The document previously issued with the above code on 30 April 2020 has been amended to correct a typographical error in the first sentence of paragraph [23].

Fair Work Act 2009

s.739 - Dispute resolution

"Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union" known as the Australian Manufacturing Workers' Union (AMWU)

Alleged dispute about any matters arising under the enterprise agreement and the NES;[s186(6)].

[1] The "Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union" known as the Australian Manufacturing Workers Union (AMWU) applied under s.739 of the Fair Work Act 2009 (Act) for the Commission to deal with a dispute in accordance with the dispute settlement procedure in the Australian Paper (Enterprise) Agreement, 2016 - 2019 Maryvale Mill Mechanical Maintenance and Engineering Store (Agreement).

[2] The dispute is with Paper Australia Pty Ltd (Paper Australia) and concerns the interpretation and proper operation of clause 39 of the Agreement which provides:

39.1 Protection of Entitlements - the Company agrees to continue to provide for all employee entitlements and to provide employees with a Company briefing on a six monthly basis

39.2 The Company gives a commitment that no employees will be retrenched for the term of this Agreement unless, during the period of operation of this Agreement, should any major operating unit cease production, or a reduction in the number of operating shifts result in reduced output, or any other significant change then manning numbers will be reviewed by the parties to the agreement. This review will also take place when operating units are increased; the outcome of this review will not affect the timing or outcome of any wage increases.

39.3 At the commencement of and during this agreement, manning levels will be:

The above manning levels indicate the full time permanent employees and for clarity do not include limited term employees or casuals. The consultation clause must be utilised when making any change to the above manning levels.

39.4 This clause does not prevent the Company taking disciplinary action according to this agreement in instances of individual misconduct or failure to perform the duties specified."

[3] The AMWU contends that Paper Australia continues to fail to meet the manning requirements in clause 39 of the Agreement. It is uncontroversial that Paper Australia has not maintained manning levels of 98 Mechanical and 6 Engineering Store throughout the life of the Agreement. Nor were these the manning levels at the "commencement" of the Agreement. The AMWU has sought that Paper Australia employ additional employees to meet the manning levels or to give a commitment about a timeframe within which this might be achieved. Paper Australia has not done so.

[4] In these discussions with the AMWU, Paper Australia advised that it intended to initiate a process of consultation and would provide 'relevant business cases' for the reduction of manning levels for Mechanical and Engineering Store. In the proceeding Paper Australia says it has since initiated a consultation process with a view to reducing the manning levels. It does not say that consultation has concluded.

[5] For the purpose of resolving the dispute the subject of the application, the following questions are posed by the AMWU:

1. Does cl 39.3 of the Agreement allow for the employer to alter the manning levels outside of the circumstances described in cl 39.2? (First question)

2. If the answer to the above question is 'Yes', has the employer engaged in the consultation process as required by cl 39.3? (Second question)

[6] Paper Australia did not suggest that answering the questions was not an appropriate way to resolve the dispute. The AMWU contends each question should be answered "no". Paper Australia contends the answer to the first question is "yes" and as to the second, it says the consultation has commenced.

[7] The Agreement applies to mechanical maintenance employees and engineering storepersons employed by Paper Australia at its pulp and paper manufacturing mill located at Maryvale in the Latrobe Valley in Victoria. The resolution of the first question turns on the proper construction of clause 39 of the Agreement. The principles applicable to the proper construction of an enterprise agreement were canvassed at length in Australasian Meat Industry Employees Union v Golden Cockerel Pty Limited[1] and in Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union' known as the Australian Manufacturing Workers Union (AMWU) v Berri Pty Limited.[2] The applicable principles are not in contest and need not be rehearsed at length here.

[8] In short compass, much like the approach to construing a statute, the construction of a provision in an enterprise agreement begins with a consideration of the ordinary meaning of the words used, having regard to the context and evident purpose of the provision or expression being construed. Context may be found in the provisions of the agreement taken as a whole, or in their arrangement and place in the agreement being considered. The statutory framework under which the agreement is made may also provide context, as might an antecedent instrument or instruments from which a particular provision or provisions might have been derived. The industrial context in making an enterprise agreement and in which it operates is also relevant.

[9] The resolution of the First question requires a determination whether on the proper construction of the Agreement clause 39.3 of the Agreement allows Paper Australia to alter the manning levels outside of the circumstances described in clause 39.2. The question is underpinned by the AMWU's submission that a change to the manning levels through consultation as contemplated by clause 39.3 is subject to the limited circumstances set out in clause 39.2. That submission is rejected for reasons which follow.

[10] Clause 39 of the Agreement is headed "Security of Employment" which is suggestive of a purpose to protect the employment of those employees to whom the Agreement applies. Clause 39.1 is concerned with protecting employee entitlements. Its terms are not in contest. Except as providing context, it is not otherwise presently relevant.

[11] Clause 39.2 of the Agreement is intended to establish a security of employment protection for the employees covered by the Agreement by limiting the circumstances in which an employee may be retrenched. The words ". . . Company gives a commitment that no employees will be retrenched for the term of this Agreement..." appear to establish an unambiguous and significant job security protection for "the term" of the Agreement. The protection is not absolute. It is subject to the exceptions set out in clause 39.2. The first exception is engaged if ". . . any major operating unit cease production . . .". The second exception is engaged if ". . . a reduction in the number of operating shifts result in reduced output . . .". The third exception is engaged if there is "any other significant change".

[12] The Agreement covers only mechanical maintenance and store personnel. It does not cover the operations staff of the pulp and paper manufacturing mill. The first two exceptions on their face appear to cover circumstances where operational changes at the pulp and paper manufacturing mill have an effect on the maintenance requirements, rather than any decision bearing directly on the maintenance operations.

[13] Clause 39.3 of the Agreement sets out manning levels to apply (or at least those said to apply[3]) at the commencement and during the operational life of the Agreement. Clause 39.3 on its face envisions that the prescribed manning levels may change by utilising the consultation clause, which is found in clause 35. Clause 39.3 establishes a prima facie position that manning levels will not change during the operational life of the Agreement, but it contemplates that manning levels may change through consultation. Employees have a right to be consulted about any proposed change in manning levels pursuant to clause 35. Clause 39.3, read in the context of clause 39 and having regard to its purpose, places a significant limitation on the capacity of Paper Australia to change manning levels in a way which might affect the employment security of employees. The discharge of an obligation to consult requires there to have been genuine consultation and it is not to be perfunctory. Consultation should provide employees, or the representative of the employees, with a genuine opportunity to influence the employer.[4] The obligation to consult is much broader than advice on what is to happen and is concerned with what should happen and how this might be achieved. However, the obligation to consult does not involve a veto.

[14] Clauses 39.2 and 39.3 are related, in the sense that each is a species of protection concerned with the security of employment of employees. However, the provisions deal with different matters.

[15] Clause 39.2 of the Agreement is concerned with a commitment to no retrenchment of employees except in the prescribed circumstances. So much is clear from the use of the conjunction "unless" immediately following the substantive no retrenchment commitment and before the exceptions to which the conjunction relates. The last sentence of clause 39.2 is concerned with a review of manning numbers if operating units are increased. This is not concerned with retrenchment but rather with a consideration of whether additional workers are to be engaged.

[16] Clause 39.3 of the Agreement is concerned with a maintenance of manning levels. Manning levels may change but not result in any retrenchment. For example, manning levels might change through consultation, because of natural attrition and the inability to recruit suitably qualified employees, or because the vacancy created though natural attrition need not be filled given workload levels. Manning levels might also increase through consultation.

[17] Clause 39.3 of the Agreement does not express the limitation for which the AMWU contends. It is not expressed as being read subject to clause 39.2. The provisions are, as noted above, concerned with different things. Clause 39.2 is principally concerned with providing protections against retrenchment. Clause 39.3 is concerned with maintenance of manning levels. A changing in the manning levels which has the effect of resulting in a retrenchment, could only occur in the excepted circumstances in clause 39.2 following the review process outlined therein. But that is because 39.2 is engaged, not because clause 39.3 has limited operation. Clause 39.2 has nothing to say about changes to manning levels which occur through consultation as set out in clause 35 and which do not or will not result in a retrenchment.

[18] The AMWU's submission that the requirement in clause 39.3 that "the consultation clause must be utilised when making any change to the above manning levels" is not a clause that empowers Paper Australia to make changes to manning levels is also rejected. It runs counter to the express terms of the Agreement. Properly construed, clause 39.3 of the Agreement makes provision, relevantly, for a fixed number to be the manning level for maintenance. This number may be changed after consultation has occurred pursuant to clause 35 of the Agreement, but the nature of the change is subject to the overarching purpose of the provision - that the proposed change to manning levels not occur in a way which might affect the employment security of employees to whom the Agreement applies. To read the provision otherwise, as suggested by the AMWU, would render the requirement to use the consultation clause when making any change to the manning levels prescribed by clause 39.3 otiose.

[19] It follows from the above that the answer to the first question is "yes".

[20] The Second question is somewhat abstractly framed. Paper Australia does not assert that it has complied with the consultation term in the sense that consultation to change the manning levels prescribed by the Agreement has been completed. Paper Australia's reliance on what it says it did under a predecessor agreement, to assert compliance, is misguided and rejected. Whatever consultation may have occurred to change the manning levels under a predecessor agreement is not relevant to assessing whether consultation to change the manning levels under this Agreement has occurred. That was consultation about changing manning levels under that agreement. Ultimately manning levels did not change as Paper Australia agreed by this Agreement to fix the manning levels at those set out in clause 39.3. These correspond with the manning levels under the predecessor agreement.

[21] As to this Agreement, Paper Australia says that it has commenced consultation with a view to implementing a change to the manning level set out in clause 39.3.

[22] It is, as I have already indicated, uncontroversial that at the commencement of the Agreement and throughout its operation the actual manning levels at the pulp and paper manufacturing mill have been less than those prescribed by clause 39.3. To the extent that the actual levels might be said to reflect a change to the manning levels prescribed by clause 39.3, then there is no evidence that Paper Australia has completed consultation as required by clause 35. But Paper Australia does not say that the actual levels are the levels that would comprise the change to the manning levels prescribed by clause 39.3. There is little doubt that Paper Australia has not complied with the requirement to meet and maintain the prescribed manning levels set out in clause 39.3. But both parties are complicit. It was evident to the parties to this dispute at the relevant times when the Agreement was made, approved and commenced operation the manning levels in clause 39.3 were not the actual manning levels at the pulp and paper manufacturing mill. Nonetheless, both parties agreed on the term and supported the approval of the Agreement and its implementation, even though they knew, contrary to the express term of the Agreement, that the prescribed manning levels were not the actual manning levels.

[23] Plainly there is a continuing failure to comply with the obligation in clause 39.3 - either by meeting the manning levels set out therein or by changing the manning levels after consultation. This latter omission is now in the process of being rectified. Given my answer to the First question, the process of consultation should now continue which then may enable a change to the manning levels to be made within the strictures of clause 39.3 of the Agreement.

[24] For the reasons set out above I answer the questions raised for determination as follows:

1. Q. Does cl 39.3 of the Agreement allow for the employer to alter the manning levels outside of the circumstances described in cl 39.2?

   1. Yes.

2. Q. If the answer to the above question is 'Yes', has the employer engaged in the consultation process as required by cl 39.3?

A. Paper Australia has commenced engaging in consultation with a view to changing the manning levels in clause 39.3 of the Agreement.

[1] [2014] FWCFB 7447

[2] [2017] FWCFB 3005

[3] Because the manning level numbers contained in cl.39.3 did not accurately reflect those in place at the commencement of the Agreement

[4] Queensland Rail Limited v Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia [2010] FCAFC 150; 204 IR 142; see also Construction, Forestry, Mining and Energy Union v BHP Coal Pty Ltd [2016] FCA 1009; 262 IR 176

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