1
Fair Work Act 2009
s.424—Industrial action
Minister for Industrial Relations for the State of Victoria
v
Australian Workers' Union, The;
Communications, Electrical, Electronic, Energy, Information, Postal,
Plumbing and Allied Services Union of Australia;
"Automotive, Food, Metals, Engineering, Printing and Kindred Industries
Union" known as the Australian Manufacturing Workers' Union (AMWU);
Esso Australia Pty Ltd
(B2016/1264 and B2016/1267)
VICE PRESIDENT WATSON MELBOURNE, 7 DECEMBER 2016
Application for an order to terminate protected industrial action pursuant to s.424 – whether
protected industrial action threatened, impending or probable – whether industrial action
threatens to endanger the welfare of part of the population – whether the industrial action
will cause significant damage to an important part of the Australian economy – whether
termination or suspension is appropriate – Fair Work Act 2009, ss.424, 415, 266.
Introduction
[1] This decision concerns two applications made by the Minister for Industrial Relations
for the State of Victoria (the Minister) under s.424 of the Fair Work Act 2009 (the Act) that
orders be made terminating protected industrial action notified by The Australian Workers’
Union, the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing
and Allied Services Union of Australia and the "Automotive, Food, Metals, Engineering,
Printing and Kindred Industries Union" known as the Australian Manufacturing Workers'
Union (AMWU) (the Unions) against Esso Australia Pty Ltd (Esso).
[2] The industrial action notified by the Unions relates to employees who would be
covered by the proposed enterprise agreements to replace the Esso Gippsland (Longford and
Long Island Point) Enterprise Agreement 2011 (the Gippsland Agreement) and the Esso
Offshore Enterprise Agreement 2011 (the Offshore Agreement). The Notices of Protected
Industrial Action served on Esso (Notices) declared an intention to take industrial action in
the form of 24 consecutive one hour stoppages on the performance of all work by the
employees commencing at 6:00am on 9 December 2016, and repeated from 6:00am on each
day thereafter, until 6:00am on 1 March 2017.
[2016] FWC 8826
DECISION
E AUSTRALIA FairWork Commission
[2016] FWC 8826
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[3] The applications by the Minister were brought on the basis that the industrial action
has threatened, is threatening, or would threaten to endanger the welfare of the population or a
part of it and cause significant damage to the Australian economy or an important part of it
within the terms of s.424(1) of the Act. The Minister has standing to bring the application
under s. 424(2)(b)(iia) of the Act. The Unions supported the Minister’s application for
termination. Esso did not oppose nor support the application.
[4] The applications were listed for hearing on 7 December 2016 in Melbourne. In the
hearing of these applications, Mr C Dowling of counsel appeared with Mr D Catanese on
behalf of the Minister. Mr H Borenstein QC of counsel appeared with Ms J Vardi on behalf of
the Unions. Mr F Parry QC and Mr L Howard of counsel appeared with Ms A Granger on
behalf of Esso.
The Legislative Test
[5] Section 424 of the Act provides:
“424 FWC must suspend or terminate protected industrial action—
endangering life etc.
Suspension or termination of protected industrial action
(1) The FWC must make an order suspending or terminating protected industrial
action for a proposed enterprise agreement that:
(a) is being engaged in; or
(b) is threatened, impending or probable;
if the FWC is satisfied that the protected industrial action has threatened, is
threatening, or would threaten:
(c) to endanger the life, the personal safety or health, or the welfare, of the
population or of part of it; or
(d) to cause significant damage to the Australian economy or an important
part of it.
(2) The FWC may make the order:
(a) on its own initiative; or
(b) on application by any of the following:
(i) a bargaining representative for the agreement;
(ii) the Minister;
(iia) if the industrial action is being engaged in, or is threatened,
impending or probable, in a State that is a referring State as defined in
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section 30B or 30L—the Minister of the State who has responsibility
for workplace relations matters in the State;
(iib) if the industrial action is being engaged in, or is threatened,
impending or probable, in a Territory—the Minister of the Territory
who has responsibility for workplace relations matters in the Territory;
(iii) a person prescribed by the regulations.
Application must be determined within 5 days
(3) If an application for an order under this section is made, the FWC must, as far
as practicable, determine the application within 5 days after it is made.
Interim orders
(4) If the FWC is unable to determine the application within that period, the FWC
must, within that period, make an interim order suspending the protected industrial
action to which the application relates until the application is determined.
(5) An interim order continues in operation until the application is determined.”
[6] The provision requires the application of each element of the section to the
circumstances of this case. Little is served by paraphrasing the elements of the section. The
terms are to be given their ordinary and natural meanings.
Evidence
[7] Evidence was given by the following persons:
Stephen Bell, General Manager, Commercial of Qenos Pty Ltd,
David Catanese, Managing Principal Solicitor, Victorian Government Solicitor’s
Office,
Matthew Clemow, Acting Group Manager, Gas Real Time Operations, Australian
Energy Marketing Operator,
Marianne Lourey, Executive Director, ACIL Allen Consulting,
Damian Sanford, Group Manager, NEM Real Time Operations, Australian Energy
Market Operator Limited, and
Daniel Trindade, Partner, Clayton Utz, Solicitors for Esso Australia Pty Ltd.
[8] I propose to consider the evidence as it relates to each of the issues I need to determine
in order to decide whether to grant the applications.
[2016] FWC 8826
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Is Protected Industrial Action Threatened, Impending or Probable?
[9] Both the Gippsland Agreement and the Offshore Agreement passed their nominal
expiry dates on 1 October 2014. Since that time, Esso and the Unions have been negotiating
for replacement agreements. In November 2014 each of the Unions made applications for
protected action ballot orders. On 10 December 2014 the Commission made orders for the
conduct of ballots of relevant Esso employees. On 9 January 2015 the Australian Electoral
Commission declared that more than 50% of relevant employees voted and more than 50% of
the valid votes approved each of the proposed forms of industrial action.
[10] On 30 November 2016 the Unions gave notice of employee claim action in the form of
24 consecutive one hour stoppages commencing at 6:00am on 9 December 2016 and repeated
from 6:00am each day thereafter until 6:00am on 1 March 2017. This action falls within the
actions authorised by the protected action ballot.
[11] I am satisfied that protected industrial action as described in the Notices is threatened,
impending and probable.
Has the Protected Action Threatened, or Would it Threaten, to Endanger the Welfare of
Part of the Population?
[12] The evidence before me establishes that natural gas produced by Esso from its Bass
Strait oil and gas fields and processed through its Gippsland production facilities is critical to
the gas fired power generation peaking facilities and energy supply in Victoria, South
Australia, Tasmania and New South Wales. Oil and gas produced by Esso is also used in a
range of industries including power generation, transportation, gas retailing, plastics,
petrochemicals, manufacturing and mineral processing. Gas supplied through the Gippsland
facilities supplies the majority of domestic natural gas demand in South East Australia.
[13] The industrial action would immediately threaten gas supply to each of the regions and
industries currently supplied with gas through the Esso production facilities.
[14] The critical nature of the gas supply for domestic and industrial use makes it inevitable
that that the protected industrial action threatens to endanger the welfare of the population in
various regions of South East Australia.
Will the Action Cause Significant Damage to the Australian Economy?
[15] Although there has been limited analysis of the economic impact of the industrial
action, the impact is quite clear. Ms Lourey estimates that each day’s loss of gas production
would cost the Victorian economy alone at the upper end of the range of $5-15m. If the
industrial action continues for the period of the Notices, the loss to the Victorian economy is
estimated to be in excess of $1.2b. These estimates are based on an estimated loss to Esso of
$4.7m per day and a loss to gas consumers involved in manufacturing basic chemicals, glass
and glass products, ceramic products, plaster and cement products of a further $9m.
[16] On the evidence before me there can be no doubt that the industrial action will cause
significant damage to the Victorian economy and additional damage to other parts of South
East Australia.
[2016] FWC 8826
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Consequences of the Findings
[17] Section 424 requires the Commission to suspend or terminate the industrial action if it
makes either of the findings I have made in the preceding paragraphs. The consequences of
termination are that the dispute is subject to compulsory conciliation and arbitration of the
dispute under the terms of s.266 of the Act. The protection from immunity conferred by s.415
is removed. If the action is suspended, the dispute is not required to be resolved by arbitration
if it remains unresolved.
[18] It is well established that the choice of termination or suspension depends on a
consideration of all of the circumstances. In a decision concerning the 2011 Qantas dispute a
Full Bench said1:
“[12] It is apparent that a suspension of all action on an interim or short term basis is not
appropriate and in the end no party supported that course. Some of the principal issues
in the negotiations have so far proved very difficult to resolve. Other matters may be
easier to resolve.
[13] On the evidence there is significant uncertainty arising from the protected action
initially of the unions but in particular arising from the lockout and the grounding of
the airline. We should do what we can to avoid significant damage to the tourism
industry.
[14] There is a need to balance this issue against the fact that protected industrial
action is permissible under our system and has been now for many years and has been
taken relatively frequently in the airline industry with successive bargaining rounds. It
is also important that encouragement of enterprise bargaining is also part of the
system. In that respect, what we have heard indicates there are still prospects for a
satisfactory negotiated outcome in all three cases. The prospect of a negotiated
resolution in relation to the three proposed enterprise agreements still remains.
[15] In this case the primary consideration, however, as required by s.424(1), is the
effect of the protected action on the wider aviation and tourism industries. We have
decided that in the particular circumstances of this case, which on the evidence include
the particular vulnerability of the tourism industry to uncertainty, suspension will not
provide sufficient protection against the risk of significant damage to the tourism
industry and aviation in particular. Suspension is necessarily temporary - it leaves
open the possibility there may be a further lock out with its attendant risks for the
relevant part of the economy. That is, a risk the situation we are now dealing with will
recur.
[16] For these reasons we have decided to terminate protected industrial action in
relation to each of the proposed enterprise agreements immediately.”
[19] In this case the parties have been negotiating for over two years. The initial claims
made by the Unions were made in July 2014. Conciliation first occurred before the
Commission in October 2014 before Commissioner Johns and continued well into 2015. The
Commission has made good faith bargaining orders, protected action ballot orders, and orders
that industrial action stop or not occur. Appeals and Federal Court applications have been
made following these orders. The Federal Court has issued interlocutory injunctions. A
[2016] FWC 8826
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previous application for suspension of industrial action led to a temporary cessation of
hostilities.
[20] Industrial action has been engaged in on various occasions over that two year period.
That industrial action has led to Federal Court litigation and contests as to whether the action
is protected from immunity. Further discussions have been facilitated in 2016 by retired
Commissioner Blair. None of those actions has resulted in sufficient progress towards an
agreed resolution of the dispute.
[21] As recently as 2 December 2016 Esso has made offers to resolve the disputes. On 6
December 2016 those offers were rejected. The parties remain apart on several issues
including significant issues of wages and rostering. No party submitted that there was a
likelihood of an agreement being reached if industrial action was suspended for a period. The
Minister and the Unions submit that the industrial action should be terminated. Esso does not
contend otherwise.
[22] Termination of the protected industrial action will move the negotiating parties from
the extended impasse in their negotiations to an alternative path of conciliation and arbitration
under the framework of s.266 of the Act. This will provide finality to their dispute and will
result in either agreements or Workplace Determinations that deal with all disputed matters.
Having regard to all of the circumstances I have decided to terminate the protected industrial
action scheduled to commence on 9 December 2016. An order [PR588348] giving effect to
this decision accompanies this decision.
VICE PRESIDENT
Appearances:
Mr C Dowling of counsel with Mr D Catanese for the Minister for Industrial Relations for the
State of Victoria.
Mr F Parry QC and Mr L Howard of counsel with Ms A Granger on behalf of Esso Australia
Pty Ltd.
Mr H Borenstein QC of counsel with Ms J Vardi on behalf of the Unions.
OF THE FAIR WORK COMMISSION SEA THE
[2016] FWC 8826
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Hearing details:
2016.
Melbourne.
7 December 2016.
Final written submissions:
Minister for Industrial Relations for the State of Victoria on 5 December 2016.
Esso Australia Pty Ltd on 6 December 2016.
Printed by authority of the Commonwealth Government Printer
Price code C, PR588348
1 Re Minister for Tertiary Education, Skills, Jobs and Workplace Relations [2011] FWAFB 7444.
