1
Fair Work Act 2009
s.604 - Appeal of decisions
SSX Services Pty Limited
v
The Australian Workers' Union
(C2015/3708)
VICE PRESIDENT WATSON
DEPUTY PRESIDENT LAWRENCE
COMMISSIONER LEWIN
MELBOURNE, 1 JULY 2015
Appeal against decision [[2015] FWC 2217] of Commissioner Ryan at Melbourne on 9 April
2015 in matter number C2015/1557 – Stand down of employees – Nature of the function of
Commission in the characterisation of the dispute – Natural Justice - Permission to appeal -
Fair Work Act 2009, ss. 524, 526, 527 and 604.
Introduction
[1] On 9 April 2015, Commissioner Ryan issued a decision pursuant to s.526 of the Fair
Work Act 2009 (the Act). The decision concerned the standing down of approximately thirty
SSX Services Pty Limited (SSX) Bar Mill employees on 5 and 6 February 2015 over a period
of approximately twenty six hours from 4pm on 5 February and to 6pm on 6 February 2015.
The effect of the decision was that the Commissioner considered that the stand down was not
in accordance with s.524 and the deductions from wages for the period of the stand down
should be reversed.
[2] This decision relates to a Notice of Appeal lodged against the decision by SSX on 28
April 2015.
[3] An amended Notice of Appeal was filed on 11 May 2015 which removed OneSteel
Recycling Pty Ltd as an appellant as it was disclosed in the matter at first instance that SSX
was the relevant employing entity of the employees the subject of the application. SSX sought
to amend the Notice in these terms at the hearing of the matter and this application was
granted by the Full Bench.
[4] At the hearing of the appeal on 11 June 2015, Mr M. Follett, of counsel, appeared for
SSX and Mr D. Victory appeared for the Australian Workers’ Union (the AWU).
Background
[5] The decision of the Commissioner relates to an application by the AWU pursuant to
s.526 of the Act. This section allows the Fair Work Commission (the Commission) to deal
[2015] FWCFB 3964
DECISION
AUSTRALIA FairWork Commission
[2015] FWCFB 3964
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with a dispute concerning the operation of Part 3-5 of the Act, including s.524. Part 3-5
concerns the circumstances in which an employer may stand down an employee without pay.
Section 524 of the Act confers a right to stand down employees in certain circumstances. It
provides:
“524 Employer may stand down employees in certain circumstances
(1) An employer may, under this subsection, stand down an employee during a period
in which the employee cannot usefully be employed because of one of the following
circumstances:
(a) industrial action (other than industrial action organised or engaged in by the
employer);
(b) a breakdown of machinery or equipment, if the employer cannot reasonably
be held responsible for the breakdown;
(c) a stoppage of work for any cause for which the employer cannot reasonably
be held responsible.
(2) However, an employer may not stand down an employee under subsection (1)
during a period in which the employee cannot usefully be employed because of a
circumstance referred to in that subsection if:
(a) an enterprise agreement, or a contract of employment, applies to the
employer and the employee; and
(b) the agreement or contract provides for the employer to stand down the
employee during that period if the employee cannot usefully be employed
during that period because of that circumstance.
Note 1: If an employer may not stand down an employee under subsection (1), the
employer may be able to stand down the employee in accordance with the enterprise
agreement or the contract of employment.
Note 2: An enterprise agreement or a contract of employment may also include terms
that impose additional requirements that an employer must meet before standing down
an employee (for example requirements relating to consultation or notice).
(3) If an employer stands down an employee during a period under subsection (1), the
employer is not required to make payments to the employee for that period.”
[6] As we have said, s.526 permits the Commission to deal with a dispute about the
operation of s.524. It provides:
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“526 FWC may deal with a dispute about the operation of this Part
(1) The FWC may deal with a dispute about the operation of this Part.
(2) The FWC may deal with the dispute by arbitration.
Note: The FWC may also deal with a dispute by mediation or conciliation, or by
making a recommendation or expressing an opinion (see subsection 595(2)).
(3) The FWC may deal with the dispute only on application by any of the following:
(a) an employee who has been, or is going to be, stood down under
subsection 524(1) (or purportedly under subsection 524(1));
(b) an employee in relation to whom the following requirements are satisfied:
(i) the employee has made a request to take leave to avoid being stood
down under subsection 524(1) (or purportedly under
subsection 524(1));
(ii) the employee’s employer has authorised the leave;
(c) an employee organisation that is entitled to represent the industrial interests
of an employee referred to in paragraph (a) or (b);
(d) an inspector.
(4) In dealing with the dispute, the FWC must take into account fairness between the
parties concerned.”
[7] The Commissioner held a conference regarding the matter on 6 February 2015. The
matter was not settled and the matter was subsequently listed for arbitration before the
Commissioner. The dispute brought to the Commission was expressed by the AWU in its
application in the following terms:
“1. What is the industry of the employer?
Manufacturing (Steel)
2. Capacity in which the Applicant applies:
The Applicant is an employee organisation that is entitled to represent the industrial
interests of employees who are going to be stood down (s.526(3)(c)).
3. What is the dispute about?
1. The Applicant as bargaining representative for AWU members employed by
OneSteel has been bargaining for a new enterprise agreement to cover the Laverton
Site since July 2014.
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2. The Applicant applied for and obtained a PABO from the FWC. AWU members
authorised protected industrial action which has been taking place since November
2014.
3. On 28 January 2015 and 2 February 2015, the Applicant served notices of intent to
take protected industrial action (attached).
4. Relevant to this application, the Applicant notified of stoppages to occur:
a. Rod Mill - Thursday, 5 February 2015 (item 10 in the 28 January 2015
notice).
b. Rod Mill – Friday, 6 February 2015 (item 1 in the 2 February 2015 notice).
5. The Rod Mill crew is not rostered to work from 6.00 a.m. Thursday, 5 February
2015 to 6.00 a.m., Monday, 9 February 2015.
6. OneSteel has notified the Applicant that as the aforesaid stoppages have been
notified, that employees in the Bar Mill will be stood down effective 12 noon,
Thursday, 5 February 2015.
7. OneSteel advised the Applicant at a meeting at 1.30 p.m. on 4 February 2015 that if
the proposed protected industrial action notified was to occur after 12 noon on
Thursday, 5 February 2015, in the Rod Mill, then the Bar Mill Crews rostered to work
on 5 - 7 February 2015 would be stood down.
8. The reasoning provided for this by OneSteel is that they are overstocked in Bar Mill
product and understocked in Rod Mill product.
9. The Applicant contends that OneSteel is not overstocked in the Bar Mill product
and there is sufficient work available for those employees to perform as they normally
would.
10. The Applicant contends that OneSteel is undertaking a form of lockout disguised
as a stand down.
4. Order(s) sought:
1. OneSteel not stand down Bar Mill employees in circumstances where they can be
usefully employed
5. Grounds:
1. Section 524 of the FW Act permits an employer to stand down employees in
defined circumstances.
2. The current enterprise agreement covering the Respondent and its employees
contains stand down provisions specified in sections 524(1)(b) and (c) of the FW Act.
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3. The current enterprise agreement does not contain specific provisions as to stand
down in circumstances of industrial action prescribed by section 524(1)(a) of the FW
Act.
4. OneSteel has purported to stand down AWU members due to industrial action
contemplated by section 524(1)(a) of the FW Act.
5. The Applicant relies upon the facts cited above and submit that the circumstances
relied upon by OneSteel to propose to stand employees down do not exist.
6. The Applicant submits that the relevant affected employees can be usefully
employed in their normal work as contemplated by section 524(1) of the FW Act.
7. In those circumstances the actions of OneSteel do not amount to a lawful stand
down.
8. The Applicant seeks for the FWC to deal with this application via conference at first
instance pursuant to section 526 of the FW Act.
9. The Applicant reserves its’ right to seek for this matter to be arbitrated by the FWC
pursuant to section 562(2) of the FW Act pending the conclusion of the aforesaid
conference.”
The Decision under Appeal
[8] In the following passage from his decision, the Commissioner found in favour of SSX
on the issue whether the employees could be usefully employed:
“[48] I accept the evidence of Mr Murphy that over the period in which employees
have been entitled to take protected industrial action and have taken the protected
industrial action of engaging in a “stoppage of the performance of all work for all
Relevant Employees engaged to work in the Rod Mill, except for the Rod Mill Roll
and Guide Shop Operator, for a period twenty-four (24) hours..” that the subsequent
extra production through the Bar Mill has meant that the Respondent no longer has
useful work for Bar Mill employees other than that work which is set out in the
production schedule for the Bar Mill. I have carefully considered the evidence of Mr
Condon and Mr Terrill for the Applicant and the evidence of Mr Murphy and Mr
O’Connell for the Respondent. It is clear from that evidence that whilst the
Applicant’s witnesses genuinely believed that there was useful work for the Bar Mill
employees to do on both Thursday 5 February and Friday 6 February 2015 the
reality was very different. Whilst work could have been created for the Bar Mill
employees to do, such as running the Bar Mill production line to produce Angles,
such work was not scheduled to be done on either 5 or 6 February 2015 and to have
the Bar Mill employees do such work would not have been useful employment for
the Respondent. The range of non production tasks which the Applicant contended
were available either weren’t available or would not constitute useful employment for
the Respondent.
[49] The overproduction in the Bar Mill is due entirely to the fact that the
Respondents chose to keep Bar Mill employees in the Bar Mill at times that they
[2015] FWCFB 3964
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could have been directed to work in the Rod Mill. The Respondents chose not to
direct Bar Mill employees to transfer to the Rod Mill at times that the protected
industrial action of a “stoppage of the performance of all work for all Relevant
Employees engaged to work in the Rod Mill, except for the Rod Mill Roll and Guide
Shop Operator, for a period twenty-four (24) hours...” was occurring.
[50] The evidence in this matter is sufficiently strong so as to reasonably satisfy the
Commission that as at 4pm on Thursday 5 February 2015 and all day on Friday 6
February 2015 the Bar Mill employees could not be usefully employed.”
[9] However, the Commissioner then went on to find that the inability to “usefully be
employed” was not “because of” the industrial action within the meaning of s.524(1) of the
Act. The Commissioner prefaced his consideration of this issue by stating:
“[51] The issue which was not addressed by either party to the proceedings was the
requirement in s.524(1) that the stand down of employees was because of one of the
circumstances set out in paragraphs 524(1)(a), (b) or (c).”
[10] The Commissioner expressed his conclusion on this matter in the following passage
from his decision:
“[62] The standing down of Bar Mill employees on Thursday 5 February 2015 and
Friday 2015 was not a stand down within the meaning and operation of s.524 of the
Act. Whilst the stand down occurred during a period that the Bar Mill employees
could not usefully be employed by the Respondent the stand down did not occur
because of the taking of protected industrial action being a “stoppage of the
performance of all work for all Relevant Employees engaged to work in the Rod Mill,
except for the Rod Mill Roll and Guide Shop Operator, for a period twenty-four (24)
hours from 6am Thursday 5 February 2015 to 6am Friday 6 February 2015 and from
6am Friday 6 February 2015 to 6am Saturday 7 February 2015.”
[11] Payments of wages for the period of the stand down have not been made pending the
determination of this appeal.
Appeal Grounds
[12] The grounds of appeal allege that the Commissioner’s decision with respect to the
cause of the stand down was affected by a number of jurisdictional errors, errors of fact and
applied a test for causation that is not required by s.524(1) of the Act. SSX contends that the
Commissioner erred in the following interrelated respects:
Misunderstanding the nature of the function that the Commission was exercising and
the characterisation of the dispute before it by considering that the Commission was
permitted to make a finding about the causal connection contained in s.524 of the
Act;
By applying the wrong test in determining the “because of” element in s.524;
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In concluding that there was insufficient evidence to prove that the Bar Mill
employees could not be usefully employed because of the industrial action in the
Rod Mill;
In concluding that there was “no narrative” as to why the Bar Mill was operated on
days when it was not otherwise scheduled to;
In concluding that the overproduction in the Bar Mill was due entirely to the fact that
SSX choose to keep the Bar Mill employees in the Bar Mill at times when they could
have been directed to work in the Rod Mill; and
In failing to afford procedural fairness to SSX by determining the matter on the basis
of an issue which the parties had not raised, disputed or contested during the
proceedings before him.
[13] SSX contends that each of these alleged errors relate to a determination of legal issues
and do not involve the exercise of a discretion.
[14] The AWU contends that the Commissioner reached the correct outcome but for
different reasons than those relied upon by the Commissioner. It submits that SSX failed to
discharge the onus of establishing that there was no useful work and permission to appeal
should not be granted.
[15] Permission to appeal is required in order to advance an appeal against the decision.
After dealing with that question we propose to consider issues raised by the grounds of appeal
to the extent necessary to determine the matter.
Permission to Appeal
[16] The decision concerns the interpretation of a section of the Act and the approach to
resolution of disputes about that section. The grounds of appeal raise important questions
regarding the approach of the Commission, the jurisdiction of the Commission, the principles
of natural justice and the application of various concepts dealt with in s.524 of the Act. We
have had regard to the parties’ submissions on the question of whether there was useful work
for the employees in the circumstances but, in our view, this is a case in which it is in the
public interest to grant permission to appeal because of the importance of the matters at issue.
The Characterisation of the Dispute
[17] We have set out the relevant legislative provisions above because of their importance
to considering the grounds of appeal. Importantly, the right to stand down employees under
s.524 arises from the effect of the section itself. The right is not dependent on approval of the
Commission. However, to the extent that a dispute arises in relation to the exercise of that
right, the Commission is empowered by s.526 to deal with that dispute by arbitration. The
Commission is required to take into account fairness between the parties concerned and
thereby incorporate an overall discretionary factor into the task of determining a dispute over
whether the right to stand down is correctly invoked in the circumstances. The parties are
bound by s.527 to comply with an order of the Commission dealing with a dispute. These
provisions make it important to correctly identify the subject matter of a dispute the subject of
arbitration for the purposes of any such order.
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[18] The characterisation of disputes arises in various contexts under the Act, most
particularly in relation to disputes arising from the application of awards and agreements. It is
necessary to have regard to the nature of a dispute alleged in an originating application and
the factual circumstances as they evolve for the purposes of conciliation and arbitration of the
dispute. A Full Bench of the Commission’s predecessor expressed the importance of
characterising a dispute in this way, albeit in a different statutory context, namely the
resolution of disputes arising under certified agreements made under the Workplace Relations
Act 1996 (Cth):1
“[45] A dispute referred to the Commission must be properly characterised before
powers conferred by a dispute settlement provision in a certified agreement are
exercised. This is necessary in order to determine whether the dispute is ‘over the
application of the agreement’ within the meaning of s.170LW of the WR Act. …
…
[47] In characterising the nature of the dispute in this matter the Commission is not
confined to the dispute notification document. The entire factual background is
relevant, including matters such as the submissions advanced. In this context we note
that in TWU v Mayne Nickless Ltd the Full Court of the Federal Court held that in
determining whether an application calls on the Commission to exercise judicial, as
opposed to arbitral, power ‘a court should review the entire factual background to
properly characterise the claim and the power sought to be invoked.’”
(footnotes omitted)
[19] In Maritime Union of Australia v Australian Plant Services Pty Ltd, Lacy SDP said:2
“Parliament has authorised the Commission to exercise powers under the agreement to
settle disputes over the application of the agreement and, accordingly, its powers are
limited to disputes of that kind. Therefore it is necessary for the Commission, in each
case where it is asked to deal with the matter arising under the disputes settling
procedure in an agreement, to ascertain the character of the dispute before it in order
to determine whether the matter is a dispute over the application of the agreement,
and, importantly, the character of the dispute is distinguishable from the order that
may be made in settlement of the dispute.”
[20] We consider that the arbitration of the dispute under s.526 (1) and (2) of the Act
requires similar characterisation by the Commission for the purposes of any arbitration of
such a dispute.
[21] We have set out the full terms of the originating application above. A fair reading of
those terms is that the AWU sought to challenge the fundamental basis relied on by the
employer for the stand downs - that there was no useful work for the employees at the
relevant time. The AWU contended that “the relevant affected employees could have been
usefully employed in their normal work as contemplated by s.524(1) of the Act”. The order
sought was that SSX not stand down employees “in circumstances where they can be usefully
employed”.
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[22] As paragraph [51] of the Commissioner’s decision makes clear, the parties did not
address the further question of whether the stand down was “because of one of the
circumstances set out in paragraphs 524(1) (a), (b) or (c).” The parties accepted in the
proceedings before us that this observation from the Commissioner was correct. However the
fact that they did not address the issue establishes that this matter was not in dispute. The
Commission was not empowered to deal with this question because it did not fall within the
dispute that arose in relation to s.524. In proceeding to deal with this matter the
Commissioner considered an issue outside the scope of the dispute and exceeded the
jurisdiction conferred by s.526.
[23] It follows that the appeal on this ground must be allowed and decision of the
Commissioner quashed in relation to this aspect of his decision.
Natural Justice
[24] A related ground is the contention that the Commissioner did not provide the parties
with an opportunity to deal with the question which he ultimately ruled was a matter
inconsistent with the terms of s.524. As the Commissioner noted, the parties did not raise it.
Even if he had jurisdiction to deal with the matter, it is well established that he was under an
obligation to raise the issue with the parties. As the NSW Court of Appeal has put it:
“These cases establish the general principle that although the basis on which the
parties conduct a trial does not bind the judge, if the judge contemplates determining
the case on a different basis he or she must inform the parties of this prospect so that
they have an opportunity to address any new or changed issues that may arise.”3
[25] Before determining a matter not agitated by the parties, a court or tribunal should alert
the parties to the possibility of doing so and afford them the opportunity to put whatever case
they might have wished to put in the circumstances.4
[26] As the decision of the Commissioner makes clear, no such opportunity was given in
the circumstances. If the matter was within jurisdiction, the denial of natural justice inherent
in this approach would have provided a further basis for allowing the appeal.
Usefully Employed
[27] There is no appeal against the part of the decision of the Commissioner extracted
above that there was no useful work for the Bar Mill employees on the days in question.
Nevertheless the AWU has sought to establish that this conclusion is wrong and is a basis for
either denying permission to appeal or disallowing the appeal.
[28] As stated above, we consider that the subject matter of the appeal and the issues raised
by the grounds of appeal provide a sufficient basis for granting permission to appeal.
[29] Further, we are not satisfied that the conclusions reached by the Commissioner on this
question are in error. The case made out by SSX was essentially that the overproduction in the
Bar Mill caused by previous instances of industrial action in the Rod Mill and the consequent
decision to keep Bar Mill employees working in the Bar Mill rendered any future Bar Mill
production surplus to its requirements not useful. SSX led evidence concerning the
overproduction in the Bar Mill and the view its management reached that bar product
[2015] FWCFB 3964
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inventory levels had exceeded acceptable levels. This evidence was accepted by the
Commissioner and was rightly considered to be decisive. In its submissions before us the
AWU has not established that the decision of the Commissioner in respect to the lack of
useful work is wrong or that the evidence should have led to a different finding.
Conclusions
[30] We grant permission to appeal and allow the appeal in relation to the consideration of
the cause of the lack of useful work and the conclusion of the Commissioner expressed at
paragraph [62] of the Commissioner’s decision. As that matter does not fall within the dispute
that arose over the operation of s.524 there was no jurisdiction to deal with the matter.
Although the other grounds of appeal do not arise, we have dealt with the natural justice issue
because it provides an alternative basis for the finding that the Commissioner exceeded his
jurisdiction in relation to the causation question. We are not satisfied that the conclusion of
the Commissioner as to the lack of useful work was in error.
VICE PRESIDENT
Appearances:
Mr M. Follett, of counsel, with Mr A. Pollock for SSX Services.
Mr D. Victory, with Mr B. Bromberg for the Australian Workers’ Union
Hearing details:
2015.
Melbourne.
11 June.
Final written submissions:
SSX Services on 20 May 2015.
Australian Workers’ Union on 9 June 2015.
Printed by authority of the Commonwealth Government Printer
Price code C, PR568289
THE OF THE FAIR WORK C. SEN THE NOISS
[2015] FWCFB 3964
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1 PR940366.
2 PR908236.
3 Seltsam Pty Ltd v Ghaleb [2005] NSWCA 208; (2005) 3 DDCR 1 at [78] (referring to the authorities in [69]-
[77]). See also for example, Pantorno v The Queen (1989) 166 CLR 466 at 473; BHP Billiton Iron Ore Pty
Ltd v Construction, Forestry, Mining and Energy Union of Workers (2006) 151 IR 361 at [33]-[39]; Re
AIRC; Ex parte CFMEU (2001) 115 FCR 267 at [45]-[46]; Murray & Roberts Australia Pty Ltd v G B
Lifestyles Pty Ltd [2013] WASC 345 at [64]-[76].
4 Re Australian Railways Union; Ex parte Public Transport Corporation (1993) 51 IR 22 at 29; Re Galintel
Rolling Mills Pty Ltd (2011) 214 IR 258 at [30]-[32].
