The Australian Workers' Union v Murphy Pipe and Civil

[2013] FWC 1251

[2013] FWC 1251

FAIR WORK COMMISSION

RECOMMENDATION

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

The Australian Workers' Union
v
Murphy Pipe and Civil
(C2013/227)

Building, metal and civil construction industries
SENIOR DEPUTY PRESIDENT RICHARDS	BRISBANE, 26 FEBRUARY 2013

Recommendation: inclement weather provisions - commercial contract - costs reimbursable contract - hard money contract - stand down for reason not within employer's control.

[1] On 25 February 2013 a dispute conference was held following an application under s.739 of the Fair Work Act 2009 (“the Act”). The employer (“the Company”) was Murphy Pipe and Civil (“MPC”). The AWU and MPC are parties to the Murphy Pipe and Civil Gas QCLNG Upstream Project Works Enterprise Agreement (“the Agreement”).

[2] The dispute arose from the circumstances affecting the project on and after Australia Day, 26 January 2013. On that day MPC demobilised a large proportion of its work force, and stood down its employees in the gathering crews and the trunk line crews. These employees were removed from site and returned to their home base. They did not resume work until between the 6 and 12 February 2013. Apart from the payments made by the Company up until - what I understand to be - 29 January 2013, the employees concerned have not received any remuneration for any of this period in which they would have been ordinarily rostered to perform work.

[3] On behalf of the employees, the AWU contends that the employees were stood down because of adverse weather conditions and that this invoked Appendix 3 of the Agreement. Appendix 3 of the Agreement provides for payment of employees whose work is interrupted because of adverse weather conditions or inclement weather in certain circumstances. For the most part the circumstances are of an intermittent kind, or they are circumstances in which productive work on site is suspended for short periods.

[4] Appendix 3 also provides for payment of employees where they are stood down in the event of inclement weather. In the circumstances, where the employer stands down an employee under the Agreement, the employee shall be paid for the normal rostered ordinary time that occurred during the stand down, subject to some attendance-related conditions.

[5] The AWU contends that this provision was enacted by the employer and payment is owing to the employees as a consequence. The AWU argues further that whilst Appendix 3 contains a general right for an employer to stand down an employee without pay for any day or part of the day on which an employee cannot do work owing to a cause which the employee cannot reasonably be held responsible, the current circumstances are different.

[6] The AWU suggests that the approach of the Company in 2011 to a flood situation at that time should be again adopted. In 2011, the Company made payment to its employees who were stood down because of a decision made by the employer in relation to the then prevailing adverse weather conditions.

[7] The Company’s argument in response is that its decision to stand down its employees was for reasons other than the adverse weather conditions at the time.

[8] The Company explained that it received correspondence from its principal - QGC - dated 26 January 2013, that directed it to suspend work under the contract between itself and MPC in specified regions.

[9] The same correspondence informed MPC that QCG was unable to continue to provide accommodation for MPC’s personnel in five of the relevant accommodation or construction camps.

[10] MPC was therefore required to immediately demobilise all of its personnel from the construction camps until further notice.

[11] There seems little doubt that in so directing MPC, QCG was acting under the particular provisions of clause 52 of the commercial contract to which it and MPC were parties.

[12] MPC argued it therefore had no choice whatsoever other than to suspend work and demobilise its workforce who were resident in the construction camps.

[13] Some further context is required to explain the situation.

[14] The current scope of works which MPC is undertaking for QCG is a costs reimbursable contract. QCG is therefore able as a contractual term to regulate the conduct of MPC over the course of the project life, determining in what circumstances it will and will not reimburse costs to the contractor. In the context of the correspondence of 26 January 2013, because of the direction received by MPC it was not to be reimbursed for any further work from that day going forwards. Nor was any accommodation available for its employees, who were therefore required to be demobilised (other than those who were based locally of course and who were able to continue other duties and be remunerated accordingly).

[15] Because of the direction made pursuant to its commercial contract, it cannot be concluded that the Company stood down its employees because of inclement weather pursuant to Appendix 3 of the Agreement. Instead, once the accommodation was withdrawn and the Company was no longer to be paid for any work by QCG, it was compelled to stand its employees down without pay. It is for this reason that the inclement weather provisions of the agreement do not apply to the circumstances of this case.

[16] The contractual situation in January 2013 was different from the contractual situation in 2011, when flooding occurred and demobilisation was necessary.

[17] At that time, the Company had a hard dollar contract and had as a consequence full control over decision making about the suspension of work and the terms on which it was conducted. Because it held responsibility for these matters under such a contract, when it stood its employees down for reasons of adverse or inclement weather it did so because of its own decision-making. As a consequence, the inclement weather provisions of the Agreement were triggered and employees were paid pursuant to Appendix 3 (which I have outlined in summary above).

[18] There are no doubt reasonable concerns that will arise in an employee’s mind in relation to the different situations which arise in relation to the different contracts which govern the operation of their employer’s particular projects. This is especially the case when the greenfields agreement referred to above operates across multiple projects for its duration and where these projects may be governed by different contractual arrangements. The different contractual arrangements may impact variably on some entitlements and obligations such as those in Appendix 3, which concerned the operation of the site and access to accommodation and the conditions to which a stand down may be invoked.

[19] It would not ordinarily be expected that employees would appreciate the commercial contractual underpinnings to their employment, and how these may affect what they believed otherwise to be their entitlements or the obligations that are owed to them. Yet this is not necessarily an unusual case, as employers generally will be exposed to many legal (and business) risks which could at any time interpose in the employment relationship.

[20] Be that as it may, it appears to me as though the decision to stand down the employees was taken because of the direction given by QCG to MPC to suspend certain works, in hand with the withdrawal of access by MPC employees to the various construction camps. The stand down occurred therefore because of circumstances the cause of which the employer could not reasonably be held responsible. In such circumstances employees will not receive remuneration for the period of the stand down that follows.

[21] The AWU expressed concerns as to whether or not there might be scope for contractors and their principles to come to arrangements whereby a principal may give a direction at the behest of a contractor to assist the contractor in avoiding an obligation it may otherwise owe its employees. I can only comment in relation to this concern that if such collusive-type conduct arose, the conduct by the parties may be exposed to legal risk (that may far outweigh any commercial gains).

[22] Ultimately, it may be a matter of future agreement making to take into account the manner in which different project commercial contracts interact with agreements.

[23] There is one final matter that warrants my comment. MPC has a large workforce of some 600 employees. The majority of these were stood down on short notice and with limited information being communicated to the AWU about their circumstances. It appears to me that the consultation requirements under the Agreement would reasonably oblige the Company to maintain close communication with the AWU in a significant matter affecting the interests of its members.

[24] There appears on this occasion to have been a breakdown in communication owing to the resignation of a key employee of MPC whose resignation took effect on 26 January 2013; the day on which QCG issued its direction to MPC. This particular employee had been responsible for maintaining open and effective communication with the AWU over some time, a function which was acknowledged by the AWU.

[25] But for this particular circumstance, it would seem that the Company seeks to maintain its history of productive communication with the AWU, and I would recommend that it do so in any event.

SENIOR DEPUTY PRESIDENT

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