[2013] FWC 2554

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FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.526—Stand down

Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia & Anor
v
FMP Group (Australia) Pty Ltd
(C2013/3921, C2013/3923)

DEPUTY PRESIDENT GOSTENCNIK

MELBOURNE, 26 APRIL 2013

Application to deal with a dispute involving stand down.

Introduction

[1] On 15 April 2013 I issued a decision and delivered short reasons, which are recorded in transcript, 1 in relation to applications by the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (CEPU) and the “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU), to deal with a dispute involving the stand down of 31 maintenance employees of FMP Group (Australia) Pty Ltd (Employer) under s.526 of the Fair Work Act 2009 (FW Act). On 16 April 2013 I made orders giving effect to my decision.2 These are my full reasons for making the orders.

[2] The CEPU and AMWU have each made an application under s.526 of the FW Act for the Commission to deal with a dispute between the two unions, some of their members and the Employer about the operation of Part 3-5 of the FW Act. Given the urgency of the matters alleged in the applications it was convenient to deal with them concurrently.

[3] The dispute about the operation of Part 3-5 of the FW Act concerns the stand down by the Employer of 31 of its maintenance employees 3 each of whom are members of either the CEPU or the AMWU (Relevant Employees). The Relevant Employees were stood down by the Employer during the course of 12 April 2013.4 No party raised any issue concerning the capacity of the Commission to deal with the dispute by arbitration in accordance with Division 3 of Part 3-5 of the FW Act.

Factual context

[4] The Employer conducts a business involving the manufacture of automotive break products at its manufacturing facility at Ballarat in Victoria and it operates a day, afternoon and night shift at the facility. 5 The Relevant Employees are employed to undertake both breakdown and preventative maintenance at the facility,6 and their employment is covered by the FMP Group (Australia) Pty Limited, Enterprise Agreement 20107 (Current Agreement). That agreement has passed its nominal expiry date.8

[5] The two unions, as bargaining representatives, have been bargaining with the Employer for a new agreement. Orders authorising the holding of protected action ballots were made by the Commission in favour of the CEPU and the AMWU on 20 March 2013. 9 Pursuant to the protected action ballot orders, members of the CEPU and the AMWU who are to be covered by the proposed agreement were balloted and subsequently approved the action proposed in the ballots.10 On 8 April 2013 the Unions in their capacities as bargaining representatives each gave notice to the Employer of an intention to organise and take employee claim action commencing on 12 April 2013.11 Relevantly the notices informed the Employer that the Relevant Employees were intending to take employee claim action in the form of “[A]n indefinite ban on filling in paper work, excluding health and safety matters” (Paper Work Ban) and that the action would begin at 7.00 a.m. on 12 April 2013.12

[6] In anticipation of the commencement of industrial action, the Employer conducted a briefing with some of its workforce including the Relevant Employees. 13 The purpose of the briefing was to inform the workforce attending of the proposed industrial action, its likely impact and possible Employer responses to the action. A powerpoint presentation used by the Employer in the briefings was tendered in evidence.14 It was not disputed that the powerpoint presentation was used during the briefing. As to the Paper Work Ban, the Employer advised the Relevant Employees during the briefing that:

[7] Ms Susan Honeyman is the Human Resources Manager of the Employer and gave evidence that prior to the workforce briefing on 11 April 2013, she had met with the Maintenance Manager and the senior management team of the Employer to discuss what might happen if the Paper Work Ban was implemented. Relevantly Ms Honeyman’s evidence was as follows:

[8] Mr Tim Farquhar, a maintenance fitter employed by the Employer, gave evidence that Ms Honeyman told the workforce briefing that he attended, that employees who participated in the Paper Work Ban would be stood down. 17 Similar evidence was given by Mr Brett Buckwell18 and Mr Simon Jones19, both of whom are employed as electricians by the Employer, and Mr Craig Spark20, another maintenance fitter employed by the Employer. This evidence was not challenged by the Employer. It seems clear from the evidence that the Employer had determined at some point prior to the commencement of the Paper Work Ban, that it could not allow the Relevant Employees to perform any work while those bans were in effect. Ms Honeyman gave evidence that the Employer had considered other options which might avoid a stand down of the Relevant Employees but ultimately the Employer “couldn’t think of any tasks that people could do that would keep them gainfully employed for a full shift”.21 In this regard Ms Honeyman gave evidence that the Employer did not undertake an individual assessment of each Relevant Employee to determine whether any particular employee could be usefully employed during the Paper Work Ban, rather it determined that “. . . as a collection, we didn’t have work that would keep people usefully employed if they weren’t doing their normal job and we weren’t able to let them do their normal job if they weren’t doing the paperwork part of it.”22

[9] According to Ms Honeyman’s evidence, the Employer was concerned that the Paper Work Ban would result in the performance of work to a standard below that which the Employer would accept and that if it accepted the work the Employer may suffer reputational damage. 23 Ms Honeyman agreed that the Paper Work Ban would not have prevented the Relevant Employees physically undertaking repairs in the event of machinery break down.24 As the Relevant Employees were ultimately not permitted to undertake any work, and effectively not able to implement the Paper Work Ban, it follows that the Employer could not know the actual impact of those bans, or its capacity to usefully employ any of the Relevant Employees because of the ban.

[10] Shifts at the Ballarat site are organised to start and finish at times providing for an overlap with the next shift. 25 The purpose of the overlap is to allow for tool box meetings and communications to occur during the overlap period.26 Ms Honeyman gave evidence that she attended the Ballarat site on the morning of 12 April 2013 and at some time after 6.00 a.m. commenced asking Relevant Employees on Day Shift individually whether they intended to participate in the Paper Work Ban.27 Relevant Employees on the Night Shift were spoken to towards the end of their shift on the morning of 12 April 2012, while Afternoon Shift Relevant Employees were spoken to by Ms Honeyman at the beginning of their respective shifts later on 12 April 2013.28 Each Relevant Employee who was asked whether they intended to participate in the Paper Work Ban advised the Employer that they would participate. These employees were also given a document titled “Memorandum” and dated 12 April 201329 (Stand Down Notice), advising the employees that the “nature of this ban has placed the Company in a position of being unable to make suitable work available to trades (mechanical and electrical) employees for the duration of this ban” and that the employee would “be ‘stood down from employment’ for the duration of the ban” without pay. The employees were then stood down with immediate effect and told to leave the site.30

[11] Maintenance employees are required to complete certain documents when undertaking preventative or repair maintenance. These documents are titled “Maintenance Request” 31, which is used for repair maintenance32 and FMP Work Order”33, which is used for preventative maintenance.34 The Paper Work Ban is directed to the completion of these documents. Information entered on the documents by the maintenance employee attending to a fault or general maintenance of equipment is subsequently entered onto the Employer’s computer system.35 This forms part of the maintenance record of the equipment.

[12] The maintenance record of equipment does not appear to be regularly reviewed by maintenance employees before attending to any maintenance work, although it may be reviewed in connection with a piece of equipment that is continually breaking down. 36 The documents are also used to conduct original equipment audits, other audits and to keep a record of equipment reliability, capability, traceability, preventative maintenance, breakdowns, MOC, licensing, permits and programming.37 There is some evidence that maintenance record documents are not always completed either because the operator of equipment requiring repair does not provide a maintenance request document to the maintenance employee38, the past practice was to make a diary note39 or the maintenance employee simply does not complete the documents.40

[13] Ms Honeyman gave evidence that the Employer’s system requires maintenance employees to complete the documents but did not seriously dispute the fact that on some occasions “they don’t get filled in”. 41 The Employer regarded the purpose for which the data in the documents is kept to be very important and a failure to maintain the maintenance record as “untenable”42. Therefore the Employer took the position that “no work . . . will be permitted while a paperwork ban is in place”.43

Stand down provision of the FW Act and Employer’s right to stand down

[14] The Employer relies upon s.524 of the FW Act as the basis for its stand down of Relevant Employees. Section 524 permits an employer to stand down an employee during any period in which the employee cannot usefully be employed in certain limited circumstances. Section 524(1) provides:

[15] The consequence of a stand down of an employee for a period under s.524(1) is that the employer is not required to make any payment to the employee for the period. 44

[16] An employer is not permitted to stand down an employee under s.524(1) if:

[17] In such a case, the employer will need to rely upon the terms of the enterprise agreement or contract of employment to effect a stand down of an employee. The Current Agreement does not expressly provide for the standing down of employees, however by clause 4, all provisions of the Metal, Engineering and Associated Industries Award 1998 - Part 1 as in force on 1 March 2006 (Incorporated Award) are incorporated as terms of the Current Agreement. Clause 4.6 of the Incorporated Award provides as follows:

[18] During the course of submissions, Ms Henderson, appearing for the Employer, submitted that the Employer relied upon clause 4.6 of the Incorporated Award as an alternative source of power the Employer could rely upon to stand down the Relevant Employees. 46 Specifically Ms Henderson argued that the stoppage of work that resulted from the Paper Work Ban was a stoppage for which the Employer could not be held responsible.47

[19] On the face of the provision it seems clear that clause 4.6 confers a narrower right to stand down an employee than s.524(1). The reference to ‘industrial action’ in s.524(1)(a) carries the meaning ascribed to that phrase by s.19 of the FW Act. The Paper Work Ban falls within the described conduct in s.19(1)(a) and (b). Relevantly, clause 4.6 confines the right to stand down an employee to periods when the employee cannot be usefully employed because of a “strike” or “or any stoppage of work by any cause for which the employer cannot reasonably be held responsible”.

[20] I do not regard the Paper Work Ban as fitting comfortably within either of these circumstances. Self evidently the ban was not a strike, which in common industrial parlance would mean a complete withdrawal of labour and a refusal by employees to perform any work at all. Further, the stoppage of work that resulted from the standing down of Relevant Employees on 12 April 2013 occurred not because the Relevant Employees refused to perform the work, but rather because the Employer would not permit maintenance employees to carry out maintenance work “while a paper work ban is in place”. 48 The stoppage of maintenance work was caused by the Employer and occurred after it had implemented the stand downs.

[21] The Employer did not assert a right under any contract of employment with any Relevant Employee which might have permitted the employer to stand down an employee.

[22] I therefore find that the only source of power that the Employer could rely upon to justify the standing down of the Relevant Employees on 12 April 2013 is s.524(1).

[23] Ms Maloney, appearing for the Unions, submitted that in order for the right under s.524(1) to be enlivened the circumstances listed in paragraphs (a) to (c) must actually be occurring. Ms Maloney submitted that at the time the Employer stood down the Relevant Employees, the employees were not engaging in industrial action, and that whether such action would occur amounted to mere speculation on the Employer’s part. Ms Maloney submitted that the Employer cannot rely upon s.524(1) to stand down an employee when industrial action is only threatened but not yet occurring. 49

[24] Ms Maloney also made submissions to the effect that the Relevant Employees could be usefully employed by the Employer during any period that the Paper Work Ban was in place and that the evidence supported such a conclusion. Ms Henderson strongly disputed this submission and sought to elicit evidence about the importance of the maintenance records and the significant risks faced by the Employer if it allowed the Relevant Employees to carry out maintenance work whilst adhering to the Paper Work Ban. For reasons that will become apparent, I have found it unnecessary to resolve this conflicting evidence or to decide the issue of whether any Relevant Employee could be usefully employed by the Employer during any period that such employee or any Relevant Employee was adhering to the Paper Work Ban.

[25] Turning back to Ms Maloney’s first submission in [23] above, Ms Henderson submitted that the Employer was entitled to stand down the Relevant Employees because:

the Paper Work Ban amounted to a stoppage of work for any cause for which the employer could not reasonably be held responsible (s.524(1)(c)). 51

[26] Ms Henderson argued that it was enough to enliven the industrial action circumstance in s.524(1)(a) for the Relevant Employees to have commenced their shift with the intention to implement the Paper Work Ban. Ms Henderson’s argument and the evidence upon which she relied in encapsulated in the following exchange:

[27] The evidence of the four Relevant Employees who were called by Ms Maloney was that when they attended for their shift and before they had commenced any maintenance duties:

[28] This evidence was not challenged by the Employer, nor were the observations in the evidence given by the four Relevant Employees, that the other Relevant Employees were processed in the same fashion. Their evidence is consistent with that given by Ms Honeyman. 54 Ms Honeyman also accepted that no Relevant Employee had refused to fill in any paper at the time they were stood down. That evidence, given in cross-examination appears below:

[29] Further, the fact that the Relevant Employees were not engaging in industrial action at the time that they were stood down by the Employer was not challenged by the Employer in the proceedings. 56

[30] It seem abundantly clear from the evidence that the Relevant Employees had not refused to perform any work at the time that the Employer stood down the Relevant Employees, although each had expressed an intention to do so. Although I do not agree with Ms Maloney’s submission that whether such action would occur amounted to mere speculation on the Employer’s part, and find that industrial action by Relevant Employees was both threatened and probable, industrial action was not occurring at the time each Relevant Employee was stood down.

[31] Section 524(1) is intended to relieve an employer of the obligation to pay wages to employees who cannot be usefully employed in certain limited circumstances. The consequences of a stand down can be severe for an employee as the employee may be deprived of wages for a lengthy period. Whether a particular employee can be usefully employed is a question of fact to be determined having regard to the circumstances that face the employer. The circumstances and their effect on the capacity of an employer to usefully employ a particular employee cannot be known in advance of the circumstance arising, although educated guesses may be made. Section 524(1) is unlikely to have been intended to operate so as to deprive an employee of wages and to relieve an employer of the obligation to pay wages before one of the circumstances in s.524(1)(a)-(c) has arisen. Indeed the structure and language of s.524(1) shows that there needs to be a temporal connection between one of the circumstances arising and the standing down of an employee because the employee cannot usefully be employed. The words “because of” in s.524(1) are used to indicate a causal link between the occurrence of a circumstance and the absence of useful employment. In that sense, the alleged absence of useful employment for the Relevant Employees cannot be said to have been caused by industrial action, as no industrial action had taken place at the time the Relevant Employees were stood down.

[32] It follows, in my view, that in order for an employer to validly exercise its right under s.524(1)(a), the employee who is to be the subject of a stand down must, at the time of being stood down, be engaging in the industrial action/have previously engaged in industrial action which causes the unavailability of useful employment, or have his or her capacity to be usefully employed affected by the industrial action of others that is happening or has happen. It cannot be said that the Relevant Employees could not usefully be employed during a period unless that period is affected by actual industrial action taken by then. Consequently, in my view, the Employer did not have a proper basis to stand down the Relevant Employees under s.524(1)(a). Given that finding, it is unnecessary for me to consider whether the Relevant Employees could usefully be employed in the event that the industrial action eventuated.

[33] Given, the structure and language of s.524(1), I do not accept the Ms Henderson’s submission that the Paper Work Ban could amount to a stoppage of work for which the Employer cannot be reasonably be held responsible within the meaning of s.524(1)(c). True it is that s.524(1)(c) refers to a stoppage of work for “any cause”, however once it is established that the Paper Work Ban would be industrial action and therefore caught by s.524(1)(a), it seems overly artificial to suggest that the ban is also caught be s.524(1)(c). Even if I am wrong about the proper construction of s.524(1)(c), the stoppage of work that resulted from the standing down of Relevant Employees on 12 April 2013 occurred not because the Relevant Employees refused to perform the work, but rather because the Employer would not permit maintenance employees to carry out maintenance work “while a paper work ban is in place”. 57 The stoppage of maintenance work was caused by the Employer and occurred after it had implemented the stand down. Consequently it cannot be said that the stoppage of work was for a cause for which the Employer cannot be reasonably be held responsible.

[34] In any event, even if the Paper Work Ban would be caught by s.524(1)(c), it had not begun and cannot be the cause of the absence of useful employment.

[35] In dealing with this dispute by making the orders in PR535742 and PR535743, I have given consideration to fairness between the parties concerned. I accept that the Employer was in a difficult position faced with the prospect of industrial action which it genuinely regarded as having the effect of allowing the performance by maintenance employees of maintenance work as untenable. Nevertheless, the Employer was not without options. It could have waited for the Relevant Employees to begin refusing to complete paper work. It could have initiated employer response action. It could have withheld payments for partial work bans under in accordance with s.471. Conversely, the Relevant Employees proposed to engage in employee claim action, and before they did so, they were stood down. In the circumstances fairness between the parties favoured the making of the Orders.

[36] Although it is unnecessary for me to reach a concluded view on the question of whether the Relevant Employees could be usefully employed during the period the Paper Work Ban operated, I do for the assistance of the parties express a prelininary view based on the evidence before me. I would unlikely have found that the Relevant Employees could not usefully be employed, within the meaning of s.524(1), because of their participation in the Paper Work Ban. The Employer would need to lead significantly more evidence about the actual impact of the industrial action on its business, and in particular focusing on the proposition that, prima facie, the Relevant Employees can undertake maintenance work notwithstanding the Paper Work Ban and such work would seem to confer some benefit upon the Employer.

DEPUTY PRESIDENT

Appearances:

J. Maloney for the “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU) and the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia.

E. Henderson with S. Honeyman for FMP Group (Australia) Pty Ltd.

Hearing details:

2013.

Melbourne:

April 15

 1   Transcript PN 677 - 683

 2   PR535742 and PR535743

 3   Transcript PN 444 - 445

 4   Transcript PN 423 -428 and PN513 - 522

 5   See Witness Statements of Spark [2] (Exhibit A1), Jones [2] - [4] (Exhibit A 3) Bucknell [2] - [4] (Exhibit A5) and Farquhar [2] (Exhibit A6)

 6   See for example Witness Statement of Farquhar [2] (Exhibit A6)

 7   AE886487

 8   Clause 3

 9   PR535000 and PR5350002

 10   Exhibit A8 at [4], Exhibit A1 at [3], Exhibit A3 at [5], Exhibit A5 at [5] and Exhibit A6 at [4]

 11   Exhibits A2 and A4

 12   See for example Exhibit A4

 13   Transcript PN421

 14   Exhibit R3

 15   Exhibit R3, p 6

 16   Transcript PN440-443; see also PN504-505

 17   Exhibit A6 at [6]

 18   Exhibit A5 at [7]

 19   Exhibit A3 at [7]

 20   Exhibit A1 at [4]

 21   Transcript PN447

 22   Transcript PN506

 23   Transcript PN507-508

 24   Transcript PN510 and PN 479-480

 25   Transcript PN416-419

 26   Transcript PN420

 27   Transcript PN423-426

 28   Transcript PN512-522

 29   Exhibit A2; See also PN30-31, Exhibit A1 at [8], Exhibit A2 at [12], Exhibit A5 at [10]

 30   Exhibit A1 at [8], Exhibit A2 at [10], Exhibit A5 at [10], and Exhibit A6 at [8]

 31   Exhibit R1

 32   Exhibit A1 at [6]

 33   Exhibit R2

 34   Transcript PN94

 35   Transcript PN121 and PN290-291

 36   Transcript PN122-124 and PN292-293

 37   Transcript PN125-145, PN53-65 and Exhibit R3 at p 7

 38   Transcript PN148-151

 39   Transcript PN240

 40   Transcript PN 349

 41   Transcript PN477

 42   Exhibit R3 at p 7

 43   Exhibit R3 at p 7

 44   Section 524(3) FW Act

 45   Section 524(2) FW Act

 46   Transcript PN638

 47   PN630-634

 48   Exhibit R3 at p 7

 49   Transcript PN557-562 and Exhibit A8 at [15]

 50   Transcript PN613

 51   Transcript PN633-634

 52   Transcript PN613-622

 53   Exhibit A1 at [8], Exhibit A2 at [10], Exhibit A5 at [10], and Exhibit A6 at [8]

 54   Transcript PN423-428

 55   Transcript PN497-502

 56   Transcript PN406-407

 57   Exhibit R3 at p 7

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