United Voice v Lion Pty Limited T/A Castlemaine Perkins

[2015] FWC 4673

[2015] FWC 4673

FAIR WORK COMMISSION

RECOMMENDATION

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

United Voice
v
Lion Pty Limited T/A Castlemaine Perkins
(C2015/4038)

Food, beverages and tobacco manufacturing industry
SENIOR DEPUTY PRESIDENT RICHARDS	BRISBANE, 10 JULY 2015

Summary: whether employer discharged notice and consultation obligations – outsourcing – preconditions to contracting out – bearer of commercial risks.

[1] On 12 May 2015, Lion Pty Limited, trading as Castlemaine Perkins (“the employer”) provided written notice to United Voice Queensland (“the Union”) and the relevantly affected employees that it proposed changes to its organisational structure which would impact upon various team members.

[2] The Union thereafter filed a notice of dispute under s.739 of the Fair Work Act 2009, alleging non-compliance with the required consultative and notice requirements (which I will explore below) and, more generally, that the employer’s course of action was unwarranted in the circumstances.

[3] Following the second of two conferences (the first of which resulted in the employer agreeing to a further period of consultation with the Union) it was agreed that the Commission would make a recommendation in relation to the matters in dispute. That second conference was conducted on Thursday 9 July 2015.

[4] The notification issued by the employer on 12 May 2015 - to which I have referred above - set out the changes in the beer market, and in particular highlighted the significant decline in beer volumes, and indicated that there was a further projected decline in those volumes.

[5] The employer’s materials suggest that beer volumes declined by 13 million litres in the financial year 2014/2015 alone.

[6] The notice set out the goal of the business to retain its competitive position in the market and to remain cost-effective and have an organisational structure that would assist in achieving those business goals.

[7] An element of the changes as proposed was that the building services cleaning functions be outsourced to a preferred contractor and called in on an as required or programmed basis.

[8] The employer envisaged that the organisational changes proposed would result in redundancies and/or redeployment options for some seven roles in the business. It indicated that it sought to work through these proposed changes by the end of August 2015.

[9] On Monday 6 July 2014, the employer notified the Union in writing that its proposal as communicated on 12 May 2014 was now a definite decision which it planned to implement.

[10] The Union contends that the employer has failed to meet its consultation obligations under the Castlemaine Perkins Pty Limited Certified Agreement 2014-2017 (“the Agreement”).

[11] It is to the task of making recommendations in respect of these issues in dispute that I now turn.

Issue 1

[12] The Union contends that the employer has not complied with the Agreement in so far as Appendix D, Clause 2(b) states that:

“Where the employer is contemplating major changes in production, organisation, structure, technology or any other changes which are likely to have significant effects on employees or on the nature of their continued employment, unions will be notified as soon as possible and consultation will take place.”

[13] The Union argues that the employer made a decision to implement the change and to then embark upon consultation. That is, that the employer failed to act at the point at which it was contemplating major changes. The Union further contended that the content of the notice was insufficient in detail.

[14] Whether the employer had made a definite decision or was contemplating major changes at the relevant time is difficult to determine. I can only point out that the employer issued notices and communicated with the Union and its employees on the basis that as of 12 May 2015 the changes were proposed changes, subject to the consultation process.

[15] There may well be reasonable argument as to the extent to which an employer should disclose the nature of the proposed changes in the notification required under the above clause. But as I have mentioned above, on 12 May 2015 the employer set out what it stated was its proposal, the reasons for having to consider such a proposal and indicated the areas in general terms that would be affected by the changes.

[16] I doubt very much that a proposal that was in a state of development prior to having reached a point of any definition could have reasonably provided any further information at any higher level of detail than that provided by the employer.

[17] To this I add that the employer subsequently embarked upon communication programs which set out in some more detail the nature of the proposed changes and the areas of the business which were likely to be affected. This program was underpinned by a lengthy written document which appears to have been utilised as a PowerPoint presentation.

[18] It cannot be contended on a reasonable basis that the employer did not discharge its obligation under Appendix D, Clause 2(b) of the Agreement to notify the Union of the proposed changes.

[19] The clause to which I have referred also obligates the employer to embark upon consultation with the Union following notification of the proposed change (or the change as contemplated).

[20] There had been a number of meetings between the Union and the employer in this respect. An additional four meetings were conducted following the initial conference at the Commission (and in addition to those meetings already conducted between the employer and the Union).

[21] The employer contends that there was an exchange of information and views about the circumstances and the nature of the outsourcing proposal in the course of the various meetings and between the meetings. The employer contends that whilst the Union may not have achieved the result that it sought by way of the consultation process the employer acted genuinely in facilitating the meetings and considering and responding to information put to it by the Union.

[22] I have explained to the parties that it is sometimes difficult to determine - other than in extreme circumstances - where a consultation process might be considered non-genuine. What I know here is that the employer has taken steps to facilitate meetings between itself and the Union on a number of occasions and that there had been exchanges of views and information between the parties (in the meetings and between the meetings). More would be needed for me to conclude that in so meeting with the Union the employer had merely engaged in “surface consultation” or perhaps more properly, a sham negotiation.

Issue 2

[23] Clause 5 of Appendix B of the Agreement is headed “Consultation”. This clause obligates the employer to provide in writing to the Union and any employees concerned all relevant information about the proposed terminations including the reason for the proposed terminations, the number of employees likely to be affected and the period over which the terminations are likely be carried out. This obligation is designed to ensure that the employer provides an information foundation upon which consultation can take place.

[24] As I have mentioned above, in my view the written information provided by the employer about the proposal on hand provided a reasonable foundation upon which the employer, the employees and the Union could embark upon consultations. The amount of detail at hand will be moderated by the requirement under the Agreement for the employer to provide notice at the contemplative stage of it decision making.

Issue 3

[25] Appendix E of the Agreement sets out conditions regulating the engagement of indirect labour, in this case the cleaning functions of the employer’s business.

[26] Clause 2 of the Appendix places an obligation on the employer to consult with the Union and the employees concerned about matters including the type of work contemplated as might be undertaken by indirect labour employees, the number of indirect labour employees as might be considered be engaged, the potential length of the engagement, and any effects whatsoever on the job security of directly engaged employees.

[27] The point of contest here it is as to whether or not the employer has officially engaged the Union in respect of the effects on the job security of the directly engaged employees.

[28] There appears to be some confusion as to whether or not this clause obligates the employer to reconsider the foundation of its decision to outsource or contract out the cleaning function within its business. In my view, the clause requires the employer to discuss with the Union whether or not the employees affected by the change will lose their positions or whether they will be retained in the business, and if so, with what appropriate degree of security of employment (compared to what they previously enjoyed).

[29] The scope for the Union and the employer to discuss this very matter has been compromised by the dispute process itself. Of the seven employees affected, it appears that four have indicated that they wish to seek redundancy, two have indicated they wish to be redeployed and one has not as yet indicated a decision one way or the other.

[30] It would appear to me that the obligation to consult about the job security of the affected employees could only be discharged once the employer, under clause 2(c) of Appendix D of the Agreement, takes all reasonable steps to assist in arranging suitable employment opportunities for the employees whose jobs are being declared redundant.

[31] That is, until such time as the Union and the employer agreed to discuss how the affected employees will be managed in the business change process the employer will not be in a position to discharge its obligations under the Appendices to the Agreement.

[32] Of course, the Union is reluctant to engage in consultation of this kind because it is consultation about an outcome which it seeks to resist in the interests of its members.

Recommendation

[33] On what has been put before me over the course of the two conferences, I do not discern any material basis to a claim that the employer has breached any obligation under the Agreement. There will be reasonable argument as to the extent to which consultation has been fulfilled because there will be differing expectations about what constitutes complete consultation (which in turn may be informed by expectations as to outcomes). Further, decision-makers are not immune to error, and there will always be reasonable dispute as to whether or not a particular business decision has been made on the basis of appropriate information or not. In the end, however (and subject to meeting its obligations under the Agreement), it is for the bearer of the commercial risks to make a judgement as to where the interests of the business best reside.

[34] The Agreement, I point out, does not set out to inhibit or bar business change. Instead, it places obligations on the employer to provide information, to enter into consultation with the Union about the proposed changes, and to take reasonable steps to do what it can to mitigate the effects of such changes on employees.

[35] From what I have said above, it follows that the only reasonable course that is left to the parties is to discuss the options that are available for the seven employees. The employer has indicated that it is open to any reconsideration by any employees who may have requested redundancy at an earlier point in time. That is, if such employees have reviewed their circumstances and seek to be re-skilled and redeployed then it will enter into discussions with the employees about the potential to give effect to that changed position.

[36] It appears to me that the employer is doing what it can to mitigate the effects of the business change on the affected employees.

[37] It also appears to me, at least what I have heard, that the employer has been motivated in respect of its decision-making by the very significant changes in beer volumes, and the necessity to respond to a changing market. A failure to respond to a changing market can have catastrophic consequences, and may lead to consequences for employees well beyond the confined effects of the current situation.

SENIOR DEPUTY PRESIDENT

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