BlueScope Steel Limited v. Australian Workers Union, Electrical Trades Union and Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union [2008] NSWIRComm 1039

Industrial Relations Commission (NSW)|2008-06-12

CITATION: BlueScope Steel Limited v. Australian Workers Union, Electrical Trades Union and Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union [2008] NSWIRComm 1039

APPLICANT BlueScope Steel Limited

FIRST RESPONDENT Australian Workers Union PARTIES: SECOND RESPONDENT Electrical Trades Union of Australia

CATCHWORDS: industrial dispute - steelworks - coupled pickled cold mill - referral agreement arangements - restructuring of maintenance operations - manning levels on shift - preservation of existing arrangements until matter resolved - whether production employees called upon to perform additional work - occupational health and safety issues - questions of fairness of new arrangements - efficiency of the operations - proposal approved

Industrial Relations Act 1996 LEGISLATION CITED: Occupational Health and Safety Act 2000 Federal Workplace Relations Amendment (Work Choices) Act 2005

Australian Workers Union v. BlueScope Steel (AIS) Pty Limited (2006) 157 IR 93 Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union v. Ralph M Lee Pty Limited (1996) 68 IR 333 Broken Hill Proprietary Company Limited 4% Second Tier Wage Increase Dispute Case - unreported Caltex Australian Limited Dispute Case [2002] NSWIRComm 1082 Clark v. Pittwater RSL Club Limited (1998) 84 IR 309 Re Cram; ex parte New South Wales Colliery Proprietors Association Limited (1987) 61 ALJR 401 Department of Water Resources v. Australian Workers Union (1992) 43 IR 76 CASES CITED: Ermani Constructions Case (1988) 23 IR 346 Mackie v. Weinholt (1880) 5 Qld SCR 211 Labor Council of New South Wales v. Axis Metal Roofing (2004) 131 IR 272 Ottoman Bank v. Chakarian (1930) AC 277 Shift Workers Case (1972) AR 633 Soaking Pits Dispute Case (1955) AR 663 Transport Workers' Union of New South Wales v. Chubb Security Services Limited (2005) 147 IR 199 Tundish Repair Disputes Case [2007] NSWIRComm 1045

HEARING DATES: 31/03/2008, 02/04/2008, 12/05/2008, 13/05/2008

APPLICANT Trent Sebbens Blake Dawson Waldron

FIRST RESPONDENT Branko Gorgievski Australian Workers Union LEGAL REPRESENTATIVES: SECOND RESPONDENT John Thornton Electrical Trades Union of Australia

THIRD RESPONDENT Aron Neilson Brad Hattenfels Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union

DECISION: INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES

BlueScope Steel Limited and the Australian Workers Union, the Electrical Trades Union of Australia and the Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union

Notification of industrial dispute under S.130 of the Industrial Relations Act, 1996 re proposed restructuring of the maintenance operations for the coupled pickled cold mill

Referral of an industrial dispute under S.146A of the Industrial Relations Act, 1996 by BlueScope Steel Limited, the Australian Workers Union, the Electrical Trades Union of Australia and the Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union

1 A notification of an industrial dispute has been lodged by BlueScope Steel Limited under S.130 of the 1996 Industrial Relations Act concerning a review of the maintenance operations for the coupled pickled cold mill [CPCM] of the Springhill plant. The S.130 notification describes the dispute in the following terms:

"...the review of the CPCM maintenance department and the impact of this on the shift electrical trade, shift mechanical trade, shift assistant, shift production operator and roll shop employees roles..."

The employees concerned in this review are members of the Australian Workers Union, the Electrical Trades Union of Australia and the Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union. In brief, some trades positions on shift for the CPCM maintenance were to be abolished in the proposed restructuring and some of the work formerly performed by trades assistants on shift was to be taken over by shift operators. 2 The CPCM employees are presently covered by the terms of the BlueScope Steel Limited - Springhill and CRM Employees Award which, by virtue of a 2006 amendment to the State IR Act, has been converted into a State enterprise agreement - a preserved State agreement [PSA] within the context of the 2005 Federal Workplace Relations Amendment (Work Choices) Act. Clause 36, Procedure for Resolving Claims, Issues and Disputes, of the BlueScope Steel Award contains a comprehensive dispute settling procedure [DSP] for the orderly resolution of all industrial disputes at the Port Kembla steelworks. In particular, where changes described as "...significant in nature..." [Clauses 36.4.2(c) and 36.4.3] are being introduced a comprehensive consultation process is set up and the status quo is preserved, provided there is compliance with the DSP and there is no industrial action taking place. In that respect Clause 36.4.3(j) provides as follows:

"Where the consultation process concludes upon a party declaring to the other parties that it regards the consultation process as exhausted, and there is disagreement as to the change proposed, the change may be implemented forthwith unless a party to the consultation process gives notice to the other parties that it disputes the implementation of the change, and in that case the status quo will apply. Notice of disputing a change must first be provided to the other parties verbally within 24 hours after the declaration that the consultative process is exhausted, and followed up by written notice in accordance with S.36.4.3(k)."

3 The relevance of a conclusion that a particular change is significant is that, until any dispute over the change is resolved, ultimately in arbitrated proceedings before the Commission, the change may not be put into effect. In terms of Clause 36.4.2(c):

"A change is 'significant in nature'...if the change will have substantial effects on:

(i) the composition, operation or size of the workforce in a section or department of the operations of the company;

(iii) the availability of job opportunities for employees;

(ix) outsourcing of work (meaning the engagement on a permanent basis of another organisation to perform work which has previously been performed by employees of the company. In this respect outsourcing differs from the use of contractors to meet intermittent work load requirements or to provide specialist skills on a short term or as needs basis."

4 Clause 36.4.1(c) provides the tests to be applied when any change is introduced in the Port Kembla steelworks, viz:

"In considering the desirability and business case for any proposed change, the tests to be applied are requirements for the change to be:

fair." I will refer to that test in Clause 36.4.1(c) in more detail later in this decision. But these are tests which, to my mind, are appropriate to apply to any change, whether it is significant or not. 5 Agreement over the proposal for the change to the CPCM between BlueScope Steel management and the employees could not be achieved. The discussions ultimately culminated in a letter on Tuesday, 11 September, 2007 by BlueScope Steel indicating that, whilst it was prepared to continue to consult with employees and their trade unions over the changes, it would be seeking expressions of interest from employees who were effected by the change concerning their future.

6 On Monday, 17 September, 2007 the AWU wrote to BlueScope Steel expressing its opposition to the changes proposed to the CPCM and pressing for the preservation of the status quo until this matter is resolved by further conciliation or ultimately arbitration. The AFMEPKIU provided BlueScope Steel with a similar letter dated Tuesday, 18 September, 2008. On Thursday, 20 September, 2008 the ETU also conveyed by telephone its opposition to the changes and sought to preserve the status quo for its members in the CPCM.

7 BlueScope Steel has initially disputed that the changes it proposes are significant to the extent that would invoke the provisions of Clause 36 and the preservation of the status quo. It subsequently took the view that, whilst the changes may be regarded as significant for the trades positions - the electrical and mechanical trades personnel and the trades assistants (some of whom would be taken off shift and some of whom may face retrenchment), they were not significant for the CPCM operators (whom BlueScope Steel claim were only being called upon to perform work already within the scope of their employment). 8 But the reality is that if the status quo is to remain in force as far as the trades positions are concerned, then BlueScope Steel may not introduce the new arrangements until the matter is resolved in these proceedings - and that must also mean that the CPCM operators are vitally involved in the implementation of the BlueScope Steel proposal. The dispute therefore involves two separate issues: (i) whether the CPCM trades personnel - electricians, mechanical tradesmen and trades assistants - should be taken off shift and (ii) whether the CPCM operators should be called upon to perform work formerly done on shift by the trades assistants. The two issues are linked, in my opinion. 9 In any event, I am satisfied that there has been proper communication with all CPCM employees affected by the proposed changes, and the trade unions representing them. Those proposed changes have been discussed with the employees in a series of conferences, discussions with supervisors and seminars commencing in late 2006. And, as I indicated earlier in this decision, these proceedings are not confined to the position of the CPCM trades staff but the role of the CPCM operators as well.

10 In accordance with the protocol that has been developed for the Port Kembla steelworks, an individual referral agreement under S.146A (and Practice Direction No. 18) has been supplied, signed by the parties, authorising me to both conciliate and/or arbitrate this matter. The S.146A referral agreement is in the following terms:

"The dispute concerns the review of the CPCM maintenance department and the impact of this on the shift electrical trade, shift mechanical trade, shift trades assistant, shift production operator and roll shop employee roles."

11 The matter was allocated to me and it was the subject of a conference before me on Tuesday, 13 November, 2007. Those proceedings and all subsequent proceedings were convened in the Commission's premises at 90 Crown Street, Wollongong. Conciliation failed to settle this matter. I issued the certificate of attempted conciliation required by S.135, lodging it in the prescribed manner and programmed the matter for arbitration. I set the matter down for a further mention for programming purposes on Monday, 4 February, 2008.

12 Ultimately, the matter proceeded into a hearing for the arbitration of the issue in dispute on Monday, 31 March, 2008, Wednesday, 2 April, 2008, Monday, 12 May, 2008 and Tuesday, 13 May, 2008. Mr Sebbens represented BlueScope Steel in the proceedings. He called two witnesses: Mr Martin Cocca, the maintenance and reliability manager for the CPCM and Mr Keith Stevenson, the operations manager for uncoated products. Mr Sebbens has sought that the status quo flowing from the DSP and Clause 36 be revoked and that BlueScope Steel be permitted to introduce its proposal for the CPCM. 13 Mr Gorgievski represented the AWU in the proceedings. He called Mr Ilija Sukoski, a CPCM operator, to give evidence in the hearing. Mr Thornton, represented the ETU in the proceedings and on the first day of the hearing - Monday, 31 March, 2008 - he also represented the AFMEPKIU. Mr Hattenfels, who was unavailable on Monday, 31 March, 2008 represented the AFMEPKIU in the hearing on Wednesday, 2 April, 2008 and Mr Neilson represented the AFMEPKIU in the hearing on Monday, 12 May, 2008 and Tuesday, 13 May, 2008. Mr Gorgievski, Mr Thornton, Mr Neilson and Mr Hattenfels are opposed to the changes to the maintenance of the CPCM proposed by BlueScope Steel.

14 The CPCM is involved in the processing of hot rolled coils through a pickle line to remove scale and then through the cold rolling mill to reduce the gauge of the strip from approximately 2.5mm to approximately 0.4mm. The resulting product is sold to export markets or internal downstream businesses of BlueScope Steel for further processing. The CPCM has one entry point in front of the pickle line and an exit point at the other end of the mill to enable the strip to run continuously.

15 Shift maintenance employees in the CPCM - trades staff (mechanical or electrical) and trades assistants - currently form into four teams of five employees - two mechanical tradespersons, two electrical tradespersons and one trades assistants. Presently there are two relief mechanical tradespersons, one relief electrical tradespersons and one relief trades assistant available to cover employees over the four teams who may be absent for annual leave. The shiftwork employees report to the shift co-ordinator who in turn reports to Mr Stevenson. Ultimately, the responsibility for the shift operations falls on Mr Cocca who also has direct responsibility for the day work operations.

16 The existing manning and maintenance structure of the CPCM maintenance arose from an agreement reached on Thursday, 6 September, 2001 between the AWU, the ETU and the AFMEPKIU. The outcome was the present manning levels for the CPCM maintenance. The matter came before Grayson DP by way of a S.130 notification [Matter No.IRC 4965 of 2001]. The Deputy President had this to say in a recommendation he issued following a conference on Thursday, 4 October, 2001:

"...It is clearly the case, as presently advised, that the agreement reached on Thursday, 6 September, 2001 was the culmination in the process of extensive discussions between the parties both at the local level and in the course of these proceedings within the Commission. That being so, it is reasonable to assume that all matters relevant to the consideration of that agreement, including any arrangements which had historically existed, were taken into consideration in the making of that agreement. In my opinion, and unless otherwise persuaded, the agreement reflected in the document (provided in the proceedings) supersedes any prior arrangements and should stand on its merits..."

17 The primary focus of the shift maintenance teams is presently to provide an immediate response to any breakdown in equipment that impacts on the efficient operation of the production lines. They also perform preventative maintenance tasks generated from the computer maintenance management system [CMMS]. Most of those activities, which are outlined in what are referred to as "schedules", may be conducted while the line is running, although some of the activities may from time to time require the line to be stopped and, for such activities, they are usually conducted at times when the line is stopped for a roll change or for some other reason.

18 Additional "opportunity work" may be assigned to shift maintenance teams by the day maintenance team. According to Mr Cocca, that "opportunity work" is assigned to the shift maintenance teams because at present only "hands on" maintenance resources are available on shift. The day work maintenance trades personnel are dedicated to planning but it appears from Mr Cocca's assessment, day work is under-utilised. There is presently a different focus for the day work maintenance teams. It appears to me to be more of an oversighting role and the lion's share of the maintenance work appears to me to be performed on shift.

19 Mr Cocca has emphasised in his evidence the increased competitiveness placed on BlueScope Steel. He wrote in a witness statement that formed the basis of his evidence that:

"...the company competes internationally on the unit cost of production, which is essentially dollars per tonne [$/t]. In recent times the company has come under increasing pressure to reduce its unit cost of production because of the rapid growth in steelmaking from offshore competition in countries such as China and India where the company's direct competitors acquire the latest technology, run at a lower capital cost and utilise labour at cheaper rates, thereby reducing their unit cost of production... This has caused the company to consider other factors which may result in a reduction in the unit cost of production. On the dollar side, this includes cost-efficient manning levels. On the tonne side, this includes improvements in uptime by eliminating losses such as unscheduled delays and increasing tonnes of production.

The goal of the CPCM is to ensure that uptime levels are improved through reduction of equipment failures, operating at the greatest line speed possible and producing increased quality of outputs. The company must increase the reliability of plant and equipment, ie increase the mean time between failures, whilst ensuring the lines run at the required speed.

Currently, the primary focus of shift maintenance has been to cover breakdowns occurring on the line and to minimise the duration of down time. The company's consideration of the maintenance function has highlighted that in order to increase plant performance, there needs to be an increase in focus on reliability issues (ie reduce the frequency of delays, rather than focus primarily on duration, and improve the capability of plant and equipment to operate at its rated speed). There has been only limited opportunity for the shift crews to focus on and carry out reliability checks and reliability improvement work. This is, in part, due to the unavailability of adequate technical direction and support on shift for reliability improvement activities.

The technical experts, in terms of problem solving (using formal and thorough problem solving techniques) and condition monitoring, work on day work. It is difficult to apply formal problem solving activities on shift because communications and co-ordination of this type of work across shifts is very difficult. Transferring shift maintenance employees to day work will allow the company to allocate these resources for increased focus on the reliability issues for particular plant and equipment..."

20 The proposal by BlueScope Steel chiefly involves significant changes to manning of the maintenance department of the CPCM, viz:

Positions Current Manning Proposed Manning Shift mechanical tradesperson 8 + 2 relief 4 + 1 relief Shift electricians 8 + 1 relief 4 + 1 relief Shift trades assistants 4 + 1 relief Nil Day shift mechanical wages team 4 7 Day shift electrical wages team 3 5 Day shift trades assistants 2 (electrical) 4 (multi-disciplined)

The existing four shift teams would remain but each would now comprise one mechanical tradesperson and one electrical tradesman alone (with one relief mechanical tradesperson and one relief electrician available across the four teams). There would be no trades assistants engaged on shift but the production operators, members of the AWU, may be called on from time to time to assist in the maintenance work which arises.

21 This proposal would, of course, mean a surplus of seven employees - two fitters, two electricians and three trades assistants. The reduction in manning is to be achieved essentially by the elimination of CPCM positions on shift work with the bulk of the necessary maintenance work being performed on day work. It is envisaged that this change to operations will be achieved by either relocation of existing staff and/or the reduction of overall income for employees who move from a seven day shift work cycle to day work on a five day cycle.

22 It would also affect the role of the production operators. The primary role of the production operators at present is to run the mill in a safe and efficient manner. They play a significant role in ensuring the equipment is tight, lubricated and clean [TLC]. Their contribution is mainly through cleaning, inspections and reporting but BlueScope Steel considers that it will be further strengthened by working more closely with their trades colleagues. The proposal that BlueScope Steel has advanced would mean that some maintenance functions on shift would fall on production operators - something which Mr Gorgievski argues is beyond their role. Mr Cocca claimed in his evidence in this hearing that under the new proposal the CPCM operators would not be required to perform all of the duties of trades assistant position on shift - meaning that they would be required to perform some of those duties. Mr Sukoski claimed in his evidence that it had not been the responsibility of the CPCM operators to perform the work of trades assistants in the past, but he conceded that there was a certain amount of overlap in the work of the operators and the work of trades assistants.

23 BlueScope Steel has outlined in a document provided to me in evidence how they see the operators working under the new arrangements. In particular, it highlights three functions for the production operators, viz:

The shift team has the responsibility to ensure work rolls are available to the mill in the shortest possible time after roll change... Under normal conditions, as the operators are threading the mill doing run outs, etc then the roll shop would move rolls to/from the mill... Once the operators have finished these tasks then they would be able to move the work rolls.... Depending on the tasks during roll change the shift fitter may also assist. The supervisor can ask any employee who has the capability to do the work that is required.

As required during line stops, breakdowns or if there is an operator available, then it is expected (the operators) will assist their trade colleagues. Depending on the complexity of the task, there will be a requirement for a toolbox meeting and/or a JSA ['job safety analysis'] to be performed prior to commencing tasks. This is to ensure there is a safe system of work and the operator understands clearly what he is expected to do to keep himself and the tradesperson safe and perform the work to achieve quality outcome. If the operators are to be asked to assist in the motor/switch room, then they will need to have appropriate inductions, etc.

As required during breakdowns which require more than one fitter. The call will be made by shift supervision on calling out additional support dependant on the demands on roll shop (particularly MCL requirements)..."

24 BlueScope Steel commenced a review of the CPCM operations in late 2006. It took approximately five months to complete. The aim of the review was the improvement of maintenance effectiveness and the identification of measures to improve the reliability of the CPCM by the delivery of cost effective maintenance outcomes and plant reliability. Factors to be taken into account in the review of the CPCM operations included the maintenance of occupational health and safety standards, improved manufacturing excellence, reduced costs and labour flexibility. The review placed increased focus on preventative maintenance techniques.

25 Mr Cocca recorded in his written statement that:

"...I commenced an analysis of the CPCM maintenance department's 'line run' maintenance schedules over the previous 6 months to determine the 'base workload' performed by shift mechanical tradespeople, shift electrical tradespeople and trades assistants for preventative maintenance. The base workload for an employee can be described as a function of the job performed by an employee and the estimated time to perform that job. Based on my experience, it is an accepted proposition that maintenance departments across organisations 'man up' to the base workload so that the employees are then able to perform preventative maintenance work, thereby improving plant reliability which increases uptime.

Using the CPCM maintenance department's line maintenance schedules, I determined the types of tasks performed by the mechanical trades, electrical trades and trades assistants on shift. I then analysed this data to consider whether it was necessary for that work to be performed on shift, or whether the CPCM maintenance department could produce more cost effective and better maintenance outcomes by, for example, having day work mechanical tradespeople and day work electrical tradespeople perform certain maintenance schedules.

However, corrective work performed by maintenance employees which sometimes follows from these schedules is not recorded and therefore it is difficult to quantify. The line run maintenance schedules do account for corrective work. However, to the extent that corrective work is scheduled during the next period of shutdown (unless it can be conducted without stopping the line) and therefore forms part of the 'peak workload'. Otherwise, the line is stopped and it is recorded as an unscheduled delay. One of the objectives of the review of the CPCM maintenance function is to reduce situations where corrective work is performed on an unscheduled basis, ie so that the day work maintenance improves plant performance so that the plant can be run from shutdown to shutdown with minimum unscheduled work..."

26 Based on the data provided to him in the review, Mr Cocca believes that the number of employees that BlueScope Steel proposes to retain on shifts is appropriate. He has assessed the proposed changes against the requirements imposed by Clause 36 of the BlueScope Steel Award, ie the "safe", "efficient", "legal" and "fair" test [Clause 36.4.1(c)] and I propose to do the same in this decision.

27 One of the concerns of all of the CPCM employees on shift is the uncertainty of their roles under the new work arrangements and, in particular, that they may be directed by supervisors to perform work which they believe is beyond their existing skills and accreditation - and face disciplinary action, including dismissal, if they do not comply with those directions. Mr Thornton indicated that the supervisors on shift were invariably metal trades employees who may make directions to electricians over which there is concern on safety grounds. He therefore perceived some friction arising between electricians working alone on shift and the supervisors who oversight the work with an emphasis on production, ie to get the line running quickly. That is an issue also raised by Mr Gorgievski in the hearing and I will return to it later in this decision. 28 However, it must be appreciated that what sets the pace in that respect over how any maintenance work is to be performed on shift are the JSA's - not, it has to be stressed, the supervisors. The JSA's will be prepared in advance of the job and dictate who is to be engaged in performing the work and, importantly, how it should be performed safely. It is important that the employees and their supervisors on shift both understand that important obligation flowing from the JSA's and work together over any maintenance work to be performed and avoid any frictions which may arise over possible issues of workplace safety. The views on issues of safety by employee, particularly an employee with trade skills, should be respected by his supervisors at all times in how to conduct work. It would be most regrettable if an issue of this nature flared up in major dispute which affected production.

29 Mr Thornton emphasised his chief area of concern was his belief that under the proposal unqualified employees on shift may actually be engaged in complex isolations and that electricians may be engaged alone on occasions on work. Mr Cocca and Mr Stevenson are convinced that under the new arrangements no employee will be engaged to perform work on shift beyond their existing skill or accreditation. Mr Cocca indicated in his written statement that:

"...safety is paramount to everything we do....In considering the options for change against the need for change, safety was an overriding factor to the extent that if an option for change was not safe, we would not propose it to the employees and the unions. The company's proposal is aimed at having trained and competent people perform the work which is required to be carried out...

The ETU raised concerns during the consultation process about how the company's proposal would affect the shift electrical tradespeople, given the proposal involved a reduction from two shift crew to one shift crew. The concerns raised included the following:

(a) how the shift electrical tradesperson would complete complex isolations on shift;

(b) what would happen if a shift electrical tradesperson got 'hooked up', ie an electric shock) and whether a shift mechanical tradesperson would be able to perform an isolation;

(d) what the company proposed to do about the different personal protective equipment [PPE] shift electrical tradespeople and shift mechanical tradespeople are required to wear performing isolations or working in the switch room.

I considered each of these issues and investigated them, having regard to the requirements under the 2000 Occupational Health and Safety Act, applicable WorkCover codes of practice and the company's own safety policies and procedures, including the electrical safety manual... I formed the view that, if an isolation planner was not available, this would not pose a problem because the shift electrical tradesperson performing the isolation could prepare the relevant procedure for the complex isolation and then have this checked and reviewed by the shift co-ordinator..."

30 Mr Cocca claims in his evidence to have consulted widely across the operations of the Port Kembla steelworks and he discovered that consistently each section operated with one electrician on shift. For instance, in slabmaking, the shift electrician performed isolation procedures either alone or across trades. So to that extent he sees nothing novel in what he is proposing for the CPCM maintenance. But Mr Neilson argued that each section of the steelworks was distinct and what was acceptable in one section may not be suitable in another section. 31 Mr Gorgievski argued baldly in written submissions that: "...we say that the management at the CPCM would be putting the production employees at a safety risk if they were to implement the removal of the trades assistants. It would also put the trades employees, whether being mechanical or electrical, at a very serious safety risk because we say that the production employees have not been trained, assessed or accredited..."

But I see no reason why the production employees should not be trained up to perform the duties expected of them - provided, of course, they may be taken from their other essential work in ensuring the running of the line.

32 Mr Cocca asserted in his written statement that:

"...the company's proposal for change will help to increase uptime through improving the engagement of employees in preventative maintenance techniques in a number of ways... The current maintenance structure in the CPCM maintenance department does not take advantage of the overlap in skills between trades and ironworkers. Accordingly, one of the key drivers of the proposal was to derive benefit from the skills of the company's tradespeople, thereby increasing flexibility. The company's proposal for change will also decrease demarcation between the trades on shift.

Another issue under the current manning arrangements in place at the CPCM maintenance department is that the majority of the CPCM's maintenance resources currently are not effectively engaged in preventative maintenance activities. By having the majority of the CPCM's maintenance resources performing reactive maintenance on shift, the CPCM maintenance department is performing less preventative maintenance, which means resources and work focus is not targeted at improving the reliability of equipment or increasing uptime. One of the effects of the company's proposal for change is that the employees currently on shift work will be more effectively engaged in monitoring the condition of the equipment and performing preventative activities on day work. Moreover, the company will be able to increasingly schedule maintenance work based on the condition of the plant, rather than time based maintenance (ie undertaken at predetermined intervals regardless of condition).

33 In other words, BlueScope Steel has emphasised preventative maintenance of equipment in the CPCM and concluded that the occasions when the equipment breaks down on shift to the extent that the line must be stopped would not happen frequently enough to justify the existing contingent of maintenance staff on shift. Mr Cocca's assessment is that on such occasions when there is a breakdown of equipment to the extent that the line must stop it may proceed by relying on employees on call and paying them the call back allowance prescribed. From BlueScope Steel's point of view, the proposal it has advanced is a better use of human resources in the CPCM, based on the assessment that more emphasis should be placed on preventative maintenance for the CPCM and less emphasis placed on the actual breakdowns that may occur from time to time.

34 The theory is that preventative maintenance will eliminate much of repairs necessary on shift due to breakdowns. It may, in fact, do so but if there are frequent breakdowns of CPCM plant on shift, and insufficient maintenance staff to carry out the repairs at that time, notwithstanding the preventative measures which Mr Cocca has emphasised and put in place, it may mean that at least in the short term, the proposal would be less efficient, not more efficient. I understand that much of the CPCM plant is not new and I would anticipate that with its age it would become more prone to breakdown. Also, on the introduction of such a scheme, when the preventative programme has not been in place for any length of time, there may no doubt be teething problems on shift. 35 Clearly the proof of this particular pudding will only be in its eating and it would be presumptuous of a member of the Commission to make any determination concerning the efficiency of any proposal advanced by BlueScope Steel management after the thorough analysis that Mr Cocca has conducted. The assessment of the efficiency of any change to operations remains essentially the proper function of BlueScope Steel management alone and the Commission would ordinarily decline to intervene in a decision of any employer on manning levels for his operations unless it is established that the proposal advanced by the employer acts unfairly or unsafely to any of his employees.

36 It goes without saying, that any changes contemplated by an employer must not be illegal. Mr Cocca had this to say in his written statement on the question of the legality of the proposal:

"...I am not aware of any reason why the company's proposal for change is not legal. The company has complied with the provisions of the BlueScope Steel Award, including in respect to the consultation process. ...Safety is paramount to everything we do. The CPCM maintenance department will take steps to ensure it complied with occupational health and safety legislative obligations at all times, including if the status quo is removed and the company is able to implement its proposal for change..."

At no time have the AWU, the ETU or the AFMEPKIU submitted in this hearing that there is anything illegal in what is being proposed by BlueScope Steel.

37 An unfairness in any proposal to reduce manning may arise in a number of ways: eg whether an employee is suffering from a reduction in remuneration, whether unfair demands are placed on the employee, whether a career path set out for him is eroded or whether he loses his job by retrenchment. One adverse outcome of the proposal advanced by BlueScope Steel will fall on any employee who may be required to move from shift to day work and the loss of earnings he will suffer as a result. Mr Sebbens indicated in written submissions that: "...a fair process will be utilised to select employees to transfer to day work...".

38 Of course, shift loadings are payable by way of compensation to the employees required to work outside the customary span of hours fixed for day workers - essentially remuneration for the social and domestic inconvenience involved [the Shift Workers Case (1972) AR 633 at pp.647 to 649]. Shift loadings are not designed as a deterrent to an employer from requiring employees to work day work since in most cases, and certainly in the steelworks, the industry makes such shift work unavoidable. Therefore, a move from shift work to day work involves the abolition of a disadvantage to the employee and the commensurate removal of the loading paid to him for that disadvantage, which no longer arises. It would represent a diminution of earnings for the employees involved nevertheless.

39 Any difficulties with an effective career path for the CPCM operators with the abolition of the trades assistant positions does not really arise in this case. Mr Sukoski's evidence in the hearing - and Mr Gorgievski's submissions - is to the effect that the CPCM operators and the trades assistants have always had entirely separate career paths. So to that extent, the BlueScope Steel proposal should have no adverse effect on the CPCM operators at all. Quite the reverse, in fact. It may, as Mr Cocca suggested in his evidence, open up other options in employment for the operators and widen their experience and skills. 40 Mr Cocca also appears to me to be convinced that the changes he envisages may be carried out chiefly on a voluntary basis. He indicated in his written statement that:

"...The company...had regard to the impact a transition from shiftwork to day work could have on an employee from an earnings perspective and...issued a letter to relevant employees on Monday, 13 August, 2007 advising the employees that, effective from (that date) their shift earnings (excluding overtime) would be retained for six months to allow the employees time to readjust their financial commitments.

The company's proposal for the introduction of change would result in a total of seven surplus employees, comprising two surplus shift mechanical tradespeople, two surplus shift electrical tradespeople and three surplus trades assistants. The company responded to this issue by seeking expressions of interest for redundancy to help determine employee preferences with regard to redundancy and placement options to be considered during any selection process. The company has made a commitment to conduct a merit based selection process and to offer a range of services to employees identified as surplus, such as one-on-one case management, a range of re-training options and assistance in job seeking. The company has received more expressions of interest than there are surplus positions and so will be implementing the selection process agreed to with each of the relevant disciplines if the company's proposal for change is accepted..."

Mr Sebbens also pointed out in his written submissions that BlueScope Steel has called for expressions of interest for volunteers for redundancy and has more employees expressing an interest in taking voluntary redundancy than it will have surplus positions available. A merit based selection process will be used to determine which employees to retrench. 41 The AWU contends that the proposal places additional responsibilities on the production operators beyond what they would ordinarily be expected to perform. Mr Gorgievski argued in the proceedings that, at present the production operators may be required to assist the trades assistant in maintenance work, not actually perform the work of the trades assistant themselves. Mr Sukoski claimed that the work performed by the CPCM operators had fallen outside the scope of the responsibilities of trades assistant although, as I indicated earlier in this decision, there appears to be some overlap in the work of the operators and the trades assistants. 42 Nevertheless, Mr Gorgievski indicated in his submissions that the CPCM trades assistants and the CPCM operators are two distinct groups at present and follow two separate career paths - production work and trades work. He claimed that was an agreed structure for the CPCM and that the duties and responsibilities for the trades personnel was dictated by the descriptions contained for all graded trades in the Port Kembla steelworks as models in a manual - the Graded Trades Manual. That manual had never applied to production staff in the steelworks.

43 Mr Sebbens argued in his written submissions that: "...the proposal will result in greater utilisation of multi-disciplinary maintenance teams and the cross-skilling of trades people under the Graded Trades Models..."

Mr Thornton does not see the proposal that way at all. He sees it more of a case of de-skilling rather than cross-skilling , diluting the skills of the tradesmen by involving unskilled employees or employees with other trade skills in work with which they are not familiar and which they may not strictly be competent to perform. He also drew my attention to the fact that at present the Graded Trades Manual was under review and, consequently, the proposal advanced by BlueScope Steel may need revision. He argued that the implementation of the proposal for the CPCM maintenance should await the outcome of the review of the Graded Trades Manual and in the meantime the status quo should remain in place.

44 The AWU has also argued that the production operators may not at present be competent to perform much of the additional duties required under the proposal and may require substantial levels of training to do so - training that he believes the employees may decline, fearing that they may face discipline for any possible safety breach in future. It is far from uncommon in the steelworks that a breach of safety by an employee would constitute grounds for disciplinary action against a steelworks employee, notations on an employee's history card and often dismissal. As Mr Gorgievski sees it, the employee is placed between a rock and a hard place, ie being disciplined for refusing duty or for carrying out the work under directions from a supervisor in what may turn out to be an unsafe manner.

45 BlueScope Steel argues that the work that it would be expecting of the operators still falls within the range of work ordinarily expected of them. Indeed, Mr Stevenson suggested in his evidence that some of the operators perform many of those functions already - a view that is not really contradicted by Mr Sukoski. Mr Stevenson has asserted in the written statement which formed the basis of his evidence that:

"...I considered this issue as part of the consultation process and concluded that the operators were not being asked to fulfil the entire role of a trades assistant. I reached this conclusion after considering the skills of operators, the tasks trades assistants are currently required to perform and how those tasks would be performed under the company's proposal for change with the removal of the trades assistants from each shift crew. It is my understanding that the classification of maintenance ironworker was developed in conjunction with the Electrical and Mechanical Grades Trades Models and was designed to give trades assistants a career path and to enable trades assistants to carry out complete maintenance tasks ancillary to that of tradespeople... The two primary requirements of operators under the company's proposal for change are to move work rolls in a timely manner and to assist tradespeople when they are available to do so and when their assistance is required. The company's proposal requires operators to utilise skills in performing simple maintenance tasks; the same or similar in skills and nature to tasks they already perform, and to utilise general safety and job planning skills in undertaking labouring tasks..."

46 Mr Stevenson also referred in his evidence to a decision in early 1988 by McMahon DP of the former State Industrial Commission dealing with an agreement reached for a wage adjustment based on costs offsets - Broken Hill Proprietary Company Limited 4% Second Tier Wage Increase Dispute Case [Matter No.932 of 1987]. One of the agreements on which the wage increase at that time was based was that:

"...production employees to assist engineering to carry out scheduled and breakdown maintenance when process is stopped..."

47 Whilst acknowledging the agreement reached at that time for the 4% second tier wage increase, Mr Gorgievski argued that it had never been pressed by BlueScope Steel up until the current proposal was advanced. He also drew my attention to the reorganisation of the BlueScope Steel operations to the extent that, in his view, replaced any obligation production operators had formerly had to assist in maintenance work and he illustrated his claim in that respect with a later outline of the duties of the CPCM operators provided by BlueScope Steel management for arbitrated proceedings in 2005 before the Commission (which were subsequently not pursued).

48 Caution should always be exercised by members of the Commission in considering manning disputes of this kind in what is, after all, an interference with the autonomy of management to decide how the business may be effectively conducted [Re Cram; ex parte New South Wales Colliery Proprietors Association Limited (1987) 61 ALJR 401]. And as Mr Sebbens submitted in the hearing, the onus of proof rests on the AWU, the ETU and the AFMEPKIU in this hearing to establish that the status quo in this case should be preserved and that the proposal advanced by BlueScope Steel in this hearing should not be implemented. 49 In the Soaking Pits Dispute Case (1955) AR 663 Richards J of the former Commission summarised the position as follows (at p.665):

"… Prima facie , the company has the right to manage its business in its own way and is entitled to exercise its own discretion in the manning of its plant. In order to obtain an order against the company in relation to the manning decided upon by it on a case of this kind, the union carries the onus of establishing that the work which the employee is called upon to perform on his shift is more than a fair shift's work under the conditions in which the work is performed…"

As I indicated earlier in this decision, it is not ordinarily the role of the Commission to intrude into decisions to change the operations of any business - except always, of course, to the extent that it is unsafe or constitutes an unfairness to any of the employees affected by the change. That must be the issues I am primarily called upon to address in this hearing.

50 In its ex tempore decision in Australian Workers Union v. BlueScope Steel (AIS) Pty Limited (2006) 157 IR 93 the Full Bench of the Commission (Wright J - President, Walton J - Vice President and McLeay C) emphasised the need (at pp.96 and 97), when managing a change in steelwork operations, to rely on the actual terms of the relevant provisions of the BlueScope Steel Award - Clause 36 - which was designed to regulate such matters in considerable detail and not the established principles governing manning disputes at large. The Full Bench (at p.4) regarded it to have been an error of law and principle for such matters to be determined:

"...in accordance with what is described as a 'fundamental principle'. That principle was stated as the right of an employer to manage its operations as it deemed appropriate, provided the consequences of exercising such a right did not place an unjust or unreasonable burden on employees..."

In other words, the test for manning disputes where there has been a change in the operations of BlueScope Steel is not strictly dependent on the general principles concerning manning but on the "safe, efficient, legal and fair test" set out in Clause 36 of the BlueScope Steel Award.

51 But as I indicated in my unreported decision of Tuesday, 17 July, 2007 in the Tundish Repair Disputes Case [Matter No.IRC 3577 of 2007 at p.6]: "...To my mind that does not mean that the AWU in this case must establish that a change that is being contemplated meets each and every one of the requirements of "safety", "efficiency", "legality" and "fairness". In my view, it would be absurd to suggest, for instance, that a change that is illegal but nevertheless efficient should still be permitted to occur: or permit a change that alone is unsafe to the employees. Each of the tests - safety, efficiency, legality and fairness - should be considered but any one of the tests may alone prove to be fatal to a proposed change. The Full Bench is not suggesting in Australian Workers Union v. BlueScope Steel (AIS) Pty Limited to read the "safe, efficient, legal and fair test" as being cumulative: it is only emphasising the need to consider manning disputes in the context of Clause 36 rather than to otherwise rely on general principles relating to manning disputes..."

52 The determination of issues of workplace safety are ordinarily not the exclusive province of members of the Commission in S.130 compulsory conference proceedings [the Ermani Constructions Case (1988) 23 IR 346 at pp.351, 352 and 353]. And I do not see it as a proper function for a member of the Commission to make any assessment as to whether or not any proposal for change in a workplace is actually safe, although questions concerning workplace safety are obviously important factors in any manning dispute and, of course, the Commission would not be prepared to approve manning arrangements for any business if it believed those arrangements to be unsafe. 53 In these proceedings I must rely essentially on the assessments of Mr Cocca on the safety of the proposal he is advancing. I have no reason to doubt his evidence, and his enthusiasm to ensure the preservation of safety for the CPCM workforce. I am also mindful of the fact that in each case the tasks being performed will always depend upon the appropriate JSA which will dictate that all work is performed safely. The employees (and their supervisors) must ultimately rely on the JSA in the performance of any such maintenance work.

54 However, during the hearing, I indicated that I would be more comfortable if the proposal, and the concerns of the employees on safety grounds, related to electrical work especially, were referred for some independent assessment and, in fact, Mr Sebbens did so, providing a report from Mr Larry Parkes, the manager of engineering for the Port Kembla steelworks and chairman of the Steel Businesses Electrical Safety Leadership Team. That report is in the following terms:

"...I refer to your enquiries concerning the recent review of the company's safe systems of work for electrical trades manning to one electrician per shift. I am aware that safety concerns have been raised in proceedings in the Industrial Relations Commission of New South Wales in respect of these matters.

In early March, 2008 the company completed a peer review of its safe systems of work for electrical work. Those systems of work apply across the company's operations, including Springhill. This review was signed off by the Steel Business Electrical Safety Leadership Team, of which I am the chairman. Our last review occurred in June, 2005.

In performing this review the team analysed the company's safe systems of work for electrical work consisting of principles, policy, practices and guidelines in light of various changes to relevant New South Wales electrical and safety legislation, codes of practice and national standards which had occurred since the last review, to determine whether the company's systems complied with those instruments. It is the considered view of the Electrical Safety Leadership Team that the company's safe systems of work comply with the legislation and meet or exceed WorkCover's code of practice for low voltage electrical work.

With respect to your question regarding having one electrician on shift, the Electrical Safety Leadership Team considers manning to be a business decision for each unit to determine. The company's safe systems of work must be complied with and these systems may be complied with by a single electrician undertaking the work. As part of these systems a job safety analysis is required to be performed prior to the work commencing. If, after considering all available options to manage the risks presented by the work, it is determined that a second competent person is required to assist in the task in order to reduce some hazard, then the work cannot proceed until that person is present.

As a consequence, it is the Electrical Safety Leadership Team's view that, provided that the company's principles, policy, practices and guidelines are followed, the integrity of the company's safe system of work would be maintained..."

55 Mr Parkes was not called to give evidence in the hearing and Mr Neilson challenged his report on that ground. Furthermore, Mr Neilson, whilst not challenging the integrity of Mr Parkes' report, argued that he was speaking in general terms and not specifically addressing the CPCM maintenance operations. I do not believe that the inability of Mr Neilson (or Mr Thornton and Mr Gorgievski) to cross-examine Mr Parkes should present any prejudice to the arguments advanced by the AWU, the ETU and the AFMEPKIU in this hearing. Mr Parkes may have been speaking in general terms in his report but what he has written corroborates the evidence of Mr Cocca. To that extent, I see no reason for the contents of the report not to be admitted into evidence to confirm Mr Cocca's assessment that the proposal he is advancing is safe, as far as electrical work is concerned.

56 But it must always be appreciated that no employee is under any obligation to obey a direction from his supervisor which involves him in doing work for which he has not been employed or, more importantly, accredited to perform [Mackie v. Weinholt (1880) 5 Qld SCR 211]. In Clark v. Pittwater RSL Club Limited (1998) 84 IR 309 the Full Bench of the Commission (Wright J - President, Marks J and McLeay C) stated (at p.311) that:

"…It is necessary to determine what the employment is. The evidence before the Commissioner was to the effect that the appellant at all times was employed as a receptionist/doorperson. There is no evidence that he was employed to carry out any other duties, that there was a contractual requirement to carry out any other duties, or that any applicable award provision permitted the club to unilaterally vary the incidents of employment. In these circumstances, the employment of the appellant was as a receptionist/ doorperson…"

Nor, of course, is an employee under any obligation to obey an order which involves him in a situation where his own safety or the safety of others may be affected [ Ottoman Bank v. Chakarian (1930) AC 277]. 57 On the basis of the evidence before me, and notwithstanding the submissions of Mr Gorgievski, Mr Thornton and Mr Neilson to the contrary, I am satisfied that the restructuring proposal by BlueScope Steel does not involve the CPCM operators in performing work which falls outside the actual scope of their contract of employment with BlueScope Steel. I am also satisfied on the evidence available to me in this hearing, that the proposal may be implemented safely across the workforce.

58 But it may nevertheless be necessary that, as the new arrangements are put into place, supervisors act with some sensitivity to employee concerns under the new arrangements. I stress that it is not just a question of making sure that the work is carried out safely but also that any legitimate concerns of employees on safety grounds are also relieved. If an employee has a genuine concern in that respect, he should not be compelled to perform the work until his concerns are addressed properly by steelworks management [Labor Council of New South Wales v. Axis Metal Roofing (2004) 131 IR 272 and Transport Workers' Union of New South Wales v. Chubb Security Services Limited (2005) 147 IR 199]. 59 For instance, S.143(3) authorises me to order payment of wages lost by employees in terms of S.143(4)(a):

"...if the applicant satisfies the Commission that the relevant industrial action was based on a reasonable concern for health or safety..."

But, of course, an employee's concern in that respect must be a genuine and reasonable one to escape disciplinary action for his refusal to perform a task allocated to him. He cannot use a bogus safety issue as an excuse to refuse to perform work properly assigned to him. As I indicated in my unreported decision of Thursday, 14 November, 2002 in the Caltex Australia Limited Dispute Case [Matter No.IRC 817 of 2002 at pp.15 and 16]:

"...But what I must satisfy myself in these compulsory conference proceedings is that the employees were genuine over their safety concerns...whether they were right in their concerns or not... In terms of S.143(4)(a), for employees to receive payment for wages lost there must be '…a reasonable concern for health or safety…' on their part. It is not necessary, in my opinion, to establish that there was a genuine safety problem on which their refusal to work was based. But, as S.143(4)(a) stipulates, their concern must have been a reasonable one in all the circumstances... The test is subjective in that I must place myself in the position of the employees in determining whether or not they were genuine in their fears on safety grounds. The test is objective insofar as I am obliged to determine whether or not their fears were reasonable.

As McIntyre VP of the Australian Industrial Relations Commission indicated in Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union v. Ralph M Lee Pty Limited (1996) 68 IR 333 at p.343, the Commission is not '…bound to accept the belief of the employees, however sincere, that their concerns were reasonable…' Otherwise, any irrational phobia by employees who behave like Chicken Little and panic that the sky is falling in would ground payment for wages lost due a cessation of work..."

60 As far as any question of efficiency is concerned, whilst it is one of the four requirements to be assessed in the test dictated by Clause 36.4.1(c), as I appreciate the position, that must primarily be a matter for BlueScope Steel management. Neither the AWU, the ETU or the AFMEPKIU - or me in this hearing - are in a position to intrude too far into the manner in which BlueScope Steel runs its operations - except, of course, always to the extent that any change proposed acts in a manner which is unsafe or unfair to the employees (or is illegal). The jurisdiction of the Commission clearly does not extend to responsibility for the management of any business [Department of Water Resources v. Australian Workers Union (1992) 43 IR 76 at p.80].

61 Any employee forced into retrenchment or to move from shift work to day work as a result of any changes proposed by the employer, with the reduction in remuneration that would entail, would no doubt feel that he has been treated unfairly. But Mr Cocca believes that the changes he is advancing will be achieved largely on a voluntary basis as far as retrenchment is concerned and any employee moving from shift to day work will also be the subject of merit based assessments and a range of options and assistance in re-training and job seeking. 62 Mr Neilson described Mr Cocca's analysis of the BlueScope Steel proposal as an "...abstract assessment..." which did not take into account the individual position of the employees who would be required to work under it. Consequently, he argued that the implementation of the proposal should be delayed until it could be assessed against the individual employees and the status quo remain in the meantime. I do not agree. Any individual employee adversely affected by the changes may be the subject of subsequent discussions as part of the DSP or, ultimately, proceedings in the Commission but it should not hold up the manning proposals which BlueScope Steel intends to introduce.

63 If, as Mr Gorgievski asserted in his submissions, the CPCM operators will be called upon to perform additional functions under the BlueScope Steel proposal, that remains essentially an issue effectively addressed through the salary levels for the employees and a work value claim. Mr Sebbens rejects that claim. And I am only concerned in these proceedings with the reasonableness of the BlueScope Steel proposal and whether it places any unfair demands on employees in the performance of their work. I do not believe that it does. As far as the CPCM operators are concerned, whether they are required to perform additional duties not previously required of them (the AWU position) or whether the work required of them under the proposal falls essentially under what they have always been required to perform (the position of BlueScope Steel), I believe that it is fair and reasonable that they perform that work. Manning disputes are essentially concerned only with whether any change is fair to the employees and, in particular, whether it places unreasonable or unsafe demands on the employees involved. What those employees should receive by way of a wage for any work they are required to perform, if there is any change in that work, is another matter entirely - and, in my opinion, outside the scope of these proceedings.

64 Therefore, I see no grounds to further delay the introduction of the new arrangements proposed by BlueScope Steel for the CPCM maintenance. If there are any changes to the Graded Trades Manual when the review of it is concluded which impacts on the proposal for the CPCM, it may be addressed at that time. But the timetable for the completion of the review of the Graded Trades Manual is unknown at this stage and I do not believe that it is proper to put the changes in the CPCM on hold until that review is completed. Ultimately, I must rely on the current position in assessing the viability of the BlueScope Steel proposal. Also if there are any problems with individual employees flowing from the proposal, they should be addressed separately. I reject Mr Neilson's claim that the status quo should be preserved until those individual cases are addressed. 65 I therefore revoke the status quo which has been in place. BlueScope Steel, the AWU, the ETU and the AFMEPKIU should hold further discussions with a view to the implementation of the proposal at the earliest possible opportunity.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.

[2002] NSWIRComm 1082

At a glance

Court

Decision date

Source

Judgment (120 paragraphs)

Cases Cited (10)