Kellogg (Aust) Pty Ltd v National Union of Workers NSW Branch

APPLICANT: Ms K Parker, solicitor SOLICITORS: Maurice Blackburn Cashman

RESPONDENTS: Mr Moses of Counsel LEGAL REPRESENTATIVES: SOLICITORS: Blake Dawson Waldron and A. J Law & Co

INTERVENER: Mr R. F Crow of Counsel Commonwealth of Australia Australian Government Solicitor

JUDGMENT: - 17 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES CORAM: Staunton J 18 November 2002 Matter No. IRC 2253 of 2002 Notification by Kellogg (Aust) Pty Ltd of a Industrial Dispute with the National Union of Workers (NSW Branch) pursuant to s 130 of Industrial Relations Act (NSW): application for interim orders pursuant to s 136 (1) (d) of the Industrial Relations Act 1996 DECISION (Extempore) [2002] NSWIRComm 315

1 This matter that I have been required to deal with commenced its life on 19 April last as a notification by Kellogg (Aust) Pty Ltd of a dispute with the National Union of Workers (New South Wales Branch) pursuant to s 130 of the Act.

2 The original dispute notification filed by Kellogg outlined the issues between the parties in the following terms which for the purpose of this judgment I would simply précis as follows: Kellogg had for a number of years contracted out a range of its non-manufacturing functions to third party providers; that at the time the dispute was notified the company was in the process of changing the then vendor responsible for freight and distribution; that the union had threatened "significant industrial action" on the part of its members upon the selected third party provider commencing on site; it was Kellogg's view that the outward bound finished goods distribution did not fall within the scope of the Kellogg (Aust) Pty Ltd Botany (NUW) Consent Award. Therefore Kellogg said the conditions and employment of those persons by a third party have no impact on the question of the employment conditions of a Kellogg employee covered by that Consent Award. Given that the union has threatened industrial action, they sought the assistance of the Commission.

3 The matter came before Commissioner Patterson in the first instance on 23 April this year. From that first appearance, this matter has been the trigger for two other separate but related matters that are not before me - both brought by the union. The first is matter No IRC3294 of 2002. That is an application by the union for declaratory relief under s 154 of the Act. The second is matter No IRC5357 of 2002. That is an application to vary the relevant Consent Award as between Kellogg and the NUW. Those matters, I am advised, are listed for hearing next year before Kavanagh J. I am not aware of the terms of the declaratory relief nor the nature of the Award variation sought.

4 This dispute notification and its attendant formal and informal procedures before this Commission came to a temporary halt on 19 June last before Kavanagh J. They were revived by motion of the Court at the behest of her Honour on 2 October last.

5 At the same time and as part of the conciliation process, her Honour ordered the participation of the other parties now before me. That is, in addition to the union and Kellogg, Mayne Logistics Pty Ltd and Transistics Pty Ltd.

6 Subsequently her Honour issued a certificate of attempted conciliation under s 135 of the Act on 11 November last.

7 This matter came before me initially and briefly on 13 November last, accompanied by a notice of motion by the union seeking urgent interim orders. On that day I set the matter down to be heard with directions on an urgency basis on 15 November last. In these proceedings, apart from those parties I have already mentioned, I granted leave to the Commonwealth to intervene.

8 The notice of motion and the form of interim orders sought I will detail in only general terms. The union requests from 15 November, the date on which I heard these proceedings, until those other matters before Kavanagh J and this matter are determined, all the parties before me, namely Transistics, Michael Henry Services, Kellogg (Aust) Pty Ltd, the Mayne Group and their related bodies corporate, officers, members, agents and employees, must not take any steps to disturb what was described as the "status quo". This being the existing industrial regulations and rates of pay and conditions of persons employed under the Consent Award I have already referred to. Further, that there was to be no attempt by the aforementioned parties to terminate or in any way change the existing contractual arrangements for the provision of labour to the distribution centre currently in place at the Kellogg's Botany site or otherwise cause those persons' employment to cease.

9 The grounds in support of the notice of motion and interim orders sought, as set out in the affidavit of Ms Kim Parker, solicitor on behalf of the NUW were as follows: 1. Transistics (Michael Henry Services) has offered a Section 170LK Agreement under the Workplace Relations Act 1996 (Cth) to persons who are due to commence work on about 24 November 2002 in the distribution centre at the Botany site of Kellogg (Aust) Pty Ltd. However, those employees are covered by the Consent Award. A dispute about the application of this Consent Award is presently subject to: i. an Application by the NUW for a declaration of right under section 154 of the Industrial Relations Act 1996 (IRC 3294 of 2002); ii. an Application to vary the Consent Award (IRC 5357 of 2002); and iii. this Section 130 Notification made by Kellogg (Aust) Pty ltd (IRC 2253 of 2002). 2. The Consent Award commenced operation in November 2001 for a nominal period of 2 years. 3. The steps taken so far by Transistics (Michael Henry Services) are in conflict with the obligations owed to persons working in the distribution centre under the Consent Award. 4. The offer of the section 170LK Agreement to those persons and the subsequent steps taken by Transistics (Michael Henry Services) to have that agreement certified in the Australian Industrial Relations Commission is no more and no less than a crude industrial tactic to allow Kellogg's and Transistics to avoid the obligations arising under the Consent Award in the context of the current industrial dispute before the Commission. 5. The NUW seeks the interim orders set out above to preserve the status quo between disputant parties until the substance of the dispute is finally resolved, whether that be as a consequence of further determinations by the Commission as a result of the applications or notification referred to above or by some other means.

10 The urgency attached to the matter before is understood by reference to the application filed by Transistics. On 28 October last Transistics filed an application for certification of a Workplace Agreement pursuant to s 170 LK of the Commonwealth Workplace Relations Act. As I am advised, that application is listed for certification before the Federal Commission on 20 November next, some two days hence.

11 As reference to the proposed interim orders sought will confirm, the union seeks, amongst other things, to effectively restrain Transistics from proceeding with that application before the Federal Commission until the union's application for declaratory relief and the Consent Award matter are concluded by this Commission in the proceedings before Kavanagh J.

12 In a nutshell, the union seeks the retention of what it calls the "status quo" until all outstanding matters are determined.

13 What represents the "status quo" and the application of that phrase assumed some prominence in the relatively truncated arbitral proceedings before me on 15 November last. Although I was never directly taken to it, it is clear to me that to understand the current dispute between the parties it is necessary to go back to the genesis, as I see it, of this matter. That, it is apparent, is the decision of Hungerford J in matter 3567 of 1998 (unreported, 25 September 1998).

14 The decision of Hungerford J in Kellogg (Aust) Pty Ltd v National Union of Workers NSW Branch started as a dispute under s 130 of the Act and concluded by his Honour determining declaratory relief orders under s 154 of the Act. That matter was concerned with technological changes introduced by Kellogg at that time as between its Botany and Minto sites that had certain consequences. They were that those structural and technological changes affected the materials handling operations at the Botany plant. The materials handling operation of the Botany plant, it was agreed before me, is also referred to as the distribution centre.

15 As a result of those changes some eight Kellogg employees were made redundant. As part of its re-arrangement, Kellogg sought to utilise a company referred to as PGA Logistics to assume responsibility for the distribution functions centred at Botany. PGA Logistics had already been utilised by Kellogg at its Minto site. It was intended by Kellogg to use PGA contract employees within the materials handling/distribution section at Botany as part of the changes sought to be made.

16 Given that all those changes affected persons employed at the Botany site and because redundancies flowed from those changes, the union took exception to the action and industrial disputation resulted.

17 It is necessary and pertinent at this point, I believe, to refer to some extracts of his Honour's judgment when he made the declaratory relief orders that he did. I go in the first instance to p 12 of that judgment where his Honour said: "Kellogg proposed itself, to vacate the distribution function completely and to have the work performed by PGA on a contract basis from the Botany site by the use of its own employees, although some product would continue to go to the Minto site for warehousing and distribution. It is in that respect the parties are in disagreement and the very many discussions between them have failed to resolve the issue. The NUW claimed the work to be performed by the PGA employees at Botany be performed by employees of Kellogg; the eight redundancies would thus be avoided." 18 After considering the then relevant Award provisions, his Honour had this to say at p 20: "It is to be noted that the Award contains no explicit provision dealing with the entitlement of or limitation on Kellogg to contract to another employer any aspect of its operations. However, and this will be plain from a reading of some of the above quoted provisions of the Award, if certain work is contracted to another employer then there may be necessary consequences for existing employees of Kellogg - for instance the availability of suitable alternative employment, consultation between Kellogg, the NUW and the consultative committee and voluntary redundancy."

Further at pp 22-23 his Honour said: "In light of that summary and of all the evidence, I find that the Kellogg's proposal properly characterised, concerns its right to use a contractor to perform the distribution function at the Botany plant following the introduction of new equipment; as such it involves the performance of distribution work in a different way and by the use of new methods."

Further down: "I see nothing in the Award to even suggest any prohibition on Kellogg so re-arranging the work to be performed by a contractor." 19 His Honour concluded by granting the declaratory relief sought in that, having regard to the Award and the relevant circumstances before him: "Kellogg had complied with the provisions of the said Award in relation to the introduction by it of the proposed changes to the materials handling operation at its Swinbourne Street, Botany plant and is not prevented or prohibited from introducing such changes."

20 While some may think I have laboured somewhat over that decision, what is clear to me is, following that judgment, Kellogg proceeded to enter into contractual arrangements with MJS Logistics and an associated labour hire company, Adecco, to provide labour to the materials handling/distribution area at Kellogg's Botany site.

21 Those contractual arrangements continued as between Kellogg and MJS Logistics/Adecco until earlier this year when Kellogg saw fit to re-negotiate its labour hire contract in the distribution area. As explained by Mr Penfold on behalf of Kellogg before Commissioner Patterson on 23 April last in addressing the Commissioner: "After a lengthy analysis of this area of the business, the company recently made a decision to streamline its freight distribution and warehousing process by engaging a third party to manage the total system. A part of this system is obviously the area in question which is currently managed by MJS Logistics and therefore it logically follows there is an intended change in providers in this area. The successful tenderer in this instance was Mayne Logistics and this changeover is due to occur on 1 May 2002".

Further, Mr Penfold went on to say: "The company is also obviously not in a position to mandate the employment conditions under which a third party must engage its employees whose duties fall outside the scope of our company Award."

22 If anything, that process is what Kellogg maintains is the status quo. That is, its right as determined by Hungerford J's decision in 1998, to enter contractual arrangements with a third party for the provision of labour in the distribution area of the company's operations. Kellogg also sees no relevance in the application of the current Consent Award to that area of its operations.

23 The union for its part sees things quite differently. It claims that the relevant Consent Award does apply to those employees in the distribution area. It would seem that in expressing the union's view on this matter, I can do no better than to cite the position as enunciated by Ms Parker on behalf of the union on 23 April last before Commissioner Patterson. Ms Parker had this to say: "With respect to the substantive issue in dispute the union has since this Consent Award has been put in place understood in terms of the Kellogg's involvement, both parties have understood the Consent Award applied to all work at the site (sic). At the time that Consent Award was first entered into there wasn't the extensive contracting out arrangements that now exist and that Hungerford J decision that my friend referred to is a decision in 1998. So at the time that this Consent Award was entered into it was understood by both parties and the union can bear that out by documentary evidence and other evidence, that its always been understood that the work at the Botany site is to be covered by the Consent Award."

and: "…Kellogg's have also observed those Award rates of pay and conditions with respect to the provision of casual labour on the site, including in the distribution and warehouse centre. We've got references in our correspondence to regard being had to that Consent Award with respect to workers in the distribution and warehouse centre."

Ms Parker continued further: "The concern of the union is that the motivation of Kellogg is to remove a casual labour force from the distribution centre that have enjoyed rates of pay and conditions under the Award and replace it with a new contractor which will introduce a new work force which is essentially going to be working under different industrial instruments and given the representations of Kellogg to date, will not - certainly they're not recognising that the Award applied to those employees, as it sets out in its notification."

24 The above described situation in relation to the application of the Consent Award situation is the union's view as to what constitutes the status quo. That much was confirmed by Ms Parker before me. Further, that the Workplace Agreement now being sought by Transistics, the successful tenderer along with Mayne Logistics, will undermine that agreement by paying lesser rates of pay than currently applying in accordance with the Consent Award. As well, given the change in the third party tenderer, those persons currently employed by the MJS Logistics/Adecco arrangement will no longer be guaranteed continued employment at Kellogg's distribution centre.

25 In setting out its position as to the status quo, the union asserts certain agreements as between itself and Kellogg to pay the Consent Award rates to persons employed in the distribution centre. I have to say, as this matter was presented before me, I have no such evidence.

26 Establishing the application of the Consent Award to the distribution centre of Kellogg's operations is also critical to providing the evidentiary link to support the status quo in maintaining the continued employment of the Adecco employees. Otherwise one is left with the declaratory relief asserted by Hungerford J in 1998 that Kellogg was simply continuing - " … its right to use a contractor to perform the distribution function at the Botany plant …"

27 It is clear that what represents the status quo is not only in dispute as between the parties, it is unclear. Ms Parker's submissions to Commissioner Patterson on 23 April to which I have already referred bears emphasis on this point where she says: "At the time that this Consent Award was entered into it was understood by both parties and the union can bear that out by documentary evidence and other evidence, that it has always been understood that the work at the Botany site is to be covered by the Consent Award and further, we've got references in our correspondence to regard being had to that Consent Award with respect to workers in the distribution and warehouse centre ." (my emphasis) 28 If the union had such an array of evidence I did not see it. Indeed if anything, as this matter proceeded before me, there was a paucity of evidence from the union to support the contentions made by Ms Parker as long ago as April this year.

29 On one view, this issue before me should have been dealt with as a threshold issue as part of the declaratory relief sought by the union.

30 Formal evidence from the union consisted solely of an affidavit from Ms Parker with the relevant Award annexed. I permitted, at short notice, brief oral evidence from Mr Bob Herbert, the union organiser with the NUW whose responsibilities involved the Botany site. Mr Herbert gave evidence that, in negotiations with Kellogg in relation to the 2001 Consent Award, there was agreement reached that the rates to be paid in the distribution centre were to be in accordance with the Consent Award.

31 Further, Mr Herbert gave evidence that Mr Morgan, on behalf of Kellogg, as part of the negotiations for the current Consent Award, agreed, in Mr Herbert's words to "change the rates" and put certain matters into the Consent Award to reflect that agreement. There was no documentation or other corroborative evidence to support that submission in the Consent Award placed before me.

32 The Consent Award that has been referred to is the Kellogg (Aust) Pty Ltd Botany (NUW) Consent Award. It is relevant I think to look at just a couple of clauses of this Award to highlight some of the problems that I perceive in this matter before me. The first is cl 5, the Operations Clause of the Award and more particularly sub-cl(a). That sub clause says: "The A ward shall apply to the company the union and its members employed by the company at Swinbourne Street, Botany in the manufacture of ready-to-eat cereals. " (my emphasis)

It was clear in the proceedings before me that there is a clear and distinct differentiation as between the ready-to-eat cereals area of Kellogg's operations and the distribution area.

33 I then turn to cl 35, the Grievance/Dispute Procedure which includes the expression "status quo" and the meaning to be attached to those words. The meaning to be attached and procedures to be observed are expressed in these terms: "During a dispute the status quo (i.e. the situation which existed immediately prior to the matter giving rise to the dispute) shall remain. Work will proceed without stoppage or the imposition of any ban, limitation or restriction while the matters in dispute are being dealt with in accordance with the following steps."

34 It is not necessary to elaborate beyond that in these proceedings. The expression "status quo" has been mentioned by both parties in the proceedings before me. Indeed it is the critical issue I have to be satisfied about in order to support the interim orders that are being sought.

35 To the extent that the expression was used by Kellogg, it was used in the context of the original reasons for notification of the dispute: that is, the threatened industrial action by the union. In other words, the intention as I understand it is that the company is saying in effect, "We will leave things as they are until this matter, the threatened industrial action, is resolved between us". But they say at the same time that the Consent Award has no relevance to the alleged cause of the dispute because of their view of matters following Hungerford J's decision. For example, Commissioner Patterson on 23 April addressed the following to Mr Morgan who was there on behalf of the company with Mr Penfold: COMMISSIONER : Why did the company commit itself to 1 May without having resolved a potential industrial difficulty with the members of the NUW?

That question was asked when the Commissioner became aware the company had already entered into contractual arrangements with Mayne Logistics and Transistics. Mr Morgan's reply was: MORGAN: We didn't believe that the changing of our freight and distribution contract fell within the terms and conditions of our Consent Award with our employees that were negotiated. We've had that as an outsourced arrangement for a number of years and we went to an open tender process and a new vendor won the business, so the old vendor who were employing those particular casuals - not Kellogg - were not part of our business. We have a number of outsource providers. Skilled provide our maintenance engineering; Tempo provide our cleaning and we have MJS running our logistics. We've now changed vendors to Mayne and they 're not parties to our Consent Award." 36 Commissioner Patterson then asked this question which I thought was particularly pertinent: COMMISSIONER : If it was that cut and dried in the company's view, why would the company meet with the union at all?

The response from Mr Morgan goes back to their view as to how they see the status quo being applied was: MORGAN: Because the union had threatened industrial action the minute we bring people on site. 37 As understood by the union, the application of the phrase "status quo" has a different meaning altogether. To the extent it is relied upon by the union, it pre-supposes that the Grievance/Dispute provisions of the Consent Award apply to the employment and industrial conditions of the persons engaged in the distribution area of the Kellogg operations at the Botany site.

38 Given that cl 5 Operations specifies that the Consent Award applies to persons in the "ready-to-eat cereals" section of Kellogg's operations, the reliance by the union on cl 35 and the application of the words "status quo" to the distribution centre of Kellogg's business is, on any objective view, immediately and obviously contentious.

39 That Adecco was paying Award rates was commented upon by Mr Penfold on behalf of Kellogg in his comments to Commissioner Patterson on 23 April last. That much is clear from the transcript of these proceedings before Commissioner Patterson when he refers to the Adecco scale of rates given to him for information: COMMISSIONER : Am I to understand that the areas of work currently filled by casuals such as those supplied by Adecco are intended to be supplied by Mayne Logistics. PENFOLD : I think its important that we separate our use of Adecco for performing the work of production operators as opposed to other areas of the workforce. Mr Penfold goes on further: PENFOLD: There are two different relationships. MJS has chosen to utilise Adecco as their service provider at their own discretion. We haven't instructed them to do that or involved them in that purpose. They could have gone through any agency they wanted. Our relationship with Adecco for performing work is a separate issue. The Commissioner then asks him: COMMISSIONER: Whatever arrangement applies in respect to say that work provided by Adecco now, that's where the agency employees are paid the same conditions as Kellogg's employees, that remains does it? PENFOLD: Absolutely, we are not seeking to alter any terms. COMMISSIONER : That's not interfered with? PENFOLD : No terms in the agreement we're seeking to alter Commissioner and that's covered in there. We certainly gave no instructions whatsoever to Adecco and interestingly this has been supplied by the union but there is no correspondence from Kellogg advising Adecco that they are the rates to be paid. We would submit that's a decision that was made by Adecco to submit that letter in an independent relationship with MJS has absolutely nothing to do with Kellogg's instructions we've given. (sic) …The only discussions we have had with Adecco were in relation to the employees that we get them to contract to perform the work of production operators within our organisation and have absolutely nothing to do with the shipping area. 40 It has to be said on that point that there is clearly provision in the relevant Consent Award for Kellogg to use casual employees in the areas covered by that particular Consent Award. That again begs the question of the application of the Consent Award to the distribution area of the company's operations.

41 From the union's perspective, the difficulty with the statement made by Mr Penfold is that there is nothing supporting the contentions put by the union that there is an agreement between them and Kellogg such as Ms Parker made reference to on 23 April. That is, that Award rates were to apply in relation to persons employed by Adecco in the distribution centre of the company's operations.

42 At best there is, it seems to me, a strong inference that for whatever reason, MJS/Adecco saw fit to adjust the rates for contracted labour in the distribution area of Kellogg's operations in line with movements with the relevant Consent Award. If that were so, it could be said that it would be surprising that Kellogg did not know about it. Even if that were the case, that knowledge of and by itself does not impute the agreement the union relies upon in support of its application for interim orders.

43 All in all, these are matters about which, on the evidence before me, I cannot come to a concluded view. They are matters that may well be more fully ventilated in the proceedings contemplated by the union for declaratory relief.

44 In the first instance, Ms Parker before me centred her submissions in support of the interim orders sought on the decision of Deputy-President Sams in Barrier Industrial Council dispute with Broken Hill Chamber of Commerce and others re Breach of Award of the Construction, Forestry, Mining and Energy Union (New South Wales Branch) dispute with Broken Hill Chamber of Commerce and others re alleged breach of Award [2002] NSWIRComm 232. That decision was delivered on 6 September last.

45 Those matters concerned dispute notifications filed by the Barrier Industrial Council and the Construction Forestry Mining and Energy Union, NSW Branch with the Broken Hill Chamber of Commerce and others. I do not propose to go into all the details of the Deputy President's judgment. Suffice to say that having heard the matter before him he made interim orders pursuant to s 136 (1)(d) of the Act. In doing so those interim orders, amongst other things, restrained the Broken Hill Chamber of Commerce and its various agencies and employees from taking any steps to disturb the status quo. The status quo being the existing industrial regulations and rates of pay and conditions of employees employed as parties to the Broken Hill Commerce and Industry Consent Award 2001.

46 In directing me to that decision, Ms Parker also referred to the subsequent decision of the Full Bench of this Commission in an urgent stay application arising from the interim orders made by Deputy-President Sams in Broken Hill Chamber of Commerce and CFMEU (NSW Branch) [2002] NSWIRComm 244. That judgment was delivered on 20 September last.

47 In considering both of those decisions as I do, I do not see how they assist the union in the proceedings before me. In the first instance, the decision of Deputy President Sams cannot be seen as creating a precedent for the granting of interim orders under s 136 (1) generally.

48 Further, it seems to me that any application for interim orders under s 136 (1), such as those sought by the NUW, must, and would invariably turn on its own factual and contextual circumstances as to the background of the matter in seeking to invoke the Commission's powers under that section.

49 The factual circumstances confronting me in this matter are different both as to context and background to the situation confronting Deputy President Sams. Also, in the Full Bench decision referred to above, I was directed by Ms Parker to para [18] in particular which says: "The interim orders against which the appeal is brought and which are sought to be stayed in the present applications themselves sought to do no more than preserve the status quo in relation to the industrial situation in Broken Hill and to do so for a very limited period (some 28 days)." 50 The problem this particular paragraph creates in the matter before me is that it highlights what is in fact the crux of this matter. That is, there is no agreement, clarity or certainty as to what the status quo is that I am being asked to preserve in the terms of the interim orders sought. That fact in itself is starkly at odds with the situation confronting Deputy President Sams where the background and factual situation representing the status quo was, on any view, clear and unequivocal.

51 I have spent some time going through the background of this matter in order to clearly highlight the significant factual, contextual and legal differences between the parties as to what they say the status quo is.

52 Because of the paucity of clear evidentiary material before me that would allow me to determine with certainty what constitutes the "status quo" and its alleged associated consequences as between the National Union of Workers and Kellogg (Aust) Pty Ltd such as to involve Transistics Pty Ltd, Michael Henry Services and Mayne Group Ltd, I cannot make interim orders in the terms sought. Accordingly I decline to do so.

53 It is of course open to the union to pursue its concerns in relation to the proposed s 170LK agreement application filed by Transistics before the Australian Industrial Relations Commission.

54 For the reasons I have given in declining to make the interim orders sought I do not need to consider the s 109 inconsistency point raised by counsel for the companies and the Commonwealth as intervener in these proceedings. ------------------------------------------

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.