The Australian Workers' Union v BlueScope Steel (AIS) Pty Ltd

[2017] FWC 548

[2017] FWC 548

FAIR WORK COMMISSION

DECISION

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

The Australian Workers' Union
v

BlueScope Steel (AIS) Pty Ltd

(C2016/4215)

VICE PRESIDENT HATCHER SYDNEY, 3 MARCH 2017

Introduction and background

[1] On 22 June 2016 the Australian Workers’ Union (AWU) made an application to the Commission under s.739 of the Fair Work Act 2009 (FW Act) for it to deal with a dispute in accordance with the dispute resolution procedure of the BlueScope Steel Port Kembla Steelworks Agreement 2015 (Agreement). The dispute arose from the planned closure by BlueScope Steel (AIS) Pty Ltd (BlueScope) of the Unanderra Coil Processing Department (UCPD) of the Port Kembla Steelworks and the establishment of a new coil processing business within the Hot Coil Processing and Despatch Department (HCPD) in the Steelworks.

[2] The genesis of the dispute was a letter dated 9 May 2016 sent by BlueScope to employees in the UCPD headed “The Future of the UCP Business”. It advised that:

● BlueScope had announced a significant capital investment in a new coil processing business using innovative new technology;

● the UCPD would close;

● the UCPD would not be affected until the new business was operational and serving customers;

● it was expected that the UCPD Slit Flats line (SLTF) would close at the beginning of 2017 and the UCPD Slit line (SLT) would close at the beginning of 2018;

● affected employees could apply for roles in the new business “at the new business’s remuneration rate”, or seek redeployment to other roles in the Steelworks, or would be made redundant; and

● a merit based selection procedure would be used to determine which employees would be affected by the closure of the SLTF business, and employees identified as surplus would be asked which option they wished to pursue.

[3] On 12 May 2016 the AWU wrote to BlueScope contending, among other things, that the coil processing work being performed by the UCPD employees would continue to be performed in the new business, that the proposed change was a “significant change” as defined in clause 35.2.2 of the Agreement, that employees required for the new business had to be sourced from the UCPD, that UCPD employees did not have to apply for positions in the new business, and that UCPD employees transferring to the new business were entitled to rate retention under clause 11.1.1 of the Agreement.

[4] BlueScope replied to this letter on 19 May 2016. Its position was that “the closure of UCP is the outcome of a significant capital investment and as such is not significant change for the purposes of clause 35.2.3...”. In respect of the retention of rate issue, the letter indicated that UCPD employees could apply for roles in the new business prior to the closure of the UCPD “at the new business’s remuneration rate - no retention applies”, but that rate retention would apply to any employee declared surplus who was redeployed to another part of the Steelworks. BlueScope confirmed its position in a presentation to UCPD employees on the same day. That presentation also identified the rates of pay which BlueScope proposed to pay to employees in the new business.

[5] The AWU’s application in this matter, which was lodged as earlier stated on 22 June 2016, raised a number of issues including alleged failures to comply with the consultation requirements of clauses 35.2.3 and 35.2.4 of the Agreement, the job security provisions of clause 34.3 and the rate retention obligations in clause 11. I conducted a conciliation conference in relation to the dispute on 24 June 2016. The interim outcome which was agreed at the conference was that UCPD employees would have the opportunity to lodge expressions of interest for approximately ten available positions in the new business by 1 July 2016, and that BlueScope would determine whether any of the applicants were successful by 8 July 2016 before any external applications were considered. The AWU agreed to stand over its application to allow that process to occur but reserved all its rights.

[6] The outcome of the process was that four UCPD employees 1 lodged expressions of interest. The form which they had to complete required them to acknowledge that the roles in the new business would be subject to identified new remuneration arrangements (consistent with the rates of pay foreshadowed in BlueScope’s presentation of 19 May 2016). All four applicants were successful in obtaining positions in the new business. Their letters of appointment again referred to the rates of remuneration which BlueScope proposed to pay. The successful UCPD applicants commenced work in the new business on 4 September 2016. Five external applicants were also appointed to the new business. At that point, it was not anticipated that any further recruitment to the new business would be required before mid-2017. BlueScope then commenced the process to merit select which of the remaining SLTF employees in the UCPD would be declared surplus. At the time of the hearing, this process had not yet completed and no employee had been declared surplus. It is not in dispute that the four UCPD employees who have moved to the new business were never expressly declared surplus by BlueScope.

[7] Under the Agreement, UCPD employees are not graded within the main “Restructured Ironworkers Rates of Pay” in Table 1, but have their own classification structure in Table 4 which generally provides for higher rates of pay than Table 1. In addition they receive in an over-Agreement payment of $281.14. The total UCPD rates are higher than the rates which BlueScope is now paying to its employees in the new business.

[8] On 6 September 2016 the AWU sent a letter to the Commission contending that the four employees from UCPD who had been appointed to roles in the new business were entitled to the retention of their UCPD rates of pay under clause 11 of the Agreement, and that the employees were being underpaid. It requested that issue be programmed for arbitration. Accordingly directions were made for the hearing of this issue in dispute, and the hearing occurred on 30 November 2016. There was an evidentiary issue outstanding at the end of the hearing, to which reference will be made later, and the parties subsequently filed further material about this.

[9] Accordingly the issue to be determined in this decision is whether the four former UCPD employees who commenced work in the new business on 4 September 2016 were entitled to retention of their total UCPD rates of pay.

Relevant provisions of the Agreement

[10] Clause 11.1.1 of the Agreement is part of clause 11.1, which is entitled “Retention of Total Rate - Appointments on or after 29 May 2001”. It provides:

“11.1.1 Organisational Change - An employee who is appointed on or after 29 May 2001 to a classification which receives a lower total rate of pay than the classification held immediately prior to the appointment, due to the rationalisation of the Company's operations, the introduction of technological change, or changes in work practices, is subject to the following arrangements:

(a) Two or more years service

An employee with two or more years' continuous service with the Company, will retain the total rate of pay applicable to the previous classification. The following adjustments apply:

(i) In the first and second years after the date of appointment, all changes in the total rate of pay applicable to the previous classification.

(ii) In the third year after the date of appointment, half of any changes in the total rate of pay applicable to the previous classification.

(iii) No further adjustments are applicable in subsequent years.

(b) Less than two years service

An employee with less than two years' continuous service with the Company, will retain the total rate of pay applicable to the previous classification. The following adjustments apply:

(i) In the first year after the date of appointment, half of any changes in the total rate of pay applicable to the previous classification.

(ii) No further adjustments are applicable in subsequent years

(c) When the total rate of pay of the employee's new classification exceeds the total rate of pay of the previous classification as adjusted under (a) or (b) above, the employee will subsequently receive the total rate of pay of the new classification.”

[11] Clause 11.1.2 provides a somewhat more limited rate retention regime in respect of appointments to lower-paid positions “due to the market changes affecting the Company’s operations”. Clause 11.1.3 defines the expression “total rate of pay” used in clause 11.1 (and clause 11.1.2) as follows:

“11.1.3 Definition of Total Rate of Pay - The "total rate of pay" is calculated by adding the Agreement rate of pay applicable under this Agreement, and the appropriate over-Agreement or bonus payment. The total rate of pay excludes all allowances and penalty rates.

An exception to this is the leading hand allowance. Inclusion of the leading hand allowance into the total rate of pay only applies if an employee has been receiving the allowance for greater than 6 months, but ceases to be entitled to that allowance for reasons outlined in 11.1.1 and 11.1.2 above.”

[12] Clause 11.2 contains rate retention provisions applicable to appointments made prior to 29 May 2001, and thus has no direct relevance to present circumstances.

[13] Clause 34 of the Agreement is concerned with, and entitled, “Termination of Employment Due to Retrenchment or Redundancy”. Clauses 34.1 and 34.2 are primarily concerned with the entitlements of retrenched employees. Clause 34.3 deals with the circumstances of employees rendered redundant by workplace change. It provides:

“34.3 Security for employees affected by workplace change

34.3.1 The parties recognise the importance of job security for employees.

34.3.2 While seeking to adhere to this commitment, the parties acknowledge workplace change, new technologies and changes in operations and services will be ongoing and may lead to employees being made surplus. When having to manage reductions in employee numbers, the Company will seek to ensure that employees have the opportunity for redeployment. In addition, every opportunity will be taken to effect changes through voluntary means and natural attrition.

34.3.3 Nothing in this clause prevents the Company reassigning surplus employees into alternative and available roles where their skills are readily adaptable to these roles. In that case the other provisions of this clause, other than clause 34.3.9 will not apply.

34.3.4 In identifying surplus employees the Company will adopt a selection process that includes the employee's knowledge, skills and performance relevant to the employee's current positions.

34.3.5 Where employees are made surplus, the relevant employees will be given written notice by the Company that such positions are surplus and the options available to employees. The following principles will then apply:

(a) Within 14 days the affected employees are to advise the Company of their decision to either:

(i) elect to leave the Company; or

(ii) seek continuing employment with the Company.

(b) For employees who elect to leave the Company, their employment will cease as soon as practical to Department needs.

(c) For those affected employees who seek ongoing employment with the Company that opportunity will be available for a transition period of up to 36 six months which will apply from the date of the Company issuing the written notice as provided for in this clause 34.3.5 (Transition Period).

(d) The Transition Period will be used to facilitate a job search within BlueScope Steel for suitable alternate employment where this is available. During the Transition Period the employee will continue to work in their department. The Company shall provide the employee and as necessary their representative, with all relevant job search details.

(e) Whenever a vacancy occurs, all reasonable efforts will be made to communicate this position to surplus employees. The recruitment and selection of surplus employees into alternative positions will be based on merit and directed by Company policies and processes. It is expected that surplus employees will reach the interview stage for vacancies where the employee's skills and experience reasonably match the criteria for the vacancy.

(f) Competency Based Redundancy Substitutions may be available, however will remain at the discretion of the Company.

(g) Surplus employees will be managed within their Department until it is determined that no suitable alternative employment is available within the business. The Company will meet regularly with the employee and their representative to ensure the employee is updated on suitable alternate employment opportunities.

(h) The Company will provide surplus employees with appropriate redeployment assistance as part of the surplus management process. This assistance may include job search and training opportunities, such as assessment centres, interview training, work experience, secondment placements, relief roles, retraining, and outplacement programs.

(i) Surplus employees will be expected to actively and genuinely participate in all related surplus management processes and activities in order to maximise their opportunity to secure suitable alternative employment within the Company.

(j) Surplus employees seeking continuing employment are not to unreasonably reject an offer of suitable alternative employment, being employment that is comparable with the employee's skills and experience. Employees will have a maximum of 5 working days to advise whether or not they accept an offer of suitable alternative employment, or else they will be taken to have rejected the offer. If an employee rejects an offer of suitable alternative employment the surplus employee will, leave the Company with a severance payment in accordance with clause 34.1.3, within 14 days of rejecting that offer.

34.3.6 If an employee remains unplaced at the end of the Transition Period the Company will meet with the employee and their representative to discuss the employee exit arrangements from the Company.

34.3.7 Any difficulties or issues arising out of the procedures described in this clause will be discussed with the involvement of the relevant representative where appropriate, and will be dealt with in accordance with the dispute resolution procedures in clause 35 of this Agreement.

34.3.8 Major closures or significant unexpected events will be treated as special cases and will be discussed separately and arrangements appropriate to those events will be implemented. In these situations, the arrangements provided for in clause 34.3.5, including the Transition Period may not apply (as suitable alternative employment within BlueScope Steel is unlikely to be available).

34.3.9 Changes to work arrangements can result in people having to move to different shifts which provide lower ordinary time earnings. When this happens, employees will be given reasonable notice so that they have time to adjust their financial situation to suit. These arrangements do not apply to roster changes, which are driven by normal market fluctuations.

34.3.10 Nothing in this clause affects the right of the Company to dismiss an employee lawfully for misconduct or other circumstances unrelated to the employee having become surplus.”

[14] Clause 35 is entitled “Procedure for Resolving Claims, Issues and Disputes”. Clause 35.1 contains the Agreement’s dispute resolution procedure. Clause 35.2 is entitled “Introduction of Change Including Outsourcing”, and contains procedures applicable to the implementation of workplace change. The process provided for are more onerous in the case of changes which are “significant in nature”, which expression is defined in clause 35.2.2 as follows:

“(c) A change is ‘significant in nature’ for the purposes of this clause if the change will have substantial effects on:

(i) the composition, operation or size of the workforce in a section or department of the operations of the Company;

(ii) the skills required of employees;

(iii) the opportunities for promotions of employees;

(iv) the security of employment of employees;

(v) the hours of work of employees;

(vi) the location of work of employees;

(vii) shift pattern changes; and

(viii) outsourcing of work (meaning the engagement on a permanent basis of another organisation to perform work which has previously been performed by employees of the Company. In this respect outsourcing differs from the use of contractors to meet intermittent work load requirements or to provide specialist skills on a short term or as needs basis).”

The parties’ cases

[15] The AWU’s position was straightforward. It contended that all that was required to attract the operation of clause 11.1.1 was a causal link between the appointment of an employee to a classification receiving a lower rate of pay and one of the three situations identified in the clause, namely rationalisation of the Company's operations or the introduction of technological change or changes in work practices. The facts demonstrated that this single condition was satisfied, in that the invitation for expressions of interest for positions in the new business was a consequence of the decision to establish the new business using new technology and to close the UCPD.

[16] BlueScope’s position was that clause 11.1.1 was only applicable to employees affected by workplace change who had been made surplus in accordance with clause 34.3 and who were subject to the transition process provided for in clause 34.3.5. It submitted that:

● clause 11.1.1 operated as one of a suite of provisions in the Agreement regulating workplace change which also included clause 35.2, Introduction of Change Including Outsourcing and clause 34.3, Security for employees affected by workplace change;

● while clause 35.2 was directed at the particular change in issue and its implementation, clause 34.3 and 11.1.1 prescribed the entitlements of surplus employees affected by change;

● the transitional process contemplated by clause 34.3 allowed for employees to obtain appointments to another role, and it was part of that process that clause 11.1.1 came into operation;

● the transitional process in clause 34.3 itself could only commence if an employee was made surplus, and thus this became a precondition for the operation of clause 11.1.1;

● the heading “Organisational Change” to clause 11.1.1 reinforced the link between that clause and clauses 34 and 35, since “organisational change” was a synonym of the expression “workplace change” used in clauses 34 and 35;

● the preceding industrial instruments and unregistered agreements at the Steelworks dating back to 1984 included the equivalent to clause 11.1.1, and historically the provision operated as a measure to mitigate the effects of workplace change;

● the three situations in which clause 11.1.1 may operate, namely rationalisation of the Company's operations or the introduction of technological change or changes in work practices, echoed the language used in test case standards in relation to termination, change and redundancy which applied when the original Steel Industry Agreement was entered into in the early 1980s;

● because the four employees in question were never made surplus, clause 11.1.1 could not operate in respect of them;

● historically, the retention of rate entitlement had only been claimed and applied to surplus employees;

● in any event, there was no causal nexus because the affected employees accepted the positions in the new business before the workplace change at the UCPD had been effected; and

● there could not be a causal nexus where an employee accepts an offer which it was open to the employee to reject; if the acceptance is voluntary, then the appointment is not due to the employer’s decision but the employee’s decision to accept.

[17] In support of its case, BlueScope tendered witness statements made by Michael McPhan, its Hot Mills Project Manager, Processing Transformation, and Mr Mark Davis, the Senior Human Resources Adviser, Hot Mills and Services both dated 7 November 2016. Mr McPhan’s statement described the making of the decision to close the UCPD and establish the new business, the remuneration structure in the new business, and the processes by which it had dealt with potentially affected employees. He said in his statement that the UCPD would ultimately close as a result of BlueScope’s investment in the new coil processing business 2, and that “In my experience, I have always understood that the retention of rate clause to apply to employees when they were declared surplus and appointed into a position that received a lower rate of pay than their previous position”.3

[18] The contested factual issue concerned whether there had been an earlier occasion upon which employees had been transferred to different positions and received the benefit of rate retention without having first been declared surplus. Mr Branko Gorgievski, who was at the time an AWU official, gave evidence at the hearing that two BlueScope employees, Mr Troy Drayton and Mr Rob Trpenovski, had in 2015 been redeployed from the UCPD to the HCPD and given rate retention without ever having been declared surplus. In response to this evidence, BlueScope filed further material, including a witness statement made by Mr McPhan on 17 February 2017, describing the circumstances of this redeployment. It appears that although, prior to the redeployments, BlueScope had in 2014 communicated to relevant employees its intention to reduce the number of positions in the UCPD, it ultimately never had to merit select any persons for redundancy or declare any individual to be surplus in accordance with the provisions of clause 34.3. Mr Drayton and Mr Trpenovski voluntary accepted the transfers to the HCPD.

Consideration

[19] The parties’ respective submissions raise two issues for consideration. The first is whether clause 11.1.1, properly interpreted, requires as a precondition for its operation that an employee has been declared surplus and has been subject to a transition period under clause 34.3.5. The second is whether the causal link required by clause 11.1.1 exists on the facts of this case (noting that BlueScope did not contend that the establishment of the new business and the closure of the UCPD would not constitute “the rationalisation of the Company's operations, the introduction of technological change, or changes in work practices”).

[20] In relation to the first issue, both parties agreed that I should apply the principles for the interpretation of enterprise agreements enunciated in The Australasian Meat Industry Employees Union v Golden Cockerel Pty Limited. 4 Those principles are as follows:

1. The Acts Interpretation Act 1901 (Cth) does not apply to the construction of an enterprise agreement made under the Act.

2. In construing an enterprise agreement it is first necessary to determine whether an agreement has a plain meaning or contains an ambiguity.

3. Regard may be had to evidence of surrounding circumstances to assist in determining whether an ambiguity exists.

4. If the agreement has a plain meaning, evidence of the surrounding circumstances will not be admitted to contradict the plain language of the agreement.

5. If the language of the agreement is ambiguous or susceptible to more than one meaning then evidence of the surrounding circumstance will be admissible to aide the interpretation of the agreement.

6. Admissible evidence of the surrounding circumstances is evidence of the objective framework of fact and will include:

(a) evidence of prior negotiations to the extent that the negotiations tend to establish objective background facts known to all parties and the subject matter of the agreement;

(b) notorious facts of which knowledge is to be presumed;

(c) evidence of matters in common contemplation and constituting a common assumption.

7. The resolution of a disputed construction of an agreement will turn on the language of the Agreement understood having regard to its context and purpose.

8. Context might appear from:

(a) the text of the agreement viewed as a whole;

(b) the disputed provision’s place and arrangement in the agreement;

(c) the legislative context under which the agreement was made and in which it operates.

9. Where the common intention of the parties is sought to be identified, regard is not to be had to the subjective intentions or expectations of the parties. A common intention is identified objectively, that is by reference to that which a reasonable person would understand by the language the parties have used to express their agreement.

10. The task of interpreting an agreement does not involve rewriting the agreement to achieve what might be regarded as a fair or just outcome. The task is always one of interpreting the agreement produced by parties.

[21] There is no express requirement in clause 11.1.1, or anywhere else in the Agreement, that an employee must have been made surplus as a precondition for the operation of the rate retention entitlement. The only stated precondition is the employee must have been “appointed” to a classification with lower total rate of pay “due to” one or more of the three identified situations. I will return to the nature of the causal link required by the words “due to”.

[22] BlueScope’s case requires the putative precondition to arise as a matter of necessary implication because of what was said to be the close relationship or linkage between the express preconditions for the operation of clause 11.1.1 and other provisions of the Agreement concerned with the implementation of workplace change, particularly clause 34.3. However I am not persuaded that there is a contextual relationship between the provisions of the degree necessary to imply the existence of a precondition which is not expressly stated in the text of the Agreement.

[23] First, the overall structure of the Agreement does not support the proposition that clause 11.1 is part of a single “suite” of provisions concerned with workplace change which operate in an interlocked way. Part A of the Agreement is divided into seven separate divisions, each with a title identifying its broad subject matter. Clause 11.1 falls within Division 2, which is entitled “Rates of Pay and Related Matters”. The provisions in that Division, consistent with the title, are concerned with rates of pay and other monetary benefits and the mechanism for their payment. Clause 11.1 in that context may therefore be characterised as concerning employees’ pay entitlements in certain specified circumstances.

[24] Division 6 is entitled “Employment Relationship”, which only gives a very loose guide to the subject matter of the provisions within, which set out various requirements of the employment relationship. There is no specific set of provisions solely concerned with workplace change. Clause 32 deals with diverse matters such as the term of employment, probation, the circumstances in which employment may be terminated, the requirement to perform such work as may reasonably be required, and the circumstances in which the employee’s pay may be withheld. Clause 33 concerns requirements to work reasonable overtime and to comply with transfers from one shift system to another. Clauses 34 and 35 are not confined to the subject matter of workplace change, and where they deal with it, they do so in a far from integrated way. For example, clause 34 is entitled “Termination of Employment Due to Retrenchment or Redundancy”, and deals with a number of aspects of that subject matter. Clause 34.1 is entitled “Retrenchment”, and clause 34.1.1 relevantly states that clause 34.1 applies to “collective dismissals by way of retrenchment” but not to “termination of employment on account of the introduction of mechanisation or technological change” - technological change being, it may be recalled, one of the three situations which may give rise to the operation of clause 11.1. However clause 34.3, which has earlier been set out and deals with the process of managing employees rendered “surplus”, has an apparently wider application insofar as clause 34.3.2 refers to “workplace change, new technologies and changes in operations and services”. Clause 35.1 is a fairly conventional dispute resolution procedure, and clause 35.3 deals with stand down and summary dismissal of employees. Clause 35.2 deals with the procedures for the “Introduction of Change Including Outsourcing”, including change that is “significant in nature”. The definition of that expression in clause 35.2.2(c) makes it clear that the change does not need to be one which involves employees being rendered surplus or redundant, and clause 35.2 additionally deals with change that is not significant in nature.

[25] For these reasons I do not accept that there is an integrated “suite” of provisions concerning workplace change in the Agreement. Clauses 11.1, 34 and 35 each deal with various aspects of workplace change but in the context of broader subject matters which are discrete to each clause, with each clause using different definitional terminology when referring to workplace change. None of the clauses cross-refers to either of the others. There is no reason to infer from the structure of the Agreement that the subject matter of clause 11.1 is coterminous with that of clause 34.3 (or 35.2), or that clause 11.1 operates simply as an adjunct of clause 34.3. If that were the case, one would have expected that the content of clause 11.1 would form part of clause 34.3 rather than being contained in a separate provision in a separate part of the Agreement.

[26] Second, I do not accept that the type of change with which clause 11.1.1 is concerned is necessarily confined to change which involves employees being declared surplus and undergoing the transition period provided for in clause 34.3. As earlier stated, the definition of change that is “significant in nature” in 35.2.2(c) is broader than change which involves redundancies, so that for example changes which have substantial effects on the “composition, operation or size of the workforce in a section or department of the operations of the Company”, “the skills required of employees” or “the location of work of employees” are identified in the definition as alternatives to changes which have a substantial effect on “the security of employment of employees” (although it may be accepted that various aspects of the definition may cumulatively be applicable to a particular change). Changes of the type dealt with in clause 11.1.1 - “rationalisation of the Company's operations, the introduction of technological change, or changes in work practices” - could encompass any of these categories of change as well as others. It is entirely conceivable that, in the context of the implementation of change, BlueScope may wish to transfer an employee to another, lower-paid role without declaring anyone surplus. For example, the introduction of new technology or some other operational change may mean that positions graded at a higher skill level in a department are no longer needed in the same number or at all, and for that purpose existing employees may be appointed to roles in a lower classification without there needing to be any reduction in numbers. This would be a significant change under clause 35.2, but not a change to which clause 34.3 applied. In that circumstance clause 11.1.1 would operate to ensure that existing employees did not undergo a reduction in pay. Such a course would be consistent with clause 32.4, which provides among other things that “Employees must perform such work as the Company may, from time to time reasonably require.” 5

[27] Even where workplace change requires a reduction in employee numbers such as to make clause 34.3 applicable, it does not mean that the surplus employees will necessarily undergo the transition period provided for in clause 34.3.5 under which they may apply for other positions. Clause 34.3.3 allows for “surplus employees” to simply be reassigned by BlueScope into alternative and available roles, in which case the other provisions of clause 34.3, except for clause 34.3.9, do not apply. Among other things that excludes the requirement in the chapeau of clause 34.3.5 for employees to be given written notice that they are surplus, and appears also to exclude the requirement in clause 34.3.4 to use merit selection to choose those who are to be made surplus. Thus an employee regarded by BlueScope as surplus because of workplace change can simply be re-assigned to another position without any of the other procedures for surplus employees having to be followed. In that circumstance, clause 11.1.1 would be applicable if the new role was a lower-paying position. Additionally, clause 34.3.8 provides for different arrangements to apply in the case of “Major closures or significant unexpected events”, in which case clause 35.3.5 (including the procedure for providing written notice that an employee is surplus) may be rendered entirely inapplicable. Such an arrangement could conceivably involve employees being transferred to available lower-paid positions, in which case clause 11.1.1 would be applicable.

[28] The context of the Agreement as a whole therefore does not support the proposition that the operation of clause 11.1.1 is confined by the implicit precondition postulated by BlueScope; rather that context demonstrates that clause 11.1.1 may operate in a variety of circumstances, and it is not necessary that an employee has been the subject of the transition process in clause 34.3, nor is it even necessary that there is an overall reduction in employee numbers that needs to be managed.

[29] As earlier stated, BlueScope also relied upon the historical context provided by the predecessor industrial instruments, and by previous practice, to support its position. However in neither respect do I consider that the historical context supports the implied precondition contended for by BlueScope. In relation to the predecessor industrial instruments, it is clear that the rate retention provisions had an origin separate to that of the surplus employee regime currently found in clause 34.3. The Iron and Steel Works Employees (Australian Iron and Steel Pty limited, Port Kembla) Award, an award of the then Industrial Commission of NSW (State Award), was varied on 14 December 1984 to add clause 27C, Retention of Rate. The terms of this new provision were essentially the same as the current clause 11.2 applicable to pre-29 May 2001 appointments. At this time the State Award had provisions relating to automation and retrenchment, but no equivalent to the current clause 34.3.

[30] The first document I was taken to containing anything resembling the current clause 34.3 was the “Steel Industry Agreement” issued by BHP Steel on 18 December 1992. The Steel Industry Agreements were a series of non-registered agreements entered into from the mid-1980s onwards as part of a process to assist the Australian steel industry to become and remain internationally competitive. Clause 4.9 of the 1992 Agreement was entitled “Employment Security”, and clauses 4.9.1, 4.9.2 and 4.9.3 provided for the identification of surplus employees, the provision to them of various types of employee assistance, and the procedure for accepting or rejecting suitable alternative positions. The origin of the transition process in the current clause 34.3 is discernible in these provisions. Clause 4.9.4 was entitled “Retention of Rate”, and commenced with the following: “Normal ‘retention of rate’ provisions shall apply for operators and tradespersons as per the relevant sections of the Iron & Steel Works Employees (AI&S Pty Ltd Port Kembla) Award”. The provision went on to state that it was not envisaged that surplus employees would need to be redeployed outside of their stream except where no reasonable alternatives could be found.

[31] BlueScope relied upon these provisions as demonstrating the linkage between the surplus employee/transition period process and the retention of rate provisions. However the 1992 Agreement demonstrates that the retention of rate provisions, which were described as the “normal” provisions contained in the State Award, had an independent and prior existence to the surplus employee/transition period process established by clause 4.9 of the 1992 Agreement. There is nothing in the text to suggest that retention of rate provision were intended to be confined by or to operate as simply an adjunct to clause 4.9 of the 1992 Agreement. Nor could the 1992 Agreement, as an unregistered instrument, have had the legal effect of modifying the operation of provisions in the State Award.

[32] The retention of rate provisions in the State Award were modified in 2001 in respect of appointments on or after 29 May 2001, and from that point the provisions were in substance the same as the current clause 11. The predecessor to the current clause 35.2, Introduction of Change Including Outsourcing, was first introduced in clause 7 of the BHP Steel Port Kembla Operations Enterprise Agreement 2002, an enterprise agreement made and approved under the Industrial Relations Act 1996 (NSW). In the same agreement, the predecessor to the current clause 34.3 was also introduced as clause 8, Security for Employees Affected by Workplace Change, although in terms substantially different to the current provision. In the 2004 State Awardthis provision became a subclause of clause 34, Termination of Employment Due to Retrenchment or Redundancy. It was only in the BlueScope Steel Port Kembla Steelworks Agreement 2012 that clause 34.3, Security for employees affected by workplace change, was introduced in terms effectively the same as the current clause 34.3.

[33] This historical context only demonstrates, I consider, that the rate retention provisions were developed before and separately to the predecessors to the current clause 34.3 and 35.2, and these provisions never formed any integrated scheme concerned with the introduction of workplace change. It does not support the implication that the current clause 11.1 is to be read as operating subject to clause 34.3.

[34] BlueScope also relied on the evidence of Mr McPhan and Mr Davis as demonstrating that, in practice, the rate retention provisions had never previously been applied to anybody who had not been declared surplus under clause 34.3. However, that evidence was limited in its effect. Mr McPhan only stated that it was his understanding that the rate retention clause only applied to employees declared surplus, and Mr Davis could say no more than since his employment in October 2013, he had only dealt with the rate retention clause in circumstances where the employee had already been declared surplus and in conjunction with clause 34.3. This does not of itself demonstrate the existence of any historical practice, prior to the making and approval of the Agreement, that the rate retention provisions were not to apply to any employee who had been appointed to a lower-paid position due to workplace change if the employee had not been first declared surplus and been subject to the transition process provided for in clause 34.3. Further, the example of the redeployment of Mr Drayton and Mr Trpenovski in 2015 with the benefit of rate retention without either of them first having been declared surplus in accordance with clause 34.3 of the then applicable agreement tends to contradict the existence of any such historical practice. Ultimately, the evidence concerning historical practices pertaining to rate retention is insufficiently clear to bear upon the interpretation of the relevant provisions of the 2015 Agreement.

[35] For these reasons I do not accept BlueScope’s submission concerning the interpretation of clause 11.1.1.

[36] The second issue requiring determination is whether the pre-condition stated in clause 11.1.1 - that is whether the appointment to the lower-paid position was “due to the rationalisation of the Company's operations, the introduction of technological change, or changes in work practices” - was satisfied in relation to the four former UCPD employees appointed to positions in the new business. The use of the expression “due to”, applying its ordinary meaning, requires that the appointment to the lower-paid position be attributable to or caused by one or more of the three identified situations. Causation is a question of fact to be answered by applying common sense to the facts of the particular case. 6

[37] I consider that it is clear that the appointments of the four employees to the new business were caused by BlueScope’s decision to establish the new business and, eventually, to shut down the UCPD. That decision at least involved a rationalisation of BlueScope’s operations and the introduction of new technology. It is not necessary to go much further than the 9 May 2016 letter to reach that conclusion. That letter made it clear that the new business involved an investment in innovative new technology for coil processing, that the UCPD would close once the new business was fully operational and meeting customer needs, and that employees in the UCPD would have the option of taking redundancy, applying for roles in the new business, or seek redeployment elsewhere in the Steelworks. Although there was some clarification and refinement at the conference on 24 June 2016 as to the process by which this would occur, the applications by the four employees for positions in the new business and the acceptance of those applications by BlueScope were the direct result of the BlueScope decisions disclosed in the 9 May 2016 letter.

[38] I do not accept BlueScope’s submission that because the four employees made their applications voluntarily, the chain of causation was broken. An act does not constitute a novus actus interveniens merely because it was undertaken voluntarily or deliberately. 7 Here, the applications were made in the exercise of one of three options made available by BlueScope to employees whose positions were to become redundant in the future because of its decision to close the UCPD and establish the new business. The applications would not have been made otherwise, and the clear causal connection is not vitiated merely because the time at which the employees’ positions would actually become redundant had not yet arrived.

[39] It may further be observed that BlueScope’s submission in this respect is inconsistent with the proposition it also advanced that clause 11.1.1 has application to an employee the subject of the transition period provided for by clause 34.3.5 of the Agreement who, having been declared surplus, obtains an alternative lower-paid position in the Steelworks. As clause 34.3.5(a) makes clear, participation in the transition process is voluntary since the employee may alternatively decide to leave BlueScope’s employment with a retrenchment package. No party contended that an employee’s decision to enter into the transition period under clause 34.3.5 broke the chain of causation between the circumstances which caused the employee to be made surplus and any subsequent appointment of the employee to an alternative lower-paid position.

[40] BlueScope in its submissions identified some business policy reasons why clause 11.1.1 should not apply to employees who had not been declared surplus and entered into the transition period contemplated by clause 34.3.5. However, those submissions are not relevant to the task before me, which is to give effect to the Agreement and not to determine what might be considered to be a just and fair outcome.

Conclusion

[41] My determination is that the four employees in question are entitled to the retention of rate benefits provided for in clause 11.1.1 of the Agreement.

VICE PRESIDENT

Appearances:

A. Howell of counsel for The Australian Workers’ Union

M. Seck of counsel for BlueScope Steel (AIS) Pty Ltd

Hearing details:

2016.

Sydney:

30 November.

 1   Martin Bright, Laurence Tolhurst, Adam Gill and Alan Matthews

 2   Statement of Michael McPhan dated 7 November 2016, paragraph 13

 3   Ibid at paragraph 50

 4   [2014] FWCFB 7447, 245 IR 394 at [41]

 5   See AWU v BlueScope Steel Limited[2016] FWC 3848 at [74]

 6   March v Stramare (E & MH) Pty Ltd [1991] HCA 12; 171 CLR 506 at 515

 7   Ibid at 517-518

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