[2017] FWC 2583

Fair Work Act 2009

s.739 - Application to deal with a dispute

The Australian Workers Union; 'Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union' known as the Australian Manufacturing Workers Union (AMWU); Communications, Electrical and Plumbing Union

s.739 application to deal with a dispute

[1] On 24 September 2015, the Fair Work Commission (FWC), as presently constituted, published a decision[1] (the Decision) which allowed BlueScope Steel (AIS) Port Kembla (BlueScope) to immediately introduce the Trade Operator Model (TOM) into its Hot Mills Business. The decision stated:

"[23] I have decided that the proposed Trade Operator Model can be introduced immediately on the understanding that a review will be undertaken by the FWC in relation to the operation of the new classification and rate of pay in April 2016."[2]

[2] The proposed review in April 2016 was overlooked by the FWC, BlueScope and the Unions. The FWC was reminded of the review by the Australian Manufacturing Workers' Union (AMWU) in another matter (C2016/6680)[3] where senior management of BlueScope claimed that the introduction of the TOM had been condoned by the FWC because the time for the review in the Hot Mills Department had lapsed.

[3] The FWC issued a notice of listing to conduct a conference in relation to the review. BlueScope advised of a jurisdictional objection relating to the capacity of the FWC to conduct this review.

[4] The principal issues to be determined in this decision are:

1. whether the FWC has the capacity to conduct a review of the introduction of the TOM; and

2. whether BlueScope has the option to not participate in the review having implemented the operation of the TOM into the Hot Mills Department.

[5] The jurisdictional objection of BlueScope was listed for hearing on 30 March 2017. Mr Ken Brotherson from Hall and Wilcox was granted leave to appear for BlueScope in accordance with section 596(2) of the Fair Work Act, 2009 (the Act). The AMWU were represented by its Legal Officer, Ms Lucy Saunders. The Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (CEPU) were represented by its Assistant Legal Officer, Mr Ron De La Cuadra.

[6] In mid 2014, BlueScope proposed to introduce the Trade Operator Model (TOM) into its Hot Mills Department at the Port Kembla Steelworks. This proposal enlivened clause 35.2.3 of the BlueScope Steel Port Kembla Steelworks Agreement 2012[4], in relation to the introduction of change which is significant in nature.

"35.2.3 Processes for introducing change which is significant in nature and for resolving associated issues and disputes

(a) The provisions of this subclause set out the terms and order of the procedure which shall govern the introduction and management of change which is significant in nature.

(b) A change will be determined to be significant where it meets the definition as set out in clause 35.2.2(c).

(c) Consultation will commence in relation to workplace change as defined when:

(i) the Company has developed an idea regarding a workplace

Change that, if implemented, would result in a change which is

(ii) the idea has been developed sufficiently as to justify the time and effort required to allocate resources and to develop a working proposal, and

(iii ) a "Task Brief' has been prepared in at least broad terms that

• issues that may arise if the change was progressed to

• impact the idea may have on employees, customers and the

(d) Consultation will commence with a notification in writing to employees and their unions (letter 1) as to the broad objectives of the change and the possible effect the change is likely to have on employees.

(e) Consultation is the process through which employees contribute to problem-solving and decision making. It provides for employee and union input before Company management finally decides on action affecting its

(f) Employees and their unions will be provided with the opportunity to comment and input into the proposed change. This will not limit any party from proposing alternative ideas that may result in the objectives of the business being achieved.

(g) The consultation process must be fair, comprehensive and genuine.

(h) Following consideration of all aspects of the change, including consultation with employees, the Company will advise employees and the relevant unions in writing (letter 2) as to whether or not the Company will proceed with the introduction of the change. The advice will include:

(i) confirmation on the introduction of the change (as finally determined) and the nature of that change;

(iii) the impact the change will have on employees; and

(iv) what steps are to be put in place to manage the impact that the

(i) A decision by employees or the unions not to participate in such discussions bring to an end the consultation process.

(j) Where agreement is reached as to a change, the change may be implemented immediately and the parties are to promptly record the terms of the agreement in writing.

(k) Where there is disagreement as to the change to be implemented, a party to the consultation process must give written notice to the other parties that it disputes the implementation of the change and must follow the Procedure for Resolving Disputes as per clause 35.1.7. Where a matter is referred to FWC as part of the disputes procedure, implementation of the change will be subject to the outcome of such proceedings, during which time the status quo will remain.

(l) For workplace change, (including the number or composition of employees engaged on any task), the consultation process may provide for the change to be introduced on a trial basis by agreement. There should be discussion between the parties as to how the trial arrangements should be implemented. An appropriate monitoring system will be established to ensure that the proposed changes are safe, efficient, legal and fair. The period of the trial will be determined in advance, with a return to the status quo in the event that it is shown that the trial fails the safe, efficient, legal and fair test.

For the purposes of clause 35.2, the term Workplace Change does not include:

Matters that involve the requirement for employees to work in accordance with the reasonable direction of the Company; normal day to day operations and work within the employee's recognised skill s, competence, training and safe working practices.

Company decisions regarding significant capital investment, business growth etc. In these circumstance the Company is to provide the information in writing to employee and their unions as referred to in points (i) to (iv) of clause 35.2.3(h)."[5]

[7] The parties could not reach agreement in relation to BlueScope's proposal which invoked the disputes procedure (clause 35.2.3(k) above).

[8] Clause 35.1 of the Agreement states:

35.1.1 This procedure applies with respect to disputes about matters arising under this Agreement and in relation to the National Employment Standards.

35.1.2 At all stages of the procedure, a party to the dispute may appoint another person, organisation or association, which may include a Union, to accompany or represent them in relation to the dispute.

35.1.3 In the first instance, the parties to the dispute must try to resolve the dispute at the workplace level, by discussions between the employee or employees and relevant supervisors. The relevant supervisor will take all reasonable steps to reply to the employee as soon as possible. If the reply cannot be given by the end of the next ordinary working shift, a progress report will be given.

35.1.4 If the matter is not resolved according to clause 35.1.3 above, the matter will be referred to the appropriate line manager who will attempt to resolve the matter. The relevant line manager will take all reasonable steps to reply to the employee as soon as possible. If the reply cannot be given by the end of the next ordinary working shift, a progress report will be given.

35.1 .5 If still unresolved, the matter will be referred to the appropriate Departmental Manager for review. The Departmental Manager will take all reasonable steps to reply to the employee as soon as possible. If the reply cannot be given by the end of the next ordinary working shift, a progress report will be given.

35.1.6 If the matter remains unresolved following the review, then the matter will be referred to Human Resources.

35.1.7 If still unresolved, the matter will be referred to the Fair Work Commission (FWC) by either party for resolution, which will include conciliation and, if necessary, arbitration. The parties will abide by the outcome of such proceedings, subject to any right of appeal from any such decision of FWC.

35.1.8 If the matter goes to arbitration before FWC, FWC may exercise its procedural powers in relation to hearings, witnesses, evidence and submissions which are necessary to make the arbitration effective.

35.1.9 From the time a dispute first starts to when it is resolved, work shall continue as directed by the Company.

35.1.10 This clause 35 does not apply to an issue that would genuinely place at risk the health and/or safety of the employee(s) concerned. In such cases the Company may direct employees to perform alternative work."

[9] In its decision of 22 May 2015, the FWC, as currently constituted, determined that BlueScope's proposal was not legal.

[10] On 27 August 2015, a Full Bench of the FWC quashed the decision at first instance, upheld the appeal and remitted the matter back for determination of the outstanding issues, ie, whether BlueScope's proposal to introduce the TOM into the Hot Mills Department was safe, efficient and fair.

[11] This hearing was conducted in the atmosphere of great uncertainty in relation to the future operation of BlueScope's Port Kembla Steelworks. The Managing Director of BlueScope had announced that if $200million of cost savings could not be immediately identified then BlueScope would close its Port Kembla Steelworks. BlueScope advised that $40million of savings would have to be cut from employee related costs.

[12] The parties agreed to participate in a FWC mediation process conducted by Vice President Hatcher. The Vice President recommended[6] a number of changes to work practices which were binding upon the parties.

[13] This recommendation formed the basis of the 2015 Agreement. As a result, BlueScope agreed to continue its steelmaking operations at Port Kembla. It is important to note that the Vice President's Recommendation did not cut across the Hot Mills Department dispute process:

"[2] ...This Recommendation does not deal with proposals which have not been brought before me for mediation because they have been agreed to, or are entirely concerned with staff positions, or are the subject of a separate dispute resolution process before the Commission."

[14] It is appropriate to repeat the relevant passages of the Decision in order to place some context around the paragraph which is now the subject of this hearing:

"[12] The concept of fairness is obviously quite complex given the competing interests of the parties. There is an obvious unfairness in the Trade Operator Model for those Operators who will be made redundant and for those Tradespersons who will be forced to learn a new skill and competency, and who will be obliged to perform work other than their trade with possible deskilling. Alternatively, it would be unfair to BlueScope, and its employees as a whole, to deny it the opportunity to make changes which will provide cost savings to the production process and hopefully maintain the economic viability of the Steelworks.

[13] Prior to the commencement of the hearing, I asked the parties to seek instructions in relation to the training of apprentices on the basis that operating machinery is not a component of either the electro technology or mechanical apprenticeships. Mr Darams provided the following undertaking:

"The Company puts this forward: no worker who is conducting their apprenticeship will be required to do any work under this proposal. By that, they will not be trained - any of the training that might have to be provided for a tradesman to operate any particular machinery, they will not be provided with that training whilst they are doing their apprenticeship. The consequence of that is that it will only be trades who have fully completed their apprenticeship training who will be subject to these proposals."

[14] Currently, tradespersons are performing operating tasks throughout the plant which are incidental and peripheral to their core maintenance functions, i.e., in order to undertake fault finding analysis, to test the effectiveness of their maintenance/repair task, or to commission a new installation

[15] For a tradesperson to perform the operating functions now contemplated by BlueScope, additional training will be required. Mr Otsyula, the Plate Processing and Dispatch Manager, advised:

"The training will be the same training that the existing operators undertake before being able to undertake the tasks."

[16] Essentially a Tradesperson is being trained to be an Operator. As I said in my decision at first instance, the concept of Trade Operator or Operator Maintainer is not a new phenomenon in the Australian industrial landscape. The Operator Maintainer classification was introduced at ICI Port Botany some twenty years ago. In that situation, a new classification stream was introduced for tradespersons who undertook the Operator training and performed the Operator/Maintainer role. This process resulted in a work value case being conducted by the Australian Industrial Relations Commission and a consequent endorsement of the proposed classifications and new rates of pay.

[17] BlueScope does not propose to provide any additional remuneration under this proposal. As a result, the proposition may be unfair. I cannot see any industrial justification for a tradesperson to undertake additional training and utilise competencies from another stream in the Australian Qualification Framework standards and the associated training packages for no additional remuneration. Such a proposition is illogical and is inconsistent with numerous decisions of the Fair Work Commission and its predecessors in relation to issues such as cross-skilling and increased competency.

[18] It is evident that the proposal is far wider than the concept of "incidental and peripheral", with tradespersons possibly being required to spend 50% of their working hours performing operational duties. No sensible definition of incidental or peripheral could contemplate such an outcome.

[19] Under normal circumstances, I would recommend a three month trial to "test" whether the proposed work map is onerous or inefficient. It would also allow for an assessment of the productivity improvement and the skills/competencies required to perform the Trade Operator role.

[20] I would also require evidence to be sourced from ICI in relation to their experience with the classification of Operator Maintainer. I would want to consider the benefits, the challenges and the pitfalls of this classification over the last 20 years.

[21] However, due to the obvious need to find urgent cost savings, I am not prepared to delay the introduction of the Trade Operator Model to gather this evidence. To do so would be unfair to BlueScope.

[22] On balance I am satisfied that the Trade Operator Model proposal is fair.

[23] I have decided that the proposed Trade Operator Model can be introduced immediately on the understanding that a review will be undertaken by the FWC in relation to the operation of the new classification and rate of pay in April 2016."[7]

[15] BlueScope argued that these proceedings were finalised when the Decision was published on 24 September 2015 on the basis that the "review" that was contemplated in paragraph 23 of the Decision is not a process open to the FWC and therefore, the review cannot proceed. BlueScope submitted that the power of the FWC was exhausted after it was found that the TOM could be "introduced immediately" (see above).

[16] BlueScope contended that the FWC can only deal with a dispute where it is "expressly authorized" to do so in accordance with section 595 of the Act. BlueScope also referred to section 739 of the Act:

"Section 739

(3) In dealing with a dispute, the FWC must not exercise any powers limited by the term.

(5) Despite subsection (4), the FWC must not make a decision that is inconsistent with this Act, or a fair work instrument that applies to the parties."

[17] BlueScope highlighted the difference between the 2006 State Award, which allowed for arbitration of "unresolved" issues about classification restructuring or work value claims, the 2012 Agreement which continued a provision which allows for a trial of a proposed change but only by the consent of the parties and the 2015 Agreement which allows the FWC to order a trial of a proposed change.

[18] Further, BlueScope referred to the decision of the Full Bench in AWU & Ors v BlueScope[8] where they said:

"[18] Moreover, while the agreement empowers the Commission to arbitrate disputes about the implementation of change, the Commission's powers are circumscribed by s.739(5) of the Fair Work Act 2009 (the FW Act). The effect of that provision is that in arbitrating a dispute in accordance with a dispute resolution procedure in an enterprise agreement the Commission must not make a decision that is inconsistent with the enterprise agreement itself."

[19] BlueScope argued that there was no requirement for it to appeal the Decision because the proposed future review lacked jurisdiction. BlueScope referred to the decision of Gageler. J in State of NSW v Kable,[9] where he held:

"There is, however, a critical distinction between a superior court and an inferior court concerning the authority belonging to a judicial order that is made without jurisdiction. A judicial order of an inferior court made without jurisdiction has no legal force as an order of that court. One consequence is that failure to obey the order cannot be a contempt of court (108). Another is that the order may be challenged collaterally in a subsequent proceeding in which reliance is sought to be placed on it. Where there is doubt about whether a judicial order of an inferior court is made within jurisdiction, the validity of the order "must always remain an outstanding question" unless and until that question is authoritatively determined by some other court in the exercise of judicial power within its own jurisdiction (109) ..."

[20] BlueScope also submitted that if the "review" was within the power of the FWC, that the process was extinguished by the making of the 2015 Agreement.

[21] BlueScope advised that Vice President Hatcher made the following generalised comment in his Recommendation:

"[130] I do not consider that there is any basis, if there ever was, for the continuation of demarcation lines between tradespersons and non-trades personnel. Given the dire position in which the Steelworks finds itself, artificial barriers to the efficient and flexible performance of work cannot remain."

[22] BlueScope also submitted that there is no classification of trade operator in the 2012 Agreement. Further, the Full Bench of the FWC has already determined that it is legal for tradespersons to undertake operator tasks on the basis that their core function has not changed, ie, they are still tradespersons.

[23] The AMWU submitted that "absent a decision quashing the decision, BlueScope's jurisdictional objection fails and in any event, the specific objections raised by BlueScope are of no substance".

[24] The AMWU contended that the FWC, as currently constituted, was purporting to exercise a legal power. If it is ultimately found that the review was outside of the power of the FWC, the AMWU argued that the Decision "remains a thing actually done." The AMWU also referred to the decision of Gageler J in Kable:

"yet a purported but invalid law; like a things done in the purported but invalid exercise of a power conferred by law, remains at all times a thing in fact. That is so whether or not it has been judicially determined to be invalid. The things is, as is sometimes said, a 'nullity' in the sense that it lacks the legal force it purports to have. But the thing is not a nullity in the sense that it has no existence at all or that it is incapable of having legal consequences."[10]

[25] The AMWU posited that absent any appeal, the Decision stands and has legal affect in accordance with the Act.

[26] The AMWU highlighted that BlueScope appears to have concluded that the outcome of the review will necessarily lead to either a new classification or a new rate of pay. The union submitted that there were multiple possible outcomes from the review and that any suggestion that the review is a breach of the no extra claims provision of the Agreement is unfounded.

[27] Further, the AMWU submitted that if the outcome of the review resulted in an outcome that was inconsistent with the Agreement, then a party could then press its jurisdictional objection.

[28] The AMWU rejected BlueScope's submission that the proceedings had concluded. The Union argued that the Decision allowed BlueScope to introduce its significant change subject to the review. On the basis that the review has not yet occurred, the proceedings are therefore not concluded.

[29] The AMWU submitted that the FWC was exercising its procedural powers in determining the matter and was therefore entitled to inform itself, in accordance with section 590 of the Act, in any manner it considers necessary.

(1) The FWC may, except as provided by this Act, inform itself in relation to any matter before it in such manner as it considers appropriate.

(2) Without limiting subsection (1), the FWC may inform itself in the following ways:

(a) by requiring a person to attend before the FWC;

(b) by inviting, subject to any terms and conditions determined by the FWC, oral or written submissions;

(c) by requiring a person to provide copies of documents or records, or to provide any other information to the FWC;

(d) by taking evidence under oath or affirmation in accordance with the regulations (if any);

(e) by requiring an FWC Member, a Full Bench or an Expert Panel to prepare a report;

[30] Relevantly, the AMWU made the following submission:

"21. It is tolerably clear that the Commission was not satisfied, absent further evidence, that a permanent finding of fairness was possible. The Review is best understood as an exercise of the Commission's power to make inquiries and gather evidence. As such it is squarely within the scope of the power arising from the Agreement."[11]

[31] The AMWU posited that BlueScope was legally represented throughout this process by a firm that is extremely familiar with BlueScope, its Agreement and the FWC. Further, BlueScope had the opportunity to appeal the Decision but failed to do so, therefore, it is not now in a position to resist the determination on the basis that it was incorrectly or improperly made. The Union referred to clause 35.1.7 of the Agreement:

...The parties will abide by the outcome of such proceedings, subject to any right of appeal from any such decision of FWC."

[32] The AMWU submitted that, in relation to Kable, it is simply not the case that a FWC decision made under section 739 of the Act remains invalid until it has been authoritatively determined by a superior court.

[33] The AMWU also raised the capacity of the FWC to revoke a decision in accordance with section 603 of the Act:

(1) The FWC may vary or revoke a decision of the FWC that is made under this Act (other than a decision referred to in subsection (3)).

(2) The FWC may vary or revoke a decision under this section:

(ii) if the kind of decision is prescribed by the regulations--a person prescribed by the regulations in relation to that kind of decision."

[34] The AMWU argued that the vastly improved financial viability of BlueScope is a dramatic and relevant consideration in relation to the issues of fairness and efficiency.

[35] Finally, the AMWU submitted that the parties entered into the 2015 Agreement on the understanding that a review of the implementation of the TOM would be undertaken. BlueScope had not appealed the Decision nor had it ever raised any issue of jurisdictional error with the unions.

[36] I have taken into account all of the submissions of the parties. The fact that an issue is not mentioned in this decision does not mean that it has not been considered.

[37] The parties have shown over many decades that neither are adverse or reticent to lodge an appeal against a decision at first instance. I am in no doubt that the Decision of 24 September 2015 was closely perused by both parties' legal representatives. Relevantly, neither party sought permission to appeal. I am in no doubt that the unions would have been disappointed in my decision to allow the TOM to be introduced into the Hot Mills business but would have taken some solace from the proposed review. To now deny them the opportunity to participate in the review would be a denial of natural justice.

[38] BlueScope did not take the opportunity to appeal the decision at first instance. Alternatively, BlueScope could have sought an explanation or further clarity from the FWC in relation to paragraph 23 and the proposed review. BlueScope did neither. It is impossible to escape the conclusion that this current objection is nothing more than a "legal thought bubble" to stop the review that was accepted by the parties in October 2015.

[39] The preceding paragraphs of the Decision (see PN14 above) clearly identify the concerns in relation to the fairness of the proposal that were held at the time. To suggest otherwise is a very selective reading of the decision. To allow BlueScope to simply ignore these paragraphs is a form of judicial review reserved for a Full Bench, not a party to the dispute.

[40] BlueScope raised the issue of Vice President Hatcher's general observation in his Recommendation in relation to demarcation. Based on my professional experience, I understand the practical and cogent reasons why demarcations have existed in the workplace. However, BlueScope's submission goes to the merits of the TOM rather than the jurisdictional issue at hand and is therefore not a relevant consideration in these proceedings.

[41] BlueScope gave commitments that the introduction of the TOM would not result in the deskilling of tradespersons, would lead to reduced utilisation of contractors and improve the productivity and profitability of the Hot Mills business. The review will be able to explore each of these issues.

[42] Finally, the Graded Trades Manual was found by the Full Bench[12] to be not part of the Agreement. As a result, the classifications in the Agreement did not have any settled definition for the life of the Agreement:

"[21] The inference we draw from this is that the parties did not intend that the classifications in the Agreement have any settled definition for the term of the Agreement. Had they had such an intention, the Agreement would have included classification definitions. Rather, there was an intention to continue a well-established practice whereby the practical working of the classification system, including the duties and skills required of each classification, were to be dealt with through the independent process of the Graded Trades Model and Manual..."

[43] The Graded Trades Manual contains a Dispute Settling Procedure (Clause 5.2). I note that this procedure provides a role for the Industrial Relations Commission (of NSW). I am unaware if this document has been updated since BlueScope transferred its industrial regulation to the federal system.

[44] I do not accept BlueScope's argument that the Decision at first instance concluded half way through paragraph 23. Such a proposition is legally flawed and procedurally unfair. Such an outcome would result in a denial of natural justice for the unions - who accepted the decision on its merits and in accordance with the provisions of the Agreement. The wording in paragraph 23 is clear, concise and unambiguous.

[45] BlueScope had the opportunity to seek permission to appeal this Decision. They chose not do so. BlueScope implemented the Decision without question, qualification or clarification. The evidence shows that BlueScope's management who implemented the decision were waiting for the FWC review to be undertaken.

[46] Based on the decision of the Full Bench[13], I cannot see how the making of the 2015 Agreement settled this dispute. The title and rate of pay for each classification is settled but not the duties, skills and competencies of each classification. The duties, skills and competencies of the Trade Operator is one of the core issues of the review.

[47] I find that the FWC has the power to conduct the review in accordance with the Decision.

[48] At a time when BlueScope is seeking to have a more consultative and collaborative relationship with the Unions (a proposition first floated by the FWC and supported by the Unions some 5 years ago), proceedings such as these do nothing to engender the necessary trust and goodwill necessary for such a relationship to develop.

[49] BlueScope's reluctance to participate in the review appears to be based on the view of some predetermined outcome. Such a view is ill founded. There are a plethora of possible outcomes from the review, for example, the information gleaned from this review may simply identify an area of discussion for the 2018 Agreement. Obviously the legal capacity of the FWC to order the implementation of any such outcome will be the subject of discussion and possible future litigation. Neither parties' rights are exhausted or extinguished as a result of their participation in the review.

[50] BlueScope's jurisdictional application is dismissed.

[51] A conference to discuss the process of the review will be conducted on 15 June 2017 at 1pm. A notice of listing will be issued separately.

[1] [2015] FWC 6512

[2] [2015] FWC 6512 at [23]

[3] [2017] FWC 335

[4] [2013] FWCA 5308

[5] [2013] FWCA 5308 BlueScope Steel Port Kembla Steelworks Agreement 2012

[6] [2015] FWC 6871 - 6 October 2015

[7] [2015] FWC 6512 - 24 September 2015

[8] [2015] FWCFB 1798

[9] State of New South Wales v Kable (2013) 252 CLR 118 at [56]

[10] State of New South Wales v Kable (2013) 252 CLR 118 at [52]

[11] AMWU outline of submissions 10 March 2017

[12] [2015] FWCFB 5615

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