application to suspend or terminate protected industrial action - significant economic harm etc.

[1] This decision, now edited, was given in transcript at the conclusion of proceedings on 9 November 2009.

[2] On 5 November 2009 Nyrstar Pirie Pty Ltd (Nyrstar) lodged an application seeking the suspension of protected industrial action which was initially planned to commence on 6 November 2009 but was subsequently deferred so that it was proposed to commence at 5:00 pm on 9 November 2009. The application was made pursuant to sections 423 and 424 of the Fair Work Act 2009 (the Act).

[3] The application was the subject of a brief hearing on 6 November 2009 but was subsequently adjourned by agreement to 9 November 2009. At this hearing, Nyrstar was represented by Ms Mulcahy, of counsel. The Australian Workers' Union (AWU) was represented by Mr Hansen and Mr Hopgood, and the Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union (AMWU), initially by Mr Thomas but then by Mr Fenney. The Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (CEPU) was represented by Mr Adley and the Construction, Forestry, Mining and Energy Union (CFMEU) by Mr Roberts and Mr Day.

[4] Nyrstar operate a substantial silver, lead and zinc smelter at Port Pirie. Nyrstar and the AWU, AMWU, CEPU and CFMEU (hereinafter referred to as the unions) have been unable to reach agreement on a proposed new collective agreement. The matters in dispute relate to guaranteed annual wage increases, possible "sign-on" bonuses and, possibly, the duration of the proposed agreement.

[5] The unions sought, and were granted, a protected action ballot order on 29 September 2009. This ballot was subsequently held and majority support for the various protected industrial actions was achieved.

[6] On 3 November 2009 the unions issued notices to Nyrstar in the following relevant terms:

"1. Effective 5:00pm Friday the 6th of November the members resolve to take the following actions: A ban on working overtime, a ban on out of hours stand by and out of hours call in work, and a ban on staff relief work. This will run for two weeks.

2. Effective 7:30am Wednesday the 11th of November the members resolve to take a stop work meeting for up to 4 hours in duration.

[7] Whilst the commencement date for this protected industrial action was changed, the nature of the industrial action itself represents the basis for this application.

[8] Nyrstar asserts that the protected industrial action will occur at a time which will cause it significant economic harm. At the hearing on 9 November 2009 evidence was given by the Nyrstar Port Pirie General Manager, Mr Howell and the Human Resources Manager, Mr Milner. I have taken this evidence into account in reaching a conclusion with respect to the application.

[9] As a matter of convenience I have initially dealt with the application in as much as it is made under section 423. This section states:

Suspension or termination of protected industrial action

(1) FWA may make an order suspending or terminating protected industrial action for a proposed enterprise agreement that is being engaged in if the requirements set out in this section are met.

(2) If the protected industrial action is employee claim action, FWA must be satisfied that the action is causing, or is threatening to cause, significant economic harm to:

(a) the employer, or any of the employers, that will be covered by the agreement; and

(b) any of the employees who will be covered by the agreement.

FWA must be satisfied that the action is causing, or is threatening to cause, significant economic harm to any of the employees who will be covered by the agreement.

(4) For the purposes of subsections (2) and (3), the factors relevant to working out whether protected industrial action is causing, or is threatening to cause, significant economic harm to a person referred to in those subsections, include the following:

(a) the source, nature and degree of harm suffered or likely to be suffered;

(b) the likelihood that the harm will continue to be caused or will be caused;

(d) the views of the person and the bargaining representatives for the agreement;

(e) whether the bargaining representatives for the agreement have met the good faith bargaining requirements and have not contravened any bargaining orders in relation to the agreement;

(f) if FWA is considering terminating the protected industrial action:

(i) whether the bargaining representatives for the agreement are genuinely unable to reach agreement on the terms that should be included in the agreement; and

(ii) whether there is no reasonable prospect of agreement being reached;

(g) the objective of promoting and facilitating bargaining for the agreement.

(5) If the protected industrial action is threatening to cause significant economic harm as referred to in subsection (2) or (3), FWA must be satisfied that the harm is imminent.

(a) the protected industrial action has been engaged in for a protracted period of time; and

(b) the dispute will not be resolved in the reasonably foreseeable future.

Order may be made on own initiative or on application

[10] Section 43 provides Fair Work Australia with a strictly limited capacity to suspend or terminate a protected industrial action in certain circumstances. The overall scheme of the Act makes it clear that protected industrial action is a legitimate strategy open to parties who are unable to reach agreement.

[11] Subsection 423(1) confirms that, provided the remaining requirements of section 423 are met, Fair Work Australia has the discretion to make an order terminating or suspending protected industrial action. It follows that, unless Fair Work Australia is satisfied with respect to all of the circumstances set out in section 423, this discretion cannot be exercised.

[12] Subsection 423(2) is relevant to the circumstances in that the protected industrial action is being proposed to be taken by the unions in support of their agreement claims.

[13] In further considering the extent to which the proposed protected industrial action is causing or threatening to cause significant economic harm to Nyrstar, I have specifically considered the factors set out in subsection 423(4).

[14] The source, nature and degree of the harm likely to be suffered by Nyrstar is directly related to the nature of the Nyrstar Port Pirie operation. I am satisfied that Nyrstar operates as an exporter who is directly affected by the current Australian dollar exchange rate which, in historically relative terms, makes Nyrstar's trading situation more difficult. More particularly, the Nyrstar Port Pirie facility is a fully integrated smelting function. The continued operation of the overall function, which involves some 670 employees and 110 full-time contractors, is dependent on the continued functioning of processes to provide essential feedstock to the blast furnace and the management of bullion produced within the blast furnace. Consequently, the operation of the blast furnace will potentially be affected by protected industrial action in each of these areas.

[15] The sinter plant provides vital feedstock to the blast furnace. The evidence of Mr Howell is that Nyrstar generally sought to maintain a sinter stockpile of some 7000 tons but that a combination of three separate recent mechanical breakdowns had reduced this to approximately 2500 tons. Mr Howell's evidence was that this meant that there was an imminent risk that the blast furnace would need to be shut down.

[16] Mr Howell's evidence was that a planned progressive shut down of the blast furnace was the least expensive option for Nyrstar but that, in the event that an urgent shutdown was necessitated, the blast furnace would then need to be partially dismantled in order to recommence operations. The cost of ceasing production was estimated at $600,000 per day, together with an estimate of $400,000 to recommence operation of the blast furnace. Mr Howell estimated that, depending on the way in which the blast furnace was shut down, six to ten days would be required to recommence operations.

[17] In the event that the blast furnace was shut down, Mr Howell's evidence went to articulate his concern that Nyrstar Port Pirie management may not be given corporate approval to immediately restart the facility in the current economic environment. In this respect, he referred to the recent closure of various other Nyrstar parent owned facilities in other parts of the world.

[18] The effect of overtime and call out bans on Nyrstar is significant as the evidence of Mr Howell and Mr Milner is that overtime and callouts are used extensively to cover for employee absences and in order to remedy machinery breakdowns. Further, the potential for machinery breakdowns, particularly in the sinter plant, was exacerbated by the age and fragility of that plant.

[19] The unions proposed protected industrial action is clearly not intended to stop the operation of the blast furnace. However, there is no information before me which establishes how it is that the application of this protected industrial action will operate so as to ensure that the continued overall operation of the plant will not be compromised.

[20] In terms of subsection 423(4)(b), on the evidence before me, I consider that despite this clear intention of the unions that the operation of the blast furnace not be compromised, the protected industrial action is likely to cause substantial economic harm to Nyrstar.

[21] In terms of subsection 423(4)(c) I have noted the substantial cost of a closure of the blast furnace and, on the evidence before me, have concluded that it is quite possible that Nyrstar would not then re-open the facility in the foreseeable future.

[22] Subsection 423(4)(d) requires that I take into account the views of the bargaining representatives for the agreement. The Nyrstar position is that it recognises the rights of the unions to take protected industrial action but seeks in effect, that this right be qualified such that it cannot give rise to the possible shutdown of the blast furnace.

[23] The unions' seek to pursue the proposed protected industrial action with the objective of encouraging Nyrstar to improve its negotiating offer. The union's position inherently involves the exercise of judgment about what action will not stop the plant.

[24] In terms of subsection 423(4)(e), I am satisfied that the parties have been bargaining in good faith. The matter of a breach of bargaining orders does not arise.

[25] Subsection 423(4)(f) requires consideration of the extent to which the parties are genuinely unable to reach an agreement and whether there is no reasonable prospect of agreement being reached. In this respect, I am not satisfied that an agreement is impossible. I have noted that Nyrstar has withdrawn an earlier offer of a 2% annual wage outcome but that, on 9 November 2009 the unions communicated two possible settlement options. One of these involved a 2.5% wage outcome. In this respect, the parties may not be that far apart. Secondly, there may be a capacity to alter the duration of the agreement to facilitate consensus. Finally, I have noted the Nyrstar position that its current proposal is a final one and that it should be put to a formal vote. The capacity to do that exists.

[26] Lastly, subsection 423(4)(g) requires that I consider the objective of promoting and facilitating bargaining for the agreement. I consider this particular factor mitigates against the premature limitation of the protected industrial action given that the Act permits such action as a bargaining tool.

[27] Notwithstanding this, in overall terms, pursuant to section 423(2), I am satisfied that the protected industrial action is threatening to cause significant economic harm to Nyrstar and that a further attempt at negotiations, or some modification of the way in which the protected industrial action will occur, would be appropriate.

[28] In terms of subsection 423(5), I am satisfied, on the evidence before me, that the threat of economic harm to Nyrstar is imminent. The very low sinter stockpile is fundamental to that conclusion.

[29] Subsection 423(6) is pivotal to my decision. There is a potential tension between this subsection and other parts of section 423 in that the earlier considerations invite attention to threatened or imminent harm but this subsection requires that the protected industrial action has been engaged in for a protracted period of time and that it will not be resolved in the foreseeable future.

[30] What constitutes a protracted period is subject to debate in the context of a continuous production process of this nature. However, the more fundamental issue is that, at the time of the hearing of this matter, the protected industrial action had not commenced at all.

[31] It appears to me that, in summary terms, section 423 requires that Fair Work Australia must be satisfied that protected industrial action is occurring and is either causing economic harm, or threatening to do so in a fashion which warrants intervention in the normal bargaining process.

[32] Accordingly, I cannot conclude that subsection 423(6) can be satisfied in this instance. As a result, whilst there are factors that favour intervention in the current bargaining process, no suspension or termination of the protected industrial action can be considered. The section 423 application must be dismissed on that basis.

[33] The second limb to the Nyrstar application is predicated on subsection 424(1)(b). This issue was only briefly argued before me.

[34] Subsection 424(1) states:

"Suspension or termination of protected industrial action

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

if FWA 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."

[35] To the extent that there is any suggestion that the protected industrial action is threatening to endanger the life or safety of persons, I clearly understand this not to be the case. The Nyrstar position is that it will only utilise appropriately trained and qualified personnel and that it will take pre-emptive action to shut down the blast furnace in the event that it considers this to be the safest course of action.

[36] Nyrstar primarily relied upon subsection 424(1)(d) on the basis that, on the material before me, I should be satisfied that the perspective protected industrial action is, and would threaten, to cause significant damage to an important part of the Australian economy.

[37] In this particular respect, Nyrstar relied on the evidence of Mr Howell to the effect that, if the blast furnace was required to be shut down, there was no guarantee that in today's environment operations would be recommenced.

[38] Whilst the AWU asserted that the regional Port Pirie economy could not be regarded as a significant part of the Australian economy, the unions generally opposed any link between the proposed protected industrial action and damage to an important part of the Australian economy.

[39] I am not satisfied that the evidence before me establishes, with the necessary degree of certainty, that the protected industrial action is threatening, or would necessarily threaten the viability of the Nyrstar plant.

[40] It may be that this is the case, but the evidence to support this proposition has not been made out to date. Whilst Nyrstar is likely to be harmed by this action, the potential for a subsequent indefinite closure of the plant does not extend beyond Mr Howell's concerns.

[41] Further, while the possible indefinite closure of the Nyrstar plant may be a consequence of the shutting down of the blast furnace, the evidence currently before me does not establish this was sufficient certainty at the present time. Subsection 424(1) requires satisfaction about such a threat such that Fair Work Australia is then required to suspend or terminate the proposed protected industrial action.

[42] It may well be that these circumstances can be made out but this has not been established in the matter before me. The capacity exists for a further application to be made and the Act requires that Fair Work Australia deal with that as a matter of some urgency.

[43] Consequently, to the extent that Nyrstar rely on subsection 424(1)(d) as the basis for a suspension of the proposed protected industrial action, this application is also refused.

[44] Finally, I note that Nyrstar has also sought the assistance of Fair Work Australia in the negotiation of the agreement, through an application made under section 240. This issue has been the subject of a brief discussion which simply confirmed that the parties are not currently in agreement. The Fair Work Australia file in this respect will be kept open and I have subsequently extended a further invitation to the parties to meet with me in Port Pirie. I await their collective advice in this respect.

S Mulcahy counsel for Nyrstar Port Pirie Pty Ltd.

D Roberts and G Day on behalf of the Construction, Forestry, Mining and Energy Union.

D Thomas and C Fenney on behalf of the Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union.

J Hanson and M Hopgood on behalf of The Australian Workers' Union.

J Adley on behalf of the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia.

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