[2024] FWC 1116 [Note: An appeal pursuant to s.604 (C2024/3220) was lodged against this decision.]

Fair Work Commission|2024-04-30

"Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union" known as the Australian Manufacturing Workers' Union (AMWU) v Opal Packaging Australia Pty Ltd T/A Opal Fibre Packaging [2024] FWC 1116 (30 April 2024)

[2024] FWC 1116 [Note: An appeal pursuant to s.604 (C2024/3220) was lodged against this decision.]

s.739 - Application to deal with a dispute

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

Opal Packaging Australia Pty Ltd T/A Opal Fibre Packaging

Alleged dispute about any matters arising under the enterprise agreement and the NES

[1] On 13 November 2023, the "Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union" known as the Australian Manufacturing Workers' Union (AMWU) filed an application under s 739 of the Fair Work Act 2009 on behalf of its member, Mr. Alex Tran (Tran).

[2] The application seeks the Commission to deal with a dispute over a decision by Tran's employer, Opal Packaging Australia Pty Ltd (Opal), to issue him a first and final warning for a forklift incident which occurred on 29 August 2023 (the Incident). The dispute was brought to the Commission as a step in the dispute settlement procedure in clause 16 of the Opal Fibre Packaging National Enterprise Agreement 2022 (the Agreement).

[3] For the following reasons I have decided to resolve this dispute by answering the agreed question as follows:

The final warning issued to Alex Tran was an appropriate disciplinary penalty consistent with Appendix D.1(a) of the Agreement in all its terms, except the period of effect of the warning should be reduced to nine months from the date of issue which expires on Friday 31 May 2024. On that date, the final warning should be removed from his personnel file provided he has performed his tasks on the forklift to the best of his ability and in a safe manner up until that date.

[4] On 20 November 2023, a mention was conducted. Directions where subsequently issued directing parties to attend a conciliation on 29 November 2023 and to file preliminary material in the Commission.

[5] The conciliation on 29 November 2023 was not successful. Further directions were issued for the parties to file material in support of their respective cases.

[6] On 10 January 2024, the matter was listed for a mention to discuss the question for arbitration. The question was subsequently agreed and is set out below. At the mention, the parties were asked if they would consent to the dispute being resolved by way of Recommendation. After consideration, Opal informed the Commission on 12 February 2024 that they would not accept this outcome.

[7] On 18 February 2024, following the filing of all material, the parties informed the Commission that they consented to the matter being determined on the papers.

[8] Since September 2021, Tran has worked at the Brooklyn site of Opal. He is currently employed as a Forklift Operator. The Site Manager of the Brooklyn site describes his employment record as "impeccable".

[9] On 29 August 2023, Tran was operating a forklift stacking pallets in an area known as the "Heavy Duty Area" (HDA). Just before 9:00 AM, Tran struck the fire sprinkler line and dragged it back with the forklift. The fire alarm was set off and water spread through the HDA. This prompted the attendance of two fire trucks. Electrical repairs were required of the "main machine" in the HDA, putting it out of action for a day. The machines in the other areas were shut down for an hour and a clean-up was required for the water that had spread.

[10] On 31 August 2023, Opal issued Tran a first and final warning as a result of the Incident. The dispute between Tran, the AMWU, and Opal is whether this is an appropriate disciplinary penalty under the warning procedure in Appendix D of the Agreement.

[11] The parties have agreed the question to be decided to resolve the dispute is:

"Was the final warning in the terms it was issued on 31 August 2023 to Alex Tran because of his involvement in the forklift incident at Opal's site in Brooklyn Victoria on 29th August 2023 an appropriate disciplinary penalty consistent with Appendix D.1(a) of the Agreement?"

[12] Clause 16 is the dispute settlement procedure in the Agreement. It confers a right to arbitration in clause 16.2(f). The dispute is over the operation of the warning procedure in Appendix D of the Agreement. It falls within the scope of the dispute settlement procedure under clause 16.1(a). The jurisdiction of the Commission to arbitrate this matter is not contested.

[13] Clause 1 of the Agreement contains a statement of its purpose:

"The main purpose of the Agreement is to ensure the ongoing commitment of the management and employees of Opal, and the AMWU...to the principles of Continuous Improvement (the principles of Continuous Improvement are stated in Appendix A), high levels of productivity and operational excellence".

[14] Appendix A sets out the six principles of continuous improvement. The six principles are: 'customer first'; constancy of purpose and leadership; focused involvement of people; acting on facts and knowledge; emphasis on process and systems; and emphasis on continuous improvement.

[15] Part of the commitment to "constancy of purpose and leadership" includes at A.2(f); "being a coach, not a judge". Part of the "emphasis on continuous improvement" includes at A.6(a); "treating mistakes... as opportunities to learn and improve".

[16] There is no dispute that the process requirements of the warning procedure in Appendix D have been followed. Excluding the process requirements, the relevant parts of the Warning Procedure in Appendix D of the Agreement are:

(a) It is the policy of Opal Fibre Packaging to adopt a constructive approach to the discipline of all employees and to ensure they receive fair and just treatment.

(b) The parties to this Agreement have committed to developing supplementary guidelines relating to investigations conducted under this Agreement.

(a) A written record of interview is to be completed at each stage of the procedure and a copy placed on the employee's personal file.

(b) All counselling/warnings sessions are to be confirmed in writing (within twenty-four hours) with the employee, including details of the corrective action required and the understanding reached by both parties. Form DP 1 is provided for this purpose.

(c) The employee is to be requested to sign all records of interview to acknowledge the accuracy of the documentation. In the event that the employee refuses to sign the document then a note to that effect should be placed on the record.

(d) Disciplinary records shall cease to have effect for disciplinary action purposes twelve months from the date of issue and shall be removed from the employee's personnel file and archived.

(i) Disciplinary action may be taken at any one of the following steps, based on any record of disciplinary action (in accordance with this Agreement) during the previous twelve months and/or the severity of the unacceptable performance and/or behaviour.

(ii) When a manager or supervisor is going to have discussions with an employee as outlined in the warning procedure at Appendix D of this Agreement, the manager/supervisor shall do the following prior to any meeting taking place:

(A) advise the relevant employee concerned that they will be required to attend a meeting in the office: and

(iii) Immediately after notifying the employee as outlined above, the manager/supervisor will personally notify the Union delegate.

(iv) In all of the steps as follows the manager /supervisor will notify the employee concerned of the issues /allegations within 2 working days of becoming aware of the matter, so as to ensure that there is no unreasonable delay in dealing with the problem.

(v) At the request of the employee, a delegate shall be given full disclosure of all information and all details that will ensure all aspects of any warning or disciplinary action is conducted in a fair and transparent process, following the principles of natural justice.

(a) If the performance and/or behaviour of the employee remains unsatisfactory or is repeated, a Final Warning should be issued. The manager/supervisor should:

(i) Warn the employee by stating all the issues/allegations which have led to the Final Written Warning, which must include the first written warning and counselling.

(ii) Provide an opportunity for the employee to respond to the issues/allegations.

(iii) Fully investigate and give consideration to any matters raised by the employee.

(b) If a final written warning is to be issued (Form DP 3), the manager/supervisor should advise the employee in writing of:

(i) All the required corrective action and a review date that would reasonably allow the person to improve their performance to the required standard.

(ii) Warning that failure to improve will result in dismissal.

(c) The manager/supervisor should complete all required documentation as per clause D.3 of this Appendix (Records/Documentation), including confirmation in writing to the Departmental Manager or his/her nominated representative of a record of the circumstances, time, and date of the Written Warning.

[17] The argument of the AMWU is straightforward. The terms of Appendix D. states: "it is the policy of Opal to adopt a constructive approach to the discipline of all employees and to ensure they receive fair and just treatment." The issue of a first and final warning to Tran was neither constructive, nor fair and just, because Opal "failed to give appropriate weight and consideration to the mitigating factors surrounding the Incident.[1]

[18] The mitigating factors identified by the AMWU which it says Opal did not adequately take into account were:

The area of the incident was not Tran's usual place of work.
The area of the incident had a lowered height.
The stacker height within the area was too high.
The lighting and visibility in the area was poor.
The area of the factory has previously had multiple incidents of the same nature.

[19] The AMWU also makes submissions on the nature of the Commission's powers to answer the question at issue here. It asserts "the Agreement does not mandate or provide any definitive guidance or discretion about what should have been the appropriate response to Tran's actions." It relies on a passage of decision of Gregory C in CFMEU v. MSS Strategic Medical and Rescue[2] which supports exercising the power to decide matters on "equity, good conscience and the merits" under s 578(b) to answer the question:

**"**In summary, I am satisfied there is nothing in the Agreement, or in MSS's internal disciplinary procedures, that mandates or provides definitive guidance or discretion about what should have been the appropriate response to Leighton's actions. Therefore, in reviewing those circumstances the Commission is essentially being asked to exercise its discretion based on its broad powers to deal with matters having regard to "equity, good conscience and the merits of the matter."

[20] The evidence filed by the AMWU consisted of two statements of Mr. Alex Tran (Tran), dated 23 January 2023 and 14 February 2024, and two statements of the AMWU delegate at the Brooklyn site of Opal, Mr. Hassan Yassine (Yassine), dated 18 January 2024 (the January Yassine Statement) and 16 February 2024 (the February Yassine statement).

[21] In his first statement, Tran asserts he had "never been directed to work outside the Main Warehouse"[3] (rather than the HDA). On the day of the Incident, he was asked to put pallets in the HDA because there was no room in the Main Warehouse.[4] He states: "this was the first time in my employment at Opal that I was required to operate a Forklift in the HDA" and that he "had never been inducted to work" there.[5]

[22] He then gives the following account of the Incident.

[23] On the day of the Incident, he entered the HDA on the forklift and he "immediately noticed that the lighting was significantly poor in this area, especially when compared to the Main Warehouse. The HDA was very dark and made it very hard to visualise certain objects in the short distance. Due to the lighting, [he] couldn't see any water pipes in the path of the forklift."[6]

[24] The water pipes in the HDA are roughly 3.5 meters high, which he says "is a significant difference to the Main Warehouse which are roughly 10 metres high. He adds there were "no warning signs in the HDA that warned me of this difference in height. The HDA has a significantly lowered height due to the roof/mezzanine floor above. The stacking height [of the palettes] was also very high and unusual especially in an area such as the HDA." As he endeavoured to stack a palette, he "struck a water pipe causing it to burst."

[25] He also comments on the final warning given to him: "I believe, due to the mitigating factors I have presented and Opal's inaction to deter future incidents, that a final warning is harsh and unfair."

[26] Tran provided a supplementary statement dated 14 February 2024 which is responsive to the Statement of Jose Lercara (Lercara) the site manager. Tran reaffirms the stacker height impacted his ability to visualise objects. He contends that proposition is supported because it is listed as a contributing factor in the Incident report. He concedes he hit the sprinkler pipe by an incorrect maneuver, but this was contributed to by the environmental factors of the HDA he had stated earlier: poor visibility, stacker height and the HDA was not his usual workplace.

[27] The AMWU filed two statements of Mr. Hassan Yassine, an employee at Opal's Brooklyn site, who is also the AMWU delegate and an OHS representative. One is dated 18 January 2024, the other 16 February 2023. Both statements cover the same facts. The February statement can be regarded as an amendment of the January one. The general effect of the February statement is to qualify or limit some of the statements of fact made in the January Statement.[7]

[28] I set out the key statements of fact made by Yassine in his February Statement here.

[29] According to Yassine, "the HDA at the Brooklyn site has been subject to two forklift incidents in the past where the fire water pipe has been struck and has caused significant damage and flooding. The lowered roof has been hit and this is visible in area."

[30] He gives particulars of the one such incident as follows:

"The last, occurred in either 2018 or 2019 and was on a Saturday. The employee in question was Scott Gordon who was operating a forklift during his shift and was required to perform work in the HDA. Gordon struck the fire system pipe and caused mass flooding and the fire brigade had to attend the site. Gordon did not get any warning for this incident."[9]

[31] Yassine states: "The lowered roof in the HDA is damaged and is a very clear sign that a forklift has collided with the roof approximately 5 metres away from where Alex Tran's incident happened." He also states: "This area where the incident occur is mainly used for storage of bottom sheet and binders, the whole area has a lowered roof due to the office being located above it."[10]

[32] Yassine also makes statements concerning remedial action that he alleges Opal has taken as a result of the Incident:

"Opal have recently implemented measures in the HDA. The implementations have occurred after the current dispute in the FWC was lodged. When the incident occurred back in 2019, there was recommendation made to prevent these types of incidents, but nothing was done in this regard. Recently they have painted poles, added warning signs, and fixed/added more lighting. The pole where the incident happened is painted in bright visible yellow all the way to the top approximately 400mm away from the fire system pipe, which means that things can be stored up to the yellow paint."[11]

[33] It is not contested Tran had no prior disciplinary or safety breach record.

[34] Opal makes the following submissions in relation to the competence and training of Tran as a forklift driver. Tran was licensed to operate a forklift and had undergone all the training necessary for him to operate a forklift safely and competently in any area on the site. There was no requirement for him to be specifically inducted to drive a forklift in the HDA.[12]

[35] In September 2022, Tran was assessed as competent in the Safe Operating Procedures (SOP) relevant to his work area, Baler and Shredder Operations. The Baler and Shredder SOPs include the SOP "Forklift Operating Procedure". The "Travelling & Traffic Procedure" Item 12, which is part of the SOP, states that forklift drivers should be aware of overhead objects such as rails and electrical wires_[13]_ and that drivers should report any safety hazards to their supervisor.

[36] The submission of fact relied on by Opal are set out below.

"Tran was stacking top sheet board in the storage area when he went to take the top part of stacks out but had lifted the mast of the forklift up "too high." When he reversed out, he hit the fire sprinkler pipeline and dragged it back with the forklift causing it to break and pump water all over the site. This set off the fire alarm system and automatically triggered two fire trucks to the site. The fire sprinkler system suffered significant damage and the sprinkler system was out of use for multiple hours until repaired. Along with the general clean up and repair there was damage to product at a cost of approximately $70,000 was incurred."

Opal on the mitigating circumstances and their consequences

[37] Opal disputes some of the mitigating circumstances which Tran and the AMWU rely on in this dispute:

• There is no necessity for specific induction in this area, but it was noted it was "a non-standard work area."[14]
• The lighting and visibility are not so poor as to be a mitigating factor. Opal argues "it is clear from photographs filed in the proceeding that the lighting is sufficient:[15] It is not a problem that has been raised before and again, arguably, if there was any concern it should have and could have been reported".[16]
• The fact that the roof in the area may be lower is of no relevance The height of the top pallet was at the upper limit of the allowed storage/stack height which is marked on top of the poles alongside in yellow. Tran reversed out without due note of the height of his mast and then collected the sprinkler line. Tran's statement that he was not able to visualise objects in front of him or as he says, "in the path of the forklift". Should be disregarded as "the accident occurred when he was reversing and the SOP says, has to be aware of overhead objects such as rails and electrical wires[17]."

[38] Opal submits it did accept some of the mitigating circumstances in its assessment of the Incident, such as Tran: [18]

accepted responsibility for his actions;
was not working in his normal area;
was not affected by drugs or alcohol; and
had an otherwise good employment history.

[39] Opal considers these mitigating circumstances "do not displace or detract from what was regarded as the fundamental cause of the incident, the use of equipment in an inappropriate manner and the incorrect placement of equipment and objects".

Opal on why the final written warning was appropriate

[40] Opal submits a final written warning was the appropriate outcome because of the seriousness of the incident. According to Opal, "the incident created a serious risk to the safety of Tran and others at the site. It is fortunate, for example, that the fire sprinkler pipe was not electrical wires as referred to in Item 12 of the SOP".

[41] Opal also argues Tran's reversing the forklift with the mast too high and without proper care of his surroundings caused significant property damage. The cost was approximately $70,000. Tran caused the plant to be unproductive for 2 hours and one of the main machines to be unproductive for 24 hours while the damage he caused was repaired and the plant assessed for safety to resume operations.

[42] Opal argues the severity of its disciplinary response to the Incident should be regarded as an exercise in managerial prerogative. According to Opal, the disciplinary penalty applied by the Respondent was contemplated by the Agreement and should be an important consideration in terms of any discretionary decision to be made by the Commission.

The final warning decision was an exercise of managerial prerogative by Opal

[43] Opal relies on venerable authority such as the XPT case[20] and Re Cram[21] for various propositions in relation to the management prerogative in matters of discipline, such as:

an employer's right to conduct and manage its business, as it sees fit, and without external interference is not disputed. It is a well-known and long held principle, stemming from such seminal cases as the "XPT case and RE Cram; Ex parte NSW Colliery Proprietors Association Ltd [1987] HCA 28; (1987) 163 CLR 117."

the proper test to be applied ...is for the Commission to examine all the facts and not to interfere with the right of an employer to manage his own business unless he is seeking from the employees something which is unjust and unreasonable."

...An exercise of managerial prerogative will not be unreasonable in this sense if a reasonable person in the position of the employer could have made the decision in question."

[44] Opal also argued issuing of a final warning in these circumstances:

is not unjust and unreasonable;
is a decision a reasonable person could easily have made;
is a fair and just outcome; and
giving a disciplinary record an effective life of 12 months is a matter negotiated and agreed by the parties in the Agreement.

Submissions on the differences between the two Yassine statements

[45] After the February Yassine Statement was filed, Opal filed further submissions which pointed out the differences between that Statement and his earlier one and that given the differences, the Commission should disregard submissions made by the AMWU which relied on assertions in the earlier Statement.[22]

[46] Lercara is the Site Manager at the Brooklyn site, a position he has held for over two years. He has worked in the paper and manufacturing industry for 42 years and holds a current forklift truck operation licence.

Tran's training, qualifications and employment history and response to his Statement

[47] In his statement, Lercara gives evidence of the employment history of Tran with Opal. He states that Tran had a "impeccable employment record" other than the incident.[23]

[48] According to Lercara, when Tran commenced his employment with Opal, he undertook the standard Brooklyn site induction. This included training and assessment in the Safe Operating Procedures (SOPs) relevant to his work area, Baler and Shredder Operations. The Baler and Shredder SOPs include the SOP "Forklift Operating Procedures". The Forklift Operating Procedures SOP and Tran's competency assessment were attached to his Statement.[24]

[49] Lercara responded to Tran's claims that "the HDA was not his usual standard workplace". He states: "Alex has operated a forklift in the HDA in the past. He has delivered and collected materials to and from the area on a number of occasions."[25]

[50] In response to the claim that there is no such thing as specific induction for the HDA, Lercara states: "The site induction covers all areas in which an employee may work. As the holder of a forklift licence, Alex is expected to assess unfamiliar environments to ensure he can safely operate a forklift. The Site's forklift SOP includes a requirement to "be aware of overhead objects such as rails and electrical wires"."[26]

[51] In response to Tran's statement that one of the reasons for the incident was poor lighting in the HDA, Lercara replies that Tran should not have operated the forklift and instead reported the hazard to his supervisor. Lercara posits an alternative theory to poor lighting; he states: "Alex didn't see the fire sprinkler pipe in the path of the forklift because he didn't check carefully enough before reversing, not because the lighting or visibility was inadequate."[27]

[52] In response to Tran's statement in relation to the lower height of the water pipes compared to the Main Warehouse, Lercara says: "The height of fire sprinkler pipe is adequate for the safe operation of a forklift. The fire sprinkler pipe is painted red and is clearly visible. It was Alex's responsibility to check for hazards before reversing the forklift and he didn't do so." Lercara also noted "the maximum lifting height was clearly marked in yellow paint on all of the poles around the area where the incident occurred".[28]

[53] Lercara gives the reason Tran struck the fire sprinkler pipe is "because he didn't operate the forklift safely as required by his forklift licence and the Site's forklift SOP, not because the area was unsafe for him to operate a forklift. Specifically, he: used an incorrect lifting technique by lifting the top pallet from the stack instead of the second pallet; and didn't check the location of the fire sprinkler pipe or that the mast was under the maximum lifting height before reversing the forklift".[29]

[54] Lercara was present on the day of the incident. He gives an account of it in his Statement. On the day of the Incident, he was working in his office at 8:45 AM. He heard sirens and noise coming from the factory. He did not see the Incident but instead saw "the aftermath". He explains: "I saw the fire sprinkler pipe was broken and partly dislodged from the bolts holding it to the roof. Water was pouring out of the pipe and was flooding the factory floor. The forklift was parked near where it had hit the pipe. He went to check on Tran who had got off the forklift. Lercara sent Tran home on pay for the rest of the day. He provided Tran with a dry change of clothes. Tran's own clothes were soaked with water from the burst fire sprinkler pipe. Tran drove himself home. Lercara then took three photos and a video of the scene. The photos were filed and are in the Digital Court Book[31] and the Commission viewed the video on 29 November 2023.

[55] According to Lercara, the Incident caused a significant safety risk. "The fire sprinkler pipe that Alex hit with his forklift is made of thick steel and is very heavy. It would have taken significant force from the forklift for it to have been dislodged. It landed quite close to a pedestrian walkway. It could have seriously injured or killed someone."[32]

[56] Lercara also states: "The Incident severely restricted the Site's productivity for the rest of the day. Our main machine was shut down for the entire day. The other four machines at the Site were shut down for around an hour. This meant that we couldn't complete a number of customer orders that had been scheduled for the day."[33]

[57] Finally, Lercara estimates the Incident cost Opal approximately $70,000, including:

the fire brigade's costs for attending the Site.
Wormald's costs for repairing the fire sprinkler pipe.
the cost of labour for the removal of water from the factory, electrical, repairs and rectifying the main machine.

• loss of the opportunity for the five machines to generate approximately $27,000 worth of products.[34]

[58] Lercara reports: "In the last 12 months, there have been no lost time injuries and no medical treatment injuries at the Brooklyn site. Before the date of the Incident, none of the HSE Committee members raised any safety concerns about lifting heights, lighting, or visibility in the HDA. None of the HSRs has exercised their powers under the OHS Act in relation to lifting heights, lighting, or visibility in the HDA."

[59] Lercara also makes submissions about the safety of the HDA. He states: "The HDA is safe for the operation of forklifts. In the location where the Incident occurred: the area is well lit, there is ample room for a forklift to operate safely; the lifting height limit is marked in bright yellow paint on all poles and is clearly visible; and the fire sprinkler hose is painted red and is clearly visible." He claims: "This is established by the photos in the Report and my photos and video of the Incident."[35]

[60] Lercara was not involved in the preparation of the Incident Report. Lercara asserts the list of factors under the heading "other contributing factors" in the report did not cause the Incident. He understood the other contributing factors in the Report are "areas of potential improvements in safety in the area where the incident occurred and do not signify that the area was or is unsafe".[36]

Earlier incidents and damage to the roof in the HDA

[61] Lercara states since Opal acquired the business, other than the Incident, there have been no instances of forklifts colliding with water pipes causing significant damage and flooding at the Brooklyn site. He also affirms that he is "broadly aware of the 2018 or 2019 involving Scott Gordon" referred in the February Statement of Yassine. He was not involved in the Gordon Incident. The Gordon Incident occurred before Opal acquired the business and before Lercara became Site Manager.[37]

[62] In response to the Yassine Statement, Lercara refutes the claim there is damage to the roof of the factory which contributed to the Incident. He responds to Yassine that "it is not true that forklifts often collide with structures in the factory. A forklift collision is a serious matter. Employees are under strict instructions to report any safety incidents involving mobile powered plant." He states he has "not received any reports of forklift collisions other than the Incident from anyone at the Site, including HSRs".

[63] Lercara also made statements concerning the process he went through in deciding the disciplinary step he would take as a result of Tran's involvement in the Incident.[38] He states:

"I considered all of the available relevant information including my direct observations of the aftermath of the Incident, the Report and the information Alex and his representative provided during the disciplinary procedure. I decided that a final written warning was the appropriate outcome. ...

In coming to this decision, I took into account the following mitigating factors:

The "other contributing factors" referred to on page 6 of the incident report [namely "area layout and height stack to be reviewed, it was the operators non -standard work area, sprinkler line visibility is not good due to the height even though sprinkler line is painted in red, area lighting to be reviewed, area has previously had multiple incidents of the same nature"].
the incident was an accident, not deliberate.
Alex immediately took responsibility for the incident.
Alex's negative drug and alcohol test result after the incident;
Alex's otherwise impeccable employment record.

I balanced the mitigating factors against, the seriousness of the safety risk Alex created;, the fact that Alex operated the forklift negligently and in a way that was contrary to his obligations under his forklift licence and the Site's forklift SOP; the property damage and loss of productivity and the resulting cost to the business and the need to reinforce the message that safety is the most important priority at the site and across the Respondent's entire business.

In recognition of the mitigating factors, I also worded the final warning quite mildly. The warning only requires Alex to "...perform your tasks on the forklift to the best of your ability in a safe manner"."

[64] Mr. Lyle Massey (Massey) has held the position of Production Manager at Opal since September 2022. Massey was the investigation lead for the safety investigation into the Incident. The investigation team for the Incident included two Health and Safety Representatives (HSRs) and the Maintenance Manager of Opal.[39]

[65] On 30 August 2023, Massey issued a report on the safety investigation. He provided a copy to Lercara on that date. In his statement, he summarises the findings in the report.

[66] He states: "There were two individual behavioural causes to the incident which were "incorrect placement of equipment or objects"; and "using equipment in an inappropriate manner".[40]

[67] The "individual behavioural causes" were attributable to the actions and failures of the forklift operator, Tran. He states Tran "caused the incident when he moved a pallet from a stack using an incorrect and unsafe method. He lifted the top pallet from a stack and in doing so, raised the mast of the forklift above the lifting height limit marked in yellow paint on the poles in the HDA. Alex didn't properly check around him for hazards before reversing the forklift with the mast raised too high. As a result, he struck the fire sprinkler hose, causing the hose to burst and partially dislodge from the roof."[41]

[68] Massey also explained "The pipe that he damaged was a fire sprinkler pipe as opposed to a pipe that carries water. The fire sprinkler system is a safety system which, if damaged, will cause the site to shut down until the issue is rectified and trigger an automatic call to the fire brigade. In the risk analysis the risk level of the incident was rated as "high", with the consequences rated as "serious" and the likelihood rated as "possible".[42]

"Any causes of the incident related to unsafe conditions in the incident location, such as poor lighting or visibility, or inadequate height limits for stacking or lifting, would have been identified as "system or procedure causes" under the heading "Investigation Summary". The summary includes a list under the heading "Other contributing factors", as follows:

Area layout and height stacking to be reviewed, potentially needs to be lowered 0.5 meters more in this specific area to mitigate the risk of re-occurrence.
This was the operators non-standard work area.
Sprinkler line visibility is not good due to the height, even though sprinkler line is painted red.
Area lighting to be reviewed.
Area has previously hand multiple incidents of the same nature due to lowered height of the roof/mezzanine floor above."

[70] The "other contributing factors" are not causes of the Incident or a concession that the area is unsafe. They are recommendations for potential safety improvements that could be made in light of the Incident. The "other contributing factors" list was developed by the Investigation Team, which included both HSRs and Site management representatives.[44]

[71] In relation to the prior incidents referred to in both Yassine statements, Massey states he was "not aware of the details of either incident" and noted the Incident was added to the Report for completeness and transparency.

[72] The recommendations in the "other contributing factors" section of the Report were first discussed in the Site's Health, Safety and Environment Committee meeting on 3 October 2023. There was consensus that the recommendations were sensible and appropriate. No one on the HSE Committee objected to the recommendations or raised any concerns about the adequacy of the lighting, visibility, or height limits in the HDA.[45]

[73] Massey also sought to contextualise the Incident relative to the focus on safety at the Brooklyn site; "Mobile powered plant, including forklifts, is at the forefront of the site's safety agenda. Any safety incidents involving mobile powered plant are treated seriously and result in drug and alcohol testing of the employee(s) involved and a full safety investigation." Massey asserts: "the condition of the roof of the HDA is completely irrelevant to the Incident. It did not contribute to the incident in any way."

[74] During Massey's employment with Opal, and since Opal acquired the business, it is not the case that "forklifts often collide with structures in this area". Any such incidents would be notified to Massey and would be investigated. He has not been notified of or investigated any forklift collisions other than the Incident.

[75] Massey also makes the following statements:[46]

"The HDA is safe for the operation of forklifts. None of the Site's HSR representatives have raised any safety concerns or taken any action in relation to the lighting, visibility, or height limits in the HDA, such as issuing a provisional improvement notice under the Occupational Health and Safety Act 2004 (Vic) Before the incident, no one on the HSE Committee identified any concerns about lighting, visibility, or height limits".

In my regular factory walkarounds, I have observed that the lighting, visibility, and height limits are all adequate for the safe operation of forklifts in the HDA. There is no requirement under the OHS Act for warning signs in relation to lighting, visibility, or height limits. At the time of the incident, the height limit was marked in bright yellow paint on the poles in the Heavy-Duty Area Alex was aware of what the yellow paint meant".

[76] Massey also confirms Opal has implemented improved safety measures in response to the lessons learned from the Incident, not in response to the dispute proceedings.

[77] The principles of construction for enterprise agreements are well known. I will not rehearse them here. I adopt the summary of the principles expressed by the Full Court of the Federal Court in Workpac v. Skene.[47]

[78] The gravamen of the principles are words in an enterprise agreement are to be given their ordinary meaning, read as a whole and in context. A purposive, rather than pedantic or narrow, approach to interpretation is appropriate. The language of a particular agreement is to be understood in light of its industrial purpose and context.

[79] The "main purpose" of the Agreement is to ensure ongoing commitment to the principles of continuous improvement as articulated in the Agreement. The agreed elements of continuous improvement include "treating mistakes as opportunities to learn and improve" and "being a coach, not a judge". The express designation of the main purpose of the Agreement as a commitment to those principles must colour the interpretation of the rest of the Agreement, including the disciplinary procedure.

[80] Opal has committed to adopting a "constructive approach" to the discipline of employees and to ensure they receive fair and just treatment. I take the commitment to a constructive approach to have its plain meaning which is to be helpful or positive.

[81] A warning procedure is designed to punish but also to teach. A warning can act as an opportunity for the disciplined employee to learn from their mistakes and to modify the behaviour for which they were warned.

[82] Opal's express commitment to both a constructive approach to discipline and also to continuous improvement must colour the interpretation given to the words of the warning procedure. In this context, the role of a warning within the procedure should be seen as punitive but also educative. The process of continuous improvement requires a commitment from management that mistakes (including mistakes serious enough to lead to a warning) are seen as opportunities to learn and improve.

[83] This is reinforced by the terms of the procedure itself. In Step 3, which is the final warning procedure, the manager "should" advise the employee of all corrective action and a review date that would reasonably allow the person to improve their performance to the required standard and that "failure to improve will result in dismissal".

[84] The role of a warning under the Agreement is firstly an opportunity to correct errant behaviour as well as to punish. A final warning is a last chance opportunity to correct the behaviour which is the subject of the warning.

[85] The requirement in Appendix D.3(d) under the heading "Records/documentation" that "disciplinary records cease to have effect for disciplinary action purposes twelve months from the date of issue and shall be removed... and archived" is obviously designed to prevent the existence of 'zombie' warnings or verbal counselling. Without such a provision, an ancient warning or verbal counselling could be revived years later in a disciplinary procedure against an employee.

[86] I interpret the words of Appendix D.3(d) as a mandatory obligation on the employer that the disciplinary action be removed from the employee's personnel file after the expiration of twelve months. D.3(d) does not mandate that a warning must be kept on the personnel file for twelve months. The effect of the plain words is to denude the disciplinary action of effect after twelve months. The twelve-month time period acts as a maximum length for a disciplinary action to have effect.

CONSIDERATION OF THE INCIDENT AND THE MITIGATING CIRCUMSTANCES

[87] A helpful narrative of the cause of the Incident is contained in the "any additional details or comments" section of the Incident report which reads: [48]

"The height of the top pallet was the upper limit of the allowed storage/stack hight which is marked on the poles in yellow. Therefore, when the operator raised the mast of the forklift to take the top pallet off that was on top of 2 full pallets of board the forklift mast had exceeded the allowed storage/stack hight significantly. When reversing out operator was unaware of the height of his mast and then collected the sprinkler lines"

[88] Lercara gives the reason for the Incident as "Tran did not operate the forklift safety as required by his forklift licence and the ...forklift standard operating procedure. He used an incorrect lifting technique by lifting the top pallet from the stack instead of the second pallet and did not check the location of the fire sprinkler pipe or that the forklift mast was under the maximum lifting hight before reversing the forklift."[49]

[89] Massey states the individual behavioural causes of the Incident were attributable to Tran. Tran caused the Incident when he moved a pallet from a stack using "an incorrect and unsafe method...and he did not check properly around him for hazards before reversing the forklift with the mast raised to high".

[90] Tran, in his supplementary statement, concedes: "I did strike the fire sprinkler pipe because of an incorrect manoeuvre of the forklift however it was contributed to by other factors which are contained in the incident report" (emphasis added). I take that as a concession that he was at fault subject to the impact of the "contributing factors".

[91] The "incorrect manoeuvre" had serious consequences (none of which were contested). Opal incurred a cost of $70,000 which included remedial repairs, shutdown of the four machines outside the HDA for an hour, the main machine shut down for a day and the consequent failure to complete a number of scheduled customer orders.

[92] The concession by Tran that he had "incorrectly manoeuvred" the forklift, which caused his employer to incur seventy thousand dollars in costs and lost production, is a weighty consideration in an assessment of the appropriate disciplinary step to be applied to the conduct.

Tran's training to work in the HDA and experience working there

[93] Tran gives as a mitigating circumstance that he never operated a forklift in the HDA and that he was not inducted in the area.
[94] Lercara states Tran was inducted to the site which included training and a competency assessment relevant to his work area. The competency assessment on induction assessed his familiarity with the site's forklift Standard Operating Procedures which included a requirement to "be aware of overhead objects such as rails and electrical wires". He states: "there is no such thing as specific induction for the HDA".

[95] On the question of Tran's familiarity or otherwise with the HDA, Lercara stated that he had "operated a forklift in the HDA in the past and collected materials to and from the area on a number of occasions". Tran concedes he worked in HDA but refutes he had operated a forklift in this area.

[96] An argument that an employee must be inducted to work in every workspace on a site is not persuasive. I find that Tran was adequately trained to work in the area and had breached the Standard Operating Procedure for the operation of a forklift in the Incident. On the question of Tran's experience in the HDA, there is a contest on the evidence. I find that he did not normally work in the area and was not familiar with driving a forklift in the HDA as a result.

[97] The AMWU claims the light in the area was inadequate and was a contributing factor to the Incident. Tran says the area was "very dark" and was "significantly poor". Lercara says the HDA is well lit, and this is established by the Incident report and his photos and video. Massey observes from his "regular walk arounds the lighting is adequate".

[98] After reviewing the photographs and video taken by Lercara, I cannot make an adequate assessment of the lighting in the HDA. There is a direct conflict in the evidence before me on the adequacy of the lighting which I cannot resolve in an arbitration determined on the papers.

[99] In light of Tran's concession on the "incorrect manoeuvre", there is persuasive force in the evidence of Lercara that "Alex didn't see the fire sprinkler pipe because he did not check carefully enough before reversing, not because lighting and visibility was inadequate".

Lower ceiling and higher stacking height in the HDA

[100] The AMWU and its witnesses rely on a mitigating circumstance that "the area of the Incident had lowered height".

[101] Tran in his evidence says that the fire sprinkler pipe was 3.5 metres high, which is significantly different from the main warehouse where he normally works that has a height of 10 metres. He also noted that the "stacking height is very high and unusual." Lercara and Massey both stated the height of the sprinkler pipe and the height limits in the HDA are adequate for the safe operation of the forklift.

[102] The lower ceiling height and the higher stacker height in the HDA compared to the main warehouse, where he normally worked, could have contributed to the Incident in so far as Tran was not familiar with the lower ceiling or higher stacking height in the HDA. This is not to suggest that either the stacking height or the higher stack height was unsafe.

[103] Yassine in his February Statement states that there have been two incidents within the HDA in which a water pipe had been struck, causing flooding. He gives particulars of an incident in 2018 or 2019 where an employee, Scott Gordon, was operating a forklift in the HDA causing mass flooding and the fire brigade to attend on site. He says: "Mr Gordon did not get a warning for this incident". He also states the lowered roof in the HDA has signs of damage where he a forklift clearly had collided with the roof.

[104] Lercara concedes: "he is broadly familiar with the Scott Gordon incident". He was not involved in it, and it was before Opal acquired the business. On the issue of the forklift roof collisions, he states he had received no report of forklift collisions other than the incident in question. Massey states since September 2022 he had not been notified or investigated any forklift collisions other than the Incident.

[105] The "signs of damage" on the roof of the HDA cannot constitute evidence of earlier relevant incidents.

[106] Lercara confirms the Scott Gordon incident occurred. I accept that a similar incident occurred before Opal operated the Brooklyn site, where a forklift hit the sprinkler pipe causing flooding and the call out of the fire brigade.

[107] The fact, asserted by Yassine, that an earlier operator of the site warned an employee over a similar incident has no relevance to this arbitration. There is nothing before me to draw a relevant comparison between the decision not to discipline Gordon compared to Tran. There is no evidence of the regulation of discipline under the earlier operator, or the circumstances or employment history of Scott Gordon

"Other contributing factors" in the Incident report

[108] At page 6 of the Incident report under the heading "other contributing factors" are the following points:[50]

Area layout and height stacking to be reviewed, potentially needs to be lowered 0.5 metres more in this specific area to mitigate the risk of reoccurrence.
This was operators non-standard work area.
Sprinkler line visibility is not good due to height, even though sprinkler line is painted red.
Area lighting to be reviewed.
Area has previously had multiple incidents of the same nature due to lowered hight of roof/mezzanine floor above.

[109] Lercara expressly states that, in deciding the disciplinary step he would take against Tran, he took into account "the following mitigating factors"[51] which include "the other contributing factors" listed on page 6 of the report.[52]

[110] Lercara explains "the other contributing factors" did not cause the Incident. If they did, they would have been included in an earlier section of the report dealing with the cause of the Incident. "I understood other contributing factors to be areas for potential improvements in the area and don't signify that the area was unsafe".

[111] Massey argues: "The other contributing factors are not causes. They are recommendations for potential safety improvements that could be made in light of the Incident. The other contributing factors list was developed by the investigation team which included HSRs and Site management representatives." He goes on: "the recommendations in other contributing factors section of the Report were first discussed in the Site's Health Safety and Environment Committee meeting and no one objected to the recommendations or raised any concerns about the adequacy of the lighting, visibility or height limits in the HDA".

[112] The AMWU argues that words "contributing factors" specified in the report should be given their plain English meaning. It makes the point that Opal is arguing that contributing factors are not contributing factors but potential safety improvements that could be made.

[113] The evidence and submissions of Opal are confused. If the plain words "contributing factors" have no fixed meaning in the incident report, and in fact mean "recommended safety improvements", why would Lercara take them into account in his decision making on discipline? If they did not in fact contribute to the Incident, why would they be relevant to mitigation in a disciplinary context?

[114] A factor can be a contributing factor without being the cause of the Incident. The plain meaning of contribute is "help to bring about the result." An environmental factor can contribute to an accident caused by operator error without an imputation that the work site is unsafe.

[115] The fact the investigating team reached a consensus on these remedial steps to make the HDA safer is a matter I consider to be important in my assessment of the discipline decision in issue here. As Lercara took the "contributing factors" into consideration in his disciplinary decision, those factors can be part of the consideration of the question I am asked to answer in this arbitration.

[116] I cannot take into account all of the contributing factors listed in the Incident report. For the earlier stated reasons, I cannot find there were "multiple incidents of the same nature". The only incident which both parties confirm is the Gordon incident in 2018 or 2019. Also, on the papers and as result of the conflicting evidence, I cannot reach a concluded view on the adequacy of the lighting in the HDA. Other than those two factors, I take the other factors into account as mitigating circumstances.

[117] Opal argues I should not interfere with its decision to issue a first and final warning in its terms against Tran as to do otherwise would interfere with its management prerogative. It refers to venerable, and often cited authority in the XPT case.[53] In XPT, a Full Bench of the Australian Conciliation and Arbitration Commission found the Commission would not interfere with a decision of the State Rail Authority of New South Wales to end double staffing of drivers on XPT trains. In that case the Full Bench stated:

"It seems to us that that proper test to be applied which has been applied for many years by the Commission is for the Commission to examine all the facts and not to interfere with the right of the employer to manage his own business unless he is seeking from the employees something which is unjust and unreasonable."[54]

[118] XPT was decided four decades ago, in an entirely different statutory context founded on the conciliation and arbitration power. Since the advent of enterprise bargaining, employers have agreed to terms that regulate areas that were once their sole preserve, including matters of discipline. As these matters are regulated through agreements, the Commission often has power to consider and review disciplinary decisions of employers measured against the terms regulating disciplinary action.

[119] The relevance of managerial prerogative in a decision to discipline an employee where the disciplinary procedure is regulated by an enterprise bargain has been considered by the Full Bench of this Commission in Gareth Lloyd v. Australian Western Railroad Pty Ltd:[55]

"In the original application, the Appellant was applying for the Commission to determine that there would be no disciplinary penalty, or a lesser penalty, imposed by the Respondent. In approaching the determination of the dispute, it is the common objective intention of the particular terms of the Agreement when considered as a whole that must be taken into account. The Commissioner correctly found that the scope of the dispute resolution procedure within the Agreement included disciplinary matters. Clause 14 of the Agreement provided a range of discretionary responses to alleged misconduct. The Agreement did not provide an absolute right or obligation for the employer to apply a particular disciplinary outcome. Given the terms of the Agreement, including the dispute resolution provisions that permitted disputes about matters arising under the instrument to be determined by the Commission, it would not have been inconsistent with the Agreement for the Commission to determine that one of the other disciplinary options, or the chosen option differently applied, should have been implemented by the Respondent. Provided that any determination made to that end would operate within the parameters of the agreed provisions in clause 14, the terms of the Agreement and that determination could coexist and be applied without modifying or contradicting the terms of that instrument.

It follows that the Commissioner had the jurisdiction to deal with the dispute. The fact that the disciplinary penalty applied by the Respondent was contemplated by clause 14 of the Agreement would be an important consideration in terms of any discretionary decision to be made by the Commission. In that regard, the principles within the XPT case would be a relevant starting point for any consideration."

[120] The regulation of discipline by the Agreement in this case is distinguishable from the regulation of disciplinary matters in the agreement in Lloyd. In Lloyd, the "disciplinary matters" provision specified the various disciplinary steps and mandated process requirements including a prescription for adherence to the principles of natural justice. The regulation of the disciplinary process in the Agreement not only prescribes the disciplinary steps and process requirements, but also commits Opal to an overarching "constructive approach" to disciplinary matters and to a standard of treatment that is "fair and just".

[121] The relevance of whether the decision of the employer was "unjust and unreasonable" in the manner contemplated by XPT is displaced by the regulation in the Agreement which requires a constructive approach and fair and just treatment. The question I am asked to decide invokes D.1(a) in Appendix D. That clause mandates the constructive approach and the standard of treatment. The question before me is whether the disciplinary decision is appropriate and consistent with that approach and standard of treatment.

[122] The dispute resolution procedure empowers the Commission to arbitrate disputes over matters "under the Agreement." The parties have agreed to terms that prescribe both the approach to be taken in disciplinary matters and a standard of fair and just treatment for employees subject to discipline. If the approach taken by Opal, or treatment given to a disciplined employee by Opal do not meet the agreed standards, the Commission has power to displace the disciplinary decision of Opal.

[123] I adopt the Full Bench decision in Lloyd as authority for the proposition I have power to "determine that one of the other disciplinary options, or the chosen option differently applied, should have been implemented" by Opal.

WAS THE DECISION TO GIVE TRAN THE FIRST AND FINAL WARNING IN ITS TERMS THE APPROPRIATE DISCIPLINARY RESPONSE?

[124] I find the cause of the Incident was Tran failed to follow the Standard Operating Procedure for operating his forklift. This operator error had serious consequences in that it led to the shutdown of the plant, remedial costs, and lost production. Opal estimates the Incident led it to incur $70,000 in costs.

[125] It is not contested for the two years eleven months of his employment prior to the Incident Tran had an exemplary employment record. Once the Incident occurred, he immediately took responsibility for it. He was not under the influence of alcohol or drugs. The incident was an accident and not deliberate.

[126] I find that although he had worked in the HDA before, it was not his normal work area, and he was not familiar with the layout or the considerable differences between his normal place of work in the Main Warehouse and the HDA. I find the lower roof height and higher stack height were safe but considerably different to Tran's normal area, and this may have contributed to the accident. It is also noteworthy that a similar accident had occurred where a forklift hit the sprinkler pipe in 2018 or 2019 before Opal ran the Brooklyn site.

[127] Lercara states the decision to give the final warning was "the need to reinforce the message that safety is the most important priority on site across Opal's business". In his evidence he stated: "The incident caused a significant safety risk. The fire sprinkler pipe that Alex hit is made of thick steel and is very heavy. It landed quite close to a pedestrian walkway. It could have seriously injured or killed someone". Lercara said the mitigating circumstances led him to decide to give Tran a final warning rather than to terminate Tran's employment.

[128] I accept that a first and final warning was an appropriate way to send a message concerning safety at the Brooklyn Site. I also accept that in circumstances where an accident occurs through operator error with a cost to their employer of $70,000 a final written warning is an appropriate penalty.

[129] Tran had an otherwise exemplary employment record and, on the material before me, the prospects of recidivism seem remote. If the purpose of the warning was to send a message that safety is important on the site, surely the issue of the final warning, which has been in effect for eight months since August 2023, is sufficient for that purpose.

[130] Opal is bound by an enterprise agreement whose main purpose is to ensure its commitment to continuous improvement. This includes management being "a coach, not a judge" and "mistakes being opportunities to learn or improve". When considered through the frame of a disciplinary approach that is required to be constructive, a decision to have a final warning to have effect for the maximum term allowable by D.3(d) may not, in these circumstances, demonstrate a constructive approach.

[131] Given the prospects of Tran engaging in further dangerous conduct is low, what purpose does it serve for the warning to be on his personnel file for twelve months? It is not in my view a constructive approach in the circumstances of this case to have the final warning run its full term of effect.

[132] In his decision-making, Lercara considered the options he had available to him were a strict binary, either full and final warning or dismissal. He did not consider a third variable, the length of operation of the final warning.

[133] I have no evidence before me of the performance of Tran since the Incident. If it is the case that in the eight months since the warning he has continued to be a good employee and has been under a final warning for that time, the safety message which it was designed to achieve has been achieved. Given his otherwise exemplary service, and taking into account the mitigating factors, I do not consider it to be either constructive nor fair or just for the final warning to continue until 31 August 2024. It is more consistent with a focus on continuous improvement, where mistakes are treated as opportunities to learn and improve, if the length of effect of the final warning is more limited.

[134] The twelve-month expiry set for disciplinary conduct under the Agreement is a maximum. In all the circumstances it would be appropriate if the period of the warning expire nine months from the date it was issued, which is Friday 31 May 2024.

[135] I therefore resolve this dispute by answering the question with the following answer.

"Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union" known as the Australian Manufacturing Workers' Union (AMWU) v Opal Packaging Australia Pty Ltd T/A Opal Fibre Packaging [2024] FWC 1116

At a glance

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Judgment (217 paragraphs)

"Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union" known as the Australian Manufacturing Workers' Union (AMWU) v Opal Packaging Australia Pty Ltd T/A Opal Fibre Packaging [2024] FWC 1116 (30 April 2024)

Parties

Legislation Cited (2)

Cases Cited (1)