The Australian Workers' Union v Telum (Qld) Pty Ltd T/A Telum

[2016] FWC 8496

[2016] FWC 8496

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.437 - Application for a protected action ballot order

The Australian Workers' Union
v
Telum (QLD) Pty Ltd T/A Telum
(B2016/1247)

Construction, Forestry, Mining and Energy Union
v
Telum (QLD) Pty Ltd T/A Telum
(B2016/1251)

COMMISSIONER SAUNDERS NEWCASTLE, 8 DECEMBER 2016

Proposed protected action ballot of employees of Telum (QLD) Pty Ltd T/A Telum.

[1] The Construction, Forestry, Mining and Energy Union (CFMEU) and the Australian Workers’ Union (AWU) have each made an application under s.437 of the Fair Work Act 2009 (Cth) (the Act) for protected action ballot orders in relation to certain employees of Telum (Qld) Pty Ltd T/A Telum (Telum).

Hearing

[2] I heard this matter on 1 December 2016. At that time I informed the parties that I would deal with the two applications for protected action ballot orders at the same time pursuant to s.442 of the Act. I also ordered that evidence in one proceeding be treated as evidence in the other proceeding.

[3] At the hearing the CFMEU tendered a witness statement made by Mr David Kelly, CFMEU organiser, on 24 November 2016. Mr Kelly was not required for cross examination. The AWU tendered a witness statement made by Mr Mark Hughes, AWU official, on 24 November 2016. Mr Hughes was not required for cross examination. Telum tendered a witness statement made by Mr Razz Razlog, a consultant engaged by Telum in relation to the bargaining process for a proposed enterprise agreement, on 29 November 2016. Mr Razlog also gave oral evidence at the hearing.

[4] At the conclusion of the hearing I granted the CFMEU and the AWU leave to file written submissions in relation to submissions made (for the first time) by Telum at the hearing in relation to alleged non-permitted matters being sought by the unions in the bargaining process. Telum was also given the opportunity to respond to those written submissions. Telum filed its submissions in reply on 5 December 2016.

Issues in dispute

[5] Before I can make the protected action ballot orders sought by each of the CFMEU and the AWU, one of the matters about which I must be satisfied is that the relevant union has been, and is, genuinely trying to reach an agreement with Telum. 1

[6] Telum contends that:

(a) each of the CFMEU and the AWU has not been, and is not, genuinely trying to reach an agreement with Telum because each of them is, and has at all material times been, pursuing non-permitted matters in the bargaining with Telum; and

(b) although each of the CFMEU and the AWU was (putting to one side the permitted matters argument) genuinely trying to reach an agreement with Telum in the period from 31 October 2016 until 15 November 2016, in the period since 16 November 2016 each of them has not been genuinely trying to reach an agreement with Telum. The basis for that contention is Telum’s submission that the applications for protected action ballot orders are premature.

[7] Apart from the contested matters set out in the previous paragraph, there is no dispute between the parties and I am satisfied on the evidence that the statutory requirements for the protected action ballot orders sought by each of the CFMEU and the AWU have been met.

Principles re genuinely trying

[8] As to the question of whether a bargaining representative has been and is genuinely trying to reach an agreement, Flick J said the following in JJ Richards & Sons Pty Ltd v Fair Work Australia: 2

“58. It is ultimately concluded that s 443(1)(b) is to be construed such that Fair Work Australia cannot reach a state of satisfaction that an “applicant ... is ... genuinely trying to reach an agreement with the employer” unless:

• an applicant has approached the employer and informed the employer of the general ambit of that for which agreement is sought; and



• the employer has foreshadowed – even in the most general of terms – its attitude as to the proposed agreement.

More may be required. Much may well depend upon the factual scenario in which the terms of s 443(1)(b) are to be applied. But such a minimum statement of that which is required is sufficient to dispose of the present Application. Contrary to the submissions advanced on behalf of the Applicants, the terms of s 443(1)(b) do not require:

• bargaining to have commenced within the meaning of and for the purposes of s 173, found within Part 2-4, of the Fair Work Act.

59. So much, it is concluded, follows from the natural and ordinary meaning of the phrase “trying to reach an agreement ...”. It is difficult to conclude that any person can try to reach an agreement with another in the absence of a disclosure of that for which consensus is sought. One person may wish to reach an agreement with another. But, until the general content of the proposed agreement is disclosed, it cannot be said that he has even attempted to reach an agreement. Until disclosed, it is not known whether the other person will readily embrace the proposed agreement or shun it or (perhaps) embrace the concept of an agreement but wish to vary one or other of its terms. Until disclosed, the person seeking agreement has not even tried to solicit the response of the other. Unless the disclosure is genuinely with a view to reaching agreement, it could well be said that the attempt to reach an agreement falls short of a person even trying to reach agreement. The addition of the word “genuine” – on one approach to construction – perhaps adds little. But the addition of that term serves to emphasise the importance of a person actually trying to solicit agreement. Until a proposed agreement has been disclosed to the prospective parties, and a response solicited, an applicant has not even tried to reach agreement – let alone genuinely tried to reach agreement.

60. The Transport Workers’ Union, in the present proceeding, satisfied that requirement by writing to J.J. Richards on 24 December 2010. Rightly or wrongly, J.J. Richards indicated its response in the terms it did in its letter dated 7 January 2011. That exchange of correspondence was sufficient to satisfy the precondition to the exercise of the power conferred by s 443(1).”

[9] In Total Marine Services Pty Ltd v Maritime Union of Australia 3, the Full Bench expressed the following views about s.443(1)(b):

“[31] In our view the concept of genuinely trying to reach an agreement involves a finding of fact applied by reference to the circumstances of the particular negotiations. It is not useful to formulate any alternative test or criteria for applying the statutory test because it is the words of s 443 which must be applied. In the course of examining all of the circumstances it may be relevant to consider related matters but ultimately the test in s 443 must be applied.

[32] We agree that it is not appropriate or possible to establish rigid rules for the required point of negotiations that must be reached. All the relevant circumstances must be assessed to establish whether the applicant has met the test or not. This will frequently involve considering the extent of progress in negotiations and the steps taken in order to try and reach an agreement. At the very least one would normally expect the applicant to be able to demonstrate that it has clearly articulated the major items it is seeking for inclusion in the agreement, and to have provided a considered response to any demands made by the other side. Premature applications, where sufficient steps have not been taken to satisfy the test that the applicant has genuinely tried to reach an agreement, cannot be granted.”

[10] The Full Bench in Esso Australia Pty Ltd v AMWU & Ors 4made the following observations about paragraphs [31] and [32] of the earlier Full Bench decision in Total Marine Services Pty Ltd v Maritime Union of Australia:

“[35] For our part, for reasons we articulate later, we agree with the observations in paragraph [31] and the first three sentences of paragraph [32] of Total Marine, set out above. We note that the observations which follow the first three sentences in paragraph [32] are obiter and although we do not consider that they should be understood as attempting to establish any binding decision rule, nonetheless they are, with respect, somewhat inconsistent with the earlier expressed proposition (with which we agree) that it is not useful to articulate any alternative test or criteria to the words of s.443(1)(b). We note that similar reservations were expressed by the majority of the Full Bench in JJ Richards and Sons Pty Ltd v TWU (JJ Richards No.1) and by the Full Bench in Farstad Shipping (Indian Pacific) Pty Ltd v MUA (Farstad).”

[11] In light of these authorities, I will proceed on the basis that whether an applicant “has been, and is, genuinely trying to reach an agreement” is a question of fact to be decided having regard to all of the facts and circumstances of the particular case. 5 No one factor is necessarily determinative of the question of whether an applicant is, or has been, genuinely trying to reach an agreement.6 No alternative test or criteria to the words of s.443(1)(b) should be applied.7 In addition, no specific stage must be reached in the negotiations in order for there to be a finding that an applicant is, and has been, genuinely trying to reach an agreement with the employer.8

[12] The expression “has been, and is” in paragraph 443(1)(b) imports temporal considerations. 9 It is necessary for the Commission to reach the requisite level of satisfaction both (a) at the time the application for a protected action ballot order is made and determined and (b) at an earlier time.

[13] When there is more than one applicant for a protected action ballot order, each applicant must be, and must have been, genuinely trying to reach an agreement with the relevant employer. 10

Non-permitted matters

[14] If an applicant for a protected action ballot order is, or has been, bargaining for a non-permitted mater, that is relevant to, but not determinative of, the question of whether the applicant, is and has been, genuinely trying to reach agreement with the relevant employer. So much is clear from the following statement by the Full Bench in Esso Australia Pty Ltd v AMWU & Ors (at [59]):

“There is no legislative warrant for the adoption of a decision rule such that if an applicant is, or has been, pursuing a substantive claim which is not about a permitted matter it is not genuinely trying to reach an agreement within the meaning of s.443(1)(b). The fact that an applicant is, or has been, pursuing a claim about a non-permitted matter is relevant to whether the test posited by s.443(1)(b) has been met, but it is not determinative of the issue. A range of factual considerations may potentially be relevant in that context, including but not limited to the subject matter of the claim, the timing of the advancement of the claim, the basis upon which the claim is advanced, the significance of the claim in the course of the negotiations, the claimant’s belief as to whether the claim is about a non-permitted matter or not, where there is legal clarity about the permitted status of the claim, whether the other party has placed in contest whether the claim is about a permitted matter, and whether such a claim has been withdrawn and, if so, when and in what circumstances. The diversity of the factual circumstances and nuances which will be found in different cases means that it is not possible to say that any particular factor or consideration will always be determinative of the result.”

[15] When determining whether a particular clause in an enterprise agreement or a proposed enterprise agreement is about matters pertaining to the employment relationship, it is principally the subject matter of the clause that is to be considered, rather than the precise terms of the clause or claim. 11

Relevant Facts and Circumstances

[16] The applications for protected action ballot orders relate to an enterprise agreement which the CFMEU and the AWU are seeking to negotiate, on behalf of their members, with Telum in relation to a road construction project on the Pacific Highway between Kempsey and Kundabung in northern New South Wales (K2K Project).

[17] The head contractor for the K2K Project is the McConnell Dowell Constructors (Aust) Pty Ltd and OHL Construction Pacific Pty Ltd joint venture.

[18] The K2K Project is expected to be completed in around the middle of 2017. Hence, the unions submit there is some urgency in their completion of negotiations with Telum for a new enterprise agreement.

[19] The enterprise agreement being negotiated by the parties will, if made, replace an enterprise agreement known as: “Section 330 Employer Greenfields Agreement Telum (QLD) Pty Ltd ACN110619013 Contract Labour Hire – Building Works August 2006”. However, Mr Kelly gave unchallenged evidence, which I accept, that, to the best of his knowledge, workers employed on the K2K Project are currently receiving entitlements in line with the Building and Construction General On-site Award 2010.

[20] Telum initially refused to bargain with the CFMEU for a new enterprise agreement in connection with the K2K Project. As a result, the CFMEU lodged an application for a majority support determination. Prior to the hearing of that application, Telum agreed to commence bargaining.

[21] In around early September 2016, Mr Hughes became aware that Telum had initiated bargaining for a new enterprise agreement. To that end, Telum issued a notice of employee representational rights to its employees.

[22] Mr Hughes telephoned Mr Tim Myles, Telum Project Manager, a number of occasions during September 2016 in an attempt to set up a negotiation meeting.

[23] The CFMEU served its log of claims on Telum on 7 September 2016.

[24] On 30 September 2016, Mr Hughes sent an email to Mr Myles in the following terms:

“Tim,

I have made numerous attempts to organise with you, a meeting to discuss the Enterprise Agreement to cover employees on the Kundabung to Kempsey site. It is imperative that Telum begin bargaining in good faith immediately. As representational notices have already been distributed some time ago now, we need to convene a meeting with the bargaining reps as soon as possible. Understanding the restrictions over the long weekend, I would expect a response by Tuesday 4^th to confirm a meeting, or at the least to put forward a proposal for the agreement.”

[25] Mr Myles responded to Mr Hughes’ email in the following way on 4 October 2016:

“Hi Mark,

Arthur is away this week but I have spoken to him and he suggests that you organise access with McConnell Dowell OHL in order to have discussions with the bargaining reps. Telum has engaged a consultant, Razz Razlog, to manage the negotiations and we will arrange for Razz to contact you shortly.”

[26] The CFMEU lodged an application for bargaining orders in the Fair Work Commission (the Commission) because Telum disputed the CFMEU’s status as a bargaining representative. In proceedings before Deputy President Lawrence on 31 October 2016, Telum agreed to recognise the CFMEU as a bargaining representative for its members employed by Telum to work on the K2K Project.

[27] Deputy President Lawrence recorded on transcript on 31 October 2016 the agreement reached between Telum and the CFMEU in conference:

“THE DEPUTY PRESIDENT:  We're back on record and we've had the benefit of a conference of the parties to see if there could be an agreed way forward that enables bargaining to take place without the need for an argument about bargaining orders.  And what I propose to do is read on to the record what I understand to be the agreement between the parties, and then I will ask the respective representatives to confirm whether they agree or whether they seek to make any point about it.

First up, I just note that these are applications by the CFMEU for bargaining orders with respect to two legal entities; the first being Telum Queensland Proprietary Limited, and the second being Telum Precast (NSW) Proprietary Limited. I note that although they're separate legal entities they have a common management and ownership. They do, however, refer to jobs which have different circumstances as I'll note later. But in respect of both of those legal entities that I'll call collectively Telum, it's recognised that both the AWU and the CFMEU are bargaining representatives and they're recognised by Telum as bargaining representatives pursuant to section 176 of the Fair Work Act.

Secondly, each organisation is a bargaining representative to the extent that it can represent the industrial interests of employees pursuant to its conditions of eligibility. That really restates, I think, the intention of section 176 subsection (3). And, again, just by way of further explanation, that means that each organisation is able to represent in bargaining those employees that they can properly enrol pursuant to their conditions of eligibility.

On the basis of that agreement it's been agreed that bargaining will go forward in accordance with the following timetable:  that the CFMEU will receive a response to its log of claims by noon on Thursday, 3 November.  That response will include reasons for the response.  The CFMEU organiser, Mr Kelly, is onsite on the north coast later this week and it's intended that he'll report back to the CFMEU members on Thursday afternoon and on Friday.

It was then further agreed that there would be joint meetings between Telum and the AWU and the CFMEU; the first meeting to take place on either 10 or 11 November subject to Mr Beard from the AWU just confirming that the AWU official is available.  I would expect that if there's some difficulty there Mr Beard and Mr Boncardo should be able to discuss that and talk to the company and it would be agreed that there be a meeting on those dates or as soon as soon as possible around those dates.”

[28] Deputy President Lawrence also made the following comments on transcript concerning his expectations and the listing of the matter for a report back on the morning of 8 December 2016:

“I'd expect then that, depending upon the progress of negotiations, that there would be a further meeting or meetings, and I think that's up to the parties to agree hopefully, and then there would be a report back in respect of both of the matters on the morning of 8 December.”

[29] On 3 November 2016, Telum responded by email in the following way to the CFMEU’s log of claims dated 7 September 2016:

“Dear Dean and Dave

I write in response to the CFMEU’s log of claims provided to Telum QLD Pty Ltd (Telum) for a new enterprise agreement in respect to Telum’s employees who are employed performing work on the Pacific Highway between Kempsey and Kundabung Project (K2K Project).

Telum remains committed to an open and positive dialogue with the CFMEU.

Telum has carefully considered all proposals put forward by the CFMEU and considers that the claims represent a significant increase in employee related costs and do not fit with Telum’s current or future operational requirements. Furthermore, it should be noted that the labour hire market is highly competitive and challenging. The CFMEU’s log of claims do not align with current market conditions or indicative of general economic conditions. The majority of local labour companies are either paying in accordance with the relevant award or just above the award rates. It was clear at the time the project was first tendered that the other tenderers had also tendered on the basis of award rates.

Whilst we are aware of a number of labour hire companies with existing enterprise agreements they reflect pay rates and terms that are significantly lower than the CFMEU’s claims.

By way of an example, Telum would draw the CFMEU to the following enterprise
agreements which terms and conditions are significantly lower than those proposed
on Telum:

• Workpac



• Waycon/Catalyst Recruitment (part of the Skilled Group)



• Workforce International

• Protech

Furthermore, any changes to Telum’s terms and conditions which could potentially have a cost impose on the K2K project, will need to be discussed with K2K management in the first instance before any agreement to terms and conditions can be reached.

In line with Lawrence DP recommendation, Telum is committed to meeting with the CFMEU (and AWU) next week on a date to be confirmed.

Yours faithfully,
Razz Razlog

On behalf of
Telum QLD Pty Ltd”

[30] On 8 November 2016, Mr Razlog met with Mr Hughes at the AWU Newcastle office. Both Mr Razlog and Mr Hughes describe this meeting as an “introduction meeting”.

[31] On 10 November 2016, Mr Kelly and Mr Hughes met with Mr Razlog and Mr Tim Myles in the Telum office in Port Macquarie. Mr Kelly gave unchallenged evidence, which I accept, that Mr Razlog made the following points at the meeting:

• Telum did not want to out price itself in the market; compared with other body hire companies in the area;



• Telum was not prepared to offer a pay rise unless it was agreed by the principal contractor, the McConnell Dowell/OHL joint venture operating the Kundabung to Kempsey site; and



• Mr Razlog undertook to respond by email to the full log of claims by November 16^th.

[32] Mr Hughes gave unchallenged evidence, which I accept, to the effect that during the meeting on 10 November 2016 Mr Hughes “put forward and talked to the employee claims (which were a joint position of members of the AWU and the CFMEU). We requested that the Employer put forward its position and respond to the employee claims.”

[33] I am satisfied on the balance of probabilities that the “joint position” to which Mr Hughes refers is the log of claims communicated by the CFMEU to Telum on 7 September 2016. I make that finding because the only “position” the CFMEU has communicated to Telum is its log of claims dated 7 September 2016; representatives of both the CFMEU and the AWU were present at the meeting on 10 November 2016; the attendees at the 10 November 2016 meeting talked about the “employee claims”; 12 Mr Razlog gave evidence that “the joint Log of Claims were put forward and discussed”13 at the meeting on 10 November 2016; and Telum responded to the “joint proposal” on 16 November 2016 by making express reference to the “Log of Claims”.

[34] Mr Razlog agreed in cross examination that, at the end of the meeting on 10 November 2016, he did not have any misunderstanding in relation to the claims being made by the unions.

[35] By email dated 16 November 2016, Mr Razlog responded in the following way to the log of claims discussed at the meeting on 10 November 2016:

“Dear Dave and Mark

Firstly, thank you for your time on Thursday (10 Nov) to meet and discuss terms and conditions for a new project specific enterprise agreement for the Kempsey and Kundabung project (K2K project) in respect to Telum's employees who are employed performing work on the K2K project.

Telum has again carefully considered each Log of Claims individually and collectively and the resulting impact to Telum's business. Based on these considerations, Telum reject's all proposals presented in the Log of Claims for the following reasons;

• proposed pay rates and terms are unrealistic and not sustainable to Telum's business,



• proposed pay rates and terms do not align with current market conditions,



• proposed pay rates and terms are not indicative of general economic conditions,



• Telum has entered into a contractual arrangement with K2K management which sets fixed terms and conditions for the duration of the works on the project,



• an analysis of Telum's competitors (as previously advised to the unions) existing enterprise agreements reflect wage rates and terms significantly lower than those proposed on Telum, in fact, the majority of local labour companies are either paying in accordance with the relevant award or slightly above the award. Therefore, this would put Telum at a financial disadvantage with the wider industry, and



• the log of Claims represent a significant increase in employee related costs which would be detrimental to Telum's future operational requirements.

At the time Telum tendered on the K2K project, it was evident that the other tenderers has also tendered on the basis of award rates, it is for this reason, that it is difficult for Telum to rationalize with any real logical reasoning justification for such an increase in wage rates and to terms and conditions that will have an adverse effect on Telum's business, destroying jobs, and resulting in Telum becoming uncompetitive.

Notwithstanding the reasons provided for above, Telum remains fully committed to continuing positive dialogue with both the AWU and CFMEU in reaching a compromise. With this in mind, Telum request both unions to review their Log of Claims in line with wage rates and terms and conditions aligned with that of current market conditions. Once reviewed, please provide a revised set of claims to Telum.

Yours faithfully,
Razz Razlog”

[36] On 17 November 2016, Mr Hughes responded in the following way to Mr Razlog’s email from the previous day:

“Raz,

Thanks for your reply. As of this stage, the Unions have presented a log, which has been rejected by Telum in full. At no stage have Telum, or their representative, Raz Razlog, put forward their official stance, other than the reference in the email below to the minimum award rate and Telum’s belief that there is no justification for an increase above those rates. I therefore ask that Telum put forward their position, as currently it is clear there is no desire to move above the award rates. Both Unions will be meeting with members in the coming days to discuss our position and options moving forward, being very mindful of the time frame with both the Christmas period approaching, as well as the completion of the project also rapidly approaching.

We look forward to the official position from Telum being presented by early next week.

Mark Hughes
North Coast Official”

[37] On 21 November 2016, Mr Razlog sent a further email (in the following terms) to Mr Hughes and Mr Kelly:

“Dear Mark,

Apologies that the correspondence dated 16 Nov 2016 in regards to the subject matter is unclear, to reiterate, the Log of Claims put forward by the AWU and CFMEU in respect to the subject matter is rejected by Telum for the reasons provided for in the said correspondence.

Telum seeks and awaits revised and amended Log of Claims from the AWU and CFMEU as requested and outlined in the correspondence dated 16 Nov 2016.

Yours faithfully
Razz Razlog”

[38] On 22 November 2016, Mr Hughes requested a counter offer from Telum to the log of claims discussed on 10 November 2016. Mr Hughes’ request in that regard was made in an email sent by him to Mr Razlog on 22 November 2016:

“Hi Raz,

Your email dated the 16th November was clear, however the reasons listed for rejecting the Union’s log eluded to the stance that Telum had no desire to pay above minimum award rates. Given we put forward a clear log, and clearly explained our reasoning behind the claims, we wish to reiterate our request for an immediate response outlining the counter offer from Telum. At this stage, we can only assume that the offer is the award rate. Can you please clarify this position by close of business today.

Mark Hughes
North Coast Official”

[39] On 23 November 2016, Mr Razlog sent an email in the following terms to Mr Hughes and Mr Kelly:

“Dear Mark,

Telum’s ‘counter offer’ is pursuant to the terms and conditions including Wage rates specified in the Building and Construction General On-site Award 2010 (‘ referred to as “the Award”).

Your faithfully
Razz Razlog”

[40] On 24 November 2016, the AWU filed its application for protected action ballot orders.

[41] On 25 November 2016, the CFMEU filed its application for protected action ballot orders.

[42] Mr Hughes gave the following unchallenged evidence in his witness statement in relation to the AWU’s attempts to reach an agreement with Telum:

“12. At all times, the AWU has been genuine in our attempt to reach agreement with the Employer.

13. For the Proposed Agreement there remain a number of outstanding claims about which the parties cannot agree, including:

a. The quantum of wage rates;
b. The quantum of allowances;
c. Casual conversion.

14. The membership of the AWU that will be covered by the Proposed Agreement has resolved to apply for a protected action ballot to enable the taking of protected industrial action to advance its claims.”

[43] Mr Kelly gave the following unchallenged evidence in his witness statement in relation to the CFMEU’s attempts to reach an agreement with Telum:

“11. It is clear that there is no agreement between the parties, and that any increase to wages above the award rates is not acceptable to Telum at this point in time.

12. The CFMEU has at all times, and remains, genuinely trying to reach an agreement with Telum.”

[44] Mr Razlog gave the following unchallenged evidence in his witness statement in relation to Telum’s attempts to reach an agreement with the unions:

“11. I was not expecting the applications, particularly at this stage of the bargaining process for the Proposed Agreement.

12. It was my understanding that the AWU and CFMEU would put forward a revised Log of Claims and I was awaiting this in order to move forward in the bargaining process. Once a revised Log of Claims is received, it is intended that Telum will be able to negotiate further.

13. I am not aware of the AWU or the CFMEU providing a revised Log of Claims to Telum as requested by Telum on 16 November 2016 and 21 November 2016.

14. Accordingly, Telum have not had the opportunity to organise a second meeting or to proceed further with the bargaining process with the AWU and the CFMEU as a revised Log of Claims has not yet been put forward as requested. I also note that there has been correspondence with the CFMEU and AWU via email since the meeting on 10 November 2016.

15. It is the intention of Telum that once the revised Log of Claims is received then a second meeting will be organised to discuss those Log of Claims.

16. The initial Log of Claims put forward by the AWU and CFMEU were not acceptable to Telum for the reasons set out in my email dated 16 November 2016. In essence the Log of Claims put forward cannot be agreed to or negotiated with for the following reasons:

(a) the proposed rates are significantly above the market rates currently being paid in the region;

(b) the proposed rates and terms are not sustainable by Telum;

(c) the proposed rates and terms are not affordable for Telum.

17. Further, Telum has an existing contract in place with the principal contractor for the K2K Project. Part of this contract includes the terms and conditions and rates of pay of the employees supplied by Telum, meaning that this formulates part of the pricing structure at the time of entering into the contract. Where any changes occur to the rates of pay, Telum is required to seek and negotiate any variations to the contract with the principal contractor. This means that the negotiations for the Proposed Agreement are more complex than a standard enterprise agreement as Telum must also liaise with the principal contractor and the contractual obligations between Telum and the principal contractor need to be considered during the negotiations for the Proposed Agreement.

18. As a result, Telum is unable to move forward with negotiations for the Proposed Agreement with the initial Log of Claims as they are unrealistic and unsustainable for Telum. Hence, the request was made for a revised Log of Claims.

19. At all times, Telum has been genuine in its attempt to negotiate and reach an agreement with both the AWU and the CFMEU.”

[45] Mr Razlog gave oral evidence to the effect that the “market rates” to which he refers in paragraph [16(a)] of his witness statement are the rates of pay and terms and conditions provided for in enterprise agreements to which the following labour hire companies are a party:

• Workpac;



• Waycon/Catalyst Recruitment (part of the Skilled Group);



• Workforce International; and



• Protech

[46] Mr Razlog also gave oral evidence to the effect that he does not believe there are any employees engaged under the relevant McConnell Dowell enterprise agreement.

Consideration

[47] The bargaining process between Telum and its employees commenced about three months ago, in early September 2016. The CFMEU communicated its log of claims to Telum in writing on 7 September 2016.

[48] Because Telum disputed the CFMEU’s status as a bargaining representative and it took some time to set up a meeting, the first bargaining meeting did not take place until 10 November 2016. That meeting took place in accordance with the agreement reached in conference before Deputy President Lawrence on 31 October 2016.

[49] At the meeting on 10 November 2016, the log of claims dated 7 September 2016, being the joint proposal of the CFMEU and the AWU, was discussed with representatives of Telum. The discussion about those claims was sufficient to ensure Mr Razlog did not, by the end of the meeting, have any misunderstanding in relation to the claims being made by the unions. In addition to discussing the unions’ claims at that meeting, the unions requested Telum to put forward its position and respond to the log of claims.

[50] On 16 November 2016, Telum communicated its response to the log of claims to the unions. Telum rejected the claims being made by the unions and gave its reasons for doing so. Telum also requested the unions to review their “log of claims in line with wage rates and terms and conditions aligned with that of current market conditions. Once reviewed, please provide a revised set of claims to Telum.”

[51] The unions did not accede to Telum’s request to put forward a revised set of claims, but nor did they ignore it. They responded by asking Telum on 17 November 2016 to put forward its position, so they could consider their position and options.

[52] On 21 November 2016, Telum responded to the unions by reiterating that the log of claims had been rejected by Telum and again asking the unions to put forward an amended log of claims. In effect, Telum was asking the unions to bid against themselves. The unions did not take up that request. Instead, on 22 November 2016 they asked Telum to make a counter offer to their log of claims. On the following day, 23 November 2016, Telum communicated its counter offer to the unions, which was effectively the award terms and conditions. On the following two days, 24 and 25 November 2016, the AWU and CFMEU respectively filed their applications for protected action ballot orders.

[53] The parties are now at a stage in the bargaining where they have each put a proposal to the other side. There has been one bargaining meeting. The unions have clearly articulated their claims. Various written communications have passed between the parties about their respective positions and the reasons for adopting them. The parties are obviously a significant way away from reaching an agreement.

[54] It is also relevant that the K2K Project is expected to be completed in around the middle of 2017. In order for an enterprise to provide some practical benefit to Telum’s employees working on the K2K Project, it will have to be negotiated and made in a relatively short timeframe.

[55] In light of the status, content and nature of the bargaining negotiations to date, the significant gap between the bargaining positions currently adopted by each party and time being somewhat of the essence, I am satisfied that each of the CFMEU and the AWU has filed an application for protected action ballot orders in an attempt to genuinely reach an agreement, and not for some ulterior purpose.

[56] The meeting between the parties on 10 November 2016 took place in accordance with the agreement reached in conference before Deputy President Lawrence on 31 October 2016. Although Deputy President Lawrence recorded an agreement “that there would be joint meetings” [emphasis added], the Deputy President went on to explain that the first meeting would take place on about 10 November 2016, after which the Deputy President said he expected that, “depending upon the progress of negotiations, that there would be a further meeting or meetings, and I think that's up to the parties to agree hopefully”. In my view, the agreement reached between the parties on 31 October 2016 did not oblige the unions to participate in more than one meeting before taking other action such as applying for a protected action ballot order. The possibility of subsequent meetings depended on “the progress of negotiations”. On any view of it, negotiations had not progressed much by the time the unions received Telum’s counter offer on 23 November 2016.

[57] Notwithstanding that the CFMEU and the AWU have applied for protected action ballot orders, there is no evidence to suggest that the CFMEU (and the AWU, if it is involved in those proceedings) will not attend the report back on 8 December 2016 or participate in a meaningful way in a conference before Deputy President Lawrence on that day.

[58] I do not accept Telum’s contention that the CFMEU and the AWU have not been genuinely trying to reach an agreement since 16 November 2016 or that their applications for protected action ballot orders are premature. Since 16 November 2016 the unions have responded quickly to the written communications made by Mr Razlog on behalf of Telum and requested a counter offer to their log of claims. The fact that the unions did not comply with Telum’s repeated requests to submit a revised log of claims, even with the encouragement by Telum that it “remains fully committed to continuing positive dialogue with both the AWU and CFMEU in reaching a compromise”, does not, in my view, suggest they are not, or have not been, genuinely trying to reach an agreement. Their preferred course of action was to seek a counter offer from Telum, so they could consider their position and options.

[59] The counter offer from Telum was low. I do not criticise Telum for making such an offer, having regard to the reasons and rationale explained by Mr Razlog for the offer. There is no suggestion that Telum’s counter offer will be its final offer; in fact, Telum says it is willing to reach a “compromise”. However, it is not surprising that, on receipt of such a counter offer, the unions took the step of applying for protected action ballot orders, rather than seeking a further meeting with Telum. In the circumstances of this case and putting to one side for the moment the permitted matters arguments to which I will shortly turn, I am satisfied that each of the CFMEU and the AWU has been, and is, genuinely trying to reach an agreement with Telum.

Permitted matters

[60] At the hearing on 1 December 2016, Mr Cross of counsel made submissions on behalf of Telum to the effect that the following three claims from the CFMEU’s log of nine claims dated 7 September 2016 are not about permitted matters within the meaning of s.172 of the Act:

(a) Incorporation of the Building and Construction Industry Award Standards (BCGOA) into the agreement (Award Claim);

(b) Casual conversion clause – casual employees to automatically become fulltime after two weeks (Casual Claim); and

(c) All employees to be covered by Coverforce sickness, accident and top-up workers compensation insurance (Insurance Claim).

[61] There is no evidence to suggest that, at any time prior to the hearing on 1 December 2016, Telum had ever communicated to the CFMEU or the AWU its view that these three claims are not about permitted matters. The CFMEU and the AWU required time after the hearing on 1 December 2016 to respond to the contention that these claims are not about permitted matters. In those circumstances, I am satisfied that Telum did not, at any time prior to the hearing on 1 December 2016, communicate to the CFMEU or the AWU its view that these three claims are not about permitted matters.

[62] As to the Award Claim, it is first necessary to understand what are the “Building and Construction Industry Award Standards (BCGOA)” to which reference is made in the Award Claim. The correct title of the relevant modern award is the Building and Construction General On-site Award (2010) (Building Award). Given the full title of the Building Award, it is likely that the acronym BCGOA in the Award Claim is a reference to that award. Further, I am satisfied that a reasonable person with knowledge of the relevant background facts would construe the word “Standards” in the Award Claim, when read in context within the expression “Building and Construction Industry Award Standards (BCGOA)”, to mean the terms and conditions of the Building Award. Accordingly, I find that the Award Claim is a claim for incorporation of the terms and conditions of the Building Award into the proposed enterprise agreement.

[63] Telum has not identified any particular term or condition of the Building Award which it contends is not about a permitted matter. I am satisfied that there are no terms or conditions of the Building Award which are not about permitted matters. It follows that I reject Telum’s contention that the Award Claim is not about permitted matters.

[64] The Casual Claim is for casual employees to automatically become full time employees after two weeks. Clause 14.8 of the Building Award confers on a casual employee, other than an irregular casual employee, who has been engaged by a particular employer for a sequence of periods of employment under the award during a period of six months, to thereafter elect to become a full time or part time employee. Accordingly, the Casual Claim seeks to reduce the relevant period in the Building Award from six months to two weeks and to make the transformation from a casual employee to a full time employee automatic, rather than at the election of the employee.

[65] The subject matter of the Casual Claim is the conversion of casual employees to full time employees. Such a claim clearly pertains to the relationship between the employer and its employees. In addition, the Casual Claim is concerned with the job security of employees, 14 but it does not prohibit the employment of casual employees. For those reasons, the Casual Claim is about a matter that pertains to the relationship between the employer and its employees. My conclusion in that regard is supported by the following provisions of the Explanatory Memorandum to the Act:

“672. It is intended that the following terms would be within the scope of permitted matters for the purpose of paragraph 172(1)(a):
…

• terms relating to conditions or requirements about employing casual employees or engaging labour hire if those terms sufficiently relate to employees’ job security – e.g. a term which provided that contractors must not be engaged on terms and conditions that would undercut the enterprise agreement;



• terms that would provide that casual employees are converted to permanent employees after a set period of time;

…
673. The following terms would not be intended to be within the scope of permitted matters for the purpose of paragraph 172(1)(a):
…

• terms that would contain a general prohibition on the employer employing casual employees; …”

[66] The objective of the Insurance Claim is to secure an obligation by Telum to pay for an employee benefit in the form of insurance cover for sickness, accident and top-up workers compensation insurance.

[67] In Australian Maritime Officers Union v Sydney Ferries Corporation, 15 the Full Court of the Federal Court unanimously held that an income protection provision pertained to the relationship between the employer and its employees. The term considered by the Full Court of the Federal Court in that case required Sydney Ferries Corporation to “insure its Maritime Officers for income protection insurance for long term illness and injury”. The Full Court stated:

“[19] A matter of considerable importance is that the agreed term provides a benefit to employees during their employment, even though it might also generate a benefit to them after employment has ceased. No obligation is imposed on SFC, or any immediate right created for employees, outside the period of employment. Even a post-employment benefit would depend upon the happening of an entitling event (accident, injury or illness) during a period when a policy was in force – ie during employment pursuant to an agreed obligation to pay the necessary premiums.

…

[21] As a general rule, a payment made to, or for the benefit of, an employee by an employer is normally presumed to pertain to their relations unless it falls into a category identified as outside the relationship.

…

[23] A term directed to the protection of income in the event of illness or injury may pertain to the relationship of employers and employees in the same way as those other forms of employment benefit and may do so where the protection endures after the obligation to make the payment which secures it has ended. Whether or not the term pertains to the relationship of employers and employees depends upon all the circumstances.”

[68] The Insurance Claim seeks to have “employees … covered by … sickness, accident and top-up workers compensation insurance.” [emphasis added] It does not propose that Telum obtain such cover for former employees or any other persons not employed by Telum. It is clear by the reference to “workers compensation insurance” that the Insurance Claim would cover injuries or accidents at the workplace, but, as was the case in Australian Maritime Officers Union v Sydney Ferries Corporation, it is not limited in its terms to events that take place while the employee is at work. What is of central importance is that the Insurance Claim, if agreed to, will provide a benefit to employees during their employment, and such a benefit may continue after the employment relationship has ceased if the entitling event took place during the employment relationship. 16 Such a claim pertains to the relationship between an employer and its employees.

[69] In my view, the fact that the Insurance Claim proposes a particular insurance provider, Coverforce, does not alter the fact that the subject matter of the Insurance Claim pertains to the relationship between an employer and its employees. I therefore reject Telum’s contention that the Insurance Claim is not about permitted matters.

[70] Even if, contrary to my earlier findings, the Award Claim, Casual Claim and/or Insurance Claim are not about permitted matters, I would still find that each of the CFMEU and the AWU has been, and is, genuinely trying to reach an agreement with Telum as the employer of the employees who are to be balloted. My reasons for so finding are as follows:

(a) Whether a claim is about a non-permitted matter is relevant to whether the test posited by s.443(1)(b) has been met, but it is not determinative of the issue;

(b) The log of claims was communicated to Telum about three months ago. In particular, the CFMEU provided the log of claims to Telum on 7 September 2016 and the AWU and CFMEU presented the log of claims to Telum as their joint proposal on 10 November 2016;

(c) Although there is little evidence about the precise discussions that took place at the bargaining meeting on 10 November 2016, the evidence that has been adduced on that topic does not suggest that any of the Award Claim, Casual Claim or the Insurance Claim were given any particular significance in the discussions on that day. The three “points” Mr Hughes recalls were made by Mr Razlog at the meeting on 10 November 2016 were not directly related to any of the Award Claim, Casual Claim or the Insurance Claim;

(d) I accept the unchallenged evidence given by Mr Hughes in paragraph [10] of his witness statement. The effect of that evidence is that Mr Hughes does not believe that any of the claims made in the log of claims communicated to Telum are about non-permitted matters. His belief in that regard was reasonable;

(e) Telum did not, at any time prior to the hearing on 1 December 2016, communicate to the CFMEU or the AWU its view that the Award Claim, Casual Claim and/or Insurance Claim are not about permitted matters; and

(f) I also rely on the facts, matters and circumstances set out in paragraphs [16] to [59] above.

Conclusion

[71] Having had regard to all the relevant facts and circumstances, as summarised above, I am satisfied that:

(a) an application has been made by each of the CFMEU and the AWU under s.437 of the Act; and

(b) each of the CFMEU and the AWU has been, and is, genuinely trying to reach an agreement with Telum as the employer of the employees who are to be balloted.

[72] Accordingly, I must make a protected action ballot order. 17

[73] Orders [PR587936 & PR587914] will be issued concurrently with this decision.

COMMISSIONER

Appearances:

Mr A Gounis, Industrial Advocate on behalf of the AWU;

Mr T Fischer, Legal/Industrial Officer on behalf of the CFMEU;

Mr B Cross, of Counsel, together with Ms R Kasbarian, Solicitor from Kemp Strang, on behalf of Telum.

Hearing details:

2016.

Newcastle:

December, 1.

Final written submissions:

Unions’ final submissions, 2 December 2016;

Respondent’s final submissions, 5 December 2016.

 1   Section 443(1)&(2) of the Act

 2 [2012] FCAFC 53

 3   [2009] FWAFB 368

 4   [2015] FWCFB 210

 5   Esso Australia Pty Ltd v AMWU & Ors[2015] FWCFB 210 at [57] & [69]

 6   Ibid at [55]

 7   Ibid at [35]

 8   AMWU v HJ Heinz Company Australia Ltd[2009] FWA 322 at [20]

 9   Ibid at [54]

 10   Ibid at [55]

 11   Wesfarmers Premier Coal Limited v The Automotive Food Metals Engineering Printing and Kindred Industries Union (No 2) [2004] FCA 1737, per French J (as his Honour then was) at [92]

 12   Ex A2 (Statement of Mark Hughes dated 24 November 2016) at [7]

 13   Ex R1 (Statement of Razz Razlog dated 29 November 2016) at [3]

 14   Re Schefenacker Vision Systems (Australia) Pty Ltd, AWU, AMWU Certified Agreement 2004 (PR956575); NUW v Alto Manufacturing Pty Ltd [2015] FWC 2730 at [60]

 15 [2009] FCAFC 145

 16   Australian Maritime Officers Union v Sydney Ferries Corporation [2009] FCAFC 145 at [19]

 17   Section 443(1) of the Act

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