Transport Workers Union of Australia v BP Australia Ltd
[2001] FCA 1174
•23 AUGUST 2001
Transport Workers' Union of Australia v BP Australia Ltd [2001] FCA 1174
Industrial law
Transport Workers' Union of Australia v BP Australia Ltd [2001] FCA 1174
INDUSTRIAL LAW - application for interlocutory injunction - decision to contract out refuelling services and to dismiss employees - whether serious question to be tried under s 298K(1) and s 170NC(1) of the Workplace Relations Act 1996 - balance of convenience
Workplace Relations Act 1996 (Cth), ss 170NC, 298K, 298L(1)(h), 298L(1)(l)
Greater Dandenong City Council v Australian Municipal, Clerical and Services Union [2001] FCA 349 applied
Maritime Union of Australia v Geraldton Port Authority (1999) 93 FCR 34 referred
Davids Distribution Pty Ltd v National Union of Workers (1999) 91 FCR 463 referred
Transport Workers' Union of Australia v Mayne Nickless Limited [1997] FCA 1514 referred
Cadbury Schweppes Pty Ltd v Australian Liquor, Hospitality and Miscellaneous Workers' Union [2000] FCA 1793 referred
Finance Sector Union of Australia v Commonwealth Bank of Australia (2000) 106 FCR 16 referred
National Union of Workers v Qenos Pty Ltd [2001] FCA 178 referred
Seven Network (Operations) Ltd v Communications, Electrical, Electronic, Energy Information, Postal, Plumbing and Allied Services Union of Australia [2001] FCA 456 referred
Schanka v Employment National (Administration) Pty Ltd (2000) 170 ALR 42 referred
Crescendo Management Pty Ltd v Westpac Banking Corporation (1988) 19 NSWLR 40 referred
BHP Iron Ore Pty Ltd v Australian Workers' Union (2000) 102 FCR 97 referred
Victorian Egg Marketing Board v Parkwood Eggs Pty Ltd (1978) 33 FLR 294 cited
Town & Country Sport Resorts (Holdings) Pty Ltd v Partnership Pacific Limited (1988) 20 FCR 540 referred
Thomas A Edison Ltd v Bullock (1912) 15 CLR 679 referred
TRANSPORT WORKERS' UNION OF AUSTRALIA v BP AUSTRALIA LTD
ACN 004 085 616
V 837 of 2001
KENNY J
23 AUGUST 2001
MELBOURNE
IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY V 837 OF 2001
BETWEEN: TRANSPORT WORKERS' UNION OF AUSTRALIA Applicant
AND: BP AUSTRALIA LTD ACN 004 085 616 Respondent
JUDGE:
KENNY J DATE OF ORDER: 23 AUGUST 2001 WHERE MADE: MELBOURNE
UPON THE APPLICANT BY ITS COUNSEL UNDERTAKING TO THE COURT:
(a) to submit to such order (if any) as the Court may consider to be just for the payment of any compensation, to be assessed by the Court or as it may direct, to any person, whether or not a party, adversely affected by the operation of this interlocutory order or any continuation (with or without variation) thereof; and
(b) to pay the compensation referred to in (a) to the person there referred to:
THE COURT ORDERS THAT:
1. Until further order, the respondent, by itself, its servants and agents, be restrained from giving effect to or implementing its decision to contract out the work currently performed by its employees employed as refuellers at Perth airport in Western Australia.
2. The motion, notice of which is dated 20 August 2001, be dismissed.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY V 837 OF 2001
BETWEEN: TRANSPORT WORKERS' UNION OF AUSTRALIA Applicant
AND: BP AUSTRALIA LTD ACN 004 085 616
Respondent
JUDGE: KENNY J DATE: 23 AUGUST 2001 PLACE: MELBOURNE
REASONS FOR JUDGMENT
1 On 15 August 2001, the Transport Workers' Union of Australia ("the TWU") made application under ss 170NG and 298T of the Workplace Relations Act 1996 (Cth) ("the Act") and s 39(1A)(c) of the Judiciary Act 1903 (Cth) for declaratory and other relief, including interlocutory injunctions, against BP Australia Ltd ("BP"). On 16 August 2001, a judge of the Court made orders, including an interim order restraining BP from terminating the employment of those of its employees who are refuellers at Perth airport in Western Australia. The TWU's application for further injunctive relief was renewed before me on 21 August 2001. Also on 21 August 2001, the Court had before it a motion filed on behalf of BP, notice of which was dated 20 August 2001, to dissolve the interim injunction made on 16 August 2001.
2 In support of its application, the TWU relies upon two affidavits sworn by Rolf Muraru (a BP employee and a TWU delegate) on 13 August and 21 August 2001 respectively; an affidavit sworn by Linton Duffin (the TWU's solicitor and legal officer) on 16 August 2001; and three affidavits sworn by Ric Burton (a TWU official) on 13 August, 20 August and 21 August 2001 respectively. The respondent filed three affidavits in opposition. These were the affidavits sworn by Tim John Ind (BP's Manager - Asia-Pacific Assets) on 20 August 2001; Janine Meg Doull (a BP human resources officer) on 20 August 2001; and Allan Jones (BP's Major Airports and Joint Venture Manager) on 20 August 2001. There was also an unsworn affidavit in the name of Allan Jones relied upon at the hearing on 21 August 2001. Subsequently, a sworn copy of the affidavit was filed with the Court.
3 The central facts, as stated in these affidavits, were as follows. BP currently has employees who work as refuellers at Perth, Adelaide and Darwin airports. At other airports in Australia, BP engages contractors for airport operations which include loading aircraft fuelling tankers, delivering fuel to aircraft, tank storage operations, quality control and minor equipment maintenance and testing.
4 BP has seventeen employees who work as refuellers at Perth airport ("the employees"). All of them are members of the TWU. This application is made in respect of them. The employees' employment is governed by the Transport Workers (Oil Companies) Award 1998 ("the Oil Companies Award") and a certified agreement entitled "BP Australia Airport Operations Agreement 1999" ("the Agreement").
5 The Agreement, with a nominal expiry date of 31 March 2001, originally applied to work of the type performed by the employees, and other refuellers at Darwin and Adelaide airports. By operation of s 170LX of the Act, however, the Agreement has continued operation only in respect of the employees. This is because the TWU and BP have entered into new certified agreements to apply at each of Darwin and Adelaide airports. Of these two new agreements, Mr Burton deposed:
These new agreements are in substance identical to the terms of the Agreement and do not contain any wage increases.
According to Mr Jones:
BP reached an agreement with the employees at the Adelaide Airport that there were to be no increases in base wages for the period of the certified agreement, and new roster systems were to be implemented. ... We also reached an agreement that the Local Manager was to become qualified as a refueller so that he could assist during busy periods. In addition, we reached agreement that the manning levels were to be reduced by four, with two employees positions being made redundant and two employees retiring from employment.
Mr Jones further deposed:
In Darwin, the employees agreed to `roll over' the existing enterprise agreement with no new pay increases. The employees agreed to vary the shifts so that the Darwin airport became a 24 hour operation on certain days. This reduced the need for overtime rates and call-in payments and improved efficiency.
6 In the latter part of 2000, the TWU and BP commenced negotiations for a new enterprise bargaining agreement for the employees. Mr Jones deposed that he met with the employees in the week beginning 12 September 2000 "to explain to them recent changes which had occurred with the way BP handled its fuel supply and `into plane' services at the Brisbane airport". ("Into plane services" refers to the delivery of fuel to aircraft.) According to him, he gave the employees a presentation "regarding BP's decision to exit the [former] arrangement and outsource the `into plane' services at Brisbane and the reasons why". Mr Jones deposed that:
I explained that the changes had come about because of the decision by the airlines to contract separately for bulk fuel supply delivery and `into plane' services. I told them these decisions by the airlines were out of the hands of BP. I told them that whilst we were competitive in Perth so far as the cost of BP's fuel supply as compared with our competitors, there were a number of inefficiencies related to the way we conducted the `into plane' services....
By showing the employees these comparisons I did not say and was not implying that BP was proposing to cut the wages and conditions of the Perth employees. I was simply pointing out the comparisons between BP and our competitors, and explaining why it was difficult for BP to remain competitive if it continued to employ labour directly.
7 On 6 March 2001, Mr Jones met with the employees for the first meeting for the negotiations for a new enterprise bargaining agreement. He gave another presentation to the employees at the meeting. He deposed that in this presentation he "again outlined to the employees that the trend in the market place was for airlines to separate out the contracts for fuel sales from `into plane' services in order to drive better efficiencies and cost savings". According to Mr Jones, he said that:
[O]ur main problem was our lack of competitiveness with alternatives in the marketplace. I explained that the pay rates and conditions were much higher than those in the community.
He showed the employees a slide entitled "Comparison of Labour rates/costs", showing "a difference of $435,901 between the labour rates for BP for 17 employees and a competitor using the TWU Award". According to Mr Jones, he explained that there were a number of issues confronting the Perth airport operations, including issues relating to flexibility, cost efficiency, labour efficiency, multi-skilling, and teamwork. Mr Jones deposed that:
My message to the employees was that there was no way things could continue as they had and as a minimum they needed to start working more flexibly. I told them that any pay increases in the new EBA had to be `cost neutral' to BP. I told them about other measures which had been implemented in other areas of BP's business. ... I also told them that employees at the Adelaide, Darwin and Cairns airports had recently rolled over their existing agreements with no increase to the base pay rate or annualised cost as a means to increase the security of their employment. ... I told the employees that BP's position was that it wanted to keep its existing workforce and do whatever possible to stay competitive, but that in the current market that might not be possible. I referred to what had happened at the Brisbane airport as an example.
8 Also on 6 March 2001, the TWU made a claim for a two per cent wage increase in a new enterprise agreement. Mr Willie Anderson, BP's Employee Relations Manager, responded to the claim on 16 March 2001, acknowledging that it was "moderate" and stating that:
If a 2% payment is made it should be on the basis of an additional 1% on team performance and 1% on individual performance.
Mr Anderson also referred to BP's desire "to obtain offsets to neutralise the effect of the increase".
9 On 2 April 2001, the employees met with Mr Burton. The meeting endorsed a revision of the claim for improved conditions and, in particular, endorsed a claim for an increase in wage rates in excess of those previously sought from BP. On 5 April 2001, Mr Jones received a copy of the revised claim. According to Mr Jones, this claim effectively increased the rate of the wage increase to six per cent for the first two years of a proposed three years agreement.
10 On 27 June 2001, Mr Jones again met with the employees and told them that the negotiations for a new enterprise agreement were to be put on hold pending a review of Perth airport operations. He deposed that he "explained that we needed a commitment from the employees for significant productivity improvement". Mr Jones added:
I told the employees that as far as I was concerned there was no point progressing the EBA negotiations. I explained to them that we only wished to proceed if we considered that doing the `into plane' fuel delivery ourselves was a viable way of running the business. I said to the employees words to the effect `there is going to be a review of the `into plane' operations at the Perth airport. There will be a committee set up to do the review. ... We will report back to you in about 3 weeks'.
According to Mr Jones, he also stated "this review isn't part of a negotiating strategy to cut a better deal with you over the EBA".
11 On 24 July 2001, Mr Jones again met with the employees for what he termed "a report back on the outcome of the review". He apparently told the employees that they should identify $500,000 worth of cost savings in the ensuing two-week period. This sum was said by BP to represent the difference between the labour cost of the employees and the cost of a contractor performing the refuelling work. According to Mr Muraru, "BP management told those present that for us to remain as employees we would need to adopt `community standard terms and conditions'". Mr Muraru understood that this was a reference to the rates of pay contained in the Transport Workers (Oil Agents/Contractors) Award 1981 ("the Oil Contractors Award"). Mr Burton also deposed that BP representatives said that the employees "needed to work to `relevant community standards'" and that he too understood this as a reference to the Oil Contractors Award. Mr Muraru deposed that at this meeting the issue of the termination of the employees' employment arose, and that Mr Anderson for BP stated that they would "have to take their chances" if a contractor undertook the refuelling work.
12 I interpolate here that it is apparently common ground between the parties that the Agreement, the Oil Companies Award and the Oil Contractors Award apply to and cover refuelling work of the type performed by the employees. The rates of pay for this work provided by the Agreement are higher than those contained in the Awards. Specifically, the Agreement provides for a weekly rate of pay of $835.20 for a 35 hour week (plus a 31.64% shift penalty). In comparison, the Awards provide for a rate of pay of $557.50 for the same work over a 35 hour week.
13 Mr Jones deposed that he gave another presentation at this 24 July meeting in which he "set out all of the options which BP had looked at in its review of the Perth airport operations. These options included keeping the work within BP, moving to a joint venture operation, agency arrangements, using a contractor". He said:
I explained to the employees the pros and cons in using a contractor to do the work. The benefits included:• lower management support from BP's senior and middle level management, meaning lower overheads;
• community standard conditions (that is, a contractor would not be obliged to provide the non-award terms and conditions currently provided by BP, including a petrol rebates, employee share schemes, enhanced redundancy packages, payments to employees' superannuation above the levels mandated by the Superannuation Guarantee legislation);
• efficiencies of a fee for service based pay structure, where BP is only paying for the refuelling tasks actually undertaken by the contractor and not unproductive down time;
• additional revenue streams open to the contractor ... ;
• a `step change' (that is, the ability to achieve savings by immediately implementing a new structure rather than incrementally changing BP's); and
• capital reduction, whereby the contractor makes its own capital investment arrangements.
I explained that having examined all of the option[s], the recommendation following the review was that BP outsource to a contractor, unless we were able to identify major efficiencies which could be achieved immediately. I said to the employees words to the effect `[T]here is a cost differential of approximately $500,000 between us doing the work and in outsourcing the work. We need to identify ways to bridge that gap if we want to stay competitive. We don't know how we can do this. If you have any ideas as to how we can do this, let us know. We want you to give us your ideas within the next two weeks'.
Mr Jones denied that he said that if the employees were to remain as employees they would need to adopt "community standard terms and conditions".
14 Mr Jones said that, shortly after the meeting with the employees, he met with Mr Burton of the TWU. According to Mr Jones, Mr Burton stated that the TWU was prepared to have discussions about cost savings "after we have made a new EBA with you. We don't want to pursue the pay claim". In his third affidavit, Mr Burton specifically denied that he said "We don't want to pursue the pay claim". In any event, Mr Jones stated that Mr Anderson, who was also present, said that BP would not accept any proposal of the kind being made by the TWU. BP stated its position in a letter to the TWU that relevantly read:
The company is of the view that the operational performance standards which the refuelling operation at Perth airport must meet should be contained in any EB agreement. The company is not prepared to roll over the existing EBA with a view to then discussing performance improvements with employees during the course of the agreement.
15 Later on 24 July 2001, the TWU notified the Australian Industrial Relations Commission ("the Commission") of an alleged industrial dispute. The parties came before the Commission on the application of the TWU on 27 July 2001. Before the Commission, Mr Burton repeated the proposal that the current EBA be rolled over for another term, with a view to negotiating any costs savings with BP once the agreement was certified. Mr Anderson, who attended on behalf of BP, did not accept this proposal. The Commission was unable to resolve the dispute. The Commission requested that BP inform the employees what they might have to do to maintain their employment. In consequence, Mr Jones drafted a memorandum as requested by the Commission to be sent to the employees and the TWU.
16 The document, apparently sent to the employees on 3 August 2001, relevantly stated:
The efficiencies that the company identified and presented to employees in terms of a preferred future mode of operation for the refuelling business were made up of a range of items. Outsourcing of non-core functions has been a continuing trend in our industry, as well as others and we are at pains to stress it should not be taken as a direct reflection on individuals and their performance for BP and its customers.Some of the items that the company has identified were items over which employees would have no control and are of a nature that is distinctly different from the company's current refuelling operation.
For instance the company has set out below the efficiencies and benefits that will be achieved from the proposed outsourcing of the refuelling operation at Perth airport and has outlined opportunities that arise from a combination of the following factors:
• Additional business revenue streams:
...
• Lower level of management support:
...
• Variabilised cost
...
• Selection of contractor
...
• Non award/non EB Terms and Conditions
...
• Reduced capital expenditure
...
• Performance incentive
...
• Step change
...
New Terms and Conditions required before BP could contemplate remaining with a company operation
In light of the above points, it is difficult for BP to determine precisely what changes to the existing company fuelling operation it would be possible to make to equate to the savings and advantages arising from a change to a contractor arrangement.
Whilst changing to community standard terms and conditions would contribute to savings they would not in themselves deliver the full level of benefits achievable with a contractor. Suffice to say, we have up to now taken the view the large changes necessary to be simply competitive would be unpalatable to the existing employees and the union.
However since we have been asked, in its simplest terms, the only realistic option to retain employment in the refuelling operation would be for employees to work under the same terms and conditions and work arrangements as those likely to be implemented by a contractor.
By way of reference this would involve conventional minimum rates governed by a Transport Workers Award.
Additionally, community standard non-award non-EB conditions would apply. There would be no share scheme or petrol rebate. Other conditions which would apply, would be:
- SGC standard superannuation.
- The ability to deliver the additional efficiencies arising from a contractor arrangement as identified in the review.
- A preparedness to undertake a range of other unspecified activities that could deliver additional income streams in the future.
- Capping overtime at existing levels of a maximum of 1.5 hrs/week/man.
- Capping any existing potential redundancy cost and reducing redundancy costs over time to close the gap towards basic community redundancy or transition standards.
- A reduction in refueller numbers by 2.
As mentioned above, BP expects that such a step change as proposed above would be unpalatable to the majority of existing employees as it is a very marked change in how we currently operate and reward our staff. We are reluctant to impose such severe changes due to the potential deterioration in employee morale, customer service standards, health and safety performance, and maintenance and quality control.
We again stress, the intention of the review and proposed implementation was not to use it as a bargaining mechanism to drive down terms and conditions of existing employees and this remains the case. The purpose of this note is to respond to the request by the Commission and TWU to clarify what needs to be done to remain as employees of BP.
Due to the very diverse views and personal situations of the employees, we expect that this clarification will not provide an overall satisfactory outcome to all.
We sincerely regret the uncertainty this has created for staff, and if as per the company's expectation, it is not possible to have absolute commitment by all staff to accept the above changes, we feel it is in everyone's interest to bring this to a rapid conclusion.
If agreement on the above cannot be reached locally by close of business Monday 13th August or earlier, we have the view that the only realistic outcome is to move to outsourcing and hence all participate in an agreed transition process of the refuelling operation to a new contracting operation as soon as possible. In the process of such a transition BP will do everything possible to minimise the effects of such a move and assist our employees to the fullest extent possible.
17 On 10 August 2001, the employees apparently voted against wholesale changes of the kind referred to by BP in its 3 August 2001 letter. Of this meeting, Mr Muraru desposed:
At this meeting the members voted to reject the offer of employment on the terms and conditions of employment set out in [the 3rd August letter].At no time at this meeting was any vote taken or motion adopted where the employees voted to take no further action with respect to the enterprise bargaining agreement.
Mr Muraru denies that he stated the contrary to Mr Jones (who asserts that he did).
18 On 10 August 2001, Mr Chris Taylor of BP informed Mr Muraru by e-mail that:
Following your response at today's meeting, to the letter from the company dated Friday the 3rd, rejecting the offer of employment with BP under the reduced wages and conditions identified in that letter and the understanding that the company will move forward with the outsourcing option, please be advised that Janine Doull, who is the Air BP personnel representative, will visit the Airport next Wednesday and Thursday to attend any organised meetings or provide individual information on the redundancy package ... . Allan Jones will also come over, for amongst other reasons, to present to the consultative committee (as representatives of the staff) and any one else who wishes to come, the acknowledgment to your meeting decision and present the way forward from here, this meeting will take place on Wednesday 15th at 1200 hours at this stage, I will contact the consultative committee individually to ensure this timing is appropriate.
19 On 15 August 2001, Mr Jones attended a meeting with the employees and told them that the decision had been made to contract out their work. He deposed that he said words to the effect:
It is the Company's view that there was no prospect of getting increased efficiencies or reduced operating costs to the required level under the Company operations. That's why we've decided to outsource the arrangements.We have chosen a preferred contractor but nothing has been signed yet. We are looking at signing as soon as possible. If an agreement is reached by Thursday there will be job advertisements in Saturday's paper. If not, they might be in the following week's paper, depending on when we get a heads of agreement signed.
The timing for the interviews of the job mean offers of employment in mid to late September. The contractor should start by mid October. There may be a potential extension of this timeframe for job training.
There will be a minimum of one month's notice.
You will be provided with estimates of your redundancies and entitlements based on a leaving date of 30 September 2001. This will be your minimum entitlement.
You can claim financial advice expenses up to $300 as part of the redundancy package.
There is an outplacement company to assist you in looking for other work.
Janine Doull from Human Resources is here today and tomorrow to answer any queries you have about redundancies on an individual basis if you require.
Mr Jones said that he told employees that it was too early to know the exact timing, although he said words to the effect "it will no doubt be difficult to give everyone work past the end of October".
20 Ms Doull met with the employees after the meeting on 15 August 2001 to discuss details of their redundancy entitlements. She deposed that the entitlements calculated for each employee had been based on an end date of 30 September 2001. She said:
I did say to employees that the entitlements were based on a nominal date of 30 September 2001 as this was the best approximation BP could make as to the likely date of termination.
21 Mr Ind, who apparently made the decision to contract out, has deposed that:
Significant changes driven by the airlines have been going on in the airport operations market in the last 2-3 years. The Brisbane and Sydney markets over that period have undergone significant changes in the way in which airlines contracted for into plane services and fuel sales. I considered that the airlines would move to make these changes in Perth in the very near future, as well as at the other airports in which BP currently operates.
22 Referring to the decision to contract out its into plane deliveries at Brisbane airport to a company called Airsupport, Mr Ind commented:
Airsupport's employees work on split or short shifts, which enables them to more efficiently meet peak period demands for labour. Airsupport employees are multi-skilled and able to perform other activities, rather than solely refuelling activities. I consider that by outsourcing its into plane delivery service, BP is much more competitive in the Brisbane market....
The practice of separate fuel supply and `into plane' services is widespread in other international markets. For instance, in the United States of America it is commonplace for `into plane' services and fuel supply to be provided by different companies. Similarly, in the United Kingdom, there are a number of companies competing with the oil companies to provide `into plane' services. Two of these companies, ASIG and Serco have recently been actively seeking to extend their `into plane' services into the Australian market place.
The trend of the major airlines to tender separately for fuel sales and `into plane' services is clearly intended to continue.
23 Mr Ind deposed that he made the decision, on 14 August 2001, "to proceed with a proposal to outsource the `into plane' services at the Perth Airport", after consultation with Mr Jones. According to Mr Ind:
The decision I made to outsource the `into plane' services was based on my belief that the current airport operations in Perth were vulnerable to threats from competitors. BP currently has the largest market share of the into plane services at Perth airport. Accordingly, BP's business is most at risk from other competitors gaining a bigger market share. That is, BP's competitors have a considerable incentive to implement cheaper cost structures and work more efficiently than BP, in order to win BP's business.BP's operations at the Perth airport were not as competitive as contractors who had the ability to provide a range of services in addition to `into plane' services. Their overheads are reduced by being able to spread management costs over a number of different income earning activities. The cost to BP of a contractor service is only incurred when the contractor is performing refuelling tasks for BP. Future capital expenditure for BP would be reduced by the contract or funding or leasing capital investment. The contractor would not be bound by non-award, non agreement terms and conditions, eg petrol rebates, share schemes, generous redundancy and superannuation. By contracting out the `into plane' services, BP could immediately deliver flexible working arrangements, reduced manning levels, multiskilling and more effective teamwork. This favourable position of using a contractor is unlikely to change over time.
In addition, we had told the employees in the memorandum [of 3 August 2001] that any changes to the employee's terms and conditions to those which a contractor would offer its employees would not in itself be enough to deliver the level of benefits achievable by engaging a contractor. The benefits to BP from outsourcing the `into plane' services were far in excess of any changes which the employees could make to their terms and conditions.
24 The TWU alleges that, since 3 August 2001, BP has approached the employees on an individual basis and informed them that to retain their employment they would have to work at the bottom level of the salary scale in the Oil Companies Award (being an amount of $557.50 per week) and have a cap on overtime. This is denied by BP. According to Mr Burton, who has been an official of the TWU for ten years, threats to contract out in the course of enterprise bargaining negotiations have the effect of seriously undermining the bargaining position of the TWU and the employees by making them fearful about prospects of their continuing employment. Mr Burton also deposed that the employees "are extremely fearful that unless they agree to an immediate reduction in their rates of pay of approximately $20,000 per year, they will lose their jobs".
serious question to be tried
25 The TWU alleges breaches on BP's part of ss 298K and 170NC of the Act. Subsection 298K(1) proscribes certain conduct that is done for a prohibited reason, or for reasons that include a prohibited reason. The subsection relevantly provides that an employer must not "do or threaten to do ... the following", namely, dismiss an employee, or alter the position of an employee to his or her prejudice.
26 For the reasons that follow, I accept the TWU's submission that there is a serious question to be tried as to whether BP has breached s 298K(1) of the Act.
27 The evidence relied on by the parties at this interlocutory stage shows that at the 15 August 2001 meeting Mr Jones informed the employees that BP was proposing to dismiss them in consequence of the company's decision to contract out the refuelling work that they have hitherto done. Mr Jones did not say precisely when the termination notices would be given. Since that date, Ms Doull, for BP, has been discussing the details of redundancy entitlements with the employees based on an end date of 30 September 2001. For present purposes, I accept that BP is threatening to dismiss each of its seventeen employees at Perth airport. This is conduct of the kind referred to in s 298K(1)(a) of the Act.
28 Further, I accept that Greater Dandenong City Council v Australian Municipal, Clerical and Services Union [2001] FCA 349 ("Greater Dandenong")establishes that a decision to contract out work performed by employees to a third party may well, in circumstances such as these, constitute conduct that alters the position of an employee to the employee's prejudice within the meaning of s 298K(1)(c): see [89] per Wilcox J, [141] per Merkel J and [208] per Finkelstein J. The evidence relied on by the parties at this interlocutory stage indicates that Mr Ind's decision on 14 August 2001, to accept the proposal to contract out refuelling operations, carried with it the consequence that the employees' security of employment was altered to their prejudice in a real and substantial way. As the TWU submitted, it seems to be the case that it is a questions of when, not if, the employment of the employees will cease.
29 A prohibited reason is a reason identified in s 298L(1) of the Act. By virtue of s 298V, it is presumed that conduct complained of under s 298K was carried out for a prohibited reason unless the respondent can prove otherwise. In discharging that onus, the respondent must establish, on the balance of probabilities, that the prohibited reason was not an operative reason for the conduct: see Maritime Union of Australia v Geraldton Port Authority (1999) 93 FCR 34 at 68; and Davids Distribution Pty Ltd v National Union of Workers (1999) 91 FCR 463 ("Davids Distribution ") at [109].
30 The TWU relied on s 298L(1)(h) and (l) in support of its submission that the relevant conduct was for a prohibited reason. Subsection 298L(1) relevantly provides:
Conduct referred to in subsection 298K(1) ... is for a prohibited reason if it is carried out because the employee ... :...
(h) is entitled to the benefit of an industrial instrument or an order of an industrial body; or
...
(l) in the case of an employee ... who is a member of an industrial association that is seeking better industrial conditions - is dissatisfied with his or her conditions;
... .
The Agreement is an "industrial instrument" and the TWU, an "industrial association" for these purposes: see s 298B.
31 In Greater Dandenong, the Full Court of this Court held that s 298L(1)(h) does not merely apply to conduct motivated by the fact that an industrial instrument or order applies to an employee. The provision also applies where the employer is motivated to engage in proscribed conduct because of the content of the instrument or order: see [80] per Wilcox J, [131] per Merkel J, and [212] per Finkelstein J. In that case, a majority of the Full Court upheld the trial judge's decision that a breach of s 298K(1)(c) had been shown. The breach arose from the trial judge's finding that the Council's contracting out decision was made because the employees were entitled to the benefit of an award and certified agreement while employed by the Council but the employees of the contractor would not be so entitled.
32 There is some evidence that BP made its decision to contract out for reasons that included that the employees were entitled to the benefit of the Agreement. It will be recalled that BP contended that the employees' employment under the Agreement was costing BP about $500,000 more than the estimated cost of contracting out. On one view of the evidence as it presently stands, BP called on the employees at the 24 July 2001 meeting to find savings of that amount as a condition of their continued employment by BP. In this way, BP may be understood as calling on the employees to give up the benefit of the Agreement as a condition of their continued employment by BP. There is also the 3 August 2001 letter. It too may support the TWU's contention that the content of the Agreement and its cost was a reason for BP's decision to contract out to a third party. That letter specifically referred to the need for new terms and conditions before "BP could contemplate remaining with a company operation".
33 In written submissions, counsel for the TWU also referred to the e-mail of 10 August 2001 from Mr Taylor to Mr Maruru; BP's insistence that the employees adopt "community standard terms and conditions"; and the individual approaches made by BP to the employees after 3 August 2001. Each of these matters was the subject of some dispute on BP's part. Their existence and significance cannot be determined prior to trial. If, however, these issues were resolved in favour of the TWU, then these considerations would support its case that the contracting out decision was made for a reason identified in s 298L(1)(h).
34 In Davids Distribution Wilcox and Cooper JJ observed at [110]:
Where there is an application for interim relief in proceedings under [Division 6], the onus remains upon the applicant to demonstrate that there is a serious question to be tried that the dismissal occurred for a prohibited reason. If a serious question to be tried is made out in respect of the other ingredients of the alleged contravention, s 298V operates to establish there is a serious question to be tried that the dismissal was for a prohibited reason. It remains available to the employer to demonstrate at the interlocutory stage that the reason for the dismissal was other than for a prohibited reason. The weight of that evidence may be such as to persuade the court there is no serious question to be tried.
Counsel for BP submitted that the weight of the evidence adduced by BP should persuade me that there was no serious question to be tried on the s 298L(1)(h) issue. I reject that submission. Counsel for BP relied on the affidavit evidence of Mr Ind concerning his reasons for decision. Mr Ind did not, however, expressly deny that he was motivated by the fact that the employees enjoyed the benefit of the Agreement while employed by BP and that a contractor's employees would not be so entitled. Mr Ind did not purport to state his reasons exhaustively. It does not seem to me, at this interlocutory stage at least, that the reasons advanced by him are necessarily inconsistent with, or exclude, the prohibited reason identified in s 298L(1)(h).
35 At this interlocutory stage, the reasons for BP's contracting out decision are not readily capable of determination. Merkel J noted in Greater Dandenong at [144]:
A difficulty in cases involving s 298L(1)(h) can arise from the fact that an ... award entitlement may result in a particular employer's business becoming unprofitable or less profitable. In such circumstances the courts have not found it an easy task to determine whether the dismissal of the employee is because of the ... award entitlement or because of the employer's business having become unprofitable.
It may be that considerations of this kind will become critically important at the trial.
36 I also accept that there is a serious question to be tried as to whether, at the time BP made the decision to contract out on 14 August 2001, the TWU was seeking better industrial conditions; whether the employees were dissatisfied with their conditions within the meaning of s 298L(1)(l); and whether a reason for BP's decision was the reason identified in s 298L(1)(l).
37 At least until 24 July 2001, the evidence at this interlocutory stage shows that the TWU was seeking better rates of pay than the employees then enjoyed. As already noted, Mr Jones maintained that, following the meeting on that day, Mr Burton withdrew the claim for increased pay. Mr Burton specifically denied that he did this. The issue is one of disputed fact and, notwithstanding BP's reliance on the transcript of the hearing before the Commission as supportive of Mr Jones, the relevant facts cannot be determined until after a trial. For the purposes of this interlocutory application, it may be assumed that, at the relevant time, the TWU was seeking better industrial conditions and that the employees were relevantly dissatisfied: cf Transport Workers' Union of Australia v Mayne Nickless Limited [1997] FCA 1514 at [33]-[34] per Ryan J; appeal stayed on other grounds. The evidence at this interlocutory stage indicates that, although Mr Jones referred to contracting out as a possibility as early as September 2000, BP did not put the enterprise bargaining negotiations on hold until 27 June 2001, after it had received the employees' revised claim for increased wages. On that day, BP announced the review that subsequently led the company to propose contracting out as the alternative to the employees' continued employment in the event they could not identify $500,000 worth of cost savings in the ensuing two-week period. As already noted, this sum was said by BP to represent the difference between the labour cost of the employees and the cost of a contractor performing the refuelling work. The 3 August 2001 letter made it plain that BP was requiring the employees to accept reduced wages and conditions to retain their employment and, if they did not, then the company would proceed to contract out their work. On one view of the evidence, the events leading to this letter were precipitated by BP's receipt of the revised claim. It does not follow from this that a reason for the contracting out decision was the reason identified in s 298L(1)(l), but, bearing in mind s 298V, I am satisfied that there is a serious question to be tried on the issue.
38 For the reasons already given in relation to s 298L(1)(h), I reject BP's submission that the affidavit evidence of Mr Ind necessarily excludes a s 298L(1)(l) reason. Mr Ind did not expressly deny that he was motivated by the fact the TWU was actively seeking increased rates of pay and that the employees were dissatisfied with their existing conditions. Indeed, he did not purport to state his reasons exhaustively. The reason identified in s 298L(1)(l) is not necessarily excluded by the reasons given by him for the contracting out decision on 14 August 2001.
39 The TWU also relied upon s 170NC(1) which provides:
A person must not:(a) take or threaten to take any industrial action or other action; or
(b) refrain or threaten to refrain from taking any action;
with intent to coerce another person to agree, or not to agree, to:
(c) making, varying or terminating, or extending the nominal expiry date of, an agreement under Division 2 or 3; or
(d) approving any of the things mentioned in paragraph (c).
The words "or other action" in s 170NC(1)(a) afford a wide scope. They extend the subsection's application to the communication of a decision to contract out the work of the employees and to terminate their employment. For present purposes, I accept, as counsel for the TWU submitted, that in order to establish "an intent to coerce", it must be shown that (1) it was intended that pressure be exerted which, in a practical sense, will negate choice; and (2) the pressure must involve conduct that is unlawful, illegitimate or unconscionable. See, e.g., Cadbury Schweppes Pty Ltd v Australian Liquor, Hospitality and Miscellaneous Workers' Union [2000] FCA 1793 at [19] per Finkelstein J; Finance Sector Union of Australia v Commonwealth Bank of Australia (2000) 106 FCR 16 at [18]-[38] per Gyles J; National Union of Workers v Qenos Pty Ltd [2001] FCA 178 at [128] per Weinberg J; Seven Network (Operations) Ltd v Communications, Electrical, Electronic, Energy Information, Postal, Plumbing and Allied Services Union of Australia [2001] FCA 456 at [41] per Merkel J; Schanka v Employment National (Administration) Pty Ltd (2000) 170 ALR 42 at [8]-[24]; and Crescendo Management Pty Ltd v Westpac Banking Corporation (1988) 19 NSWLR 40 at 46 per McHugh JA. The requirement that the pressure exerted be unlawful, illegitimate or unconscionable must be considered in the context of the scheme of the Act.
40 Counsel for the TWU submitted that on the basis of the evidence before the Court there was a serious question to be tried as to whether BP has taken action with intent to coerce the employees and the TWU to make an agreement on the terms sought by BP. In his written submissions, counsel specifically relied on the evidence as to the following matters:
(a) The enterprise bargaining negotiations had been under way since late 2000 and had been unsuccessful;(b) In April 2001, the TWU and its members revised their claims in respect of a new certified agreement by seeking greater wage increases than originally sought in their claim;
(c) [BP] has rejected the claims made by the [TWU] and the TWU members;
(d) On 27 June 2001, [BP] unilaterally suspended the enterprise bargaining negotiations;
(e) At the same time as [BP] suspended the enterprise bargaining negotiations, it announced a review of its Airport operations in unspecified terms and by unspecified participants;
(f) On 24 July 2001, [BP] demanded the TWU members identify $500,000 of savings within two weeks;
(g) Burton, on behalf of the [TWU] and the TWU members informed [BP] that the TWU members were willing to look at making savings or willing to look at making the savings sought by [BP] over the life of a new certified agreement. This offer was rejected by [BP] ... ;
(h) Since 3 August 2001, [BP] has demanded of the TWU members that they accept substantially inferior wages and conditions of employment in order to retain their employment with [BP].
41 At the hearing on 21 August 2001, counsel for the TWU also referred to the circumstance that BP had made new certified agreements with its refuellers at Darwin and Adelaide airports and that they had not pressed for any improvement in their working conditions.
42 Broadly speaking, the evidence adduced by the TWU at this interlocutory stage supports the matters referred to by its counsel. BP disputes some of the facts asserted by the union, as well as some of the union's evidence. The resolution of contested issues of fact must await trial. For these interlocutory purposes, however, I accept the TWU has made out a serious question to be tried in connection with s 170NC(1) of the Act.
43 It is at the least arguable that BP's conduct from 27 June 2001 was intended by it to constitute pressure which, in a practical sense, would deprive the employees of any choice, save the "choice" to agree to the terms and conditions of the kind referred to in BP's 3 August 2001 letter. For the reasons advanced by counsel for the TWU, it is at the least arguable that this conduct was "unlawful, illegitimate or unconscionable". In written submissions, counsel for the TWU contended that this latter requirement was satisfied by "any of the following matters". They were:
(a) by reason of the matters detailed earlier in these submissions, [BP's] conduct is unlawful as it is in contravention of s 298K of the Act;(b) it is uncontroversial that there are various provisions in Division 8 of Part VIB which are designed to place limits on the conduct of parties in negotiating certified agreements. One of these limitations is s 170MU of the Act which, inter alia, prohibits conduct, including threats to dismiss employees, undertaken because or party because, inter alia, an employee is proposing to engage in protected action. This provision underlines the policy concern of the Act that in the course of negotiating certified agreements, employees are not ... threatened with dismissal. In this sense, at the very least [BP's] conduct which necessarily involves the dismissal of the TWU members, is illegitimate or unconscionable.
44 For present purposes, I accept that it is at the least arguable that if BP's conduct constitutes a breach of s 298K(1) of the Act as the TWU contends, then it is relevantly unlawful. Further, I accept that if BP is shown to have threatened to dismiss the employees with an intent to coerce their consent to an enterprise bargaining agreement in the terms BP wanted, then that conduct may well be illegitimate or unconscionable, depending upon the circumstances that are shown to exist at trial.
45 Counsel for BP sought to avoid this conclusion by a statement made in the course of the hearing on 21 August 2001. In the midst of her submissions, she said "we'll be giving an undertaking to the court in fact that we will not seek or enter into any agreement with [the TWU]. So if there was any coerciveness in the process ... we'll give an undertaking to the court not to [enter negotiations] and that's the end of the whole argument about the so-called alleged coercive process".
46 This statement was apparently made by counsel for BP as a forensic response to the submissions made by counsel for the TWU concerning s 170NC(1). A decision by an employer that it no longer wished to make any agreement with its employees may, depending on the circumstances, be a complete answer to a case alleging breach of s 170NC(1) on the employer's part. In this case, there was, however, no evidence that a decision had previously been made by BP that it would not enter into any new agreement with the employees, not even an agreement that fulfilled the conditions contemplated in the 3 August 2001 letter. In the circumstances of the case, the court cannot give much weight to a statement volunteered in the course of submissions by counsel from the bar table. Even if it were accorded some weight, it is unclear, in the absence of any other evidence, what would follow. The statement, even if supported by evidence, would not necessarily prevent a finding that there was a contravention by BP of s 170NC(1) at a date before the decision not to enter into a new agreement was made. Perhaps, if the statement were supported by evidence, then, depending on the circumstances, this might prevent a finding of a continuing breach of s 170NC(1) and the grant of consequential injunctive relief. In the present case, had counsel's statement been supported by evidence, it might have led to a finding that there was no serious question to be tried, or to a finding that, on this aspect of the case, the balance of convenience did not favour the grant of interlocutory relief. There was, as I have said, no such evidence.
balance of convenience
47 Counsel for the TWU sought interlocutory relief in the following terms:
Until the hearing and determination of the applicant's application for final relief, or further order, the respondent, by itself, its servants and agents, be restrained from giving effect to or implementing its decision to contract out the work currently performed by its employees employed as refuellers at Perth airport in Western Australia.
Where does the balance of convenience lie?
48 Counsel for BP submitted that the TWU had not established that there was an immediate threat of dismissal. She also submitted that if the TWU were to succeed at trial, it would be open to the court to make orders for the reinstatement of any dismissed employees. Presumably too, any such employee might bring an action for damages for wrongful dismissal. Counsel for BP also contended that any interlocutory restraint would operate upon BP's conduct of its business, particularly the decision, which was in the nature of a commercial decision, to contract out the refuelling work at Perth airport to a third party. This decision was, she submits, made in the interests of BP's maintaining a competitive edge over any business rivals.
49 As the Full Court observed in BHP Iron Ore Pty Ltd v Australian Workers' Union (2000) 102 FCR 97 at 122-123, citing Victorian Egg Marketing Board v Parkwood Eggs Pty Ltd (1978) 33 FLR 294 at 305-306 per Bowen CJ, it may be proper to restrain a person from doing something that is lawful, so long as the restraint is not for any lengthy period.
50 No termination notices have yet been given by BP to the employees. BP has not yet told the employees precisely when these notices will be given. It is, however, common ground that the employees' employment is to be terminated by BP within the next month. Although BP has had the opportunity to undertake that it will not take steps to dismiss any of the employees prior to a nominated date, it has not done so. Accordingly, I proceed on the basis that BP may issue the termination notices forthwith. I reject BP's submission that there is no immediate threat of dismissal.
51 Further, in the circumstances of this case, the possibility that an order for reinstatement might be made and an action for damages brought in the event the TWU succeeds, does not weigh greatly against the grant of interlocutory relief. BP's submission in this regard fails to take account of the object of the interlocutory relief that the TWU seeks. This relief is designed to preserve the status quo until the matter may be resolved finally, with the least inconvenience to the parties as may be possible. In the circumstances, the inconvenience likely to be suffered by the employees, if they are dismissed in breach of the Act, outweighs the inconvenience to BP of continuing them in ongoing employment, even though no breach of the Act may have been committed.
52 There is, moreover, no evidence before the court that BP has yet concluded any agreement with a third party to perform the work presently done by the employees at Perth airport. BP has not adduced any evidence that it would suffer any particular harm if it were restrained, for a relatively limited period, from giving effect to its contracting out decision. The TWU has indicated that it will give the usual undertaking as to damages. It would appear that the decision to contract out was made no more than nine days ago. On the evidence as it presently stands, there is no reason to believe that BP cannot conveniently maintain the status quo for a relatively short period. On the other hand, there is the unquantifiable harm to which the TWU refers, namely, that its ability to press its claims on behalf of its members will be greatly undermined if BP is now permitted to proceed with giving effect to its contracting out decision.
53 Accordingly I would grant interlocutory relief substantially in the terms the applicant seeks. Amongst other things, the order restrains the respondent from terminating, or taking steps to terminate, the employment of the employees.
notice of motion
54 As previously noted, by a notice of motion dated 20 August 2001, BP sought an order dissolving the interim injunction granted by a judge of this Court on 16 August 2001. In support of the motion, counsel for BP called in aid a principle which governs applications for injunctions on an ex parte basis. Referring to Town & Country Sport Resorts (Holdings) Pty Ltd v Partnership Pacific Limited (1988) 20 FCR 540 at 543 and Thomas A Edison Ltd v Bullock (1912) 15 CLR 679 at 681-682, counsel advanced in justification of the motion the principle that:
A party who seeks the granting of an injunction on an ex parte basis has a duty to place before the Court all relevant matters including such matters which would have been raised by the respondent in his defence if he had been present.
55 This principle is beside the point in the circumstances of this case. BP was represented by counsel at the hearing before his Honour on 16 August 2001. The TWU did not make its application ex parte. I do not accept that, as counsel submitted, the application was effectively made ex parte due to the limited notice received by BP of the TWU's application. Counsel for BP contended that, in breach of its duty, the TWU had failed to inform the Court on 16 August 2001 that BP did not intend to dismiss the employees prior to 30 September 2001. She referred to the entitlements notified to the employees in the redundancy packages provided by Ms Doull on 15 August 2001. These were based on a leaving date of 30 September 2001. For the reasons already stated, it does not follow from this material that BP will not issue termination notices at an earlier date, and I accept (as did his Honour) that there is an immediate threat of dismissal. More importantly, so far as this motion is concerned, counsel for BP conceded that BP had an opportunity to inform the Court on 16 August 2001 about the facts of the case as BP saw them. This was so notwithstanding that she unsuccessfully sought to tender a copy of the speaking notes used by Mr Jones at the meeting on 15 August 2001. For these reasons, the motion, notice of which is dated 20 August 2001, is dismissed.
I certify that the preceding fifty-five (55) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Kenny.
Associate:
Dated: 23 August 2001
#DATE 23:08:2001
Counsel for the Applicant: Mr S Moore Solicitor for the Applicant: Linton Duffin Counsel for the Respondent: Ms F O'Brien Solicitor for the Respondent: Freehills Date of Hearing: 21 August 2001 Date of Judgment: 23 August 2001
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