Fair Work Act 2009

s.424 - Industrial action

Application to suspend or terminate protected industrial action - endangering life etc.

[1] On 4 January 2019 BP Refinery (Kwinana) Pty Ltd (BP Kwinana) applied (Application) to the Fair Work Commission (FWC) for an order pursuant to section 424 of the Fair Work Act 2009 (Cth) (FW Act) for the termination of protected industrial action being engaged in or proposed to be taken by employees covered by the BP Refinery (Kwinana) Pty Limited & AWU Operations and Laboratory Agreement 2014 (Agreement).

[2] The Agreement covers all operations employees, employed by BP in the classifications contained in clause 60 of Schedule A to the Agreement and all laboratory employees employed by BP in the classifications contained in clause 71 of the Agreement (Employees). BP Kwinana currently employs 143 employees in the 'Operator' classifications contained in clause 60 of Schedule A to the Agreement and 19 in the 'Laboratory' classifications contained in clause 71 of the Agreement.[1]

[3] The AWU is the bargaining representative of the Employees for the purposes of section 176(1)(b) of the FW Act.

[4] The Application was made on the basis that the industrial action threatens to cause significant damage to the Australian economy or an important part of the Australian economy.

[5] The Minster for Commerce and Industrial Relations (WA) (Minister) applied for, and was granted, leave to be heard in relation to the Application pursuant to section 589(1) and 590(1) of the FW Act on the grounds that the proposed industrial action was likely to have a serious impact on the Western Australian economy and potentially endanger public safety. The granting of leave to be heard to the Minster was not opposed by either BP Kwinana or the AWU.

[6] Permission was sought by and granted to BP Kwinana and the Minister to be represented at the Hearing of the Application on the grounds that it would enable the matter to be dealt with more efficiently, taking into account the complexity of the matter.[2]

[7] Section 424(3) requires that as far as practicable applications pursuant to section 424 of the FW Act must be determined within 5 days from the date on which they are made.

[8] The Application was heard and determined on 4 January 2019, following a conciliation conference attended by the AWU and BP Kwinana earlier the same day. I informed the parties of my decision and the terms of the proposed order on transcript at the conclusion of the hearing on 4 January 2019. An order terminating the industrial action was published at 6.17 pm on 4 January 2019, in Print [PR703616] (Order). Below are the reasons for my decision.

[9] BP Kwinana is the largest oil refinery in Australia and the only oil refinery in Western Australia. BP Kwinana refines crude oil to produce various refined fuels including petrol, diesel, aviation gas, LPG and bunkering fuel at an oil refinery located in Kwinana (Refinery). BP Kwinana supplies those refined fuels to customers and the public in Western Australia, South Australia, Tasmania, New South Wales and Queensland. The Refinery is the only supplier of jet fuel to the Perth Airport.[3]

[10] BP Kwinana, the AWU and a group of workplace delegates have been endeavouring to negotiate the terms of a replacement Agreement since June 2017.

[11] The Agreement passed its nominal expiry date on 30 November 2017.

[12] On 22 October 2018, the AWU applied for a Protected Action Ballot Order (PABO) pursuant to section 437 of the FW Act. The PABO was issued on 23 October 2018 in Print [PR701661] and a ballot subsequently conducted by the Australian Electoral Commission. The ballot was supported by a majority of the workforce (Ballot).

[13] The forms of industrial action authorised by the Ballot include:

(a) Reduction in crude distillation throughput to minimum or stable state operations for 12 or 24 hours (see AEC Declaration of Results, Q1, Q48).

(b) A ban for seven days on receiving into tank storage imported hydrocarbon product (see AEC Declaration of Results, Q9).

(c) An indefinate ban on operating equipment with an AORA or SORA deviation (see AEC Declaration of Results, Q15).

(d) An indefinite ban on working overtime, except for covering of personal leave or bereavement leave (see AEC Declaration of Results, Q25).

(e) A 48 or 72 hour ban on using more than one transfer pump on the Kewdale line (see AEC Declaration of Results, Q11, Q22).

(f) A 12 hour ban on transferring product through the Southern pipeline (see AEC Declaration of Results, Q14).

(g) A seven day ban on economic flaring (see AEC Declaration of Results, Q43).

(h) A 48 hour work rule requiring strict adherence to the Production Plan for the Refinery (see AEC Declaration of Results, Q49).

[14] On 28 November 2018, the AWU issued 33 notices of intention for the Employees to take protection industrial action authorised by the Ballot (First Set of Notices).

[15] On 30 November 2018, BP Kwinana commenced proceedings under section 424 of the FW Act seeking to terminate the protection afforded to the industrial action contained in the First Set of Notices (First s.424 Application).

[16] An interim order suspending the protection afforded to the industrial action contained in the First Set of Notices was issued on 30 November 2018 in Print PR702796 (Interim Order) pending the hearing and determination of the First s.424 Application on 7 December 2018.

[17] On 6 December 2018, on the eve of the hearing to determine the First s.424 Application, the AWU withdrew each of the First Set of Notices. BP Kwinana subsequently discontinued the First s.424 Application. Consequently, the Interim Order was revoked on 7 December 2018, in Print [PR703021].

[18] Between 11 December 2018, and 31 December 2018 inclusive, the AWU issued 51 notices of intention of the Employees to take protected action pursuant to the Ballot (NIAs). The NIAs specified the nature of the industrial action proposed to be taken (Notified Action) and indicated that the Notified Action would commence on various dates, the earliest date being 00:01 on 21 December 2018. The Notified Action foreshadowed in the NIAs to commence on 21 December 2018, commenced on that date.[4]

[19] BP Kwinana took the view that the Notified Action underway and the Notified Action threatened in the NIAs to commence on 11 January 2019, posed such significant risk to safety, the environment and the refinery equipment that it would be necessary to commence a controlled shut down of the Kwinana Refinery from 7:00pm on 4 January 2019, which would lead to a disruption in the supply of refined fuel to its customers and the general public.

[20] The Application is brought on the grounds that the disruption to refined fuel supply in Western Australia would cause significant damage to the Western Australian economy and consequently the Australian economy.

[21] BP Kwinana called the following witnesses to give evidence in support of the granting of the Application:

1. Mr Paul Julian Alford - Business Improvement Lead, BP Kwinana (Mr Alford);
2. Mr David Plant - Optimisation Manager, BP Kwinana (Mr Plant);

1. Mr Stephen Brown - Managing Director, Cadence Economics (Mr Brown); and

1. Ms Marina Laura Campbell - Health, Safety, Security, Environment and Quality Manager, BP Kwinana (Ms Campbell)

[22] The AWU did not oppose the Application. In fact the AWU indicated that the workplace delegates supported the Application being granted and the Order issued.

"424 FWC must suspend or terminate protected industrial action - endangering life etc.

Suspension or termination of protected industrial action

(1) The FWC must make an order suspending or terminating protected industrial action for a proposed enterprise agreement that:

if the FWC is satisfied that the protected industrial action has threatened, is threatening, or would threaten:

(c) to endanger the life, the personal safety or health, or the welfare, of the population or of part of it; or

(d) to cause significant damage to the Australian economy or an important part of it.

(iia) if the industrial action is being engaged in, or is threatened, impending or probable, in a State that is a referring State as defined in section 30B or 30L - the Minister of the State who has responsibility for workplace relations matters in the State;

(iib) if the industrial action is being engaged in, or is threatened, impending or probable, in a Territory - the Minister of the Territory who has responsibility for workplace relations matters in the Territory;

(3) If an application for an order under this section is made, the FWC must, as far as practicable, determine the application within 5 days after it is made.

(4) If the FWC is unable to determine the application within that period, the FWC must, within that period, make an interim order suspending the protected industrial action to which the application relates until the application is determined.

(5) An interim order continues in operation until the application is determined.

[24] The Application was made by BP Kwinana in its capacity as a bargaining representative for the Agreement. BP Kwinana therefore has standing to make the Application.

[25] In order to grant the Application and make the order sought by BP Kwinana, I must be satisfied that:

b. is being engaged in or is threatened, impending or probable;

c. which has threatened, is threatening, or would threaten;

e. to the Australian economy or an important part of it.

[26] The Notified Action proposes the performance of work by Employees in a manner different from the manner in which it is customarily performed and the imposition of bans, limitations and restrictions on the performance of work by Employees.

[27] The Notified Action is not authorised by, or agreed to, by BP Kwinana.[5]

[28] There is no assertion that the Notified Action relates to an imminent risk to health or safety.

[29] I am therefore satisfied that the Notified Action is "industrial action" as defined by section 19 of the FW Act.

[30] The Notified Action is organised by the AWU for the purpose of advancing the claims of the Employees in relation to a proposed enterprise agreement.

[31] The Notified Action is authorised by the Ballot conducted in accordance with the PABO issued on 23 October 2018 in Print [PR701661].

a. the claims include unlawful terms or matters which are not permitted matters;

b. the Notified Action involves pattern bargaining;

c. the Notified Action relates to a demarcation dispute;

d. the Proposed Agreement be a greenfields or multi enterprise agreement;

e. the notice requirements in section 414 of the FW Act have not been met by the AWU;

f. the AWU are not genuinely trying to reach an agreement; or

[33] The Agreement has passed its nominal expiry date.

[34] I am therefore satisfied that the Notified Action is "protected industrial action" as defined by section 409 of the FW Act.

Second Element - Threatened, Impending or Probable Protected Industrial Action.

[35] Between 11 December 2018, and 31 December 2018, the AWU issued 51 notices of intention of the Employees to take protected action pursuant to the Ballot.

[36] As at the date of Hearing the Employees were, or have been, engaged in the following forms of industrial action pursuant to the NIAs[6]:

a. An indefinite ban on Deputy Shift Team Leaders covering Shift Team Leaders except for annual leave and short term sickness from 00:01 on 21 December 2018.

b. An indefinite ban on night time soot blowing from 00:01 on 21 December 2018.

c. A 24 hour period of reducing crude distillation throughput in Crude Distillation Units to not more than 8000klpd for 24 hours from 00:01 on 4 January 2019.

d. A 24 hour ban on testing LPG from 00:01 on 3 January 2019.

[37] The NIAs foreshadow further industrial action commencing.

[38] There is a discernible pattern of notices being issued and acted upon and it is probable that further notices will be issued and acted upon.

Third Element- has threatened, is threatening, or would threaten;

[39] The evidence of Mr Alford is that the Employees employed as Operators perform roles which are highly complex and which play a critical role in the operation of the Refinery and the prevention of safety incidents. He says that the action or inaction of the Operators could result in high consequence safety events such as fires and explosions and influence the release of large volumes of toxic materials into the environment with adverse consequences for those working at the BP Refinery and working or living in the adjoining community.[7]

[40] According to Mr Alford, BP Kwinana has an insufficient number of alternative persons (whether non-Agreement staff or contractors working at the Kwinana Refinery) trained to work as Operators and it would take alternative persons at least six months to be trained, complete practical experience and be certified as competent to operate a processing unit at the Kwinana Refinery.[8]

[41] The NIAs foreshadow that Employees intend to commence the following industrial action on 11 January 2019.

a. Consecutive 24 hour reduction of crude distillation throughput to a minimum of stable state of operation.

b. An indefinite ban on working overtime except for covering for personal leave or bereavement leave.

c. A 12 hour withdrawal of labour of Mogas Control Technicians.

d. A 12 hour withdrawal of labour of Lube Control Technicians.

[42] The BP Kwinana Operations Contingency Team (OCT) experts assessed the impact of the proposed consecutive 24 hour reduction of crude distillation throughput to a minimum of stable state of operation and took the view that the reduction of crude distillation could potentially make the crude unstable and pose a safety risk. The OCT were also of the view that the unpredictability of the impact on throughputs further downstream meant that modelling could not be conducted to ensure that the downstream units could continue to be safely operated. According to the evidence of Mr Alford, if the downstream units became unstable there exists a real risk of equipment damage leading to a leak of flammable or toxic material with the potential for an explosion.[9]

[43] The OCT assessed the impact of the proposed indefinite ban on working overtime except for covering personal or bereavement leave and took the view that BP Kwinana would have insufficient appropriately skilled personnel to guarantee the safe operation of the Refinery, particularly in circumstances where other industrial action was likely to increase the need for Operators elsewhere in the Refinery.[10]

[44] The OCT assessed the impact of the proposed 12 hour withdrawal of labour of Mogas Control Technicians. Mr Alford explained that the Mogas Control Technicians are responsible for monitoring and controlling the multiple processing units which make up approximately one quarter of the Refinery. This includes one of the major processing units that is required to keep half the Refinery running. As there is only one non-Agreement employee competent to perform this role, the OCT took the view that there was a high risk of a safety critical role being unmanned during the Notified Action which meant that BP Kwinana could not safely operate multiple processing units.[11]

[45] The OCT assessed the impact of the proposed 12 hour withdrawal of labour of the Lube Control Technicians. Mr Alford explained that the Lube Control Technician is responsible for the monitoring and control of multiple processing units, including the Refinery flare relief system which is required to be in operation, and continuously monitored, at all times while the Refinery is operating and while the Refinery is in the process of shutting down or starting up. The Refinery flare relief system is required to safely dispose of hydrocarbon and toxic gasses produced from the process units, if there is a safety scenario requiring equipment on one or multiple process units to be rapidly reduced in pressure. There are also several continuous streams of hydrocarbon gas directed to the flare during normal operation, such as vent gas from process sample systems. According to Mr Alford if the flare system is not monitored then BP Kwinana cannot continue to keep the Refinery in operation because the function of the flare could become compromised, resulting in the over pressurisation of process equipment and the release of toxic and flammable gasses which could then ignite causing a serious safety incident.[12]

[46] It is the evidence of Mr Alford that there are no trained and certified non-Agreement employees who are competent to be able to fulfil all of, or any part of, the role of Lube Control Technician. He says that it would take between 4 to 6 weeks to train and certify enough non-Agreement employees to be able to monitor and control the Refinery flare system, which is part of the Lube Control Technician role, even for 12 hours so that the Refinery could continue to operate safely while the withdrawal of labour is in place. He estimates that it would take 6-12 months to train an employee to perform all the responsibilities of a Lube Control Technician.[13]

[47] In light of all of the above Mr Alford endorsed the OCT recommendation that the Refinery commence a controlled shutdown from 7:00pm on 4 January 2019, in response to the Notified Action proposed in the NIAs. [14]

[48] There is no evidence before me that this recommendation was unreasonable or even avoidable. I am therefore satisfied that the proposed shutdown of the Refinery is the unavoidable and inevitable consequence of the threatened protected industrial action.

[49] If the Refinery shutdown were to proceed BP Kwinana would cease refining crude oil and cease producing refined fuel, including jet fuel, petrol and diesel, from the commencement of the shutdown.

[50] The evidence of Mr Alford is that:[15]

a. It would take seven days (from day 1 to day 7) to shutdown safely all processing units at the Refinery.

b. To recommence production it would be necessary to conduct inspections of the processing units and clean out some processing units to ensure they are in a safe state to start-up. Those inspections and the necessary clean outs would take at least seven days (from day 8 to day 14) to complete.

c. It would take ten days (day 15 to day 24) to start-up all of the processing units.

d. The earliest that BP could commence producing normal levels of jet fuel, petrol and diesel would be day 25.

[51] The evidence of Mr Plant is that should a shutdown commence there would be a period of at least:

b. (in the case of petrol for Perth and South Western Australia) 8 days; and

e. (in the case of diesel for Perth and South Western Australia) 4 days

between the exhaustion of existing stockpiles and the replenishment of stock from alternative sources.[16]

[52] Presuming there are no delays in recommencing production or in the sourcing of stock from alternative sources an interruption in the supply of diesel, petrol and jet fuel for Perth and the South West of Western Australia for a minimum of 4 days is momentous for the Western Australian economy.

[53] Mr Brown, an independent economic consultant, has estimated the economic cost of disruption in supply on the Australian economy as in the order of $75.2 million dollars, each day diesel and jet fuel supplies are simultaneously disrupted. He considers the potential impact on the Western Australian economy to be an even larger quantum of $89.5 million per day as a consequence of the negative impact on tourism.[17]

[54] Mr Brown provided a detailed rationale for his opinion and there is no evidence before me to suggest that it is not reasonably held.

[55] It was submitted on behalf of the Minister that the Government of Western Australia holds serious concerns that the lack of fuel for emergency service vehicles such as ambulances, fire trucks and police vehicles would endanger the personal safety and welfare of Western Australians. The Public Utilities Office has advised the Minister that as soon as it is notified that the Refinery is in a shutdown process the situation will be treated as a Level 2 Amber alert and it would commence emergency management activities immediately as the situation would most likely be elevated to Level 3 Red Alert, the highest incident level under the State Hazard plans.[18]

[56] It was also submitted on behalf of the Minister that any disruption to aviation fuel supplies would have significant adverse flow on effects on the Western Australian economy particularly in the mining, tourism, retail and hospitality sectors.[19]

[57] It is not contested and I am satisfied that there is an appropriate evidential basis to support BP Kwinana's assertion that the Notified Action will cause significant damage to the Western Australian economy.[20]

[58] The Western Australian economy is an important part of the Australian economy. The city of Perth alone is the fourth biggest economic city in Australia and produces 8.3 per cent share of Gross Domestic Product.[21] I am satisfied that threatened protected industrial action is threatening to cause significant damage to an important part of the Australian economy.

[59] The FWC has a discretion whether to terminate or suspend the immunity conferred by the protected industrial action.[22]

[60] The protected industrial action was temporarily suspended during the period the Interim Order was in force. Notwithstanding that period of suspension, the parties made no further progress in concluding a replacement agreement and the AWU subsequently issued the NIAs. I am therefore not satisfied that an Order suspending the protected industrial action is appropriate.

[61] The parties have been endeavouring to negotiate a replacement agreement since June 2017, without success. Having endeavoured to facilitate the parties concluding an agreement during eleven interest based bargaining sessions in Application NA2018/7 and in formal traditional conciliation pursuant to section 240 of the FW Act, I am satisfied that the parties are unlikely to reach agreement over the terms of the proposed Agreement. As the prospect of a concluded agreement becomes less likely and the industrial relationship deteriorates further, it would appear that more frequent and serious industrial action is the most likely outcome.

[62] While my view is that a more permanent and effective industrial solution would be obtained if the parties reached an agreed position, granting the Application to terminate the industrial action will move the parties to conciliation and arbitration under the framework of section 266 of the FW Act. Currently this appears to be the only way to achieve finality to the dispute.[23]

Mr N Ellery, of Corrs Chambers Westgarth, on behalf of the Applicant.

Mr C Young, of the Australia Workers' Union, for the Respondent.

Mr R Andretich, of the State Solicitors Office, on behalf of the Minister of Commerce and Industrial Relations (WA).

[6] Application for an order for suspension or termination of protected industrial action - Form F37.

[20] Victorian Hospitals' Industrial Association v Australian Nursing Federation [2011] FWAFB 8165 at [49].

[22] Section 424(1) of the FW Act; see also NTEIU v Monash University [2013] FWCFB 5982 at [55] per Hatcher and Catanzariti VPP, Lee C; Essential Energy v CEPU [2016] FWC 3338 at [30] per Hamberger SDP).

[23] See for example, Minister for Industrial Relations for State of Victoria v Esso Australia Pty Limited [2016] FWC 8826 at [22] per Watson VP).

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