The Australasian Meat Industry Employees Union v Golden Cockerel Pty Limited

[2014] FWC 3974

[2014] FWC 3974 [Note: An appeal pursuant to s.604 (C2014/5226) was lodged against this decision - refer to Full Bench decision dated 27 November 2014 [[2014] FWCFB 7447] for result of appeal.]

FAIR WORK COMMISSION

DECISION

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

The Australasian Meat Industry Employees Union
v
Golden Cockerel Pty Limited
(C2014/3197)

SENIOR DEPUTY PRESIDENT RICHARDS BRISBANE, 19 JUNE 2014

Summary: Dispute application – roster changes and allowances -construction of Agreement -plain and ordinary language - extrinsic materials - reasonable person test as to whether joint acceptance - operational reasons for shift changes - changes in workflow and labour savings - whether compliance with consultation clause.

[1] This matter concerned an application made under section 739 of the Fair Work Act 2009 (“the Act”) by the Australasian Meat Industry Employees Union (“the Union”) and relates to a dispute between the Union and the Golden Cockerel Pty Ltd (“the Company”) arising under the Golden Cockerel Certified Workplace Agreement 2012 (“the Agreement”).

[2] The AMIEU and Company have been unable to resolve their differences in relation to the proper application of the Agreement in relation to roster changes and now seek for the Fair Work Commission to exercise its powers of arbitration under the disputes procedure at clause 9.4 of the Agreement.

[3] The dispute arose for the reason that two employees were changed at the direction of the employer from a fixed early morning shift (commencing at 3.00am), which provided for a 20% (or 25%) allowance (under the grandfathered provisions of the Agreement) to a later starting time (of 4.00am), which attracted no shift allowance (though paid at an overtime rate for the hour worked prior to the commencement of ordinary hours at 5.00am).

[4] In broad summary, the issue in contest was whether or not the two employees were covered by a grandfathering clause in the Agreement which guaranteed (expressly and\or implicitly and\or by reference to understandings entered into during the enterprise Agreement negotiation phase) their continuing entitlement at all times to the applicable early morning shift allowance.

[5] The Union held that the effect of the grandfathering clause in the context of the understandings entered into at the time of negotiations entitled the employees to the applicable shift loading and disentitled the Company from altering the employees roster or level with the intent of avoiding such allowances. The Company, for its part, contended that no such understandings, as alluded to by the Union, had been entered into or otherwise agreed, and that the plain language of the Agreement authorises it to change any employee’s roster on the basis of operational requirements with minimal conditionality (regardless of the consequent effects for the applicable allowances).

[6] There are further incidental arguments that are relevant as well, such as whether the Company was authorised to change the commencement times and whether the consultation clause was applicable. I will comment on these matters as the discussion unfolds.

The relevant provisions of the Agreement

[7] The Agreement, at clause 1.10, defines the Early Morning Shift in the following terms:

"Early Morning Shift" means a shift commencing at or after 2:00am and before 4:00am

[8] The Agreement sets out allowances that apply to various shifts. Clause 3.2 of the Agreement provides as follows:

“3.7 Allowances

3.7.1 Shift Allowances

The following shift allowances are payable:

(a) Afternoon and/or night shift -15% of the Employee's Ordinary Pay.

(b) Fixed afternoon and/or night shift (other than cleaning gangs)- 20% of the Employee's Ordinary Pay.

(c) Fixed afternoon and/or night shift (cleaning gangs) -15% of the Employee's Ordinary Pay.

(d) Fixed early morning shift- 10% of the Employee's Ordinary Pay.

(e) An employee, who is employed by the Company before 1 July 2003 and is engaged to work afternoon or night shift and as a result does not rotate with day work then the employee shall not be regarded as working a fixed shift for the purposes of the Agreement. In such circumstances a shift loading of 25% shall be payable on night and afternoon shift.

(f) An employee, who is employed by the Company before 1 September 2012, shall be paid 20% for a fixed early morning shift. This does not apply if the employee requests to be placed on an early morning shift.”

[9] In Part 4 of the Agreement, the Agreement deals with how shift starting times can be changed:

“PART 4- HOURS OF WORK

4.1 Ordinary Working Hours

4.1.1 Except as otherwise provided in this Agreement 38 hours shall constitute a full week's work to be worked by Agreement between the Employees and the Company. Management shall retain the discretion to set such hours failing Agreement in each establishment concerned, with the following alternatives being available:

(a) 7 hours 36 minutes per day.

(b) 4 days of 8 hours and one day of 6 hours.

(c) 4 hours off per fortnight.

(d) One day off per 4-week cycle.

4.1.2 Subject to Agreement with the Employees at the enterprise level, up to 10 ordinary hours per day may be worked.

4.1.3 Departmental starting times may be altered at the Company's discretion with 36 hours notice or without such notice if by Agreement with the Employee.

[...]

4.1.6 Employees, employed prior to 1 September 2012, may be required to perform their ordinary working hours within a spread of 14 hours between 5.00 am/7.00 pm. An employee (other than Delivery Drivers) may agree to commence ordinary working hours at 4.00am. Any time worked between 4:00am and 5:00am will be paid for at overtime rates but will be included as ordinary hours worked.

4.1. 7 Employees, employed after 1 September 2012, may be required to perform their ordinary working hours within a spread of 15 hours between 4:00am and 7:00pm. This clause will also apply to any employee, employed prior to 1 September 2012, that requests a start time prior to 5:00am.”

Approach to the dispute on the plain language of the Agreement

The shift allowance

[10] The Agreement, by way of clause 3.7.1(d), provides that any employee who is performing a fixed Early Morning Shift (that commences between 2.00 am and 4.00am) will receive a 10% allowance.

[11] Clause 3.7.1(f) of the Agreement, however, introduces a caveat on the operation of clause 3.7.1(d) of the Agreement, which functions as a grandfather clause. That is, clause 3.7.1(f) of the Agreement provides that any employee who is employed before 1 September 2012 shall be paid a 20% allowance (as opposed to a 10% allowance for an employee employed after this date) where the employee performs an Early Morning Shift as defined.

[12] Clause 3.7.1 does not affect the operation of clause 4.1.3 of the Agreement, which authorises the Company to alter Departmental starting times at its discretion (upon the giving of 36 hours notice, or without notice where there is Agreement between the Company and the employee).

[13] Clause 3.7.1(f) of the Agreement preserves an allowance where employees employed before specified date performs a particular shift. The clause does not derogate from the authorisation vested in the Company by the Agreement at clause 4.1.3 to set starting times at its (conditioned) discretion. This is because the Agreement includes no words to that effect.

The commencement time

[14] It was contended by the Union, as an incidental argument, that the Company had no power in any event under the terms of the Agreement to direct the two employees to commence work at 4.00am. This is because clause 4.1.6 of the Agreement states that an employee employed prior to 1 September 2012 may consent to commencing their ordinary hours at 4.00 am. Clause 4.1.6 of the Agreement does not suggest that an employee (other than truck driver) can be directed to perform their ordinary hours outside the span of hours.

[15] I agree with the Union’s construction, so far as it advances this proposition.

[16] Notwithstanding this, clause 4.1.6 of the Agreement sets out the ordinary hours of work. Clause 4.4.1 of the Agreement sets out the overtime provisions and provides as follows:

“4.4 Overtime

4.4.1 The Company may require an Employee to work reasonable overtime at overtime rates.

When requiring an Employee to work overtime the Company will consider the interests of the Employee and the Company and in particular the following:-

(i) any risk to the Employee's health and safety;

(ii) the Employee's personal circumstances including any family responsibilities;

(iii) the needs of the workplace or enterprise;

(iv) the notice (if any) given by the employer of the overtime and by the Employee of his or her intention to refuse it”

It does not follow therefore that employees (be they an employee employed prior to or post September 2012) cannot be directed to perform reasonable overtime (between 4.00 am and 5.00am).

[17] The two employees concerned were directed to perform reasonable overtime between 4.00am and 5.00 am and the commencement of their ordinary hours (and were paid as such) -- as would be expected for work performed outside the spread of agreed hours at 4.1.6 of the Agreement.

Purposive\liberal etc approach to construction of the terms of the Agreement

[18] The Union contends that the “true meaning” of the Agreement arises only from a consideration of the entirety of the circumstances relating to the making of the Agreement, which include any understandings (that a reasonable person would believe to be so) arising from the parties conduct and exchanges in the course of the making of the Agreement. 1 I will now turn to consider the Union’s claims in this regard.

[19] At the time when the terms of the Agreement were being negotiated, the Union sent an email to the Company on 20 September 2012. The email, sent by the Union’s Industrial Officer (who is the Union’s representative in these proceedings) read relevantly as follows:

“Proposed additional clause: Clause 3.9 Employee Protection -

An employee’s roster or level may not be changed with the intent of avoiding payment of penalties or loadings, or other benefits applicable. Should such circumstances arise, the employee shall be entitled to such penalty, loading or benefit, as if their roster or level had not been changed.”

[20] The Company replied on 25 September 2012 in the following terms:

“Employee Protection Clause - I believe that this is covered adequately by the grandfather clauses that were placed in the Agreement.”

[21] The matter of the inclusion of proposed clause 3.9 of the Agreement was raised again in an email exchange of 28 September 2012, as incidental to a concern raised over the scope for the Company to make changes to breaks for a certain class of employees under clause 4.3.3 of the Agreement. The Company referred by way of its reply (on 2 October 2012) to the position it took on clause 4.3.3 of the Agreement in the negotiation meetings. The Union at that time indicated it would confer internally about the Company’s response. The Union responded on 5 October 2012, and at that time, no reference was made to the proposed clause 3.9 of the Agreement.

[22] There is no further material arising from the email exchanges between the Company and the Union about the proposed clause.

[23] That said, the Union did make reference to a bulletin made available to employees following, it would appear, the defeat of the first draft of the Agreement in the ballot of August 2012. At that time, the Company indicated as follows:

“Spread of Hours

Current spread of hours

5.00am – 7.00pm

Proposed spread of hours

5.00am – 7.30 pm.

Facts

No one’s roster will change because of the change in the spread of hours.

Overtime rates will start at 7.30 pm instead of 7.00pm

[….]

No one would lose money under this proposal.”

[24] In evaluating the circumstances of the email exchanges and the bulletin, I doubt either lends support for the Union claim.

[25] The email exchange itself does not demonstrate or imply that the Company acquiesced to the inclusion into the Agreement of the clause proposed by the Union. That is, the proposed clause 3.9 did not form a term of the Agreement that was eventually made. The Company indicated, instead, that in its view the matter of grandfathering of conditions had been dealt with “adequately” in the existing clauses.

[26] The matter appears to have been left at that, largely, and the Union did not press the draft clause further at the time. This matter is discussed somewhat further below.

[27] The bulletin, as referred to above, does not support the claim in so far as it can be said to have demonstrated an implied understanding that the rosters would not be subject to change under a new Agreement.

[28] Firstly, I make the observation that the bulletin itself was a statement produced at a point in the negotiation process. This is sufficiently evidenced by the fact that the position there espoused in relation to the spread of hours changed by the time the final draft of the Agreement was settled and put to the vote. Further, the bulletin does not refer to the subsequent developments by way of the grandfathered clauses (the evolution of which are discussed below).

[29] Secondly, in any event, the statement made in relation to rosters is only that the rosters will not be changed “because of the change in the spread of hours”. As is explained below, the changes to the two employees’ rosters here in dispute arose principally from bona fide (externally driven) operational circumstances affecting the business in the following year - which warranted a re-alignment of labour requirements following substantial changes to the workflow.

[30] That is, the decision to alter the employees’ hours did not arise because of the change in the span of hours as negotiated (any more than it was “changed with the intent of avoiding payment of penalties or loadings, or other benefits applicable”, which was the proscribed intention in proposed clause 3.9). Its causation was otherwise based.

[31] There were further reasons why the Union held that there was an understanding reached between the negotiating parties to the effect of the intention of proposed clause 3.9 of the Agreement. These reasons related to claims made about concessions made or understandings reached during the negotiation process. I will now turn to consider these matters in detail, as they turn of the evidence led in the proceedings.

The negotiation process

[32] Mr Warren Earle, the Union organiser, was the spokesperson for the Union Consultative Committee representing the Union’s members over the course of the Agreement negotiations. He attended bargaining meetings conducted on 25 and 29 June 2012, 13 and 19 July 2012, 29 August 2012 and 4 September 2012 - a total of some six meetings.

[33] Mr Earle gave evidence to the effect that:

• He “directly expressed to Golden Cockerel representatives on the half of the employees that grandfathering arrangements for affected employees were needed to protect those workers currently had those entitlements payable a shift allowances.”



• That it was “explicit in [his] communication [with the Company] that the employee's rostered and/or level may not be changed with the intent of avoiding payment of penalties or loadings.”



• The CEO of the Company, Mr Patrick McCaffrey, had “agreed to grandfather the employees on the basis that no employee would be adversely affected by changes to the employee’s shifts.”



• The Union subsequently made it clear to “all parties that you couldn't change the employee’s shifts to avoid payment of the shift allowances [and] this was to make sure that no employees would come back later after the Agreement was made and lose their shift allowance by a change in roster.”



• During the negotiations the Union said “it wanted a clause put into the Agreement to protect those people”, and that the Union's industrial officer would forward a draft clause to that effect.



• The draft, proposed clause 3.9 was directed to the Company (as set out above) and the Company replied (as set out above).

[34] The Union contends that it represented the agreement of the Company to the intention of clause 3.9 in subsequent representations to its members. This appears to have been principally by way of a flyer headed “Golden Cockeral EBA Update” 2, in which the Union advocated support for the Agreement:

[…]

6. All employees who commenced their employment with Golden Cockerel prior to the completion of the negotiations will continue to receive all shift allowances and penalty rates they are currently on.

7. Span of hours – unchanged all existing employees.

[...]

The proposal is to extend your ordinary hours making them 4.00am - 7.00pm. All current employees will continue to receive all penalty rates and shift allowances that they are already receiving.

Grandfathering clauses : a Grandfather Clause is a clause added to the agreement to cover all employees currently working at Golden corporal prior to the date set out hearing. Any employee starting work at Golden Cockeral after that date will adhere to the new EBA

8. Night shift allowance – unchanged all existing employees.

Currently employees receive a 20% shift allowance between the hours of 2 AM and 4 AM. New employees will now receive a 10% allowance between 2 AM and 4 AM. All existing employees are protected by a grandfather clause.

All current workers on the shift will continue to receive the 20% shift allowance.

[35] Ms Victoria Scriven was the Group Manager – Human Resources for the Company. Ms Scriven was a member of the Agreement negotiating team for the Company.

[36] Ms Scriven explained the explanation for the grandfathering clause at clause 3.7.1(f) of the Agreement was to ensure that employees who have been working on the night shift in the former afternoon/night shift arrangement under the 2009 Agreement retained the same loading under the new early morning shift arrangement introduced in the 2012 Agreement.

[37] Ms Scriven attended ten negotiation meetings (conducted on 2 May 2012, 11 May 2012, 23 May 2012, 8 June 2012, 25 June 2012, 29 June 2012, 13 July 2012, 19 July 2012, 29 August 2012 and 4 September 2012).

[38] Ms Scriven further contended that the claim by Mr Earle that the Union had explicitly communicated to the Company that an employee's roster end\or level may not be changed with the intent of avoiding payment of penalties or loadings was never a demand made by the Union in the course of the negotiation meetings.

[39] Ms Scriven argued that the first time she had encountered a claim of this type was when she received an e-mail from the Union's industrial officer on 20 September 2012 (in the terms set out above).

[40] Ms Scriven gave evidence that she did not witness Mr McCaffrey agreeing to grandfathering “the employees on the basis that no employee would be adverse in affected by changes to the employees shifts”. Ms Scriven attended all ten negotiation meetings (as set out above).

[41] Mr McCaffrey’s evidence was that he attended the same 10 negotiation meetings as Ms Scriven and he denied that Mr Earle had ever made the communication to him that Mr Earle alleged. That is, Mr McCaffrey contended that Mr Earl never put a position that the employee's rosters and\all levels may not be changed with the intent of avoiding payment of penalties or loadings. Mr McCaffrey therefore denied that he ever agreed or offered to grandfather employees on the basis that no employee would be adversely affected by the changes to the employee’s shifts.

[42] Mr McCaffrey, in his evidence, also denied that Mr Earl ever made such comments that he sought to ensure that no employees would lose their allowances by a change in roster or level.

[43] Mr McCaffrey gave evidence that the Company had sought to introduce the early morning shift (and the definition thereof) and the applicable allowance that was in the Poultry Processing Award 2010 (the modern award). The Union had objected to the reduction the shift allowance to 10%, (from 20%) and as a consequence the Company had agreed to preserve the shift allowance for current employees (only). Mr McCaffrey contended that the Company could never have agreed to maintain an employee's hours of work absolutely indefinitely as the Company needed flexibility to change hours worked to meet the operational requirements of the business (some of which will be set out below).

[44] Mr McCaffrey's evidence therefore buttressed that of Ms Scriven.

[45] Ms Scriven further claimed that neither Mr Earle nor any of the Union representatives ever made demands to the effect that the Company “couldn't change the employees’ shifts to avoid payment of the shift allowances [...] to make sure that no employees could come back later after the Agreement was made and lose their shift allowance by a change in roster.” In any event, Ms Scriven contended “there was certainly no Agreement to this effect between the parties.”

[46] Ms Scriven referred to various notices published by the Company in the course of the negotiating process. In two of those notices, dated 18 September 2012, the following statement was made:

The introduction of an early morning shift with 10% loading the starting work between 2.00 AM and 4.00 AM. This will only affect new starters and those who requested change. Current arrangements applied to all employees.

[47] The reference to “current arrangements” was said to be a reference to the retention of the shift allowance that applied in the former Agreement.

[48] Ms Scriven claims that the Company would never have accepted a position where by an employee would retain a 20% early morning shift allowance even where the employee no longer worked such a fixed early morning shift; or that it would apply a different definition of early morning shift for employees employed before 1 September 2012 and to those after 1 September 2012; or that employees employed prior to 1 September 2012 would never have their hours changed at all.

[49] To the extent that the Union communicated otherwise to its members it misrepresented the Company's position.

[50] Ms Scriven did not deny that she replied to the Union e-mail of 20 September 2012 on 25 September 2012 in the terms as set out above. She explained, however, she viewed the Union’s approach as an endeavour to cushion the effect of changes to the spread of ordinary hours and the definition of the different sheds and shifts allowance payable in the proposed Agreement.

[51] With this in mind, she referred in her reply of 25 September 2012 to the two grandfathering clauses in the Agreement - they been clause 3.7.1 (f) and clause 4.1.6 of the Agreement, as set out above.

[52] The Union’s industrial officer (the Union’s representative in these proceedings) responded to Ms Scriven's reply of 25 September 2012 on 27 September 2012. The e-mail reply stated as follows:

“Clause 3.8 Employee protection clause is particularly relevant but covered under grandfather clause as in Agreement.”

[53] A follow-up communication from the industrial officer indicated that the reference above to clause 3.8 of the proposed Agreement was “covered under” the existing clause 3.9 of the proposed Agreement. 3

[54] Ms Scriven understood the absence of any further substantive pursuit of the claim e-mail reply to express acceptance that the issue of protection of employees entitlements was adequately addressed by the existing grandfather clause is in the proposed Agreement.

[55] Draft clause 3.9, however, was again mentioned in a further email exchange between Ms Scriven and the Union’s industrial officer on 2 October 2013. But again, the Company’s reply of that same day ignored the reference (as it had been made in the context of a claim about breaks elsewhere in the business, to which the Company had replied directly). That is, reference to the draft clause on 2 October 2009 did not take the form of a claim as such, and in any event there was no reply to the Company’s response after that time. That is, the draft clause was not again the subject of any email correspondence.

[56] The Agreement was voted on by employees on 16 October 2012, some three weeks later, without any further correspondence being entered into on this matter.

Comments on evidence

[57] Firstly, if Mr Earle held the view that the Company was not entitled under the proposed Agreement to change start times and alter shift rosters it was not expressed in the “Golden Cockeral EBA Update” referred to above. That statement indicates no more than there was an understanding that employee’s shift and other allowances would not alter as a result of the changes to the spread of hours and would be preserved. This is consistent with the terms of the Agreement.

[58] It may be that the Union had a late arriving proposal as advanced to Ms Scriven by email on 20 September 2012, but as I have found above, the email exchange between the Union’s industrial officer and Ms Scriven does not demonstrate that there had been an Agreement reached that the proposed clause 3.9 the expressly or implicitly referenced in the Agreement.

[59] Ms Scriven's e-mail reply of 25 September 2012 merely indicated that she believed the matters that were being agitated in the e-mail of 20 September 2012 - the preservation of certain terms and conditions - had been “adequately” addressed by way of the existing grandfathering clauses in the proposed Agreement. This is not acceptance of or acquiescence to the request by the Union of 20 September 2012.

[60] Exchanges of this kind are routine in Agreement negotiations and are a means of deflecting an additional claim by reference to existing concessions.

[61] I add, the email exchanges gives no suggestion of a prior history, or that the proposal had been the subject of earlier discussion and argument, or that any developed level of understanding had been reached at an earlier time. This accords with Ms Scriven’s version of events.

[62] Further, Ms Scriven's evidence about the content of the negotiations was corroborated by that of Mr McCaffrey. McCaffrey's evidence was candid and gave no suggestion of fabrication, and his evidence was left without serious challenge.

[63] It appears to me, in any event, that an Agreement that was striving to achieve “efficiency and productivity by ensuring management and labour practices are more closely attuned to current and future needs and the objectives of the enterprise” would be unlikely to then cede its power to alter its control over rosters and hours of work. This was the point of Mr McCafferty’s evidence, in effect. The importance of this issue, I add, was readily evidenced by the events that significantly changed the Company’s business model around the time the Agreement was made. These matters are discussed below.

[64] Generally, the evidence for the Company was more dense than that of the Union. Mr McCafferty argued with some coherence that the Company had initiated the proposal to grandfather the shift allowances as a means of garnering support for its proposal to fall back to the Poultry Processing Award 2010 shift allowance (of 10%) for future employees (which the AMIEU had opposed).

[65] The debate in the negotiations for good reason focused on this issue, and Mr McCafferty’s evidence provides a continuous and contained narrative as to the context for the wording of the grandfathering clause that was introduced into the Agreement and that came to be voted on, and the scope of meaning of those clauses and the Company’s intention Mr Earle’s narrative, by contrast, creates a disjunct between the Company-initiated grandfathering clause and the negotiations that is not readily resolvable or explained.

[66] In all, I prefer the evidence of Ms Scriven and Mr McCaffrey as to the content of Agreement negotiations over that of Mr Earle.

[67] Thus, it is not possible to construe clauses 4.1.6 and 3.7.1(f) of the Agreement as being referable in any literal or contextual manner to the clause sought by the Union in its email of 20 September 2012. These clauses do not convey the scope of meaning of the claim made by the Union on 20 September 2012, though they do concern preservation matters.

[68] It appears, by way of its response of 27 September 2012 and 2 October 2012 that the Union acceded to the Company’s view, that the matter of the preservation of certain terms and conditions of employment had been adequately addressed by way of the existing concessions.

[69] The email exchanges alone provide no basis for the Union to have reached a state of reasonable belief that the Company had acceded to its claim.

[70] If the Union had sought an unambiguous commitment to its additional claim it should have continued to press for that claim and/or to have sought further articulation of the employer's position to ensure that its claim had been accepted in the manner in which it understood. It did not do these things, even though the employer’s response (either on 25 September 2012 or 2 October 2012) was not acceptance of its claim as such.

[71] The Union may have drawn a conclusion or formed a view as to what had been agreed with the Company, and thereafter represented this view to its members. But there is no reasonable basis for the Union to have reached this view in the first instance.

[72] Just as to why the Union fell into confusion or misunderstanding is not an issue that requires my examination. It is enough to say that this is not a case in which the terms of an Agreement require modification or need to be read contextually in light of a position a reasonable person would accept the parties had mutually accepted. In respect of the provisions in question, no such point mutual acceptance, implied or express, had been reached on the evidence before me.

Did the Company act with the intention of avoiding the payment of allowances?

[73] I have made mention, in passing above, that I did not hold the view from the evidence that the Company had been motivated to change the two employees’ start time “with the intention of avoiding the payment of allowances” or as a consequence of the fact that it had by agreement changed the span of hours. The Company, in actuality, was motivated by changes in operational circumstances which caused it to re-align it labour supply to its business needs. The Company did not set out to avoid discharging an obligation to pay Mr Muntz and Mr Shaw a benefit under the Agreement as such.

[74] It cannot be argued, on the evidence, that even if the proposed clause 4.9 of the Agreement was taken to be a term of the Agreement by implication, that the Company was in breach of that clause.

[75] The circumstances which culminated in the change to Mr Muntz and Mr Shaw's rosters resulted from a significant change in the manner in which the Company received orders from its largest client - Coles supermarkets - and the manner in which it supplied that client. The evidence in this regard was given by Mrs Shannon, who was the distribution manager for the Company.

[76] Ms Shannon's evidence, firmly given, was not contested in relation to the changes in the demands by Coles and the consequent changes in the manner in which the Company undertook its business (which are set out immediately below).

[77] Up until September 2013 the Company received individual orders from Coles stores, picked those orders individually, transported the product to those to the 106 stores on an individual basis, largely by way of subcontracted truck drivers. In future, the requirement to pick one bulk order and deliver to a central delivery location would improve productivity and workflow and lead to new efficiencies (particularly in relation to overtime and shift structures).

[78] In September 2013 Coles required that all product was to be delivered to a Coles distribution centre. Coles also required that the product be packaged in a different manner, including in relation to labelling types of packaging and packing for delivery. These changes required significant alterations to the Company's production and distribution area is, including the installation of new conveyors and new scanning equipment, new racking and lighting and the raising of ceiling heights to accommodate the new racking requirements, higher reach forklifts, and the development of a new labelling system.

[79] Ms Shannon gave evidence that she had consulted with distribution employees about the changes being made because of the new requirements by Coles. To this end, she conducted six group meetings in the Company's training room. To explain the stages of the work involved in reconfiguring the workflow and the changes to the physical buildings that were required as a consequence.

[80] Once the changes referred to above had been bedded down the Company looked in early 2014 to reviewing its labour requirements.

[81] The changes to the picking work meant that the bulk pick had been completed by the night shift workers and there was no longer a need for a handover to early morning shift workers to the same extent as previously. Though early morning shifts were still required (to pick orders for another non-Coles - client) only a smaller number of employees were required to perform this work. Further, the introduction of the new product scanning system led to improvements in inventories accuracy which meant that less stocktaking was now required on a daily basis.

[82] Ms Shannon indicated that over the course of the first few months of 2014 she determined that it was no longer necessary to have as many people starting between 3.00am and 4.00am as had previously been required. That is, the volume of labour required to perform the work required had decreased.

[83] Ms Shannon said that she had spoken to the employees likely to be affected by the changes on 13 January 2013. She did so for the purpose of consulting with them about the proposed change to their working hours. Mr Menz and Mr Shaw both were present at that meeting. Ms Shannon retained file notes of the record of her discussion with employees in this respect.

[84] Ms Shannon gave further evidence - supported by her file notes- that she met with the employees individually in January 2014. Ms Shannon met with Mr Menz on 16 January 2014 and with Mr Shaw on 21 January 2014. The employees were informed at this time of the changes to their start times in the reasons therefore. They expressed their disagreement with the changes.

[85] The changes to working hours took effect on 28 January 2014, and had the consequence of requiring the two employees - Mr Shaw and Mr Munz - to commence their shift at 4.00am in the morning as opposed to 3.00am in the morning (with payment for the hour before 5.00 am at the applicable overtime rate).

[86] Mr Menz had been intermittently asked to commence work at 3.00 am to fill vacancies.

[87] It seems to me on the evidence that the Company did no more than to organise its labour arrangements in accordance with its operational needs, and to derive the efficiency that this would yield, as the Agreement anticipates. When the changes affected two employees, Mr Munz and Mr Shaw, it consulted with them and provided notice of the changes taking effect, consistent with its obligations under the Agreement.

[88] The evidence does not show that the Company set out to avoid discharging its obligations as they might have been under the Agreement.

[89] That said, it is another question, agitated to some measure over the course of the proceedings, whether the consultation clause in the Agreement applied to the circumstances and if so whether those consultation provisions were complied with in its full measure.

[90] It is enough to say that the change in the two employees’ rosters arose because of the operational changes consequent of the demands made by Coles upon the Company. The changes were significant changes, as Ms Shannon’s evidence revealed. Those changes had effects that led to the change in the two employees’ start times (because the volume of labour required at earlier times changed). Indeed, the Company’s own evidence (by way of a file note retained by Ms Shannon and referred to below) construed the changes to the working hours as being “the last part of the whole change”).

[91] The (model) consultation clause in the Agreement (noting the Agreement was made and approved in late 2012) reads as follows:

“Model consultation term

(1) This term applies if:

(a) the employer has made a definite decision to introduce a major change to
production, program, organisation, structure, or technology in relation to its
enterprise; and

(b) the change is likely to have a significant effect on employees of the enterprise.

(2) The employer must notify the relevant employees of the decision to introduce the major change.

(3) The relevant employees may appoint a representative for the purposes of the procedures in this term.

(4) If:

(a) a relevant employee appoints, or relevant employees appoint, a representative for the purposes of consultation; and

(b) the employee or employees advise the employer of the identity of the representative;

the employer must recognise the representative.

(5) As soon as practicable after making its decision, the employer must:

(a) discuss with the relevant employees:

(i) the introduction of the change; and

(ii) the effect the change is likely to have on the employees; and

(iii) measures the employer is taking to avert or mitigate the adverse effect of the change on the employees; and

(b) for the purposes of the discussion — provide, in writing, to the relevant
employees:

(i) all relevant information about the change including the nature of the change proposed; and

(ii) information about the expected effects of the change on the employees; and

(iii) any other matters likely to affect the employees.”

[92] Ms Shannon’s contemporaneous file note created on 13 January 2014 at 11.30 hours reflected both her statement and her viva voce evidence as to the terms of the explanation given to the employees likely to be affected by the changes (which included Mr Shaw and Mr Munz).

[93] That evidence and the file note in particular, demonstrates that the employees were informed at a meeting on 13 January 2014 that the changes rolled out because of the change in Coles’ distribution procedures. The file note itself records Ms Shannon as having explained that:

• “labour and shifts structure was the last part of the whole change”;



• “life had changed post Coles DC and that we must change as well to stay competitive as a business”



• the morning shift “would only focus on picking OSI and Sydney orders. Don’t need as many people simple as that doing task in the early morning”;



• the changes had meant “no longer daily stocktakes”. This will mean a labour saving and changes to people start times. (sic)



• “we were looking to reduce the O/T between shift cross over and most employees on [morning shift] will have a change to start time and we as employees on [afternoon shift]”. (sic)



• “[..] as a result we will not need as many people to be starting work between 0300-0400. I cannot justify now having as many people on early morning shift allowance. The work is simply not required. The requirement was to changing start time to better match the production and picking windows […] I will speak individual to each employee once finalised. Change would not be effective until the 3 February 14 after the Aust Day long weekend and short week.” (sic)



• It “was important to ensure the cost of the Distribution operation was as cost effective as possible. We need to reduce costs.”

[94] The file note then records that employees were invited to ask questions. Mr Shaw was one of the employees who asked a question at the time of the meeting.

[95] I prefer Ms Shannon’s evidence over that of Mr Munz and Mr Shaw. There were differences in their evidence that gave me cause to suspect its accuracy.

[96] Mr Shaw, for example, was adamant there was no reference to changes in shift commencement times:

All right; and she also spoke to about overtime and she said, "We're looking to reduce the overtime between shift crossover and most employees on morning shift will have to change start time as well as employees on afternoon shift"?---No

She said that to you in that meeting?---She never said anything about us changing our starting times. 4

[97] Mr Munz recalled - at the same meeting - that Ms Shannon had indicated that she was trying to reduce the impacts of the changes on employees, but there was no guarantee no changes would occur. Mr Munz also gave further evidence (and contrary to that of Mr Shaw) that issues of labour savings and commencement times had been mentioned by Ms Shannon ):

She said, "This will mean a labour saving and a change to people's start time"?
---Yes.

You remember here saying that?---Mm.

She spoke about overtime?---Mm.

And she said, "We were looking to reduce the overtime between shift crossover and most employees on morning shift will have a change to start time as well as employees on afternoon shift." Do you remember that?---Yes. 5

[98] Having heard the evidence from the witnesses, I have high confidence in Ms Shannon’s evidence. Her viva voce evidence was confident but unaffected, and her attention to detail there evident was also reflected in her contemporaneous notes of the meeting of 13 January 2014.

[99] Over the course of the week following the above meeting, the Company met with both Mr Shaw and Mr Munz, and were informed of the changes to their shifts and the reasons for those changes. The Company did not resist a request for representation. Ms Shannon’s file notes also reveal that neither employee supported the Company’s decision to changes to their commencement times. The indication given as the changed commencement times was consistent with the requirements under clause 4.1.3 of the Agreement.

[100] I do not discern from Ms Shannon’s detailed and contemporaneous evidence that the model consultation clause was not applied. At most – and I am not at all sure the proceedings pressed the evidence to the necessary degree – the Company may not have conformed with clause 5(b) of the above clause. That is, it may be the case (though the evidence may not have been exhaustive to this effect) that the Company did not put the details of the change in writing. That does not necessarily mean there was no understanding or reasonable appreciation of the nature of the changes and their scope disclosed in an appropriate time frame.

Conclusion

[101] In broad summary only and subject to my detailed findings above, I have found that:

● the Company was entitled to alter the start time of the two employees in accordance with the Agreement (as I have constructed the terms of the Agreement);

● An employee can be directed to perform reasonable overtime;

● The Company has no obligation to maintain an employee’s shift rosters and allowances where operational or business reasons necessitate changes; and

● To the extent it was evidenced, the Company conformed to the requirements of the consultation clause in the Agreement in explaining the changes to the employees likely to be affected.

In light of my discussion above and to the extent of my various findings, the application by the Union under s.739 of the Act is dismissed.

SENIOR DEPUTY PRESIDENT

Appearances:

Mr E. Dalgleish, for the Applicant

Ms C. Hartigan, Counsel, for the Respondent

Hearing details:

Brisbane

2014

12 June

 1   Toll (FGCT) Pty Ltd v Alphafarm Pty Ltd 9 HCA 52; 219 CLR 165 at 179

 2  Exhibit A1, Statement of Warren Earle, Annexure WRE3, Attachment 8.

 3   Exhibit R1, Statement of Victoria Scriven, Annexure VS - 4 at page 6.

 4   Transcript 12 June 2014, PN257-258.

 5   Transcript 12 June 2014, PN422-426.

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