[2020] FWC 49

Fair Work Act 2009

s.425 - Industrial action

Orora Packaging Australia Pty Ltd t/a Orora Bag Solutions

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

Application to suspend protected industrial action, cooling off

[1] This decision concerns an application made by Orora Packaging Australia Pty Ltd (Orora) under s 425 of the Fair Work Act 2009 (the Act) for an order to suspend protected industrial action currently being engaged in by employees at its Thomastown site, at which the company manufactures bags for food and industrial products.

[2] The employees in question are members of the Australian Manufacturing Workers' Union (AMWU). They are covered by the Orora St Regis Bates Keon Park Enterprise Agreement 2015 (2015 Agreement). The AMWU is covered by the Agreement. The nominal expiry date of the Agreement was 30 June 2019. The parties have been bargaining for a new enterprise agreement to replace the 2015 Agreement. Since October 2019, employees have been engaging in protected industrial action in support of their claims for a new agreement.

[3] The company contends that it is appropriate that the Commission suspend the protected industrial action, having regard to the considerations in s 425(1). In particular, it says that the industrial action has been protracted and that a suspension would be beneficial to the bargaining representatives, because it would assist in resolving the matters in dispute.

[4] The AMWU opposes the application and contends that the considerations in s 425(1) weigh against the granting of the application. It says that a suspension order would benefit the company by removing the pressure brought about by the protected industrial action, but that it would not benefit the union or employees and would not assist in resolving the matters at issue in bargaining.

[5] I heard the application on Monday 6 January 2020, concurrently with another application lodged by the company under s 418 of the Act, which asked the Commission to issue an order stopping unprotected industrial action. The two applications related to the same industrial action and were brought as alternatives. The company's primary position was advanced in the present proceeding, namely that the relevant industrial action is in fact protected action, and that the Commission should grant its application under s 425 and suspend the action for a 'cooling off' period. The company's alternative position, pressed in its s 418 application, was that the industrial action had become unprotected, because of an impending transfer of business whereby employees will take up employment with the purchaser. On the company's alternative case, the industrial action was no longer being taken for the requisite purpose in s 409, or against the employer which would be covered by the proposed agreement, and the action had therefore ceased to be protected.

[6] In a decision issued on 7 January 2020,[1] I determined that the industrial action was protected for the purposes of the Act and dismissed the company's application for orders under s 418.

[7] At the hearing of the two matters, evidence was given by Mr Greg Aldous, the company's general manager, as well as by Mr Dean Griffiths, the AMWU organiser responsible for members and bargaining at the Thomastown site. The parties relied on the evidence of these witnesses in relation to their respective positions in both applications.

[8] The background to this matter is set out in the company's application and the witness statement of Mr Aldous and can be briefly stated. Since the nominal expiry date of the 2015 Agreement in June 2019, the company and the AMWU, as bargaining representative for relevant employees, have been negotiating a new enterprise agreement. They have met on some 18 occasions. Issues that remain in dispute include the company's proposed removal of certain paid meal breaks, the classification structure, and wage increases.

[9] On 15 August 2019, the AMWU obtained from the Commission a protected action ballot order. Pursuant to that order, a ballot took place on 13 September 2019, and employees authorised the taking of protected industrial action in support of a new agreement. Following the protected action ballot, the AMWU organised, and employees commenced to engage in, industrial action. On 22 October 2019, employees commenced an indefinite ban on overtime. On 12 November 2019, employees on night shift, day shift and afternoon shift engaged in a one-hour stoppage of work. At 4.00pm employees also engaged in a ten-minute ban on scanning for dispatch of finished goods.

[10] Each day since 20 November 2019, employees on night shift, day shift and afternoon shift have engaged in a one-hour stoppage of work commencing at 6.35am, 2.35pm and 10.35pm respectively, and there has been a ban on scanning for dispatch of finished goods for ten minutes starting at 4.00pm each day.

[11] On 29 November 2019, the company decided to take its proposed enterprise agreement to a vote of employees. The ballot occurred on 11 December 2019. A majority of employees voted not to approve the agreement, by a margin of 59 to 7.

[12] Of relevance to the present matter is the fact that Orora has agreed to sell its Australasian fibre business, including the Thomastown site, to the Nippon Paper Group (Nippon). The sale was announced on 10 October 2019 and the company subsequently commenced consultation with the union and employees. Under the sale agreement, Nippon has agreed to offer employment to all employees of Orora employed in its Australasian fibre business, including those employed at the Thomastown facility. From 6 January 2020, Nippon commenced making offers of employment to employees of the company, although the date for their commencement of employment has not yet been fixed. The contractual sale completion date is 31 January 2020. However, the sale remains subject to regulatory approvals from the Foreign Investment Review Board (FIRB) and the Australian Competition and Consumer Commission (ACCC).

[13] It is common ground that the sale will entail a transfer of business by means of asset transfer pursuant to ss 311(1) and 311(3) of the Act. If a new enterprise agreement is approved by the Commission and covers employees in their employment with Orora before employees commence employment with Nippon, that agreement will be a transferrable instrument. It will cover Nippon, as the new employer, and transferring employees of Orora in their new employment with Nippon.

[14] The power of the Commission to suspend industrial action under s 425 relates only to protected industrial action. For the purposes of the present application, the company and the union agree that the industrial action being engaged in by employees is protected under Part 3-3 of the Act. The industrial action in question is the same action that was the subject of my decision on 7 January 2020, in which I dismissed the company's alternative application for an order under s 418. The industrial action is protected, for the reasons set out in my earlier decision.

The statutory framework and the parties' contentions

[15] Section 425(1) of the Act states:

"425 FWC must suspend protected industrial action - cooling off

(1) The FWC must make an order suspending protected industrial action for a proposed enterprise agreement that is being engaged in if the FWC is satisfied that the suspension is appropriate taking into account the following matters:

• (a) whether the suspension would be beneficial to the bargaining representatives for the agreement because it would assist in resolving the matters at issue;

• (b) the duration of the protected industrial action;

• (c) whether the suspension would be contrary to the public interest or inconsistent with the objects of this Act;

• (d) any other matters that the FWC considers relevant."

[16] The Commission is required to make a suspension order if it is satisfied that the suspension is appropriate, taking into account the relevant matters, which are to be given due weight. I concur with the observation of Watson VP in Patrick Stevedores Holdings Pty Ltd v Maritime Union of Australia that protected industrial action is a right conferred by the Act and is properly to be regarded as legitimate, and that 'the approach to considering suspension under s 425 should therefore be a cautious one'.[2]

[17] The company contended that suspension of the protected industrial action would be appropriate, having regard to the matters that the Commission is required to take into account. It said that it would be beneficial to the bargaining representatives to suspend the action, because there is only a limited opportunity for them now to agree on the terms of a new enterprise agreement, have that agreement approved by the Commission, and for the agreement to apply to employees of Orora, before the transfer of business occurs at the end of January 2020. The company submitted that suspending the protected industrial action would be beneficial because it would provide a more harmonious environment and enable the parties to focus on resolving the matters in dispute. It would, the company said, permit managers to devote attention to negotiations, rather than keeping the plant running with reduced capacity, and managing customer expectations and complaints associated with the continuing industrial action. The company further submitted that a suspension would assist in addressing the problem of the parties having increasingly entrenched positions. The consideration in s 425(1)(a) was therefore, in the company's submission, a matter that favoured a conclusion that it is appropriate to suspend the protected industrial action.

[18] As to s 425(1)(b), the company submitted that the protected industrial action has been of long duration. The overtime ban has been in place since 22 October 2019, and daily one-hour stoppages have been occurring on each shift since 20 November 2019. It said that this too was a consideration that supported the company's application. Orora also said that there were no matters that would indicate that suspension of the industrial action would be contrary to the public interest or inconsistent with the objects of the Act, and that the factors in s 425(1)(c) were neutral considerations.

[19] Orora contended that other relevant considerations supported its application. It said that since the company put its proposed agreement to an unsuccessful vote, the union and employees have not shown any genuine desire to reach agreement and have adopted a rigid position on their bargaining claims. The company said that the union and employees appeared to have a preference for negotiating with Nippon once the transfer of business occurs. In addition, the company said that employees had engaged in unprotected industrial action by taking illegitimate sick leave. It relied on the evidence of Mr Aldous, who said that there had been a substantial increase in the amount of sick leave taken in the last two weeks of December 2019. The company said that although unprotected industrial action could not be the subject of a suspension order, it can and should be taken into account as a relevant consideration in determining whether it is appropriate to suspend the protected industrial action.

[20] Finally, the company submitted that the impending transfer of business was itself an exceptional circumstance, because it meant that the coming few weeks presents the last opportunity for the present parties - Orora, employees and the union - to negotiate an agreement that covers and applies to employees of Orora. It said that there remains a limited and unique opportunity for a new agreement to be made, delivering wage increases for employees and a transferrable enterprise agreement that would migrate to Nippon upon the transfer of business pursuant to the provisions of Part 2-8 of the Act. It said that this was another relevant matter that supported a conclusion that it would be appropriate for the Commission to grant the application for a suspension order under s 425.

[21] The AMWU submitted that it was not appropriate for the Commission to suspend the protected industrial action, and that the considerations in s 425 told against the making of such an order. First, the union said that the protected industrial action was not so grave that the company could not engage in meaningful negotiations with the union and employees. It said that the company had primarily been represented in negotiations by its human resources representatives, Mr Lawley and Ms Shields, who are not involved in the day to day operation of the plant or managing customer complaints and problems associated with the industrial action.

[22] The union said that the protected industrial action is evidently putting pressure on the company, and that this may move the company to make an improved offer and actually assist in the resolution of the outstanding matters. The union said that this is the point of protected industrial action, and that removing the pressure it applies to the company, and the corresponding impetus it may bring for compromise, would only benefit the company and would not assist the parties to resolve the matters at issue.

[23] The union contended that the period of the protected industrial action was relatively brief, and that it was appropriate to take into account that the action concerned was low level, comprising one-hour stoppages and limited bans, not strike action. It contended that the duration of this particular protected industrial action weighed against the making of an order.

[24] The union further submitted that the making of an order suspending the protected industrial action in the present case would be inconsistent with the objects of the Act. It said that part of the object of the Act, set out in s 3, is to recognise the right to freedom of association and achieve fairness through an emphasis on enterprise-level collective bargaining and clear rules governing industrial action (ss 3(e) and (f)). It noted that an object of Part 3 of the Act is to protect freedom of association by ensuring that persons are free to participate or not participate in lawful industrial activities (s 336). The union contended that there was no sound reason in the present case why the protected industrial action should be suspended, and that the company simply found the action to be inconvenient. It said that granting a suspension order in such circumstances would be inconsistent with the objects of the Act and that this weighed against a conclusion that it is appropriate to issue a suspension order.

[25] As to the significance of the pending sale of the business, the AMWU said that it recognised that there may now be a short timeframe for the parties to conclude an enterprise agreement, although regulatory approvals are still required and there is no firm commencement date for employees at Nippon. However, it submitted that a new enterprise agreement at Orora remained possible. It said that the union and employees had a genuine desire to reach agreement with Orora because, if no new agreement is in place by the time of the transfer of business, they will need to reset bargaining and commence afresh with Nippon, which may delay the reaching of any new agreement. Nevertheless, the union and employees are prepared to negotiate with Nippon. The AMWU submitted that the circumstances surrounding the sale of the business were not exceptional and did not weigh in favour of a conclusion that it would be appropriate for the Commission to suspend the protected industrial action.

[26] I am not satisfied that suspension of the protected industrial action is appropriate, taking into account the matters referred to in s 425(1).

[27] First, I do not consider that a suspension order would be 'beneficial to the bargaining representatives for the agreement because it would assist in resolving the matters at issue'. The consideration in s 425(1)(a) is concerned with the benefit of a suspension to all bargaining representatives, not just one of them. Clearly a suspension would benefit the company as it would be relieved of the economic and operational pressure arising from the protected action. But I do not see how suspension of the protected industrial action would benefit the other bargaining representative, namely the union, which is seeking to use its rights under the Act precisely to exert pressure on the company in support of the bargaining claims that the union and its members are advancing.

[28] The consideration in s 425(1)(a) has a causative element. It is concerned not simply with whether the suspension would be beneficial to the bargaining representatives, but whether the suspension would be beneficial because it would assist in resolving the matters at issue. I do not consider that a suspension order would have this effect. The evidence does not establish that the protected industrial action is preventing bargaining meetings from occurring. I accept that the industrial action makes it more difficult for the company to participate in bargaining, but not that it is a significant impediment. The company is evidently prepared to engage in further discussions and is able to do so. The union confirmed during the hearing that it too is willing to negotiate further. In my view, suspension of the protected industrial action would not result in an increased likelihood that the matters at issue would be resolved.

[29] Contrary to the company's contention, I am not convinced that suspension of the protected industrial action would bring about a more harmonious environment. The union and employees are unlikely to be industrially mollified by the success of the company's application to neutralise their industrial leverage. It might make the environment worse. And if the positions of the parties are entrenched, as the company says, I do not see why in the present case a suspension of the protected industrial action would change that. On one view, the union and employees might be less likely to settle an agreement at a time when they have been deprived of recourse to protected action and are therefore in a weakened position.

[30] I simply do not see any connection between a suspension of the protected industrial action and the resolution of the outstanding issues in this matter. One can imagine a case where such a connection may be present, for example, where the parties will not talk to one another, the employer refusing to negotiate while employees remain on strike, and the union and employees insisting that work and negotiations will not resume until the employer accedes to a core demand. In such a case, suspension of protected industrial action might have the effect of reanimating stalled negotiations. It might allow new proposals to be put forward at meetings held during a brief ceasefire in the industrial hostilities. But in the present case, the parties are not refusing to talk to one another, and the protected industrial action is neither directly nor indirectly a barrier to further negotiations and the resolution of the matters at issue.

[31] In my view, there is no evidence to support a conclusion that suspending the protected industrial action would be beneficial to the bargaining representatives 'because it would assist in resolving the matters at issue'. I do not discern a valid basis for the drawing of an inference to this effect. The consideration in s 425(1)(a) weighs against the suspension of the protected industrial action.

[32] Secondly, the protected industrial action currently being engaged in has been ongoing since late October 2019. In my assessment, consideration of the 'duration of the industrial action' should take account of the nature of that action. For example, a ten-minute daily ban might continue for some months without reaching the same level of significance as a one-week strike. Of course, this would depend on the level of importance of the relevant work during the respective periods. However, even if the nature of the industrial action is not something that should be taken into account under s 425(1)(b), I consider that it is another relevant matter to be considered under s 425(1)(d). It seems reasonable that the longer and more significant the industrial action has been, the more this consideration might tend to weigh in favour of a suspension to allow for the 'cooling off' suggested in the heading of s 425.

[33] The protected industrial action in the present matters consists of daily stoppages on each shift, the daily ten-minute ban on scanning of dispatch for finished goods, and an ongoing overtime ban. I appreciate that the action has been burdensome for the company, however in my view the duration of the protected industrial action is a neutral consideration in the present matter.

[34] Thirdly, I take account of the AMWU's submissions concerning the object of the Act in s 3 and the objects of Part 3 of the Act contained in s 336. Further, the objects of Part 2-4, which concerns enterprise agreements, include providing a simple, flexible and fair framework that enables collective bargaining in good faith and enabling the Commission to facilitate the making of enterprise agreements (s 171). Having regard to these objects, I consider that the Commission would not lightly reach a state of satisfaction that it was appropriate to suspend protected industrial action under s 425, and that a persuasive rationale must be established as to why it is appropriate to suspend the right to take protected industrial action. I do not find there to be such a rationale in this case.

[35] In the present circumstances, I consider that it would be inconsistent with the objects of the Act to suspend the protected industrial action, although it has not been established that it would be contrary to the public interest to do so. In my view, the considerations in s 425(1)(c) weigh against the issue of a suspension order. I would note however that, even had I regarded this consideration to be a neutral factor, it would not have altered my conclusion as to the disposition of the application.

[36] As to other matters that should be taken into account under s 425(1)(d), I do not consider that the 'limited window' for making an enterprise agreement prior to the transfer date is a factor supporting a conclusion that it is appropriate to suspend the protected industrial action. The sale and the transfer of employees is not dependent on the making of a new enterprise agreement covering employees of Orora. It is a not a condition of sale. Employees' ongoing employment at the site with Nippon does not depend on it. Subject to regulatory approvals, which have not yet been given, the sale of the business and the transfer of employees to Nippon will go ahead regardless of whether a new enterprise agreement is made.

[37] The company and the union agree and expect that, if no agreement is approved before the sale and transfer, the union and employees will simply bargain with Nippon. Neither party said that there was any particular problem associated with this eventuality. I appreciate that, in this scenario, there would need to be a recommencement of bargaining involving Nippon instead of Orora. A new notification time will be required, and any protected industrial action would require a new protected action ballot order. This could no doubt result in some delay in a new enterprise agreement being made. But this is not an especially adverse implication of no agreement being finalised before the transfer of business. The expired 2015 Agreement would apply to transferring employees in their employment with Nippon until a new agreement is made. And even if there were some imperative to conclude an enterprise agreement at Orora before the transfer of business, I do no believe that suspension of the protected industrial action is likely to facilitate that outcome.

[38] For the reasons set out in my decision in relation to the application under s 418, I do not accept the company's contention that, since the unsuccessful vote on the company's proposed agreement in December 2019, the union and employees have not had a genuine desire to reach agreement with the company, or that they have a preference to negotiate with Nippon once the transfer of business occurs. Had I accepted these contentions, it might have led to a conclusion that the industrial action currently being taken by employees was not protected, in which case no order under s 425 could be issued, as the section does not apply to unprotected industrial action.

[39] Further, if the company were correct in its submission that the union and employees have no or little interest in bargaining with Orora until after the transfer of business occurs, I do not see how a suspension of protected industrial action would create such an interest.

[40] As to the contention of the company that the union and employees have adopted a rigid position and have not initiated further discussions since the vote on the company's proposed agreement in December 2019, I reiterate the observations in my earlier decision that there is no reason to conclude that it is up to employees or the union (or the company for that matter) to make the next move in the negotiations. Further, to negotiate genuinely and in accordance with the objects and requirements of the Act does not preclude hard bargaining. In any event, Mr Griffiths gave evidence that the door to further discussions remained open and noted that the union had participated in bargaining-related conciliation in the Commission on 23 December 2019.

[41] I accept the company's submission that the Commission can take into account, under s 425(1)(d), any unprotected industrial action that may be occurring, even though such action cannot itself be the subject of a suspension order. However, I find that the evidence does not establish the company's contention that employees are currently taking unprotected industrial action in the form of absences on illegitimate sick leave. There is an insufficient basis for me to draw an inference that the absences are not legitimate. I note that Mr Aldous said in cross-examination that as far as he was aware, employees had provided medical certificates for their absences.

[42] Taking into account the matters identified in s 425(1) of the Act, I am not satisfied that it is appropriate to suspend the protected industrial action. The company's application for an order suspending the protected industrial action is therefore dismissed.

J Gardner for the Australian Manufacturing Workers' Union

[1] [2020] FWC 49

[2] [2016] FWC 510 at 21

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