Textile, Clothing and Footwear Union of Australia v Geelong Wool Combing Limited

for and on behalf of Geelong Wool Combing Limited by its authorised representative [signed] John Karounos Organisation Development Manager 24 April 2003" 5 Although the documents were dated 24 April 2003, they were not delivered to or received by employees until 28 April 2003 or the next day, Tuesday, 29 April 2003. Some were handed to employees when they attended the Company's premises for work on 28 April 2003 and some were received in the post that day or the next day. 6 The Company worked two 12‑hour shifts over a 24‑hour period. An evening shift was scheduled to end, and a new shift was rostered to start, at 6.00 am on Monday, 28 April 2003. There were approximately 15 operators on the evening shift, together with the Shift Manager, Mr John Austin, and two mechanics. 7 The following evidence was given by employees of the Company. Shortly before the end of that evening shift Mr Austin asked the employees to stop work and go to the canteen. When the night shift employees were in the canteen, Mr Karounos handed to each of them a copy of the letter and the notice. Mr Karounos told them that he was notifying them that the Company had decided to go ahead and use its "IBP" a reference to the Company's initiation of a bargaining period, notice of which it had served on 4 March 2003, and that starting that morning at 6.00 am a lockout of employees would commence. 8 One employee, Mr Glen Musgrove, asked what was the period of the lockout, and Mr Karounos told him one month. Other employees asked about the three days' notice. Mr Karounos said words to the effect that the Company would pay in lieu for the three days' notice, the shift which was about to end would be paid for the night of 28 April, and the following shifts would be paid for the next two days. Mr Karounos then asked the employees to collect their belongings and leave the plant by the back gate. 9 The workers rostered for the shift to start at 6.00 am on 28 April 2003 arrived at the plant to find the gates locked. One employee who arrived at 5.25 am, Mr David Hobbs, was told by Mr Wayne Allan, the Production Manager, "You've been locked out". Mr Allan handed Mr Hobbs through the fence a copy of the letter and the notice. Mr Hobbs heard Mr Allan tell another employee that he had been locked out and he saw him hand documents through the fence to a number of other employees. 10 Mr Hobbs remained at the front gate of the plant for most of that day. A number of employees told him that when they arrived at the plant they were handed a notice through the gate. Some of the employees received notices through the post that day. Mr Hobbs received a copy of the letter and the notice through the post the next day, 29 April 2003. 11 Mr Glen Musgrove had a similar experience with other employees who arrived to start work on the 6.00 am shift. After Mr Musgrove left the plant, as he was directed, he went round to the front gate. A number of employees were outside the locked gate and they told Mr Musgrove that they had been told there was a lockout. Mr Allan told another employee, Mr Dean Lowday, that he was locked out. When Mr Lowday asked Mr Allan where was his three days' notice, Mr Allan handed him a copy of the letter and the notice. Mr Allan handed another employee, Mr Noel McCaffrey, a copy of the letter and the notice, and told him that it was notification of a lockout. Mr McCaffrey asked Mr Allan about his three days' notice and Mr Allan told him words to the effect of, "This is it", and that the Company would pay him for the day. When Mr McCaffrey said they were meant to have three days' notice, Mr Allan said that letters had been mailed out on Thursday, 24 April 2003, and that the Company was paying him not to turn up to work. When Mr McCaffrey asked how long the lockout was for, Mr Allan said he should read the letter. 12 During 28 April 2003 the front gate to the Company's plant remained locked and employees outside the gate could not gain access to the Company's plant. Mr Allan informed other employees who came to the plant to work on 28 April 2003, and others whom he telephoned, that there was a lockout. 13 The facts and circumstances to which I have referred which occurred on 28 April 2003 have been described in affidavits from employees. Their evidence has not yet been tested by cross‑examination. Affidavits were filed on behalf of the Company by Mr Schmitt and Mr Karounos. They explained the background and circumstances leading up to what occurred on 28 April 2003. With one exception, there is not a substantial difference in the version of the events given by the employees and the version on behalf of the Company. 14 The exception relates to what the employees were told as to when the lockout was to commence and the inference that should be drawn from what they were told as to when the lockout proposed by the Company in fact commenced. Mr Karounos said that his purpose in attending the plant at 4.45 am on 28 April 2003 was to communicate to employees ending the shift and commencing the next shift at 6.00 am that the Company intended to lock them out and to hand them the Company's notice under s 170MO of the Act and his covering letter dated 24 April 2003. 15 According to Mr Karounos, he told the employees who were assembled in the canteen that the Company would be exercising its right under the Act to lock them out. Mr Karounos said he then handed each employee a copy of the letter and the notice, and said that all the relevant information regarding the lockout was contained in the two documents. 16 In response to questions as to what was going to happen in the next three days, Mr Karounos said that he would not be debating the contents of the documents but that they would be paid for the remainder of the shift on 28 April and their other shifts until the lockout notice came into play. I note that according to Mr Musgrove, Mr Karounos told the meeting that starting that morning at 6.00 am a lockout of employees would commence. 17 Mr Karounos had recommended to Mr Schmitt that the Company require the employees not to work their normal shifts until the lockout took effect, and that employees be paid during that period, because on previous occasions when the Company was negotiating industrial matters and the current industrial action with the Union and employees, the Company had experienced incidents of industrial sabotage during the negotiations. 18 According to Mr Karounos, at his request, Mr Allan and Mr Wayne Wright, the Maintenance Coordinator, attended the front gate from 5.15 am on 28 April 2003 and they told Mr Karounos that they handed each employee who came to the plant a copy of the letter and the notice and told them that they would not have to work that day, to go home, that they would be paid for the day, that they were not required to attend work during the period the lockout took effect and that they would be paid for that time. 19 Mr Karounos also said that about 1.30 pm or 2.00 pm on 28 April 2003, after management had secured the plant, he instructed Mr Allan to telephone each employee rostered on C and D shifts, and he handed him a list of those employees. Mr Karounos asked Mr Allan to telephone each employee on the list and to tell the employees that that day they would be receiving by registered post a letter and a lockout notice from the Company. Mr Karounos also told Mr Allan that the employees were not required to attend their shift commencing 6.00 am and 6.00 pm on 29 April. Mr Karounos also instructed Mr Allan to advise each employee that they would be paid until the lockout took effect. 20 Mr Karounos met Mr Allan at about 2.00 pm and asked him how his ring‑around was going, and Mr Allan gave him a report on his progress. There had been contact with some employees on the C and D shifts but there was no answer from others. The C and D shifts were rostered to work at various periods from 6.00 am on 29 April to 6.00 am on 3 May 2003. 21 The Union submitted that what occurred on 28 April 2003 was a lockout and that what occurred on that day and the continuation thereof is not protected action for the purposes of ss 170ML and 170MT of the Act. 22 First it was contended that the Company's reasons for instituting the lockout were not confined to the purposes of supporting or advancing claims in respect of the proposed agreement, as required by s 170ML(2) in order for protected action to arise. Secondly, it was contended that no notice was given of the commencement of the lockout at or about 6.00 am on 28 April 2003, as required by s 170MO(3) of the Act. 23 The first contention was based on the Union's claim that for some time the Company has been seeking the insertion of a stand‑down clause in the Certified Agreement and to rearrange the shift work at the plant. The Union relied on the following factors: First, in May 2002 the Company initiated proceedings in the Australian Industrial Relations Commission ("the Commission") and sought to vary the then current agreement to insert a stand‑down clause. The submission was made on behalf of the Company at that time in the following terms: "The application was made as a result of a range of factors beyond [the] control of the employer (including the substantial reduction in the volume of the wool clip a worldwide over capacity in wool scouring and combing, low level of demand for tops and record greasy wool prices) which have resulted in the supply of wool for processing not being sufficient to allow Geelong Wool Combing to economically process wool on a continuous shift basis." On 29 May 2002 the Commission dismissed the application. In pars 9 and 15 of its reasons, the Commission made the following observations: "9. Mr Walsh gave evidence concerning five options which had been considered by the company as methods for dealing with the current need to reduce production capacity at the plant. The options ranged from closure of the plant to the option contained in the company's proposed order and an option put by the union in previous discussions. Each option was costed and evidence given of their impact. The major variable in each scenario was labour costs. … 15. Mr Spira stated that in order to be profitable the Geelong plant need [sic] to operate at 100% capacity, 24 hours a day over seven days per week. The company started to become aware of a downturn in the industry in approximately June or July of 2001. There was a further sharp downturn after 11 September 2001 and since the beginning of 2002, the plant has not been able to obtain enough wool to run at 100% capacity. Mr Spira gave evidence of the company's current financial position." (underlining in original) 24 Secondly, the Union relied upon par 2 of the letter of 24 April 2003 which had been handed to the employees on 28 April 2003, which noted that the plant at Parkes was still operating because agreement had been reached in relation to Parkes allowing more flexible working arrangements. 25 Thirdly, the Union relied on the observation of Mr Hobbs, who had visited the Parkes plant which was operated by the BWK Group, of which the Company forms a part, on 22 April 2003. He noticed that batches were being processed there which had hitherto been processed at the Company's plant at Geelong. In this context the Union referred to the fact that Mr Schmitt had said in his affidavit that daily production rates at Parkes had not fallen away. 26 The ulterior purpose claimed or submitted by the Union is that the Company wishes to be able to stand down employees due to the downturn in work. There is a controversy whether the purpose which engages the umbrella of protected action provided by s 170ML has to be the sole purpose or whether it is sufficient if it be a substantial purpose or the predominant purpose: see FH Transport Pty Ltd v Transport Workers' Union of Australia (1997) 75 FCR 480 at 484‑486; Transport Workers' Union of Australia v Lee (1998) 80 IR 106 at 108‑109. 27 For present purposes, I am prepared to follow the same approach as Drummond J in FH Transport Pty Ltd v Transport Workers' Union of Australia (supra). However, I am not prepared to draw the inference regarding the Company's purpose submitted by the Union. Further, I do not consider that there is a serious question to be tried that the inference should be drawn. The Commission's decision on 29 May 2002 and the submissions in relation to it are too remote in point of time from the negotiations in relation to the new certified agreement, and the other matters relied upon by the Union are speculative. The sequence of events leading up to the preparation of the letter and the notice, and the evidence of Mr Schmitt, is such as to lead to an inference that the purpose of the lockout is to support or advance claims made by the Company in relation to the proposed agreement. 28 I turn to the second ground advanced by the Union, that is, insufficient notice of the lockout. A number of employees other than those employed on shift A and shift B did not receive a copy of the letter and the notice no later than three days before 1 May 2003. Accordingly, when the matter first came before the Court on 30 April 2003, the Company by its counsel undertook to the Court that it would not treat as valid the lockout notice dated 24 April 2003 insofar as it related to employees falling within the description of shift C, shift D and "all other employees" as referred to in the notice. 29 In order for a notice given under s 170MO(3) to be effective to provide an umbrella of protected action, it must be given before the relevant industrial action, such as a lockout, commences. The Union contends that the lockout commenced at 6.00 am on 28 April 2003. The Company on the other hand contends that, consistently with the documentation handed and sent to employees, the lockout for the purposes of ss 170ML and 170MO was to commence on 1 May 2003 for shift C, shift D employees and all other employees other than shift A and shift B employees, and was to commence on 3 May 2003 for shift A and shift B employees. As already noted, the Company is no longer relying on the notice for employees other than shift A and shift B employees. 30 The Company contended that the direction in the letter not to attend for work during the period between receipt of the letter and the time when the lockout and the notice was to commence was not the start of the lockout. It was said that this direction was not a lockout as there was no provision in the Act which prevented an employer from preventing employees from performing work under their contracts of employment without terminating those contracts. 31 The ability of an employer to lockout employees from employment with immunity from action under s 170MT of the Act depends upon the initiation of a bargaining period and the service of a notice under s 170MO. In the present case the Union instituted a bargaining period on 20 December 2002, pursuant to s 170MI of the Act, and on 4 March 2003 the Company instituted a bargaining period pursuant to s 170MI of the Act. It was therefore open to the Company to lock out the employees and be protected from any action for so doing if it gave the appropriate notice. 32 It is apparent that what the Company has sought to do is to have the lockout commence on the days specified in the notice but to have the employees not in the plant premises for the days preceding the commencement of the lockout. It is a question of fact as to when a lockout commences. I am prepared to accept for the purposes of the argument that it is possible for an employer, by the use of properly and carefully drawn documents, to propose to commence a lockout as protected action under s 170ML and have as a prelude to the commencement of the lockout a period during which there is a direction to employees that they are not required to report for work and during which the employees are to receive full pay. Put at its lowest, there is a serious question to be tried as to this proposition. 33 Nevertheless, there is a strong case for saying, as the Union contended, that what occurred on 28 April 2003 was not what the Company was proposing in its letter, but rather a lockout as such; that is to say, as contemplated by s 170ML(3) of the Act, the employees were locked out from their employment. Although s 170ML(5) provides: "If the employer locks out employees from their employment in accordance with subsection (3), the employer is entitled to refuse to pay any remuneration to the employees in respect of the period of the lockout", that provision is an enabling provision. It enables the Company to refuse to pay employees during a lockout complying with s 170ML. The Company may have contemplated - indeed, it did contemplate - a two‑stage process. There is a serious question to be tried that what occurred was either a one-stage process or a two-stage process in which the first stage infected, coloured or tainted the second stage. 34 There is evidence from employees, not yet tested or challenged in cross‑examination, that they were told that they were locked out and that a lockout was in place. What the Company contemplated was that on and from 6.00 am on Monday, 28 April 2003, the employees were to be excluded from the Company's premises and that this exclusion was to be continuous until 30 and 31 May 2003, depending upon the shift. If that be the correct characterisation of the Company's conduct, then it is arguable that the lockout does not have the benefit of being protected action, as the proper notice has not been given in respect of that lockout: cf PWB Anchor Ltd v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union [2000] FCA 1482 at [19]; Construction, Forestry, Mining and Energy Union v Curragh Queensland Mining Ltd (unreported, Wilcox J, 30 September 1998 at 19). 35 The consequence of this reasoning is that it exposes a serious question to be tried that the lockout which commenced on 28 April 2003 has occurred in contravention of s 170NC(1) of the Act, as it occurred with intent to coerce the employees to agree to the Company's proposals for the new certified agreement. 36 In this respect the Company's position was clear. Mr Schmitt acknowledged that the lockout was instituted to place pressure on the employees and the Union to reconsider their position on the Company's proposals for the new agreement, including a five‑day working week. It was Mr Schmitt's view that the Company's action against the employees might act as a catalyst for change in their, and the Union's, position on the flexibility which the Company sought in the proposed agreement. 37 The Company submitted that there could be no coercion in its conduct for the purposes of s 170NC, as coercion involved conduct compulsive of reaching an intended objective. It was said that stopping union organisation on the Company's premises during the period that the direction not to attend for work was outstanding was not compulsive of reaching an intended objective. I consider that there is a serious question to be tried on this issue, as the intention of the Company in initiating the lockout, whenever it commenced, was to bring pressure to bear on the employees and the Union. 38 Put shortly and in summary, there is a serious question to be tried that coercion, in contravention of s 170NC(1), occurred by way of a lockout which commenced at 6.00 am on 28 April 2003 and was to run to the end of May 2003 and that notwithstanding the s 170MO notice dated 24 April 2003, that notice does not relate to the lockout which commenced on 28 April 2003 and continued on and past 3 May 2003. 39 I am satisfied that the balance of convenience is in favour of the grant of injunctive relief. The Act, and in particular s 170MO, contemplates a period of notice to be given before protected action commences during which the party or parties given the notice can consider how they will respond. As Harper J said in National Workforce Pty Ltd v Australian Manufacturing Workers' Union (1997) 75 IR 200 at 203: "The giving of the relevant notices is not of merely symbolic importance. They have a significant part to play in the progression of an industrial dispute. Parties to a dispute are entitled to proceed upon the basis that that dispute cannot proceed beyond a certain point unless the notices are given and, when given, will provide the recipient with information of importance to the recipient in its future conduct of the dispute." An appeal against this decision was allowed: see National Workforce Pty Ltd v Australian Manufacturing Workers' Union [1998] 3 VR 265, but the Court of Appeal of the Supreme Court of Victoria did not dissent from this observation of Harper J. 40 The employees and the Union should have the opportunity of a three‑day notice period within which to consider, collectively, how they will respond. In the ordinary course the employees would have had that opportunity collectively whilst at work. It is a disadvantage to the employees and the Union not to have this opportunity. 41 Although the Company identified acts of industrial sabotage in the past during other periods of negotiations, I am not satisfied that there is such a risk of that occurring in the present circumstances that the injunction I propose should not be granted. I therefore propose to order that: 1. The respondent be restrained until the trial of the proceeding or further order from: (a) treating as valid the lockout notice dated 24 April 2003, a copy of which is included in Exhibit DH1 to the Affidavit of David Hobbs affirmed 30 April 2003; (b) preventing its employees who are members of the Union employed at its premises in Corio, Victoria, from performing work under their contracts of employment which are subject to the provisions of the Geelong Woolcombing Limited - TCFUA Certified Agreement 2001 without first giving them, whilst they are not prevented from working under their said contracts, a notice which complies with s 170MO(3) of the Act.

I certify that the preceding forty-one (41) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Goldberg.

Dates of Hearing: 30 April and 1 May 2003