1
Fair Work Act 2009
s.739 - Application to deal with a dispute
The Australian Workers' Union
v
BlueScope Steel Limited
(C2016/3763)
VICE PRESIDENT HATCHER SYDNEY, 23 JUNE 2016
Introduction
[1] On 16 May 2016 the Australian Workers’ Union (AWU) lodged an application
(Application) for the Commission to deal with a dispute in accordance with the dispute
settlement procedure contained in clause 35 of the BlueScope Steel Springhill Workplace
Agreement 2015 (2015 Agreement). The dispute arose in a direct sense from a letter dated 5
May 2016 sent by BlueScope Steel Limited to its employees in the Despatch area of the
Painting and Finishing Department (PFD) of its Springhill Plant at Port Kembla. The letter
concerned the implementation of proposals advanced by BlueScope1 to train operators in the
Despatch area to perform tasks in parts of the PFD other than Despatch on a relief basis as
required, and read as follows (omitting formal parts, emphasis added):
“RESTRUCTURE OF THE PFD DESPATCH DEPARTMENT (LETTER 2)
On the 9th September 2015 the Company issued letter 1 to employees and their union
representatives detailing the proposed change to reduce costs, improve productivity
and efficiencies, reduce costs [sic] and improve operator utilisation across PFD. On
the 18th of March 2016 the Company issued another letter to employees confirming its
intention to commence training of Despatch operators in other areas of PFD
Operations.
Since that time consultations have been undertaken with employees and their union
representatives in accordance with Clause 35.2.3 of the BlueScope Steel Springhill
Workplace Agreement 2015. Having regard to those consultations and the
recommendation of the mediation from Vice President Hatcher dated the 6th October
2015 the Despatch restructure has been implemented with one objective outstanding.
Further consultation as directed by Vice President Hatcher has occurred without
agreement being reached. As a result the Company will proceed with its proposed
change to improve operator utilisation in PFD.
1 The BlueScope group consists of a number of corporate entities. The corporate entity which operates the Springhill Plant is
BlueScope Steel Limited. In this decision I shall refer to the BlueScope group and any relevant corporate entities within it
generically as “BlueScope”.
[2016] FWC 3848
DECISION
E AUSTRALIA FairWork Commission
[2016] FWC 3848
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The proposed changes are as follows:
Despatch operators will be introduced to the Packline's operation by receiving
base level training.
Despatch operators will be trained to operate station 5.
Despatch operators will be trained to strip packed coils.
Despatch operators will be trained to pack coils manually.
Despatch operators who have previously been trained in forklift driving will be
trained to despatch vertical coils.
Despatch operators to work anywhere across PFD as reasonably directed.
The proposed workplace change is expected to result in a reduction in costs and an
improvement in efficiencies and operator utilisation.
In accordance with the 2015 Agreement changes will be assessed against the criteria
of safe, efficient, legal and fair. The Company intends to implement this change from
the 15 May 2016.
If you have immediate concerns or issues please refer them to your Team leader and/or
Manager.
Thank you for your participation and contribution during the consultation process and
I look forward to your continued participation during the transition to the new
arrangements.”
[2] The AWU’s application indicated that it opposed the introduction of the changes
itemised in the emphasised dot points in the above letter on the basis that they would not be
safe, efficient, legal and fair, and therefore did not satisfy the criteria for workplace change
provided for in the 2015 Agreement. The Application was the subject of a conciliation
conference before me on 17 May 2016, but this did not result in a resolution of the dispute.
The AWU seeks an arbitrated determination restraining BlueScope from proceeding with its
proposed changes. BlueScope wishes to proceed to implement the changes.
History of the dispute
[3] Because, as shall be explained later, the AWU’s case against the implementation of
the BluesScope proposal is substantially based on an alleged lack of consultation with
employees, it is necessary to analyse in some detail the history of the proposals for change
and the disputes to which it gave rise. Evidence concerning that history was given by Mr
Branko Gorgievski, the Branch President of the Port Kembla, South Coast & Southern
Highlands Branch of the AWU, and Mr Gary Meta, the Operations Manager of the PFD.
There was some degree of conflict in their evidence which it is necessary to resolve.
[4] The PFD is one of four departments in the Springhill Plant. Its function, broadly
described, is to receive steel products and other materials from other sections of the plant,
paint it where necessary, and pack it for distribution to customers. The Paintline section of
PFD performs any painting work. The Finishing section carries out the other functions. It has
four operational areas:
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The Packline is a continuous line which packs coiled steel according to customer
specifications. It has 14 different stations along the line. The functions are
approximately half automated and half manual.
Despatch receives delivery of coils, and places them by crane into designated
locations ready for despatch by road or rail.
The Tension Leveller performs a quality assurance process to correct defects in
coils or in their packing and readies them for despatch.
The Manual Pack area involves the manual packing of coils to meet customer
specifications, and the manual unpacking, inspection and repacking of coils
returned by customers or other sections such as the Packline.
[5] Mr Meta’s evidence was that BlueScope’s proposal that Despatch operators be trained
to perform duties in other parts of the PFD was first raised in discussions with employees in
August 2015. At this time the BlueScope Steel Springhill Workplace Agreement 2012 (2012
Agreement) applied to the Springhill Plant.
[6] The context in which those discussions occurred requires some description. In that
period, the Port Kembla Steelworks was under severe commercial pressure due to a collapse
in the international price of steel. This was the result of overproduction from the subsidised
Chinese steel industry being dumped onto world markets. The BlueScope group announced
that it was likely to make the decision to close the Port Kembla Steelworks (but not the
operationally separate Springhill Plant) by November 2015 unless $200 million in annual cost
savings (including $60 million in direct labour costs) could be achieved. The Springhill Plant
was required to make a contribution to these cost savings. The discussions engaged in with
the Despatch employees were part of this process to identify and implement labour cost
savings.
[7] Mr Meta said that in the discussions in August 2015, he proposed that Despatch
employees be trained to perform the functions of station 5 on the Packline, which he
described to the employees as involving the attachment of “donuts” to coils. He said the
proposal “didn’t go down well” with employees, who said that they did not wish to be
“gofers”. Mr Gorgievski denied that any such proposal was raised at this time. However he
did not attend all the meetings which occurred. I accept Mr Meta’s evidence in this respect.
Nonetheless there is no doubt that this proposal was only a minor aspect of the matters being
discussed, and that the focus was upon a proposed change to shift patterns and crewing in the
Despatch area.
[8] Following these discussions, Mr Meta sent a letter dated 9 September 2015 to all
Despatch operators and the AWU which, omitting formal parts, stated:
“LETTER 1: NOTICE OF THE COMPANY’S INTENTION TO
RESTRUCTURE THE PFD DESPATCH DEPARTMENT
The purpose of this letter is to formally advise all PFD Despatch employees that the
department will be commencing consultation about changes that are under
consideration and which are significant in nature. This notification is letter 1 for the
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purposes of consultation in accordance with clause 35.2.3 of the BlueScope Steel Port
Kembla Steelworks Agreement 2012.
Background:
The PFD Despatch "manning" levels are being reviewed to better match the current
workload requirements and peak workload days and times.
Current challenging business conditions demand that Bluescope continue to look for
solutions to remain competitive and protect the future of the steel industry in the
Illawarra. Through improved alignment of the PFD Despatch crews manning and
roster arrangements with the expected workload, PFD operations will be able to
reduce operating costs and contribute to our cost saving goals.
Objectives:
The objectives of the proposed workplace changes are:
Reduce fixed costs
Maintain safe, reliable despatch operations for the Springhill Plant
Improve productivity and efficiency of operations
Reduce PFD Operations despatch costs and contribute to the cost savings
necessary to improve the viability of the steel industry in the Illawarra
Improve operator utilisation across PFD Operations
Impact:
The effects the proposed changes are likely to have on employees include:
A reduction in the total number of existing positions on each existing 7day
12hour shift work crew by two (2).
Transferring affected operators to a new shift work arrangement covering
rotating 9.5 hour day shift and afternoon shift Monday - Friday. This
arrangement will also provide leave relief to the 7day 12 hour shift
operations.
The despatch operations will be continually reviewed to right size to
workload requirements. It is expected that the Monday - Friday operations
may be further reduced following implementation of the change. This is
expected to occur by natural attrition.
A reduction in weekend and shift penalties for affected Operators
The Company has notified the unions about this letter and it is our intention to engage
with you and your representatives as the proposal is progressed. Regular consultation
meetings will begin on Friday 11th September 2015 at 07:00 and continue twice
weekly.
Throughout the consultation process, employees and the Australian Workers Union
(AWU) will have the opportunity to comment and input into the proposed change.
If you have any concerns or issues, please let me know, or alternatively please refer
them to your Shift Team Leader who will pass them onto me.
Please stay safe during this process and look after yourself and your workmates. I also
want you to be aware that the Employee Assistance Program is available to you and
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your immediate family. Should you wish to utilise this service please contact Mentor
Services on 4226 1099 or 1300 727 308.”
[9] The letter was followed by a number of consultation meetings with employees, as was
indicated would occur in the letter. In the course of this consultation process, Mr Meta
provided a PowerPoint presentation (bearing the same date as the letter) to employees
detailing the changes which were proposed. One of the slides was as follows (emphasis
added):
“Future Arrangements
Cost savings of a minimum of ~$590k per annum in weekend penalties and
overtime reduction
9.5hr Day/afternoon shift workers arrangements -
- Extra people available on shifts that are the busiest
- Will “man up” only according to the needs of the business
- May be required to assist in other PFD operations work as required. E.g:
Packline (base level operator training will be provided)
- Will assist with leave coverage and coverage for unplanned absences, without
incurring overtime
- Day/afternoon shift and shift relied not relieving - are not required to work
public holidays - single time and not required to work.”
[10] The bulk of the slides in the slideshow were concerned with the proposed changes to
shift patterns and crewing, and this subject dominated the discussions which occurred. There
were further PowerPoint presentations on 16 and 23 September 2015, and each contained the
same slide as that set out above.
[11] Commencing on 8 September 2015 the Commission (constituted by myself) conducted
a mediation process (in matter NA2015/5) involving BlueScope, the AWU and other unions
in order to assist the process of identifying the labour cost reductions necessary to ensure that
the Port Kembla Steelworks was not closed. The mediation process had two tracks. The first
was to identify savings of about $40 million to be achieved by reductions in staffing levels
across each department in the Steelworks and the Springhill Plant. Where agreement was not
reached in relation to any department, it was agreed that the Commission would issue a
recommendation resolving the disputed issue. The second track involved changes to
employment conditions across the board to generate further savings of about $20 million.
[12] The issues concerning the PFD arose as part of the first track, and were dealt with in
the mediation process on 23 and 28 September 2015. A printed copy of a PowerPoint
presentation was presented to the Commission entitled “PFD Operations – Significant
Change 2015 – Mediation – 23th September 2015”, which contained a page in terms identical
to the slide from Mr Meta’s earlier PowerPoint presentation to employees which has been set
out above.2 The proposal to train Despatch operators was not specifically identified as an
issue in dispute, but it was discussed at least briefly on 23 September 2015. My notes of that
mediation conference include the following statement: “Surplus labour - go & assist
Packline”. The focus during the mediation was upon a disagreement between the parties about
what changes to shift patterns and crewing should occur. A comprehensive recommendation
2 A copy of this was retained in the Commission’s file for the mediation.
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was issued by me on 6 October 2015 which dealt with all the identified issues in dispute in the
first track. The PFD was dealt with at paragraphs [176]-[182] of this recommendation. It did
not touch upon the proposal to train Despatch operators to perform Packline duties. It dealt
only with the proposed changes to shift patterns and crewing in the Despatch area. In relation
to that issue, the recommendation was that the BlueScope proposal should be adopted, subject
to the following:
“[182] It is clear that implementation of the Bluescope proposal will result in a loss of
take home pay for those operators required to move to day shift. One option to mitigate
the effect of this would be to rotate operators between day work and shift work so that
the income loss is shared and not suffered by particular individuals. This should be
done by Bluescope provided that there is a consensus amongst the affected employees
that they want this to occur.”
[13] It does not follow that because it was not dealt with in the 6 October 2015
recommendation, BlueScope’s proposal to train Despatch operators to perform Packline
duties somehow ceased to be in dispute. Mr Meta suggested that it was up to the AWU to
identify that this was an issue in dispute during the mediation process. While this may be
correct in a strictly technical sense, it unfairly ignores the context in which the mediation
process occurred. The parties were required, in a very compressed timeframe, to identify the
savings necessary to save the Steelworks from closure. The focus was necessarily upon those
changes which would generate the major savings. The proposal concerning Packline duties
had not been a major issue in the discussions, and it is therefore not surprising that it did not
attract significant attention during the mediation. In any event, as Mr Meta made clear in his
evidence, he was fully aware that the Despatch operators opposed the proposal.
[14] On or about 30 September 2015 BlueScope, the AWU and the other unions finalised
the terms of a memorandum of agreement (MOA) which resolved the second track of
discussions. The MOA provided for two new enterprise agreements to be entered into, one of
which was to apply to the Springhill Plant. Annexure C to the MOA set out a modified
“Procedure for Resolving Claims, Issues and Disputes” which was to be contained in each of
the new agreements. This included detailed procedures for the introduction of significant
change. Pursuant to the MOA, the 2015 Agreement was approved by a vote of employees at
the Springhill Plant, and subsequently approved by the Commission on 18 November 2015. It
took effect on 25 November 2015.
[15] Subsequent to the recommendation, Mr Meta and other representatives of BlueScope
management met with representatives of the Despatch operators and the AWU to discuss
implementation of the recommendation including paragraph [182] set out above. Six meetings
occurred, on 21 and 28 October, 11, 18 and 25 November, and 16 December 2015. Notes
taken of the meetings disclose that the proposal to train Despatch operators to perform
Packline duties was discussed at the meeting on 11 November 2015. The notes refer to an
exchange between Mr Meta (GM), Mr Gorgievski (BG) and an unnamed Despatch operator
(MP) as follows:
“GM Training. Intent to train ppl up to be base level in packline. If we are short in
packline & we have spare bodies in despatch then can go & help on packline.
MP Where do the ppl come from who go to despatch [sic - presumably should say
“packline”]? Day work or 12 hrs?
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GM haven’t distinguished, could be either,
BG Not compulsory to train, can’t make employees train.”
[16] Mr Meta said this was the only occasion at the six meetings at which the issue was
discussed.
[17] The next development was that Mr Meta caused to be issued the letter dated 18 March
2016 to the operators in Despatch. The letter read as follows (omitting formal parts):
“RE: NOTICE OF INTENTION TO COMMENCE TRAINING OF PFD
DESPATCH OPERATORS IN PFD PACKLINE AND MANUAL PACK
This letter is to advise you that it is the Company's intention to commence training of
all PFD Despatch Operators in some Packline tasks and Manual Pack operation. This
has previously been discussed and consulted on during the mediation process that
occurred in September 2015 with the Fair Work Commission.
Having Despatch Operators trained to assist with the operation of the Packline and
Manual Pack will allow the operations to become more efficient by helping to ensure
labour shortfalls do not negatively impact each units output. Reduction of overtime
costs through utilisation of Despatch labour will further enhance the Pack and
Despatch business.
The Company considers this to be a lawful reasonable request that is safe and
efficient, and would like to work with each employee to develop a plan for them to
commence their training in the Packline effective from the 14 April 2016.
To progress this initiative Despatch operators will be introduced to the Packline’s
operation by being trained to operate station 5. After this base level training is
completed further training to operate the forklift to despatch and operate the upender
will be undertaken. Training to obtain Manual Pack skills will follow Packline
training. Individual training plans will be developed with your Team Leader.
If you have any questions or concerns then please raise them with myself or your
Team Leader.”
[18] Insofar as the above letter referred to Despatch operators being trained to perform
manual pack, forklift and upender tasks, Mr Meta accepted that this was the first time this had
been raised with employees in writing, but said that at least the performance of manual
packing had been discussed with the Despatch operators back in September 2015.
[19] A copy of this letter was not immediately sent to Mr Gorgievski. He heard about it
from the Despatch operators, and after raising it with Mr Meta he was sent a copy on 30
March 2016. He also requested an urgent meeting about the letter, which occurred on 31
March 2016. This meeting appears to have primarily involved an argument about whether
there had been prior consultation about the matters contained in the 18 March 2016 letter.
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[20] On 7 April 2016 the AWU wrote to the Commission requesting the re-listing of matter
NA2015/5 to deal with a number of identified outstanding issues. One of those issues
concerned the 18 March 2016 letter. The correspondence stated:
“The Company has not properly consulted with employees regarding this change. The
AWU rejects the Company’s assertion that it has met its consultation obligations
during the mediation. We request his Honour’s assistance in resolving this matter.”
[21] In response to this correspondence, the Commission (constituted by myself) conducted
a conciliation conference on 27 April 2016. In relation to the issue concerning the Despatch
operators, which was framed as one involving a lack of consultation, I issued an ex tempore
recommendation to the following effect in an endeavour to resolve the dispute:
1. BlueScope’s letter of 18 March 2016 should be treated as “Letter 1” for the
purpose of the “Introduction of Change Including Outsourcing” provisions in
clause 35.2 of the 2015 Agreement.
2. The parties were to consult further in relation to the matters in that letter over a
two-week period in accordance with the relevant provisions of the 2015
Agreement.
3. If the issue remained unresolved after that two-week period, BlueScope was at
liberty to issue “Letter 2” under the “Introduction of Change Including
Outsourcing” provisions.
4. If the AWU wished to dispute the matter further, it should lodge an application
for the Commission to deal with the dispute in accordance with the dispute
settlement procedure contained in clause 35.1 of the 2015 Agreement. If this
occurred, the Commission would deal with the dispute to finality within the time
period of 35 working days from the date of Letter 2 required by the 2015
Agreement.
[22] Being a recommendation only, the parties were not bound to comply with it, nor could
it prejudice the parties’ respective legal rights under the 2015 Agreement. Neither party
communicated to the Commission that it accepted or rejected the recommendation, but the
parties subsequently conducted themselves in a manner consistent with the recommendation.
[23] The parties held two consultation meetings within the two-week period specified in the
recommendation. On the AWU’s side, the meeting was attended by Mr Gorgievski and
representatives of the Despatch operators. The AWU did not request that any employees from
the Packline or Manual Handling be released in order to attend the meeting. In his evidence,
Mr Gorgievski complained that at these meetings BlueScope did not provide meaningful
information about what it intended to do, including where Despatch operators would be
required to work, what they would be required to do, what their training would be, or what the
effect would be on other areas of the PFD. However, there was no suggestion in Mr
Gorgievski’s evidence that he or any of the Despatch operators at the meetings actually
sought any further information about these matters. Indeed, despite the fact that the purpose of
the recommendation that the parties engage in further consultation was to address the AWU’s
complaint that there had not yet been proper consultation, Mr Gorgevski’s evidence was:
“Just about all of those meetings were arguments about how BlueScope had not followed the
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consultation processes in the Agreement”. It may readily be inferred from his evidence that
this argument was one pressed by him. Mr Meta’s evidence was that the employee
representatives at the meetings expressed adamant opposition to any notion of being required
to work outside the Despatch area. He also said that he made it clear that the training for the
Packline would only involve basic training to perform the station 5 tasks, and would not
require the training necessary to become a Level 1 Operator on the Packline. I accept the
evidence of Mr Meta in this respect.
[24] Following the failure of these further meetings to resolve the issue, Mr Meta
(consistent with the 27 April 2016 recommendation) issued the letter to the Despatch
operators dated 5 May 2016 which has earlier been set out.
[25] Again consistent with the recommendation, the AWU responded to that letter by filing
the Application on 16 May 2016. The Application recounted the history of the matter and,
significantly, stated that “The AWU disputed the change, initially, on the basis that the
Respondent had not complied with its consultation obligations for this proposed change under
clause 35.2.2 of the Agreement” (underlining added). The application subsequently stated that
the changes were disputed on the basis that they did not meet the test in clause 35 of the 2015
Agreement of being safe, efficient, legal and fair. This was particularised in the following way
in the application:
“7. Primary amongst the AWU’s concerns is that the Despatch operators will not
perform these roles with a frequency sufficient to maintain the skills and
training required to perform them safely and efficiently.
8. After the recent changes in the Despatch area, which were discussed during the
Mediation in September 2015 and were the subject of the recommendation of 6
October 2015, the operators now work the following shift patterns:
a. There are 4 shifts of 5 operators working seven days a week. Each operator
works 12 hours shift (four on, four off), on the following Day, Day, Night,
Night, follow by four roster days. The fifth member of this crew acts as an
annual leave and 38-hour roster relief (five weeks of each).
b. Additionally, there are four operators working Monday to Friday. These
operators work 8 hours shift rotating through Day, Afternoon and Night
shifts.
c. Finally, there are three operators who work Monday to Friday on 8 hours
shifts rotating through Day and Afternoon shifts.
9. As per the Recommendation of 6 October 2015, the parties agreed to a
mechanism to mitigate the loss of income of employees transferred from shift
to day to day work. Every six months, employees rotate between day work and
shift work. Seven operators perform day work for a period of six months, after
which they are rotated back into shift work.
10. The concern of the AWU is that the proposed new roles of Despatch operators
will primarily by performed by operators on Day shift. This will likely result in
operators not performing the proposed new roles for lengthy periods, not
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maintaining their skills in these areas and not being sufficiently familiar with
the policies and procedures of the new areas when they are finally requested to
perform the roles.”
[26] The Application gave no indication that any alleged lack of consultation remained an
issue in dispute. The Application did however advance a compromise proposal to settle the
dispute as follows:
“11. The AWU is proposing a compromise position, which will give the
Respondent the flexible utilisation desired during the peak periods when work
in the proposed new roles is most likely, while allowing the operators who
perform these roles sufficient frequency in them to allow the roles to be
performed safely, efficiently and fairly.
12. The AWU has consulted with the members in Despatch, who have agreed in
principle to the following approach:
a. Two operators will remain on day shift, as described in 8(c) above, on a
permanent basis, that is, without rotating back into shift work every 6
months. Two operators have volunteered for this position.
b. These two operators agreed to be trained in areas outlined in the attachment
AWU3, and perform these roles on an as needs basis.
c. These operators will be stationed in Despatch as their primary role, but will
receive the slightly elevated pay rate of employees on level 3 in the
Packline.
13. This proposal will save numerous hours of training required to maintain the
skill and performance in the proposed roles of all 27 Despatch operators, while
still providing the flexibility desired by the Respondent.”
[27] The Commission (again constituted by myself) conducted a conciliation conference in
relation to the Application on 17 May 2016, during which the AWU’s compromise proposal
was discussed. It proved not to be acceptable to BlueScope. A different compromise position
emerged during the conference which was broadly acceptable to BlueScope and which the
AWU representatives present (including Mr Gorgievski) undertook to take back to a meeting
of the Despatch operators. This occurred, but the compromise proposal was rejected by the
Despatch operators on 19 May 2016. Accordingly it became necessary to proceed to
arbitration of the dispute.
[28] Prior to the commencement of the arbitration, on 26 and 27 May 2016, employees at
the Springhill Plant who were members of the AWU, including Despatch operators, took non-
protected industrial action. At least one of the grievances behind this appears to have been
BlueScope’s proposal to train Despatch operators to perform other duties as identified in the
letter of 5 May 2016.
The Procedure for Resolving Claims, Issues and Disputes
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[29] Clause 35 of the 2015 Agreement is entitled “Procedure for Resolving Claims, Issues
and Disputes”. Clause 35.1 contains a dispute resolution procedure which provides for an
escalating series of steps required to be taken to resolve any dispute ending with conciliation
and arbitration by this Commission. Clause 35.1.7 provides that “The parties will abide by the
outcome of such proceedings, subject to any right of appeal from any such decision of FWC”.
Clause 35.1.9 provides: “From the time a dispute first starts to when it is resolved, work shall
continue as directed by the Company”. This last provision was obviously not complied with
by the AWU’s members in relation to this dispute.
[30] Clause 35.2 is entitled “Introduction of Change Including Outsourcing”, and provides
(emphasis added):
“35.2 Introduction of Change Including Outsourcing
35.2.1 Principles concerning the management of change
The parties agree to the following key principles concerning the management of
change:
(a) The parties recognise and accept that change is an inevitable and
increasingly necessary part of the steel industry.
(b) Change must be ongoing to ensure that the Company remain viable and
employee expectation concerning security of employment can be satisfied.
(c) In considering the desirability and business case for any proposed change
the tests to be applied are requirements for the change to be:
safe;
efficient;
legal; and
fair.
(d) The parties will use their best endeavours to enable early consultation, and
to facilitate the timely and efficient implementation of change, where it
satisfies the test above.
(e) The parties commit to consult and abide by the dispute settling procedures
provided in this Agreement in the event that proposed changes are not
agreed. In support of this commitment there will be both detailed
communication and strong reinforcement by the Company and Unions in
respect of these procedures. Subject to any disagreement being dealt with in
accordance with agreed procedures, and in the case of significant change
35.2.3, the change will be able to be implemented.
(f) All parties share an intent that there be "zero industrial action" and to that
end will actively ensure that employees, delegates and officials will, on each
and every occasion where a dispute arises and is not resolved, follow the
applicable dispute settling procedure and not take industrial action.
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35.2.2 Process for the introduction of Change
(a) Where changes are "significant in nature", as defined in this subclause, they
shall be the subject to the processes set out in 35.2.3.
(b) Changes which are not "significant in nature" shall be introduced in
accordance with the principles set out in subclause 35.2.1 and the provisions
of the Agreement. Disputes in relation to such changes shall be dealt with in
accordance with Clause 35.1 Procedure for Resolving Claims, Issues and
Disputes.
(c) A change is "significant in nature" for the purposes of this clause if the
change will have substantial effects on:
(i) the composition, operation or size of the workforce in a section or
department of the operations of the Company;
(ii) the skills required of employees;
(iii) the opportunities for promotions of employees;
(iv) the security of employment of employees;
(v) the hours of work of employees;
(vi) the location of work of employees;
(vii) shift pattern changes; and
(viii) outsourcing of work (meaning the engagement on a permanent
basis of another organisation to perform work which has
previously been performed by employees of the Company. In this
respect outsourcing differs from the use of contractors to meet
intermittent work load requirements or to provide specialist skills
on a short term or as needs basis).
(d) Where a change is otherwise provided for in this Agreement it will not be
regarded as significant in nature for the purposes of this clause.
35.2.3 Processes for introducing change which is significant in nature and for
resolving associated issues and disputes
(a) The provisions of this subclause set out the terms and order of the procedure
which shall govern the introduction and management of change which is
significant in nature.
(b) A change will be determined to be significant where it meets the definition
as set out in clause 35.2.2(c).
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(c) Where a problem is identified that is likely to lead to a significant change,
line management will communicate the dimensions of the problem to the
relevant employees.
(d) A work team will be created to investigate the problem and to seek solutions
using problem solving techniques.
(e) The work teams will include representatives nominated by the relevant
employees. The provisions of clause 35.2.3(i) will also operate for the
purposes of this sub-clause.
(f) Taking into account the contribution of the work teams, if line management
intends to develop an idea regarding significant change, notification will be
made in writing to employees and their union ("Letter 1"). This will outline
the broad objectives of the change and the possible effects that the change is
likely to have on employees, to enable further Consultation.
(g) The Company is not under any obligation to disclose commercially sensitive
information at any stage. The Company may proceed directly to
Consultation in the event that the problem involves commercially sensitive
information.
(h) Consultation is the process through which employees contribute to problem-
solving and decision making. It provides for employee and union input
before Company management finally decides on action affecting its
employees.
(i) Employees and their unions will be provided with the opportunity to
comment and input into the proposed change. This will not limit any party
from proposing alternative ideas that may result in the objectives of the
business being achieved.
(j) The consultation process must be fair, comprehensive and genuine.
(k) Following consideration of all aspects of the change, including consultation
with employees, the Company will advise employees and the relevant
unions in writing (letter 2) as to whether or not the Company will proceed
with the introduction of the change. The advice will include:
(i) confirmation on the introduction of the change (as finally
determined) and the nature of that change;
(ii) the date of the introduction of the change;
(iii) the impact the change will have on employees; and
(iv) what steps are to be put in place to manage the impact that the
changes will have on employees.
[2016] FWC 3848
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(l) A decision by employees or the unions not to participate in such discussions
brings to an end the consultation process.
(m) Where agreement is reached as to a change, the change may be implemented
immediately and the parties are to promptly record the terms of the
agreement in writing.
(n) Where there is disagreement as to the change to be implemented, a party to
the consultation process must give written notice to the other parties that it
disputes the implementation of the change and must follow the Procedure
for Resolving Disputes as per clause 35.1.7.
(o) Where a matter is referred to FWC as part of the disputes procedure, FWC
shall make such procedural directions for the conciliation, and, if
necessary, arbitration of the matter as may be necessary to ensure that, so
far is as practicable, the matter is determined within a period of 35 business
days (Monday to Friday) from the date of the issue of Letter 2. The parties
shall ensure strict compliance with such directions.
(p) Once a matter is referred to FWC, implementation of the change will not be
implemented by the Company until either:
(i) The resolution of the FWC proceedings in accordance with clause
35.1.7; or
(ii) A period of 35 business days has elapsed from the issuing of
Letter 2 (unless either party has sought and been granted by FWC
an interim order to reduce or extend this period);
Whichever occurs first.
(q) Notwithstanding clause 35.2.3(p), a union may apply to FWC for an
interim order restraining the implementation of the change. Such an
interim order will be made only if FWC is satisfied that:
(i) The matter cannot be determined within the period of 35 business
days from the date of the issue of Letter 2;
(ii) There is an arguable case that the change is not safe, legal,
efficient and fair; and
(iii) The balance of convenience favours the grant of the interim
order.
(r) An interim order restraining the final implementation of the change may
also be made by the FWC if the parties agree or FWC considers that a
trial of the change should take place before the matter is arbitrated.
(s) For workplace change, (including the number or composition of
employees engaged on any task), the consultation process may provide
[2016] FWC 3848
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for the change to be introduced on a trial basis by agreement. There
should be discussion between the parties as to how the trial arrangements
should be implemented. An appropriate monitoring system will be
established to ensure that the proposed changes are safe, efficient, legal
and fair. The period of the trial will be determined in advance, with a
return to the status quo in the event that it is shown that the trial fails the
safe, efficient, legal and fair test.
(t) Definition:
For the purposes of clause 35.2, the term Workplace Change does not
include:
Matters that involve the requirement for employees to work in
accordance with the reasonable direction of the Company; normal day to
day operations and work within the employee's recognised skills,
competence, training and safe working practices.
Company decisions regarding significant capital investment, business
growth etc. In these circumstance the Company is to provide the
information in writing to employees and their unions as referred to in
points (i) to (iv) of clause 35.2.3(k).
35.2.4 Nature of Consultation
Consultation involves:
(a) All parties being prepared to put forward considered views in respect of
desired improvements and alternatives as to how such improvements
could be achieved;
(b) An opportunity being given to all affected parties to fully understand the
nature and impact of those views before any final decision on
implementation of changes is made by the Company;
(c) Fair consideration being given to the issues and concerns raised by the
parties before any final decision on implementation of change is made.”
[31] The procedure set out above in large part reproduces the provisions concerning the
introduction of change contained in the 2012 Agreement which applied up to and including 24
November 2015. However the emphasised parts represented significant modifications
introduced as a result of the 2015 mediation process and the MOA. In the 2012 Agreement,
clause 35.2.3 provided:
“35.2.3 Processes for introducing change which is significant in nature and for
resolving associated issues and disputes
(a) The provisions of this subclause set out the terms and order of the
procedure which shall govern the introduction and management of
change which is significant in nature.
[2016] FWC 3848
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(b) A change will be determined to be significant where it meets the
definition as set out in clause 35.2.2(c).
(c) Consultation will commence in relation to workplace change as defined
when:
(i) the Company has developed an idea, regarding a workplace
change that, if implemented, would result in a change which is
significant in nature, and
(ii) the idea has been developed sufficiently as to justify the time and
effort required to allocate resources and to develop a working
proposal and
(iii) a "Task Brief" has been prepared in at least broad terms that
includes the:
objectives of the change,
issues that may arise if the change was progressed to
implementation;
criteria for appraisal of the idea;
impact the idea may have on employees, customers and the
business; and
milestones in the review process.
(d) Consultation will commence with a notification in writing to employees
and their unions (letter 1) as to the broad objectives of the change and the
possible effect the change is likely to have on employees.
(e) Consultation is the process through which employees contribute to
problem-solving and decision making. It provides for employee and
union input before Company management finally decides on action
affecting its employees.
(f) Employees and their unions will be provided with the opportunity to
comment and input into the proposed change. This will not limit any
party from proposing alternative ideas that may result in the objectives of
the business being achieved.
(g) The consultation process must be fair, comprehensive and genuine.
(h) Following consideration of all aspects of the change, including
consultation with employees, the Company will advise employees and
the relevant unions in writing (letter 2) as to whether or not the Company
will proceed with the introduction of the change. The advice will include:
[2016] FWC 3848
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(i) confirmation on the introduction of the change (as finally
determined) and the nature of that change;
(ii) the date of the introduction of the change;
(iii) the impact the change will have on employees; and
(iv) what steps are to be put in place to manage the impact that the
changes will have on employees.
(i) A decision by employees or the unions not to participate in such
discussions brings to an end the consultation process.
(j) Where agreement is reached as to a change, the change may be
implemented immediately and the parties are to promptly record the
terms of the agreement in writing.
(k) Where there is disagreement as to the change to be implemented, a party
to the consultation process must give written notice to the other parties
that it disputes the implementation of the change and must follow the
Procedure for Resolving Disputes as per clause 35.1.7. Where a matter is
referred to FWC as part of the disputes procedure, implementation of the
change will be subject to the outcome of such proceedings, during which
time the status quo will remain.
(l) For workplace change, (including the number or composition of
employees engaged on any task), the consultation process may provide
for the change to be introduced on a trial basis by agreement. There
should be discussion between the parties as to how the trial arrangements
should be implemented. An appropriate monitoring system will be
established to ensure that the proposed changes are safe, efficient, legal
and fair. The period of the trial will be determined in advance, with a
return to the status quo in the event that it is shown that the trial fails the
safe, efficient, legal and fair test.
(m) Definition:
For the purposes of clause 35.2, the term Workplace Change does not
include:
Matters that involve the requirement for employees to work in
accordance with the reasonable direction of the Company; normal day to
day operations and work within the employee's recognised skills,
competence, training and safe working practices.
Company decisions regarding significant capital investment, business
growth etc. In these circumstance the Company is to provide the
information in writing to employees and their unions as referred to in
points (i) to (iv) of clause 35.2.3(h).”
[2016] FWC 3848
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[32] It can be seen that the alterations to the introduction of change processes effected by
the 2015 Agreement had two major features:
(1) Under the 2012 Agreement, the necessary consultation was to be initiated by
Letter 1. In the 2015 Agreement, Letter 1 was to be preceded by a process
whereby any problem that might lead to significant change was to be
communicated to relevant employees, and a work team was to be established
including employee representatives to investigate the problem and seek to
identify a solution using problem-solving techniques.
(2) A disputed change under the 2012 Agreement could not be implemented until
the matter had been dealt with to finality by the Commission. Under the 2015
Agreement, implementation of a change was only restrained for a period of 35
working days (that is, seven weeks) from the date of Letter 2, unless extended
by the making of an interim order by the Commission.
[33] Both under the 2012 Agreement and the 2015 Agreement (clause 35.2.1(c)), the
criteria for the implementation for any change are whether it is “safe, efficient, legal and fair”.
Those criteria apply whether or not the change is “significant in nature” as that expression is
defined (in clause 35.2.2(c)). However the detailed process for the introduction of change in
clause 35.2.3 only applies where the change is significant in nature.
[34] The introduction of change provisions had their origin in awards of the NSW
Industrial Relations Commission made under the Industrial Relations Act 1996 (NSW)
applicable to the Port Kembla Steelworks and the Springhill Plant. The awards applicable to
the Springhill Plant contained introduction of change provisions identical to those contained
in the awards applicable to the Steelworks. A Full Bench of the NSW Commission in
Australian Workers’ Union, New South Wales v BlueScope Steel (AIS) Pty Ltd3 said in
relation to the BlueScope Steel (AIS) Pty Limited - Port Kembla Steelworks Employees Award
2006 (the award then applicable to the Steelworks):
“[21] Our decision should not be taken as suggesting that the onus of making out a case
for the retention of the status quo or resisting changes on grounds which rely on the
principles in clause 36.4.1 (c) falls on the Company. Such an approach would
constitute error. The onus in such cases falls upon the Union to make out a case that
the changes proposed by management should not be made or should be offset by some
compensation or other adjustment in conditions of employment...”
[35] This approach, by which a union contesting a proposed change pursuant to the
introduction of change provisions bore the onus of demonstrating that the change was not
safe, efficient, legal and fair, was adopted by a Full Bench of this Commission in relation to
the introduction of change provisions in clause 35.2 of the BlueScope Steel Port Kembla
Steelworks Agreement 2012 (2012 Steelworks Agreement) in BlueScope Steel (AIS) Pty Ltd v
AWU and Ors.4 That agreement, consistent with past practice, had the same introduction of
change provisions as the 2012 Agreement.
3 [2006] NSWIRComm 318, (2006) 157 IR 93 at [17]-[20]
4 [2015] FWCFB 5615 at [7]
[2016] FWC 3848
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[36] The AWU submitted before me that the introduction of change provisions in the 2015
Agreement should be interpreted as placing upon BlueScope the onus of demonstrating that
the changes it proposed were safe, efficient, legal and fair. I reject that submission for the
following reasons:
(1) The usual principle applied by the Commission (and its statutory predecessors)
is that the notion of legal onus applies in proceedings before it in the limited
sense that “if the Commission is not able to make a necessary finding, the party
invoking the jurisdiction, being a party to whose case that finding is necessary,
should fail in having the jurisdiction applied in the manner sought”.5 The
proposition that the union contesting a change under clause 35.2 of the 2015
Agreement, being the applicant in dispute proceedings before the Commission
seeking to prevent the implementation of the change, bears the onus in at least
that sense is therefore an entirely conventional one.
(2) The adoption of the introduction of change provisions in the 2015 Agreement
are, as to the criteria for change to be applied, the same as those in the 2012
Agreement. For that reason, I consider that the Full Bench decision in
BlueScope Steel (AIS) Pty Ltd v AWU and Ors6 should be followed by me here.
(3) In accordance with well-established principles of interpretation of legal
instruments, the adoption by the parties of the relevant parts of the introduction
of change provisions in the 2015 Agreement in a form unchanged from the
2012 Agreement, with full knowledge of the Full Bench decision, suggests that
the parties intended that the provisions should continue to be interpreted in
accordance with the Full Bench decision.
(4) Additionally, the altered parts of the introduction of change provisions tend to
confirm the approach in the Full Bench decision. In particular, clause 35.2.3(q),
which allows a union to apply for an interim order restraining the
implementation of a change, requires the Commission to be satisfied before
granting such an order that, among other things, “There is an arguable case
that the change is not safe, legal, efficient and fair...” (clause 35.2.3(q)(ii),
underlining added). This provision clearly indicates that the onus lies on the
union to demonstrate that a change does not meet the specified criteria.
The AWU’s case against the proposed changes
[37] The case presented by the AWU at the hearing before me as to why BlueScope’s
proposed changes should not proceed differed considerably from the objections to those
changes outlined in the Application. Its case focused almost entirely on the proposition that
the changes did not meet the criterion of legality because the introduction of change
provisions in clause 35.2.3 of the 2015 Agreement had not been followed. In this respect the
AWU submitted:
5 Re Chamber of South Australian Employers Inc (No 2) (1991) 43 IR 424 at 441-442, quoted with approval in Teterin v
Resource Pacific Pty Limited t/a Ravensworth Underground Mine [2014] FWCFB 4125, (2014) 244 IR 252 at [24]; see also
Coal and Allied Operations Pty Ltd v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union (1997)
73 IR 311 at 317
6 [2015] FWCFB 5615 at [7]
[2016] FWC 3848
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the changes proposed were significant in nature, so that the introduction of change
procedures in clause 35.2.3 were applicable;
the procedures in clause 35.2.3 were the necessary precursor to the introduction of
any significant change, and a failure to comply with those procedures with respect to
any proposed changes meant that the changes were not “legal” because they would
be implemented in breach of the 2015 Agreement;
BlueScope’s letter of 18 March 2016, which outlined the proposed changes, was not
preceded by the “problem-solving” consultative process required by clause
34.2.3(c)-(e);
nor did the letter of 18 March 2016 constitute a valid “Letter 1” in accordance with
clause 35.2.3(f), since it did not outline the effects of the changes and was not
provided to all affected employees in the PFD including Packline employees;
the Commission’s recommendation of 27 April 2016 could not operate to validate
the 18 March 2016 letter as “Letter 1” for the purposes of clause 32.2.3(f);
the meetings which occurred following the Commission’s recommendation did not
constitute proper consultation because they followed the decision to implement the
changes communicated in the 18 March 2016 letter;
the “Letter 2” issued by BlueScope on 5 May 2016 was not preceded by any genuine
consultation, since neither the AWU nor the affected PFD employees had been
provided prior to that time with any description of what was being proposed in terms
of the changes to the skills, knowledge or work requirements of employees; and
the letter of 5 May 2016 was itself vague and uncertain in that it did not provide
employees with a proper understanding of the proposal and its effects and did not
accord with the requirements of clause 35.2.3(k)(i)-(iv).
[38] To the extent that the proposal for changes had been raised prior to the date of
commencement of the 2015 Agreement, the AWU submitted that there had been no proper
consultation prior to that date and that BlueScope’s letter of 9 September 2015 did not
constitute a valid “Letter 1” in relation to the changes under clause 35.2.3(d) of the 2012
Agreement because it did not identify the particular proposed change and had not been sent to
Packline employees or other relevant employees in the PFD.
[39] Mr Gorgievski gave evidence in support of the proposition that there had not been
meaningful consultation in accordance with the 2015 Agreement. He summarised the position
from his perspective in paragraph 63 of his witness statement as follows:
“Because BlueScope has never described what they propose in any meaningful way,
our members have been completely denied the opportunity to undertake the problem
solving and input into decision making described in the Agreement. They just don’t
know what is going to be required of them.”
[2016] FWC 3848
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[40] The AWU contended that it was prejudiced in its capacity to otherwise address the
criteria of safety, efficiency, legality and fairness because of its purported lack of
understanding as to what was involved in BlueScope’s proposals for change as a result of
BlueScope’s non-compliance with the introduction of change procedures. It did however
advance the following submissions:
the AWU could not be satisfied about the safety of the proposals because there had
been no proper articulation of the training that was proposed that Despatch
employees would undergo; in particular, there had not been any proper identification
of what constituted “base level training” for the Packline;
in relation to the Packline, there was a concern about the safety implications of a
partially trained and inexperienced Despatch operator being allocated one task in the
operation of the continuous Packline in circumstances where Packline operators
worked as a team and rotated tasks;
the general and unparticularised requirement in the letter of 5 May 2016 for
Despatch operators to work anywhere in the PFD as reasonably required raised
significant safety implications, as each area in the PFD was inherently dangerous and
had its own safety procedures, and there was a concern that employees would not be
allocated work in other areas with sufficient frequency to develop and maintain the
necessary skills;
it was not clear how the proposals would improve the efficiency of the PFD;
the proposals were not fair because they involved employees working outside their
pre-existing working environment, acquiring new skills and performing additional
work for no extra pay; and
they were also not fair because the new work and skills required exposed the
Despatch operators to the risk of making mistakes and placing the security of their
employment in jeopardy.
BlueScope’s case in reply
[41] BlueScope in its submissions accepted that compliance with the introduction of
change provisions in the 2012 Agreement and the 2015 Agreement was a matter relevant to
the requirement for legality. However it submitted that there had been no failure to comply
with the introduction of change provisions of the 2015 Agreement or the 2012 Agreement.
The tasks which Despatch operators would be required to perform under its proposals were of
a simple nature and did not involve changes which were “significant in nature” as defined in
clause 35.2.2(c) of the 2015 Agreement and the 2012 Agreement, with the result that the
detailed procedures in clause 35.2.3 of each agreement were not applicable. BlueScope
submitted in the alternative that if the changes were significant in nature, then:
the changes had been initiated under and in accordance with the procedures in clause
35.2.3 of the 2012 Agreement, with the letter of 9 September 2015 constituting
“Letter 1” for the purpose of those procedures;
[2016] FWC 3848
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in any event the Commission’s recommendation of 27 April 2016, and the steps
taken in accordance with that recommendation, validated any previous failure to
comply with the consultation requirements of the 2012 Agreement or the 2015
Agreement;
in substantive terms there had been significant consultation at meetings occurring in
August, September and November 2015 and in April and May 2016, as well as in
conciliation proceedings before the Commission; and
the AWU and its members well understood what was proposed by BlueScope, as
was demonstrated by the contents of its Application.
[42] BlueScope contended that the proposals were efficient, since they allowed under-
utilised Despatch operators to perform duties in other areas which might otherwise have to be
performed by employees on overtime or contractors and would thereby generate cost savings.
They were fair, in that employees were being required to perform only basic duties which
were graded below their current level of remuneration, and they would be properly trained to
perform those duties. The duties would be performed on an occasional basis only, and their
substantive roles as Despatch operators would remain unchanged. There was no evidence that
the proposals were not safe. The training to be provided would ensure that the simple tasks
required would be performed safely.
Legality
[43] As earlier stated, the AWU contended that the proposals were not “legal” because
BlueScope had failed to comply with the applicable procedures concerning the introduction of
change in the 2015 Agreement and/or the 2012 Agreement. That was the only contention
concerning the legality of the proposals which was raised by the AWU.
Introduction of change provisions – general observations
[44] Before turning directly to the issue raised by the AWU’s case in this respect, which is
one of some complexity, it is necessary to make some general comment about the introduction
of change procedures contained in clause 35.2.3 of the 2015 Agreement. Those procedures
apply to changes which are “significant in nature” as defined in clause 35.2.2(c). There are
two phases of consultation involved. The first, which precedes “Letter 1”, involves BlueScope
identifying to relevant employees the existence of any problem which is likely to lead to
significant change in order to resolve it. It then requires the formation of a “work team”
including employee representatives to investigate the problem and to seek to identify
solutions using problem-solving techniques. It is only after this process has been undertaken
that BlueScope may issue a “Letter 1” identifying a specific proposed change, which may
draw upon ideas generated by the work team.
[45] As identified above, this first phase of the consultation process was an innovation in
the 2015 Agreement. It is plainly one of considerable significance. It involves a departure
from the pre-existing model of “top-down” introduction of change by BlueScope
management, and allows employees to be involved in the design of workplace changes that
will affect them. This will, it seems to me (having regard to my involvement in the mediation
process which led directly to the MOA and the 2015 Agreement) allow employees to have
[2016] FWC 3848
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“ownership” of workplace change and its implementation rather than having to deal
adversarially with change imposed from above.
[46] The second phase of consultation in the 2015 Agreement, which is required to occur
after “Letter 1” and before “Letter 2”, is not new but repeats provisions contained in the 2012
Agreement and predecessor instruments. However it likewise allows for employees not
simply to respond to employer proposals for change, but also to participate in shaping the
change and proposing alternatives.
[47] In order for these consultation mechanisms to operate successfully, they require parties
to participate in the processes genuinely in accordance with the commitments that they have
made to each other in the 2015 Agreement. On BlueScope’s side, that means that consultation
cannot be treated simply as a requirement to be ticked off prior to the implementation of pre-
determined workplace changes of a significant nature, and requires a bona fide effort to
involve employees and their union in the development of the changes necessary to meet the
business’s commercial challenges. On the part of employees and their unions, it requires
approaching consultation about change on the basis of the understandings identified in clause
35.2.1(a) and (b), namely that “change is an inevitable and increasingly necessary part of the
steel industry” and that “Change must be ongoing to ensure that the Company remain[s]
viable and employee expectation concerning security of employment can be satisfied”. That
means that employees and unions must constructively engage with any issues raised by
BlueScope during the consultation process, actively seek the information necessary to permit
such constructive engagement to occur, and advance positive proposals to assist BlueScope to
make the changes necessary to meet developing circumstances. Consultation is not to be
approached on the basis of it simply being an opportunity to develop and advance arguments
as to why no change should be implemented.
[48] As I have also earlier identified, the second major innovation in the 2015 Agreement
concerns the time limitation of 35 working days. This operates in two respects. Firstly, the
Commission is required to make procedural directions to ensure, so far as practicable, that a
dispute concerning a proposed change is determined within 35 working days of “Letter 2”,
with a requirement for strict compliance with such directions. The second is that the restraint
imposed by clause 35.2.3 upon the implementation of a disputed change only operates until
the earlier of the resolution of the dispute by the Commission or the passage of 35 working
days from the date of “Letter 2”. The period of restraint may be extended by the Commission,
but only in limited circumstances. This innovation was clearly intended to speed up the
process of the resolution of disputes concerning proposed changes that are significant in
nature, in circumstances where the resolution of such disputes under the 2012 Agreement had
in some cases taken an extensive period of time and consequently been the subject of
criticism. In order for these new provisions to work as they were intended, the parties must
endeavour to identify the issues which are genuinely in dispute and cooperate with procedural
directions intended to allow disputes to be heard and determined expeditiously and within the
timeframe required by the 2015 Agreement. While parties can of course expect to be afforded
procedural fairness, they cannot expect to be given the opportunity to adduce evidence
through written witness statements prepared pursuant to a leisurely timetable, raise new issues
at the hearing which do not bear a genuine relationship to the issues in dispute, or otherwise
engage in forensic tactics intended to frustrate the expeditious resolution of the dispute.
A failure to consult?
[2016] FWC 3848
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[49] It is necessary to state at the outset that, except in one respect, I regard the AWU’s
claim that an alleged lack of consultation has left it in the position that it does not properly
comprehend the changes being proposed as being entirely bogus. The concept that Despatch
operators perform basic duties in other parts of the PFD was, in a broad sense, first raised in
August 2015. It has since been discussed and developed at meetings between BlueScope
management and employees in August 2015, at the mediation on 23 September 2015, at a
meeting between the parties on 11 November 2015, at a conciliation conference before me on
27 April 2016, at two further meetings between the parties in the fortnight after that date, and
at a further conciliation conference before me on 17 May 2016. BlueScope’s proposals are not
complex or difficult to understand. At least so far as the two conciliation conferences before
me are concerned, the AWU was able to participate meaningfully and discuss the changes
being proposed. There is no evidence that the AWU or its members at any stage requested
information about any aspect of the proposals which was not responded to by BlueScope.
There is certainly no evidence of any written request for further information on the part of the
AWU. The Application in particular dispels any notion that the AWU lacked information
about the change, given that it strongly suggested that consultation was no longer an issue and
proposed a compromise position that would have allowed the change to proceed at least on a
limited basis. The exception is that I accept that the last itemised proposal for change in the
letter of 5 May 2016, namely a generalised proposition that Despatch operators perform other
duties in the PFD as reasonably directed, has never been properly articulated or particularised
by BlueScope.
[50] There is no indication that prior to the lodgement of the Application, the AWU or the
Despatch operators constructively engaged with the BlueScope proposals at any of the
meetings they attended. The evidence suggested rather that the Despatch operators opposed
outright any notion of them performing duties outside the Despatch area and had no desire to
engage in discussions about it or to seek further information about how it might work. The
position stated by Mr Gorgievski at the 11 November 2015 meeting, recorded in the notes of
the meeting as “Not compulsory to train, can’t make employees train”, well summarises the
position of the Despatch operators and the AWU. I accept that the compromise proposal set
out in the Application constituted an attempt to constructively engage with the BlueScope
proposals, but that occurred after BlueScope’s Letter 2 had been issued and the time for
consultation had passed.
[51] For these reasons, and subject to the identified exception, I do not accept that the
AWU was in any way prejudiced in its capacity to advance a proper case before me as to why
the criteria of safety, legality, efficiency and/or fairness were not satisfied in relation to the
proposed changes.
Compliance with the introduction of change processes
[52] However, those observations do not answer the AWU’s submission that BlueScope
failed to comply with the introduction of change processes in clause 35.2.3 of the 2015
Agreement (or clause 35.2.3 of the 2012 Agreement), with the result that BlueScope’s
proposed changes do not satisfy the criterion of legality in clause 35.2.1(c). Consideration of
that submission requires two preliminary questions to be determined:
(1) Were the changes proposed by BlueScope “significant in nature”, as defined in
clause 35.2.2(c) (of the 2015 Agreement and/or the 2012 Agreement) such as
to make the procedures in clause 35.2.3 (of either agreement) applicable?
[2016] FWC 3848
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(2) If the procedures in clause 35.2.3 were applicable, to what extent did any non-
compliance with the procedures render the proposed changes not “legal” for
the purpose of clause 35.2.1(c)?
[53] In relation to the first question, I find that the proposed changes are significant in
nature so far as the Despatch operators are concerned. Although work functions in the PFD
have in the past occasionally been moved from one operational area to another, a requirement
that employees located in one operational area be trained to also perform duties in another
operational area appears to be entirely novel. The working premise of the PFD to date has
been that it has been divided into the operational areas of Despatch, Packline, Paintline,
Manual Packing and Tension Levelling, and each area has a discrete workforce dedicated to
the performance of duties in that area. In that context, training employees in one operational
area to acquire the skills to perform duties in a different operational area as required from
time to time must necessarily be characterised as a change which has “substantial effects” on
“the skills required of employees” (clause 35.2.2(c)(ii)). Therefore the procedures in clause
35.2.3 of the 2015 Agreement and/or the 2012 Agreement applied to the changes in relation to
the Despatch operators.
[54] The AWU submitted that the changes also had significant effects on employees in
other parts of the PFD who might be required to work alongside Despatch operators who had
been trained in the way proposed by BlueScope. I do not accept this submission. There was
no evidence of such significant effects, and the case in this respect did not rise above the level
of assertion. No employee from the Packline was called by the AWU to give evidence about
this. Mr Meta gave evidence that in the past year he had had labour hire employees (referred
to as “contractors”) brought in to perform the station 5 function on the Packline and the
manual packing tasks, and there was no suggestion that this had any significant effect on other
Packline or manual handling employees. Accordingly I do not consider that BlueScope was
required to undertake the consultation processes under clause 35.2.3 with any employees in
the PFD other than the Despatch operators.
[55] That makes determination of the second question necessary. The starting point is the
following statement made by the Full Bench in BlueScope Steel (AIS) Pty Ltd v AWU and
Ors7 in relation to the 2012 Steelworks Agreement (footnote omitted):
“[15] The criterion of legality has, in relation to industrial instruments preceding the
Agreement which applied to Bluescope and contained a provision equivalent to the
current clause 35.2, been applied on the basis that a change will be “legal” if it is not
illegal - that is, if it is not positively prohibited by any enforceable legal
requirement. That approach is consistent with the ordinary meaning of “legal” and is
one that we propose to adopt...”
[56] No party submitted that any different approach should be taken to the criterion of
legality contained in the 2015 Agreement or the 2012 Agreement. Therefore it is necessary to
determine whether either agreement positively prohibits the implementation of any change
which is significant in nature where the introduction of change processes in clause 35.2.3
have not been complied with. This question is analogous to one that often arises in the context
of statutory interpretation, namely whether an act done in breach of procedural requirements
7 [2015] FWCFB 5615 at [7]
[2016] FWC 3848
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conditioning the exercise of a statutory power is invalid. In Pearce and Geddes’ Statutory
Interpretation in Australia8, the learned authors summarised the principles applying to this
analogous question as follows:
“In summary, the only guiding principle will be the statute and from it the court will
have to glean one of three intentions in regard to procedure that is set out in it: (a) that
strict compliance is necessary; (b) that substantial compliance is necessary together
with the degree of ‘substantiality’; or (c) that compliance is not a precondition to the
action taken. Breach of (a) or (b) will result in invalidity but no such consequences
will flow if (c) is found to apply (unless some separately designated penalty is
included in the legislation or an action can be brought independently of the statute).”
[57] In a number of respects, clause 35.2.3 of the 2015 Agreement strongly indicates that it
was not intended that proposals for significant change could be implemented without the prior
consultation processes required by the clause having been engaged in. Firstly, the clause is, in
general, detailed and prescriptive as to the processes for consultation required such as to make
it unlikely to have been intended that BlueScope could simply bypass those processes and still
be permitted to introduce any significant change which it proposed. Secondly, clause
35.2.3(a) specifically provides that the procedures set out in clause 35.2.3 “govern the
introduction and management of change which is significant in nature” (underlining added).
The use of the word “govern”, which read in its context bears its ordinary meaning of
“control” or “regulate”, indicates that compliance with the consultation processes in the clause
was intended to condition the introduction of significant change. Thirdly, the provisions
which permit agreed changes to be implemented immediately (clause 35.2.3(m)) and prohibit
the implementation of disputed changes for a defined period, subject to the making of a
further restraining order by the Commission (clause 35.2.3(p)) could only have a useful
operation if significant changes could not be introduced other than by following the
prescribed consultation processes in the provision. The equivalent provisions of clause 35.2.3
of the 2012 Agreement would dictate that the same conclusion applies to it.
[58] However I consider what is required (under both the 2015 Agreement and the 2012
Agreement) is substantial compliance, not strict compliance, in that the information sharing
and consultation required by the clause must in substance occur before any final decision is
made to introduce the proposed significant changes. For example, the “Letter 1” referred to in
clause 35.2.3(f) of the 2015 Agreement is required to “outline the broad objectives of the
change and the possible effects that the change is likely to have on employees, to enable
further Consultation”. The substantive purpose of the requirement is to provide affected
employees with relevant information in writing so as to permit meaningful consultation to
occur. Provided that the relevant information is provided, it does not seem to me that it was
intended that the subsequent implementation of a proposed change can be regarded as not
“legal” because, even though there was meaningful consultation, the information was not
contained in a single document, or the document containing the information was not described
as being the Letter 1 for the purposes of clause 35.2.3(f). An overly technical approach would
defeat the intention of clause 35.2 overall to “facilitate the timely and efficient implementation
of change” (clause 35.2.1(d)) without adding anything of substance to the benefits of
consultation conferred by the clause.
8 Seventh edition at [11.34]
[2016] FWC 3848
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[59] For these reasons I will approach the matter on the basis that a proposed significant
change will not be “legal” if there has not been substantial compliance with the consultation
processes of clause 35.2.3 of the applicable agreement.
[60] If the process for the introduction of the proposed changes here had occurred in a
period during the whole of which the 2015 Agreement was in operation, then on the evidence
before me it could not be concluded that clause 35.2.3 of the 2015 Agreement had been
substantially complied with. The “first phase” of consultation to which I have earlier referred
which was introduced by the 2015 Agreement simply did not occur. At no stage did
BlueScope identify to employees a “problem” which was “likely to lead to a significant
change” (clause 35.2.3(c)), establish a “work team” to “investigate the problem and ... seek
solutions using problem solving techniques” (clause 35.2.3(d)), or take into account “the
contribution of the work teams” (clause 35.2.3(f)). BlueScope’s submission that my
recommendation of 27 April 2016 in some sense validated any prior failure to consult in
accordance with the 2015 Agreement cannot be accepted. As earlier stated, that
recommendation was intended to facilitate the resolution of a dispute which at that stage was
about an alleged failure to consult; it could not have the effect of excusing any non-
compliance with the provisions of the 2015 Agreement. Section 739(5) of the Fair Work Act
2009 prohibits the Commission, in the exercise of its dispute resolution function, from
making a decision inconsistent with the provisions of an applicable enterprise agreement, and
acceptance of the BlueScope submission in this respect would amount to an infringement of
that prohibition.
[61] However that is not the end of the matter, because the BlueScope proposal for
Despatch operators to perform other duties in the PFD was initiated at a time when the 2012
Agreement was in effect, with the consultation process then continuing beyond 25 November
2015 when the 2015 Agreement took effect. It is plain that the 2015 Agreement could not
have retrospective effect, and no party contended otherwise. The 2015 Agreement does not
contain any transitional provisions in relation to the introduction of significant changes first
proposed prior to the 2015 Agreement taking effect. Therefore it is necessary to approach the
matter on the basis that the relevant provisions of the 2012 Agreement applied to those stages
of the introduction of the proposed changes which occurred prior to 25 November 2015, and
the 2015 Agreement applied to those stages which occurred on or after 25 November 2015.
The most significant consequence of this approach is that the “first phase” of consultation
prior to “Letter 1” introduced by the 2015 Agreement has no application to a proposed change
in relation to which a “Letter 1” was issued prior to 25 November 2015.
[62] BlueScope’s letter of 9 September 2015 initiated a restructure of the Despatch area of
PFD, and was explicitly described as a “Letter 1”. That letter referred to significant changes to
staffing arrangements in the Despatch area and contained a non-exhaustive list of the effects
the changes were likely to have on employees. The August 2015 discussions which preceded
the letter, as well as the subsequent discussions, made it apparent that the training of Despatch
operators to perform other duties in the PFD was an aspect of that proposal, but that was not
expressly identified as part of the changes in the letter itself.
[63] On that basis, the AWU argued that the requirements of clause 35.2.3(d) of the 2012
Agreement had not been complied with. However that submission looks at the 9 September
2015 letter in isolation and divorced from its context, including the context of the preceding
discussion in which the proposal was first raised. As earlier recited, shortly after this letter
was issued BlueScope advised employees in the consultation meetings which the letter
[2016] FWC 3848
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indicated would occur that part of the proposed new staffing arrangements would be that
Despatch operators “May be required to assist in other PFD operations work as required.
E.g: Packline (base level operator training will be provided)”. This was done in a PowerPoint
presentation, and confirmed the proposal which Mr Meta had verbally explained to employees
in August 2015. I consider this amounted to substantial compliance with clause 35.2.3(d) at
least insofar as the proposal involved Despatch operators performing basic Packline duties:
the information was in writing and conveyed both the broad objective and the likely effect on
employees of the proposal, namely that they would undergo basic training and be required to
work on the Packline. That BlueScope was proposing a change of this nature (that is, that
employees be trained to perform basic Packline duties) was well understood by employees, as
demonstrated by the reactions it elicited from employees as described above. I consider that
consultation about this proposal in accordance with clause 35.2.3 of the 2012 Agreement
occurred in August and September 2015 and on 11 November 2015, and there was further
consultation under the 2015 Agreement in April and May 2016. Letter 2 was issued once this
consultation failed to result in any agreement, and I consider that the 5 May 2016 letter
contained the information required of a “Letter 2”.
[64] Therefore I find that, insofar as BlueScope proposed that Despatch employees perform
basic duties at station 5 of the Packline, the introduction of change processes in clause 35.2.3
of the 2012 Agreement and the 2015 Agreement (as they applied at different stages of the
introduction of change process) were complied with. The proposed changes are, to that extent,
legal for the purpose of clause 35.2.1(c) of the 2015 Agreement.
[65] That finding covers the first two of the proposed changes (itemised by dot points)
identified in the letter of 5 May 2016. The position is different with the remaining items
(concerning the performance of manual pack duties, the despatch of vertical coils by forklift,
and any other duties in the PFD as reasonably directed). The first two of these changes were
not identified in writing until the letter of 18 March 2016, and the last was identified in the 5
May 2016 letter for the first time. Mr Meta gave evidence that the manual packing aspect of
these changes was first raised verbally by him in September 2015. If so, the evidence does not
suggest that this led to any meaningful consultation about it. My note of the 23 September
2015 mediation session, and the notes for the meeting of 11 November 2015, only disclose
discussion about the performance of duties on the Packline. I do not consider that this
amounted to substantial compliance with clause 35.2.3 of the 2012 Agreement, and I find that
the proposal for Despatch operators to perform manual packing duties was not clearly
identified to employees until the 18 March 2016 letter. Mr Meta accepted that the other items
were not raised until during 2016. For the reasons earlier stated, it is plain that, with respect to
changes that were not proposed until after the 2015 Agreement took effect, clause 35.2.3 of
that agreement was not complied with.
[66] I recognise that the PowerPoint presentation of 9 September 2015 referred to a
proposed requirement to work in the PFD as required, with base level work on the Packline
given as an example. However, leaving aside the specific Packline example, I do not consider
that stating a proposal with that level of generality was sufficient for the purpose of clause
35.2.3 of the 2012 Agreement to allow meaningful consultation to occur under that
agreement, nor did it occur (except in relation to the Packline aspect of the proposal).
[67] Accordingly I find that the last four itemised proposed changes in the 5 May 2016
letter are not “legal” because neither clause 35.2.3 of the 2012 Agreement nor clause 35.2.3 of
the 2015 Agreement were substantially complied with in relation to those changes.
[2016] FWC 3848
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[68] Because only the proposal for Despatch operators to perform basic duties at station 5
on the Packline has been found to be “legal”, it is therefore only necessary for me to proceed
to consider whether that particular proposal is also safe, efficient and fair.
Safety
[69] With the benefit of the evidence and an inspection of the work required to be
performed which I undertook at the Springhill Plant on 20 June 2016, I consider that the tasks
which Despatch operators would be required to perform on station 5 of the Packline may
fairly be characterised as basic. It fundamentally involves manually placing “donuts” on coils
of varying sizes, with some ancillary tasks associated with monitoring station 4 (mainly
consisting of occasionally topping up the glue pot). I emphasise that in describing this work as
basic, I am not referring to the duties of operators permanently stationed at the Packline, who
are generally graded at Level 3 under the 2015 Agreement and perform the whole range of
duties at all the Packline stations on a rotational basis.
[70] I do not consider that there is any evidence before me to suggest that Despatch
operators may not be trained to perform this work safely. There was some argument before
me about the extent of the training that would be required in order for this work to be
performed safely. To that extent, the AWU referred to the training and accreditation
requirements for a Level 1 operator on the Packline (whose duties include but are not limited
to the operation of station 5). However it has been made clear in the proceedings that it is not
proposed that Despatch operators be trained to meet the requirements for a Level 1 operator,
but only to perform the functions I have described. In that respect, the evidence is that
contractors have been trained on the job to perform this basic work, and no difficulty or
concern about safety was identified in that respect. Provided that the training properly deals
with the situational safety risks associated with station 5, I have no reason to conclude that the
proposal cannot proceed safely. I note that BlueScope proposes to consult with employees
about training plans for them to perform the Packline tasks, and I am confident that such
consultation will allow any residual safety concerns to be addressed.
[71] I reject the AWU’s submission that safety concerns may arise because Despatch
operators will only be performing Packline duties infrequently and would not be able to
develop and maintain their skills sufficiently. That submission might have some force if the
tasks were complex, but they are not. I also reject the AWU’s submission that difficulty may
arise in the interactions between Despatch operators and the team members on the Packline.
There was no evidence of any such difficulty arising when contractors performed basic tasks
on the Packline.
[72] I find that the proposal for Despatch operators to perform Packline duties would be
safe.
Efficiency
[73] The proposal is intended to use Despatch employees who are under-utilised to perform
duties in the Packline in circumstances where it might otherwise be necessary to bring in a
Packline operator on overtime or hire a contractor. The proposal will therefore save costs, and
for that reason I find it would be efficient.
[2016] FWC 3848
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Fairness
[74] I do not consider that there is anything inherently unfair about requiring an under-
utilised employee to perform other duties in the Springhill Plant for which they have been
appropriately trained. Clause 32.4 of the 2015 Agreement provides that “Employees must
perform such work as the Company may, from time to time reasonably require”. The AWU
suggested that it was not reasonable to require an employee in the PFD to perform duties
beyond his or her assigned operational area, having regard in particular to the terms of the
1998 Agreement for the Restructure of the Finishing Department which assigned defined
working boundaries for each operational area. I do not accept this. Multi-skilling has long
been accepted as a reasonable working practice to improve efficiency and productivity in
industry, and having regard to the commitments to ongoing change in clause 35.2.1 of the
2015 Agreement I do not consider that multi-skilling across operational areas is unreasonable
simply because it may not have been contemplated in a 1998 departmental agreement.
[75] No issue of fairness arises in respect of pay levels. The Despatch operators are all, or
nearly all, graded as Level 3 under the Finishing classification structure. The basic tasks
envisaged to be performed at station 5 of the Packline may be performed by a Level 1
Operator, or perhaps even an Entry Level Operator, at significantly lower rates of pay.
[76] I do not accept the AWU submission that requiring Despatch operators to perform
Packline duties on an occasional basis is unfair because it runs the risk of them making
mistakes and then being disciplined or dismissed. I do not accept that mistakes are likely,
having regard to the simplicity of the work, if appropriate training is provided. There was no
evidence that BlueScope has a practice of disciplining or dismissing employees for simple
one-off mistakes.
[77] For these reasons, I find the proposal to be fair.
Conclusion
[78] For the reasons stated, BlueScope’s proposal for Despatch operators to be trained to
perform basic station 5 duties on the Packline satisfies the criteria of safety, efficiency,
legality and fairness. Accordingly BlueScope may proceed with the implementation of that
proposal forthwith.
[79] In respect of the other proposals for change itemised in BlueScope’s letter of 5 May
2016, BlueScope has not complied with the introduction of change processes in clause 35.2.3
of the 2012 Agreement or clause 35.2.3 of the 2015 Agreement. Implementation of those
changes would therefore not satisfy the criterion of legality. It will be necessary for
BlueScope to recommence consultation about these matters. While that consultation needs to
occur on a genuine basis, I do not envisage that it would take an extensive period of time
having regard to the history of this matter as earlier outlined. It may be that the parties can
reach an agreement about these matters with the benefit of the findings contained in this
decision. The parties are of course at liberty to request the further assistance of the
Commission in relation to these matters at any time.
[2016] FWC 3848
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VICE PRESIDENT
Appearances:
A. Howell of counsel for the Australian Workers’ Union.
K. Brotherson solicitor for BlueScope Steel (AIS) Pty Ltd t/a BlueScope Steel.
Hearing details:
2016.
Sydney:
10 June.
Printed by authority of the Commonwealth Government Printer
Price code G, PR581550
OF THE FAIR WORK MISSION THE
