submitted that extending what had happened in respect to split shifts in Sydney, to Newcastle and Melbourne could not conceivably be found to be reasonable.

[20] The submissions made by Mr McNally included severe criticism of what he asserted to be the lack of adequate consultation as required by various terms of the Agreement. In particular the submissions made by Mr McNally rejected that the Commission was appropriately seized of power to determine the reasonableness question in circumstances where the consultation requirements of the Agreement had not been satisfied in respect to AIMPE.

[21] Mr McNally submitted that in circumstances where Svitzer had reached agreement with the AMOU and the MUA, and refused to negotiate with the AIMPE as required by clause 10 of the Agreement, the Commission could not proceed to arbitrate the issue of reasonableness, particularly having regard to the fact that the Orders sought did not reflect the heads of agreement reached with the other Unions. Mr McNally urged the Commission to refuse the Orders that were sought by Svitzer and to require the conciliation process to be fully exhausted.

[22] Mr McNally made further submissions which challenged the assertion that the rearrangements proposed by Svitzer were reasonable. In particular, Mr McNally made submissions which stressed that the expansion of the split shift arrangements which would require individuals to go to work twice on one day was a requirement that was totally unreasonable. Mr McNally submitted that in addition to the unreasonable expansion of split shift arrangements, a variety of other engineer specific issues had not been properly addressed by Svitzer.

[23] In further submissions made by Mr McNally, it was asserted that Svitzer had also failed to comply with requirements of the Agreement regarding notification to the AIMPE regarding proposed changes to POPs. Mr McNally submitted that the failure to properly comply with notice requirements for changes to POPs reflected that Svitzer had implemented its own consultation procedure contrary to the requirements of the Agreement. Mr McNally was critical of the port level staff briefings which he said could not be properly held to have been meetings as required by the consultation requirements of clause 10 of the Agreement.

[24] Mr McNally also made submissions which strongly opposed the particular Orders that were sought by Svitzer. Mr McNally submitted that in the absence of compliance with the consultation requirements of the Agreement, the Commission should refuse the Orders sought by Svitzer and instead recommend that they resume negotiations with the AIMPE.

[25] In conclusion, Mr McNally submitted that the dispute in this instance had not been properly brought before the Commission in accordance with the requirements of clauses 10 and 13 of the Agreement. Therefore, according to Mr McNally, the Commission was not empowered to provide for either the determination or the Orders sought by Svitzer. Mr McNally submitted that the application should be refused and that the Commission should recommend to Svitzer that they resume proper consultations with the AIMPE.

Consideration

[26] The dispute in this instance has involved a contest about the reasonableness of rearrangements that have been required because of an expansion to the towage operations of Svitzer in the three ports. The application has been made pursuant to the particular terms contained in clause 13 of the Agreement which specifically empowers the Commission to determine the reasonableness of any proposals to address changed circumstances such as the expansion to Svitzer’s operations in the three ports.

[27] In addition to the challenge to the reasonableness of the rearrangements to operations in the three ports, the AIMPE has also challenged the application on the basis that the consultation requirements of the Agreement were not followed and thus the Commission was not properly empowered to make a determination on the question of the reasonableness of the rearrangements. Consequently, as a matter of logical approach, the Commission has been required to firstly determine whether the application has proper standing and then secondly, and only if the application can be affirmatively endorsed, provide for any subsequent determination of the reasonableness question.

[28] The challenge to the application made by the AIMPE was based upon the alleged failure of Svitzer to comply with the consultation requirements of the Agreement. It is commonplace that many DSPs will include a procedure that requires escalated levels of consultation to be exhausted before an application for the Commission to deal with the dispute can be made. A failure to follow any procedure that is contained in a DSP such that an application under s. 739 of the Act was taken before the DSP procedure had been exhausted, will generally render the s. 739 application to be invalid. It is therefore relevant to carefully examine the particular terms of the relevant DSP.

[29] The relevant DSP is found at clause 10 of the Agreement and is in the following terms:

“10. Continuity of Operations and Dispute Resolution Procedure

10.1 The following procedure shall apply to settle disputes about any matters arising under this Agreement and in relation to the NES.

10.2 The parties to a dispute must genuinely attempt to resolve the dispute at the workplace level as follows.

10.2.1 As soon as practicable after a dispute arises an employee must speak to his or her immediate supervisor or manager and give the supervisor or manager an opportunity to resolve the dispute.

10.2.2 If the dispute remains unresolved, the employee may request a representative, which may be an AIMPE delegate or officer, to progress the matter with the immediate supervisor or manager.

10.2.3 Where the delegate or representative of the AIMPE on the tug becomes aware of any such matter he or she may take it up with the local manager.

10.2.4 In the case of a matter arising at federal level, the employee's representative or relevant federal official of the union concerned and the appropriate regional or national company representative concerned shall discuss the matter and endeavour to resolve it.

10.2.5 If the matter cannot be settled it shall be referred to FWC for conciliation and/or arbitration.

10.3 Dispute Settlements -The above steps shall not preclude the right of any party to refer a dispute to the Fair Work Commission. In these circumstances, FWC shall retain its discretion to either refer the parties back to a continuation of this procedure (where FWC considers that course as appropriate), or conduct conciliation proceedings and where the FWC cannot settle the matter by conciliation, determine the matter.

10.4 Work shall continue pending determination of any matter or dispute in accordance with the above procedures except in circumstances where an employee holds a reasonable concern about an imminent risk to his or her health or safety. Subject to relevant provisions of work health and safety law, 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 SVITZER to perform other available work that is safe and appropriate for the employee to perform. The fact that the employee continues to work will not prejudice the employee or SVITZER.

10.5 Continuity of Operations

Pending the completion of the procedure set out in this clause, work shall continue without interruption. No party shall engage in unlawful action and pending the resolution of the dispute the status quo shall apply. The rights of individuals or parties under the Act shall not be prejudiced by the fact that work has continued under this process normally and without interruption.”

[30] The most significant terms are those words which are contained in sub-clause 10.3 which state;

“The above steps shall not preclude the right of any party to refer a dispute to the Fair Work Commission.”

[31] Therefore, in this instance the terms of the DSP specifically permit the s. 739 application to be taken even if the consultation requirements of the DSP may not have been followed. Consequently, the Commission is properly seized of power to deal with the dispute and relevantly, the terms of clause 13 of the Agreement specifically provide for the Commission to determine the reasonableness of the arrangements that are proposed to deal with Svitzer’s expanded operation in the three ports.

[32] It is relevant to set out the provisions of clause 13 of the Agreement which are in the following terms:

“13. Reduction, Cessation or Growth in Business

13.1 The parties have entered into this Agreement in the expectation that the terms of this Agreement will apply for the life of the Agreement.

13.2 However, if circumstances affecting the business, either across the board or in a particular port will lead to a reduction, cessation or growth of port business, SVITZER and the Union will confer in an attempt to resolve any issues arising from the change in circumstances. The parties will attempt to resolve such issues in accordance with the dispute resolution procedure, clause 10 of this Agreement, including by reference to FWC to have FWC determine the reasonableness of any proposals to address the changed circumstances. Where found to be reasonable by FWC, the Company proposals will be implemented.

13.3 In the event of substantial changes in roster arrangements or the level of towage operations or other relevant circumstances, the parties agree to review, and where necessary, adjust the salaries referred to in clause 24 of this Agreement.

13.4 If, as a result of the review referred to above, it is necessary to alter salary levels, the parties agree to take such steps as are required by the Act and clause 7 to vary this Agreement accordingly.”[emphasis added]

[33] The combined operation of clauses 10 and 13 of the Agreement has meant that the Commission has been required to examine the evidence provided about the detailed tug deployment arrangements and the associated tug crew rostering, which Svitzer has proposed for the expanded operations at the three ports. The examination of this evidence has provided the Commission with an appropriate basis upon which to determine the reasonableness of those arrangements.

[34] Unsurprisingly, Svitzer has argued that the particular tug deployment arrangements, and the associated tug crew rostering proposed for each of the three ports was reasonable. In broad terms, Svitzer has contended that the number of tugs and the rostering arrangements for the crews of those tugs, appropriately provided for all contingencies associated with the expansion of operations in each of the ports. In addition to evidence of the actual arrangements for each of the three ports, Svitzer pointed to the acceptance of these arrangements by the AMOU and the MUA as providing support for the reasonableness of these arrangements.

[35] Conversely, it was argued by the AIMPE that the arrangements were not reasonable. In particular, the AIMPE asserted that the position adopted by the other Unions should not be translated into a conclusion that the arrangements would be found to be reasonable. I unequivocally accept this particular aspect of the position that was advanced by the AIMPE. It would be fundamentally wrong to accept that the agreement reached between the AMOU, the MUA and Svitzer, established reasonableness, particularly in respect to any impact that the arrangements might have upon employees who are members of the AIMPE.

[36] Consequently, I have carefully evaluated the evidence that was presented by the AIMPE and upon which it asserted that the arrangements for the expanded operations at the three ports were unreasonable. The evidence revealed different concerns which arose in respect to the expanded operations in each of the three ports. However, in broad terms, the concerns that were raised by the AIMPE involved; (a) issues relating to potential for there to be insufficient time for certain maintenance tasks to be undertaken, (b) potential for problems related to fatigue management, (c) potential incapacity to properly deal with emergency situations, (d) inefficient operational arrangements, and (e) the expansion of rostering arrangements involving split shifts.

[37] The most significant issue of concern, as was advocated by the AIMPE as; “the big issue” 1, involved the expansion of rostering arrangements involving split shifts. The split shift arrangements had been developed in the port of Sydney as a means to assist the competitiveness of Svitzer. As Svitzer had now become the sole provider of towage services in the three ports, there was some reluctance to continue the split shift arrangements in the port of Sydney, and some resistance to their expansion into the port of Newcastle.

[38] Although Svitzer has secured a monopoly on the towage operations in the three ports, that particular change in circumstances does not render the split shift arrangements to be unreasonable. There are certain logistical aspects of the split shift arrangements which may have fatigue implications and represent legitimate concern for not only members of the AIMPE but also for the other Unions. On balance however, the rostering arrangements which include the working of split shifts cannot, per se, be found to be unreasonable.

[39] The potential fatigue implications of spilt shift working and the various other port specific concerns which were raised by the AIMPE are issues which can be addressed as part of the changes to the POPs process envisaged in particular, by sub-clause 41.4 of the Agreement. Importantly, the various concerns raised by the AIMPE did not establish any particular issue that could be described as specifically impacting upon tug engineers in a significantly different fashion or magnitude because of the work that they perform as compared with the work of masters or general purpose hands.

[40] It is also relevant to note that the nominal expiry date of the Agreement is 31 December 2015, and apparently negotiations for a replacement agreement have either commenced or are about to commence. Logically, issues that may arise as a result of the rostering and other arrangements associated with the expanded operations in the three ports could be conveniently dealt with as part of the bargaining for a replacement enterprise agreement.

[41] Further, there was asserted to be some general unreasonableness to the arrangements for the expanded operations caused by the alleged lack of consultation with the AIMPE as compared to the consultations undertaken by Svitzer with the AMOU and the MUA. Unfortunately, any deficiency with the level of consultation for the AIMPE as compared to the AMOU and the MUA arose from the “strategic” decision of the AIMPE to refuse to engage in certain local level consultations, and to require separate consultations directly between Svitzer and the AIMPE excluding the AMOU and the MUA. The particular approach to the consultation process adopted by the AIMPE was curious as it appeared to result in a loss of opportunity in respect to enhanced redundancy arrangements.

[42] Consequently, I am unable to find that, even if there was some deficiency with the level of consultation with the AIMPE as opposed to the level of consultation with the other Unions, such deficiency should be visited upon Svitzer so as to render the rearrangements proposed to be unreasonable.

[43] Therefore, in summary, for the purposes of the determination required by clause 13 of the Agreement, the evidence that has been provided by the AIMPE has not established that the proposals to facilitate the expansion of Svitzer’s operations in the three ports is anything other than reasonable.

Conclusion

[44] The determination of the dispute in this instance has involved a requirement for the Commission to determine whether particular proposals advanced by the employer as the basis to deal with its expanded operations in the ports of Sydney, Melbourne and Newcastle could be found to be reasonable. The terms of the Agreement, in particular clauses 10 and 13, empower the Commission to deal with the dispute and to specifically determine the question of the reasonableness of the rearrangements as advanced by the employer.

[45] Upon analysis and careful consideration of the concerns that were advanced by the AIMPE as basis for finding that the proposed rearrangements were not reasonable, I am unable to conclude that any aspect of the proposed rearrangements could be found to be unreasonable. Therefore, for the purposes of sub-clause 13.2 of the Agreement, the Commission determines that the changed circumstances as advanced by Svitzer and as set out in Attachments 1 and 2 to the Draft Order, are found to be reasonable and will therefore be implemented.

[46] In view of the conclusions that I have reached, I determine that the amended application made by Svitzer is, in broad terms, granted. Should it be necessary for an Order to be made to reflect the determination of the Commission, Svitzer should advise my Chambers accordingly and an Order broadly in the terms sought by the Draft Order shall be issued.

COMMISSIONER

Appearances:

Mr M Easton of Counsel, with Mr R Gunningham, solicitor for Svitzer Australia Pty Ltd.

Mr W McNally, solicitor for The Australian Institute of Marine and Power Engineers.

Hearing details:

2015.

Sydney:

September 23, 25.

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