Warren & Australian Manufacturing Workers Union v Diamond Power Australia Pty Ltd
[1996] IRCA 401
•23 Aug 1996
DECISION NO: 401/96
IN THE INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
VI 6233 of 1995
B E T W E E N:
Gregory Robert WARREN
& AUSTRALIAN MANUFACTURING WORKERS UNION
Applicants
A N D
DIAMOND POWER (AUSTRALIA) PTY LIMITED
Respondent
REASONS FOR DECISION
23 August 1996 PARKINSON JR
This is an application made pursuant to s170EA of the Industrial Relations Act 1988. The applicant was employed by the respondent, Diamond Power (Australia) Pty Ltd in the Latrobe Valley in Victoria. The applicants are Mr Warren (“the applicant”) and the Australian Manufacturing Workers Union (“AMWU”). It is alleged that Mr Warren’s employment was terminated without valid reason; that the termination of his employment was harsh, unjust and unreasonable, and that the reason or part of the reason for the termination of the employment was a matter proscribed by s170DF(1)(d) of the Act. The applicants contend that Mr Warren’s employment was terminated because of his activities as a union representative at the workplace. The respondent contends that the reason for the termination of the employment was based upon the operational requirements of the respondent. It denies that any part of the reason for termination included a reason proscribed by s170DF(1)(d) of the Act.
This matter has a complex factual background. It is appropriate to set out this background and I turn now to set out this background together with my findings of fact. Prior to commencing employment with the respondent, the applicant had been employed by the State Electricity Commission of Victoria (“SECV”) at its Yallourn power station performing maintenance fitters’ work. He commenced employment with the respondent on 25 October 1993 as a fitter. The respondent is a proprietary limited company which tendered for aspects of maintenance work required to be performed at the Yallourn Power Station. Although the respondent is not limited in any way from seeking work outside the SECV, or Vic Generation as it now is, the reality is that the vast majority of its work is obtained from that source. It was successful in its tender bid and entered into the contract prescribed by the SECV. That contract was for a term of years and provided for payment on account of regular maintenance service provision. The contract document was exhibited as a confidential exhibit in the proceedings. It is not necessary in this decision to refer to the contractual terms, save for the operation of one clause which is relied upon by the respondent as the “operational requirement” for termination of employment.
The contract was entered between the respondent and the SECV. Vic Generation, the new body operating the power station, became a successor to the SECV’s obligations under the contract with the respondent. Many of the employees of the respondent were ex-SECV employees who had previously been employed at Yallourn Power Station or at another Latrobe Valley Power Station. The applicant was of course one of these employees. He continued as an employee of the respondent to perform maintenance work on the soot blowers at Yallourn Power Station. There were two distinct work locations within the respondent, one being the workshops where welding and repair work was undertaken, the other being the on-site locations, where localised repair and maintenance work was undertaken on the site of the client.
The applicant became the workplace delegate or shop steward of the AMWU. In this capacity he represented AMWU members in negotiations with the respondent as to an Enterprise Agreement. The respondent was represented in those negotiations by the respondent’s executive managers, Mr Harry Ward and Mr Murray Shears, and the Victorian Manager, Mr Max Marek The AMWU was represented at these negotiations by Mr Bass, Mr Waterhouse the applicant. During the course of those negotiations there were discussions as to future job security in the respondent. The applicants contend that the result of the negotiations was an agreement for a reduced hourly rate of pay in exchange for agreement as to job security for the term of the agreement.
This agreement, known as the Diamond Power (Australia) Pty Limited Gippsland Facility Industrial Agreement 1995 (“the enterprise agreement”) was an industrial agreement made pursuant to the Industrial Relations Act 1988. The respondent contends that the agreement as to wage reduction was unrelated to job security. The evidence of the applicant and Mr Wisniewski, an organiser with the AMWU, was that the union agreed with some reluctance to a lesser wage outcome for its members under the enterprise agreement in return for an agreement as to job security for at least the term of the agreement. In cross examination Mr Marek conceded there had been an agreement as to job security, however it was his understanding that it was an agreement qualified by and subject to the continuation of contract arrangements with the SECV. His evidence was that it was an agreement which was confined to the realities of the contractual environment in which the respondent was operating. Whilst the enterprise agreement contains no express provision as to job security, I have concluded from its terms that it provided for consultation as to implementation of changes, and that this did not occur. Save for this matter, the enterprise agreement did not assist me in this decision.
In December 1995, there was an industrial dispute at the Yallourn Power Station. As a result of the dispute, bans were placed upon various aspects of the work at the Station including the issuing of permits for commencement of maintenance work or re-commissioning of completed work. These bans affected the availability of ongoing work for the respondent. Before maintenance tasks may be performed on a power station site by contractors, permits must be obtained by the contractor. The bans did not affect work which was already the subject of permits. There is some dispute between the parties in this proceeding as to how much work there was left to the respondent on existing permits. The bans were operative from 2 December 1995. Both parties concede there was a limited amount of existing work left as at the date of the industrial bans coming into effect. I am satisfied that there was sufficient work left to the respondent to maintain existing employee numbers for two weeks, that is to 11 December 1995. The evidence in this regard is that the union was informed by the respondent on 5 December 1995 that there was ten days work left for five people, or five days work left for nine people. This occurred by telephone to the full time official of the union, Mr Brown. At the same time the local shop stewards were informed of cost and manning level problems as a result of bans and work uncertainty. The union suggested that implementation of stand downs at that stage would be premature. The respondent continued in the ensuing week to perform its obligations under the contract to the SECV. It became aware that the negotiations as to the industrial dispute were not progressing and had information that the dispute may last for some time. As a result of this information the respondent began to consider its position in relation to staffing. It had regard to the terms of the contract and initiated discussions with the contract officer of the SECV, Mr Haines, for the purpose of ascertaining the client’s view as to the ongoing staffing arrangements. The respondent invited the comment of Mr Haines as to its future operational requirements. The written advice it received was to the effect that if there was no useful work to be performed then the respondent would be expected to take steps to make suitable arrangements to reduce the number of employees at the site during the period of the industrial action (exhibit R2). The letter did not purport to direct the respondent to take any particular course of action.
As a consequence of this letter, Mr Marek decided that the only course of action open to him was to initiate a program of stand downs in accordance with the provisions of Clause 6(e) of the Metal Industry Award 1984 (exhibit A1), an award of the Australian Industrial Relations Commission (“the Award”). He notified the relevant unions, including the AMWU, of the decision. The local union delegates declined to participate in the decision as to who would be selected for stand down. Whilst there was some reference to possible redundancies this was not the focus of the respondent, and indeed I am satisfied that, by telephone, Mr Marek advised the union that it was not a course he proposed to adopt at that time. Both parties concede there was a limited amount of existing work left as at the date of the industrial bans coming into effect.
At a meeting on 6 December 1995 Mr Marek issued letters to a number of employees, who had been selected for stand down by Mr Graeme Donnet, site manager for the respondent. Mr Donnet had applied criteria for selection based upon who was apparently in most need, and who was more able to absorb the loss of income associated with being stood down for what might be an indefinite period of time. The union members had a meeting as a result of the stand down notices being issued and resolved in the following terms:
Due to the threat of stand downs of members at the Yallourn W site we the members of the CEPU and the AFMEU recommend the following:
1. The work load left at “W” to be shared among the members until work is complete or the current situation and bans are lifted.
2. If one or more members are stood down all members at Yallourn “W” and Morwell workshop will also be considered stood down until such time as all members are back at work.
3. If any member is to be made redundant a suitable redundancy package be negotiated and agreed to by all members prior to any redundancies taking place.
4. Union members that are made redundant have first option of taking any new position with DPA whether casual or permanent.
The resolution of the union meeting was communicated to Mr Marek on the afternoon of 6 December 1995. I am satisfied that Mr Marek was upset and angered by the resolutions as carried and in particular as to the involvement of the workshop employees in the decision of the meeting. His notes as to the address he proposed to give to employees confirms this (exhibit R7). As a result, Mr Marek arranged to meet with the employees and addressed them in the terms contained in the exhibit by expressing his annoyance at the resolutions carried and the decision made by the employees at the union meeting to involve all areas of the respondent in the event that stand downs were pursued. I am satisfied that at this time there was also an identification of the applicant as being in part personally responsible for the meeting outcome.
On 7 December 1995 Mr Marek, after discussions with the unions, withdrew the stand down notices. This occurred as a result of the union requesting an opportunity to attempt to obtain further exemptions for the work of the respondent at the Yallourn Power Station. At this point of time therefore there had been no implementation of the decision of the union meeting on 6 December as to ‘one out all out’. On 11 December 1995 Mr Brown of the union advised Mr Marek that the union had been unable to obtain further exemptions. Mr Marek did not then reissue the stand down notices which he had withdrawn the previous day, but rather decided to terminate the employment of the applicant together with a number of other employees. Termination notices were issued to the employees selected on 11 December 1995. The industrial bans at the Yallourn W Power Station were lifted in part on 18 December 1995 and fully lifted by 19 January 1996.
There was no discussions with the relevant union prior to the termination of the employment as to measures to avert the termination of employment on the grounds of redundancy. Nor was there any reverting to the provisions of the Award as to stand down of employees in such circumstances. The respondent acted to substitute termination of employment for the stand down procedure set out in the Award. The Award provision exists to enable the respondent to deal with the impact of exactly the short term consequences arising from third party industrial action. Mr Marek, the decision maker, informed the employees on 11 December 1995 that:
“I said the stand down was no longer my preferred option due to their resolutions of the 6/12/95 where they wanted one in all in, and those not stood down would be on strike, which would dramatically affect not only them but everyone’s position in the Morwell operations”.
This statement is contained in the diary entry for 11 December 1995 evidenced by Mr Marek as having been made by him in the usual course of his recording incidents and activities affecting and associated with the respondent’s operations. The diary was marked as exhibit R20 in the proceedings. This material, together with the lack of an adequate explanation for the hasty implementation of termination of employment, this latter matter being the subject of further discussion later in this decision, leads me to conclude that the reason for termination of the employment was not the lack of work, but the decision taken by the employees at the meeting on 6 December 1995.
I am satisfied that the respondent acted to terminate the employment in response to the resolutions taken by the union members as to the implementation of stand downs, that is “one out all out”. The respondent took this step, notwithstanding that there was available to it other alternatives and recourse, including the provisions of the Award operating in respect of stand downs (Clause 6(e)); dispute settlement procedures (Clause 6(d)) and what is commonly known as a bans clause, (Clause 6(h)). It also took this step in circumstances where events had in fact overtaken the resolution carried by the meeting on 6 December, those events being the withdrawal of the stand down notices, and the attempts by the union to gain further exemptions. Instead of pursuing the stand down provisions, known to be available to it, the decision was made to terminate employment.
I am not satisfied that the reason for the termination of the employment was as a result of the operational requirements of the respondent. I am not satisfied that the position had been reached whereby it was a requirement of the business that the respondent terminate the employment of the applicant. As to the proposition that there was a situation of redundancy, I am not satisfied that there was a situation of redundancy at the time the applicant’s employment was terminated. This is because I find that the process of termination of employment was used as a substitution for the stand down provisions existing in the Award, and that there was on the respondent’s own evidence always an intention of re-engaging the employees after the conclusion of the industrial action and during its course, on a casual engagement basis.
As to the matters arising under s170DF(1)(d) the respondent has not satisfied the court that a reason or part of the reason for the termination of the applicant’s employment was not that he was acting in the capacity of a representative of employees of the respondent. The onus rests with the respondent to satisfy the court in this regard. In Johns v Gunns Ltd (1995) 60 IR 258, his Honour Justice Northrop said, at 268.:
For similar reasons, the opening words of subsection 170EDA(2) are to be given the same meaning. However, a very important result follows. Under subsection 170EDA(2), where that subsection is to be applied, the termination is taken to have contravened subsection 170DF(1) unless the employer proves:
"(c)the employment was not terminated for the particular reason or reasons or for reasons that included the particular reason or reasons; or"
It is because of this provision that the passage quoted from Heidt is of such importance. On the facts of this case, on the assumption that subsection 170EDA(2) applies, it would not be sufficient for the respondent to establish the reasons for dismissal as set out in the affidavit of the respondent and that they constituted valid reasons for termination under subsection 170DE(1). The respondent has to establish a negative namely that the reasons for dismissal did not include the reason that Mr Johns was temporarily absent from work because of injury. A mere denial may not be sufficient. All the facts and circumstances of the case have to be considered.
I am not satisfied that the reason for the termination of the applicant’s employment did not involve as part of the reason the applicant’s role as shop steward both in conducting the meeting of 6 December 1995 and in conveying the result of the resolutions carried by the employees at the union meeting. In this regard, and as a consequence of his holding the office of shop steward, the applicant was the focus of the anger of Mr Marek as to the outcome of the meeting, and its resolution to the effect of ‘one out all out’. I accept the evidence of the applicant and Mr Brown as to Mr Marek’s hostility towards the applicant. The evidence of Mr Brown informing Mr Marek that the applicant ‘didn’t make the bullets, he only fired them’ is consistent with there being an apparent hostility directed towards the applicant during the course of the events. Further, the evidence of the applicant and his notes of 6 December (exhibit A2), establish that the applicant had indeed become the target of the frustration and annoyance felt by the respondent as a result of the resolutions carried at the meeting. I am not satisfied that the respondent has established that the applicant’s role as shop steward was not a part of the reason for selecting the applicant for redundancy.
In view of the matters set out above, I am not satisfied that the respondent had valid reason for the termination of the applicant’s employment. I am not satisfied that the termination of the applicant’s employment did not include as the reason or part of the reason the applicant having acted in the capacity of a representative of employees. I find there has been a contravention of s170DE(1) and S170DF(1)(d) of the Act.
S170DE(2) - Harsh, Unjust or Unreasonable
In making the decision to terminate the employment, together with the decision as to who and how to select the employees to be made redundant by the respondent, there was no application of the Award provisions (Clause 42) in relation to procedures to be followed in circumstances of redundancy. There was no consultation with the employees or their union at the time when the definite decision had been made by Mr Marek not to stand down the employees, but rather to terminate the employment. This is despite the fact that the respondent had actively engaged the union in discussions as to enterprise agreements and other wage related matters in the past.
The evidence establishes that there were alternatives available to the respondent to terminating the employment, which alternatives would have at least mitigated the effect of the termination upon the employees. These alternatives included allowing the employees to take their accrued annual leave entitlements. The applicant had an accrual of 17 days annual leave which, together with the Christmas vacation, would have enabled a deferral of the decision on termination of employment, and further time for the industrial dispute to be resolved. This was a matter which was put by the employees, including the applicant, as an option and as preferable to having their employment terminated. This was rejected by the respondent. Mr Marek explained this rejection firstly as being because some employees had expressed a preference for being made redundant, and because it was against the interests of the respondent if they remained employed, because the oncosts associated with their employment would continue.
As to the first explanation, I do not accept that the applicant at any time indicated that he would prefer to be made redundant. It was conceded that the applicant requested that he be able to take his annual leave. Further, the evidence is that the only person who made such a statement was one person who was in no danger of being the subject of a redundancy, and was not subsequently made redundant. No enquiries were made of the applicant as to his views or preferences in this regard. As to the second explanation, this reasoning is inconsistent with the circumstances of shortage of work relied upon by the respondent for terminating the employment. The employees, including the applicant, had an accrued entitlement to annual leave, the taking of which leave in the normal course would have resulted in oncosts continuing to accrue. The opportunity was there for the respondent to extend the period of the employment in anticipation of a resolution to the industrial action. The respondent declined to take such steps based upon considerations other than those immediately relevant to the situation at hand, and with regard only to the immediate interests of the respondent and with no regard to the interests of the applicant.
In the making of the decision to terminate the employment, together with the decision as to who and how to select the employees to be made redundant by the respondent, there was no application of the award provisions in relation to procedures to be followed in circumstances of redundancy, nor was there consultation with the employees or their union. The process used to select for redundancy, done as it was in secret by pulling the names of persons out of a hat, appears to also be flawed, particularly in circumstances where some classes of employees were given the opportunity to volunteer for redundancy, but others, including the applicant, were not.
This is despite the fact that the respondent had actively engaged the union in discussions as to enterprise agreements and other wage related matters. In a sense the respondent took the step of terminating the applicant’s employment as a consequence of and in response to the decision of the meeting of AMWU members arising from the stand down notices. There is no other explanation for the decision to terminate the employment being made at the time that it was when there had been no developments in the industrial dispute at the SECV, nor had there been any escalation of the industrial action resulting in any further reduction of the work available at that time to the respondent. The evidence is that there was still work available to the respondent as at the date of termination of employment.
The evidence is that the respondent adopted a voluntary redundancy process in respect of employees in the workshop and a forced redundancy process in relation to the site employees. After the redundancy notices were handed to employees, the respondent then invited other employees to volunteer for redundancy. An employee who had not been selected for redundancy then volunteered and was made redundant. No steps were taken to reconsider the redundancy of the applicant or any other person in this circumstance. The operational requirement relied upon by the respondent was that the number of employees selected for redundancy, being six in number, were excess to labour requirements at that particular time. A person beyond that requirement volunteered and was accepted. No adjustment of the numbers of employees was made, and this fact gravely damages the respondent’s contention that the reason for the termination of the applicant’s employment was the operational requirement of the respondent.
S170EE - Remedy
In all the circumstances, I am satisfied that the applicant is entitled to an remedy in respect of the unlawful termination of his employment. There are no circumstances which suggest that an order for reinstatement would be impracticable. The evidence is that the respondent recommenced its activities at the SECV at latest in early January 1996. It did so by rehiring a number of the employees it had terminated at the same time as the applicant. They were rehired as casual employees and not on a permanent full time basis, as they had previously been employed. The evidence is that the applicant was offered casual work on one occasion by the respondent. This offer arose as he was leaving home to attend a grandparent’s funeral. He declined on that occasion on that basis and also because he was advised by his union not to accept casual work with the respondent. He was never subsequently approached by the respondent with any further offers of casual work. When the respondent re-employed the casual employees as permanent employees in March 1996, the applicant was not offered re-employment to a permanent position. I am satisfied that there is no bar to the reinstatement of the applicant based upon the practical reality of the workplace. The respondent is still operating under a contract to the energy generator, formerly SECV, and employing persons on a permanent basis to undertake such work. I am of the opinion that the applicant ought be reinstated. That is the order I shall make. As to the failure of the applicant to mitigate his losses by accepting casual employment, I do not accept that an offer of casual employment of indeterminate duration is an offer which the applicant, having lost permanent full time employment and expressing a desire to pursue such employment in the future, ought be obliged to accept.
I have decided that the applicant ought be reinstated to his employment with the respondent and that an order for continuity of employment ought be made. I have further decided that the applicant is entitled to an order for remuneration lost as a consequence of the unlawful termination of his employment. The parties are directed to calculate the amount of lost remuneration in this matter. The remuneration is to be calculated on ordinary time earnings. In so calculating, a deduction is to be made for any amounts earned by the applicant in employment during the period between the date of the termination of employment and the date of the reinstatement. A further deduction is to be made for payments made upon termination of employment for notice pay and severance, being the amount of eight weeks pay as set out in the notice of retrenchment (exhibit A3). Further deduction is to be made for the period between 11 December 1995 to 19 December 1995 when, I am satisfied, the applicant would have been likely not to have earned remuneration as a consequence of a stand down, until bans were lifted by the employees at Yallourn W Power Station.
The matter will be relisted for final orders as to the amount of remuneration to be paid to the applicant by the respondent. The order as to reinstatement will apply on and from the date of the order.
The orders of the court shall be:
That the applicant be reinstated to the position he held with the respondent at the date of the termination of employment.
That the period between the date of the termination of the employment and
the date of the reinstatement be recognised as continuous for all purposes.
That the respondent pay to the applicant the remuneration lost by the
applicant in the period between the date of termination of employment
and the date of this order.
That the parties calculate the amount of the remuneration lost, and that the
matter be relisted for final orders in relation to the amount of earnings at 9.30am. on 30 August 1996.
I certify that this and the preceding fifteen (15) pages
are a true copy of the reasons for decision of
Judicial Registrar Parkinson.
Associate:
Dated: 23 August 1996
APPEARANCES
Counsel appearing for the applicant: Mr D Staindl
Solicitors for the applicant: Holding Redlich
Counsel appearing for the respondent: Mr A Lindeman
Solicitors for the respondent: Phillips Fox
Dates of hearing: 8 May & 11, 12 & 13 June 1996
IN THE INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
VI 6233 of 1995
B E T W E E N:
Gregory Robert WARREN
AUSTRALIAN MANUFACTURING WORKERS UNION
Applicants
A N D
DIAMOND POWER (AUSTRALIA) PTY LIMITED
Respondent
MINUTES OF ORDERS
23 August 1996 PARKINSON JR
THE COURT ORDERS THAT:
The applicant be reinstated to the position he held with the respondent at the date of the termination of employment.
The period between the date of the termination of the employment and the date of the reinstatement be recognised as continuous for all purposes.
The respondent pay to the applicant the remuneration lost by the applicant in the period between the date of termination of employment and the date of this order.
The parties calculate the amount of the remuneration lost, and that the
matter be relisted for final orders in relation to the amount of earnings at 9.30am. on 30 August 1996.
NOTE: Settlement and entry of orders is dealt with by Order 36 of the Industrial Relations Court Rules
CATCHWORDS
INDUSTRIAL LAW - complaint of UNLAWFUL TERMINATION - REDUNDANCY - whether termination for VALID REASON of OPERATIONAL REQUIREMENTS - whether termination for prohibited reason of acting or having acted in the capacity of a representative of employees - REINSTATEMENT
Industrial Relations Act 1988, ss 170EA, 170DF(1)(d), 170DE(1), 170DE(2), 170EE
GREGORY ROBERT WARREN & AUSTRALIAN MANUFACTURING WORKERS UNION v DIAMOND POWER (AUSTRALIA) PTY LTD
VI 6233 of 1995
Before: PARKINSON JR
Place: MELBOURNE
Date: 23 AUGUST 1996
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