[2016] FWC 3848
FAIR WORK COMMISSION

DECISION


Fair Work Act 2009
s.739 - Application to deal with a dispute

The Australian Workers' Union
v
BlueScope Steel Limited
(C2016/3763)

VICE PRESIDENT HATCHER

SYDNEY, 23 JUNE 2016

Introduction

[1] On 16 May 2016 the Australian Workers’ Union (AWU) lodged an application (Application) for the Commission to deal with a dispute in accordance with the dispute settlement procedure contained in clause 35 of the BlueScope Steel Springhill Workplace Agreement 2015 (2015 Agreement). The dispute arose in a direct sense from a letter dated 5 May 2016 sent by BlueScope Steel Limited to its employees in the Despatch area of the Painting and Finishing Department (PFD) of its Springhill Plant at Port Kembla. The letter concerned the implementation of proposals advanced by BlueScope 1 to train operators in the Despatch area to perform tasks in parts of the PFD other than Despatch on a relief basis as required, and read as follows (omitting formal parts, emphasis added):

[2] The AWU’s application indicated that it opposed the introduction of the changes itemised in the emphasised dot points in the above letter on the basis that they would not be safe, efficient, legal and fair, and therefore did not satisfy the criteria for workplace change provided for in the 2015 Agreement. The Application was the subject of a conciliation conference before me on 17 May 2016, but this did not result in a resolution of the dispute. The AWU seeks an arbitrated determination restraining BlueScope from proceeding with its proposed changes. BlueScope wishes to proceed to implement the changes.

History of the dispute

[3] Because, as shall be explained later, the AWU’s case against the implementation of the BluesScope proposal is substantially based on an alleged lack of consultation with employees, it is necessary to analyse in some detail the history of the proposals for change and the disputes to which it gave rise. Evidence concerning that history was given by Mr Branko Gorgievski, the Branch President of the Port Kembla, South Coast & Southern Highlands Branch of the AWU, and Mr Gary Meta, the Operations Manager of the PFD. There was some degree of conflict in their evidence which it is necessary to resolve.

[4] The PFD is one of four departments in the Springhill Plant. Its function, broadly described, is to receive steel products and other materials from other sections of the plant, paint it where necessary, and pack it for distribution to customers. The Paintline section of PFD performs any painting work. The Finishing section carries out the other functions. It has four operational areas:

[5] Mr Meta’s evidence was that BlueScope’s proposal that Despatch operators be trained to perform duties in other parts of the PFD was first raised in discussions with employees in August 2015. At this time the BlueScope Steel Springhill Workplace Agreement 2012 (2012 Agreement) applied to the Springhill Plant.

[6] The context in which those discussions occurred requires some description. In that period, the Port Kembla Steelworks was under severe commercial pressure due to a collapse in the international price of steel. This was the result of overproduction from the subsidised Chinese steel industry being dumped onto world markets. The BlueScope group announced that it was likely to make the decision to close the Port Kembla Steelworks (but not the operationally separate Springhill Plant) by November 2015 unless $200 million in annual cost savings (including $60 million in direct labour costs) could be achieved. The Springhill Plant was required to make a contribution to these cost savings. The discussions engaged in with the Despatch employees were part of this process to identify and implement labour cost savings.

[7] Mr Meta said that in the discussions in August 2015, he proposed that Despatch employees be trained to perform the functions of station 5 on the Packline, which he described to the employees as involving the attachment of “donuts” to coils. He said the proposal “didn’t go down well” with employees, who said that they did not wish to be “gofers”. Mr Gorgievski denied that any such proposal was raised at this time. However he did not attend all the meetings which occurred. I accept Mr Meta’s evidence in this respect. Nonetheless there is no doubt that this proposal was only a minor aspect of the matters being discussed, and that the focus was upon a proposed change to shift patterns and crewing in the Despatch area.

[8] Following these discussions, Mr Meta sent a letter dated 9 September 2015 to all Despatch operators and the AWU which, omitting formal parts, stated:

[9] The letter was followed by a number of consultation meetings with employees, as was indicated would occur in the letter. In the course of this consultation process, Mr Meta provided a PowerPoint presentation (bearing the same date as the letter) to employees detailing the changes which were proposed. One of the slides was as follows (emphasis added):

[10] The bulk of the slides in the slideshow were concerned with the proposed changes to shift patterns and crewing, and this subject dominated the discussions which occurred. There were further PowerPoint presentations on 16 and 23 September 2015, and each contained the same slide as that set out above.

[11] Commencing on 8 September 2015 the Commission (constituted by myself) conducted a mediation process (in matter NA2015/5) involving BlueScope, the AWU and other unions in order to assist the process of identifying the labour cost reductions necessary to ensure that the Port Kembla Steelworks was not closed. The mediation process had two tracks. The first was to identify savings of about $40 million to be achieved by reductions in staffing levels across each department in the Steelworks and the Springhill Plant. Where agreement was not reached in relation to any department, it was agreed that the Commission would issue a recommendation resolving the disputed issue. The second track involved changes to employment conditions across the board to generate further savings of about $20 million.

[12] The issues concerning the PFD arose as part of the first track, and were dealt with in the mediation process on 23 and 28 September 2015. A printed copy of a PowerPoint presentation was presented to the Commission entitled “PFD Operations – Significant Change 2015 – Mediation – 23th September 2015”, which contained a page in terms identical to the slide from Mr Meta’s earlier PowerPoint presentation to employees which has been set out above. 2 The proposal to train Despatch operators was not specifically identified as an issue in dispute, but it was discussed at least briefly on 23 September 2015. My notes of that mediation conference include the following statement: “Surplus labour - go & assist Packline”. The focus during the mediation was upon a disagreement between the parties about what changes to shift patterns and crewing should occur. A comprehensive recommendation was issued by me on 6 October 2015 which dealt with all the identified issues in dispute in the first track. The PFD was dealt with at paragraphs [176]-[182] of this recommendation. It did not touch upon the proposal to train Despatch operators to perform Packline duties. It dealt only with the proposed changes to shift patterns and crewing in the Despatch area. In relation to that issue, the recommendation was that the BlueScope proposal should be adopted, subject to the following:

[13] It does not follow that because it was not dealt with in the 6 October 2015 recommendation, BlueScope’s proposal to train Despatch operators to perform Packline duties somehow ceased to be in dispute. Mr Meta suggested that it was up to the AWU to identify that this was an issue in dispute during the mediation process. While this may be correct in a strictly technical sense, it unfairly ignores the context in which the mediation process occurred. The parties were required, in a very compressed timeframe, to identify the savings necessary to save the Steelworks from closure. The focus was necessarily upon those changes which would generate the major savings. The proposal concerning Packline duties had not been a major issue in the discussions, and it is therefore not surprising that it did not attract significant attention during the mediation. In any event, as Mr Meta made clear in his evidence, he was fully aware that the Despatch operators opposed the proposal.

[14] On or about 30 September 2015 BlueScope, the AWU and the other unions finalised the terms of a memorandum of agreement (MOA) which resolved the second track of discussions. The MOA provided for two new enterprise agreements to be entered into, one of which was to apply to the Springhill Plant. Annexure C to the MOA set out a modified “Procedure for Resolving Claims, Issues and Disputes” which was to be contained in each of the new agreements. This included detailed procedures for the introduction of significant change. Pursuant to the MOA, the 2015 Agreement was approved by a vote of employees at the Springhill Plant, and subsequently approved by the Commission on 18 November 2015. It took effect on 25 November 2015.

[15] Subsequent to the recommendation, Mr Meta and other representatives of BlueScope management met with representatives of the Despatch operators and the AWU to discuss implementation of the recommendation including paragraph [182] set out above. Six meetings occurred, on 21 and 28 October, 11, 18 and 25 November, and 16 December 2015. Notes taken of the meetings disclose that the proposal to train Despatch operators to perform Packline duties was discussed at the meeting on 11 November 2015. The notes refer to an exchange between Mr Meta (GM), Mr Gorgievski (BG) and an unnamed Despatch operator (MP) as follows:

[16] Mr Meta said this was the only occasion at the six meetings at which the issue was discussed.

[17] The next development was that Mr Meta caused to be issued the letter dated 18 March 2016 to the operators in Despatch. The letter read as follows (omitting formal parts):

[18] Insofar as the above letter referred to Despatch operators being trained to perform manual pack, forklift and upender tasks, Mr Meta accepted that this was the first time this had been raised with employees in writing, but said that at least the performance of manual packing had been discussed with the Despatch operators back in September 2015.

[19] A copy of this letter was not immediately sent to Mr Gorgievski. He heard about it from the Despatch operators, and after raising it with Mr Meta he was sent a copy on 30 March 2016. He also requested an urgent meeting about the letter, which occurred on 31 March 2016. This meeting appears to have primarily involved an argument about whether there had been prior consultation about the matters contained in the 18 March 2016 letter.

[20] On 7 April 2016 the AWU wrote to the Commission requesting the re-listing of matter NA2015/5 to deal with a number of identified outstanding issues. One of those issues concerned the 18 March 2016 letter. The correspondence stated:

[21] In response to this correspondence, the Commission (constituted by myself) conducted a conciliation conference on 27 April 2016. In relation to the issue concerning the Despatch operators, which was framed as one involving a lack of consultation, I issued an ex tempore recommendation to the following effect in an endeavour to resolve the dispute:

[22] Being a recommendation only, the parties were not bound to comply with it, nor could it prejudice the parties’ respective legal rights under the 2015 Agreement. Neither party communicated to the Commission that it accepted or rejected the recommendation, but the parties subsequently conducted themselves in a manner consistent with the recommendation.

[23] The parties held two consultation meetings within the two-week period specified in the recommendation. On the AWU’s side, the meeting was attended by Mr Gorgievski and representatives of the Despatch operators. The AWU did not request that any employees from the Packline or Manual Handling be released in order to attend the meeting. In his evidence, Mr Gorgievski complained that at these meetings BlueScope did not provide meaningful information about what it intended to do, including where Despatch operators would be required to work, what they would be required to do, what their training would be, or what the effect would be on other areas of the PFD. However, there was no suggestion in Mr Gorgievski’s evidence that he or any of the Despatch operators at the meetings actually sought any further information about these matters. Indeed, despite the fact that the purpose of the recommendation that the parties engage in further consultation was to address the AWU’s complaint that there had not yet been proper consultation, Mr Gorgevski’s evidence was: “Just about all of those meetings were arguments about how BlueScope had not followed the consultation processes in the Agreement”. It may readily be inferred from his evidence that this argument was one pressed by him. Mr Meta’s evidence was that the employee representatives at the meetings expressed adamant opposition to any notion of being required to work outside the Despatch area. He also said that he made it clear that the training for the Packline would only involve basic training to perform the station 5 tasks, and would not require the training necessary to become a Level 1 Operator on the Packline. I accept the evidence of Mr Meta in this respect.

[24] Following the failure of these further meetings to resolve the issue, Mr Meta (consistent with the 27 April 2016 recommendation) issued the letter to the Despatch operators dated 5 May 2016 which has earlier been set out.

[25] Again consistent with the recommendation, the AWU responded to that letter by filing the Application on 16 May 2016. The Application recounted the history of the matter and, significantly, stated that “The AWU disputed the change, initially, on the basis that the Respondent had not complied with its consultation obligations for this proposed change under clause 35.2.2 of the Agreement” (underlining added). The application subsequently stated that the changes were disputed on the basis that they did not meet the test in clause 35 of the 2015 Agreement of being safe, efficient, legal and fair. This was particularised in the following way in the application:

[26] The Application gave no indication that any alleged lack of consultation remained an issue in dispute. The Application did however advance a compromise proposal to settle the dispute as follows:

[27] The Commission (again constituted by myself) conducted a conciliation conference in relation to the Application on 17 May 2016, during which the AWU’s compromise proposal was discussed. It proved not to be acceptable to BlueScope. A different compromise position emerged during the conference which was broadly acceptable to BlueScope and which the AWU representatives present (including Mr Gorgievski) undertook to take back to a meeting of the Despatch operators. This occurred, but the compromise proposal was rejected by the Despatch operators on 19 May 2016. Accordingly it became necessary to proceed to arbitration of the dispute.

[28] Prior to the commencement of the arbitration, on 26 and 27 May 2016, employees at the Springhill Plant who were members of the AWU, including Despatch operators, took non-protected industrial action. At least one of the grievances behind this appears to have been BlueScope’s proposal to train Despatch operators to perform other duties as identified in the letter of 5 May 2016.

The Procedure for Resolving Claims, Issues and Disputes

[29] Clause 35 of the 2015 Agreement is entitled “Procedure for Resolving Claims, Issues and Disputes”. Clause 35.1 contains a dispute resolution procedure which provides for an escalating series of steps required to be taken to resolve any dispute ending with conciliation and arbitration by this Commission. Clause 35.1.7 provides that “The parties will abide by the outcome of such proceedings, subject to any right of appeal from any such decision of FWC”. Clause 35.1.9 provides: “From the time a dispute first starts to when it is resolved, work shall continue as directed by the Company”. This last provision was obviously not complied with by the AWU’s members in relation to this dispute.

[30] Clause 35.2 is entitled “Introduction of Change Including Outsourcing”, and provides (emphasis added):

[31] The procedure set out above in large part reproduces the provisions concerning the introduction of change contained in the 2012 Agreement which applied up to and including 24 November 2015. However the emphasised parts represented significant modifications introduced as a result of the 2015 mediation process and the MOA. In the 2012 Agreement, clause 35.2.3 provided:

[32] It can be seen that the alterations to the introduction of change processes effected by the 2015 Agreement had two major features:

[33] Both under the 2012 Agreement and the 2015 Agreement (clause 35.2.1(c)), the criteria for the implementation for any change are whether it is “safe, efficient, legal and fair”. Those criteria apply whether or not the change is “significant in nature” as that expression is defined (in clause 35.2.2(c)). However the detailed process for the introduction of change in clause 35.2.3 only applies where the change is significant in nature.

[34] The introduction of change provisions had their origin in awards of the NSW Industrial Relations Commission made under the Industrial Relations Act 1996 (NSW) applicable to the Port Kembla Steelworks and the Springhill Plant. The awards applicable to the Springhill Plant contained introduction of change provisions identical to those contained in the awards applicable to the Steelworks. A Full Bench of the NSW Commission in Australian Workers’ Union, New South Wales v BlueScope Steel (AIS) Pty Ltd 3 said in relation to the BlueScope Steel (AIS) Pty Limited - Port Kembla Steelworks Employees Award 2006 (the award then applicable to the Steelworks):

[35] This approach, by which a union contesting a proposed change pursuant to the introduction of change provisions bore the onus of demonstrating that the change was not safe, efficient, legal and fair, was adopted by a Full Bench of this Commission in relation to the introduction of change provisions in clause 35.2 of the BlueScope Steel Port Kembla Steelworks Agreement 2012 (2012 Steelworks Agreement) in BlueScope Steel (AIS) Pty Ltd v AWU and Ors. 4 That agreement, consistent with past practice, had the same introduction of change provisions as the 2012 Agreement.

[36] The AWU submitted before me that the introduction of change provisions in the 2015 Agreement should be interpreted as placing upon BlueScope the onus of demonstrating that the changes it proposed were safe, efficient, legal and fair. I reject that submission for the following reasons:

(2) The adoption of the introduction of change provisions in the 2015 Agreement are, as to the criteria for change to be applied, the same as those in the 2012 Agreement. For that reason, I consider that the Full Bench decision in BlueScope Steel (AIS) Pty Ltd v AWU and Ors 6 should be followed by me here.

(3) In accordance with well-established principles of interpretation of legal instruments, the adoption by the parties of the relevant parts of the introduction of change provisions in the 2015 Agreement in a form unchanged from the 2012 Agreement, with full knowledge of the Full Bench decision, suggests that the parties intended that the provisions should continue to be interpreted in accordance with the Full Bench decision.

(4) Additionally, the altered parts of the introduction of change provisions tend to confirm the approach in the Full Bench decision. In particular, clause 35.2.3(q), which allows a union to apply for an interim order restraining the implementation of a change, requires the Commission to be satisfied before granting such an order that, among other things, “There is an arguable case that the change is not safe, legal, efficient and fair...” (clause 35.2.3(q)(ii), underlining added). This provision clearly indicates that the onus lies on the union to demonstrate that a change does not meet the specified criteria.

The AWU’s case against the proposed changes

[37] The case presented by the AWU at the hearing before me as to why BlueScope’s proposed changes should not proceed differed considerably from the objections to those changes outlined in the Application. Its case focused almost entirely on the proposition that the changes did not meet the criterion of legality because the introduction of change provisions in clause 35.2.3 of the 2015 Agreement had not been followed. In this respect the AWU submitted:

[38] To the extent that the proposal for changes had been raised prior to the date of commencement of the 2015 Agreement, the AWU submitted that there had been no proper consultation prior to that date and that BlueScope’s letter of 9 September 2015 did not constitute a valid “Letter 1” in relation to the changes under clause 35.2.3(d) of the 2012 Agreement because it did not identify the particular proposed change and had not been sent to Packline employees or other relevant employees in the PFD.

[39] Mr Gorgievski gave evidence in support of the proposition that there had not been meaningful consultation in accordance with the 2015 Agreement. He summarised the position from his perspective in paragraph 63 of his witness statement as follows:

[40] The AWU contended that it was prejudiced in its capacity to otherwise address the criteria of safety, efficiency, legality and fairness because of its purported lack of understanding as to what was involved in BlueScope’s proposals for change as a result of BlueScope’s non-compliance with the introduction of change procedures. It did however advance the following submissions:

BlueScope’s case in reply

[41] BlueScope in its submissions accepted that compliance with the introduction of change provisions in the 2012 Agreement and the 2015 Agreement was a matter relevant to the requirement for legality. However it submitted that there had been no failure to comply with the introduction of change provisions of the 2015 Agreement or the 2012 Agreement. The tasks which Despatch operators would be required to perform under its proposals were of a simple nature and did not involve changes which were “significant in nature” as defined in clause 35.2.2(c) of the 2015 Agreement and the 2012 Agreement, with the result that the detailed procedures in clause 35.2.3 of each agreement were not applicable. BlueScope submitted in the alternative that if the changes were significant in nature, then:

[42] BlueScope contended that the proposals were efficient, since they allowed under-utilised Despatch operators to perform duties in other areas which might otherwise have to be performed by employees on overtime or contractors and would thereby generate cost savings. They were fair, in that employees were being required to perform only basic duties which were graded below their current level of remuneration, and they would be properly trained to perform those duties. The duties would be performed on an occasional basis only, and their substantive roles as Despatch operators would remain unchanged. There was no evidence that the proposals were not safe. The training to be provided would ensure that the simple tasks required would be performed safely.

Legality

[43] As earlier stated, the AWU contended that the proposals were not “legal” because BlueScope had failed to comply with the applicable procedures concerning the introduction of change in the 2015 Agreement and/or the 2012 Agreement. That was the only contention concerning the legality of the proposals which was raised by the AWU.

Introduction of change provisions – general observations

[44] Before turning directly to the issue raised by the AWU’s case in this respect, which is one of some complexity, it is necessary to make some general comment about the introduction of change procedures contained in clause 35.2.3 of the 2015 Agreement. Those procedures apply to changes which are “significant in nature” as defined in clause 35.2.2(c). There are two phases of consultation involved. The first, which precedes “Letter 1”, involves BlueScope identifying to relevant employees the existence of any problem which is likely to lead to significant change in order to resolve it. It then requires the formation of a “work team” including employee representatives to investigate the problem and to seek to identify solutions using problem-solving techniques. It is only after this process has been undertaken that BlueScope may issue a “Letter 1” identifying a specific proposed change, which may draw upon ideas generated by the work team.

[45] As identified above, this first phase of the consultation process was an innovation in the 2015 Agreement. It is plainly one of considerable significance. It involves a departure from the pre-existing model of “top-down” introduction of change by BlueScope management, and allows employees to be involved in the design of workplace changes that will affect them. This will, it seems to me (having regard to my involvement in the mediation process which led directly to the MOA and the 2015 Agreement) allow employees to have “ownership” of workplace change and its implementation rather than having to deal adversarially with change imposed from above.

[46] The second phase of consultation in the 2015 Agreement, which is required to occur after “Letter 1” and before “Letter 2”, is not new but repeats provisions contained in the 2012 Agreement and predecessor instruments. However it likewise allows for employees not simply to respond to employer proposals for change, but also to participate in shaping the change and proposing alternatives.

[47] In order for these consultation mechanisms to operate successfully, they require parties to participate in the processes genuinely in accordance with the commitments that they have made to each other in the 2015 Agreement. On BlueScope’s side, that means that consultation cannot be treated simply as a requirement to be ticked off prior to the implementation of pre-determined workplace changes of a significant nature, and requires a bona fide effort to involve employees and their union in the development of the changes necessary to meet the business’s commercial challenges. On the part of employees and their unions, it requires approaching consultation about change on the basis of the understandings identified in clause 35.2.1(a) and (b), namely that “change is an inevitable and increasingly necessary part of the steel industry” and that “Change must be ongoing to ensure that the Company remain[s] viable and employee expectation concerning security of employment can be satisfied”. That means that employees and unions must constructively engage with any issues raised by BlueScope during the consultation process, actively seek the information necessary to permit such constructive engagement to occur, and advance positive proposals to assist BlueScope to make the changes necessary to meet developing circumstances. Consultation is not to be approached on the basis of it simply being an opportunity to develop and advance arguments as to why no change should be implemented.

[48] As I have also earlier identified, the second major innovation in the 2015 Agreement concerns the time limitation of 35 working days. This operates in two respects. Firstly, the Commission is required to make procedural directions to ensure, so far as practicable, that a dispute concerning a proposed change is determined within 35 working days of “Letter 2”, with a requirement for strict compliance with such directions. The second is that the restraint imposed by clause 35.2.3 upon the implementation of a disputed change only operates until the earlier of the resolution of the dispute by the Commission or the passage of 35 working days from the date of “Letter 2”. The period of restraint may be extended by the Commission, but only in limited circumstances. This innovation was clearly intended to speed up the process of the resolution of disputes concerning proposed changes that are significant in nature, in circumstances where the resolution of such disputes under the 2012 Agreement had in some cases taken an extensive period of time and consequently been the subject of criticism. In order for these new provisions to work as they were intended, the parties must endeavour to identify the issues which are genuinely in dispute and cooperate with procedural directions intended to allow disputes to be heard and determined expeditiously and within the timeframe required by the 2015 Agreement. While parties can of course expect to be afforded procedural fairness, they cannot expect to be given the opportunity to adduce evidence through written witness statements prepared pursuant to a leisurely timetable, raise new issues at the hearing which do not bear a genuine relationship to the issues in dispute, or otherwise engage in forensic tactics intended to frustrate the expeditious resolution of the dispute.

A failure to consult?

[49] It is necessary to state at the outset that, except in one respect, I regard the AWU’s claim that an alleged lack of consultation has left it in the position that it does not properly comprehend the changes being proposed as being entirely bogus. The concept that Despatch operators perform basic duties in other parts of the PFD was, in a broad sense, first raised in August 2015. It has since been discussed and developed at meetings between BlueScope management and employees in August 2015, at the mediation on 23 September 2015, at a meeting between the parties on 11 November 2015, at a conciliation conference before me on 27 April 2016, at two further meetings between the parties in the fortnight after that date, and at a further conciliation conference before me on 17 May 2016. BlueScope’s proposals are not complex or difficult to understand. At least so far as the two conciliation conferences before me are concerned, the AWU was able to participate meaningfully and discuss the changes being proposed. There is no evidence that the AWU or its members at any stage requested information about any aspect of the proposals which was not responded to by BlueScope. There is certainly no evidence of any written request for further information on the part of the AWU. The Application in particular dispels any notion that the AWU lacked information about the change, given that it strongly suggested that consultation was no longer an issue and proposed a compromise position that would have allowed the change to proceed at least on a limited basis. The exception is that I accept that the last itemised proposal for change in the letter of 5 May 2016, namely a generalised proposition that Despatch operators perform other duties in the PFD as reasonably directed, has never been properly articulated or particularised by BlueScope.

[50] There is no indication that prior to the lodgement of the Application, the AWU or the Despatch operators constructively engaged with the BlueScope proposals at any of the meetings they attended. The evidence suggested rather that the Despatch operators opposed outright any notion of them performing duties outside the Despatch area and had no desire to engage in discussions about it or to seek further information about how it might work. The position stated by Mr Gorgievski at the 11 November 2015 meeting, recorded in the notes of the meeting as “Not compulsory to train, can’t make employees train”, well summarises the position of the Despatch operators and the AWU. I accept that the compromise proposal set out in the Application constituted an attempt to constructively engage with the BlueScope proposals, but that occurred after BlueScope’s Letter 2 had been issued and the time for consultation had passed.

[51] For these reasons, and subject to the identified exception, I do not accept that the AWU was in any way prejudiced in its capacity to advance a proper case before me as to why the criteria of safety, legality, efficiency and/or fairness were not satisfied in relation to the proposed changes.

Compliance with the introduction of change processes

[52] However, those observations do not answer the AWU’s submission that BlueScope failed to comply with the introduction of change processes in clause 35.2.3 of the 2015 Agreement (or clause 35.2.3 of the 2012 Agreement), with the result that BlueScope’s proposed changes do not satisfy the criterion of legality in clause 35.2.1(c). Consideration of that submission requires two preliminary questions to be determined:

[53] In relation to the first question, I find that the proposed changes are significant in nature so far as the Despatch operators are concerned. Although work functions in the PFD have in the past occasionally been moved from one operational area to another, a requirement that employees located in one operational area be trained to also perform duties in another operational area appears to be entirely novel. The working premise of the PFD to date has been that it has been divided into the operational areas of Despatch, Packline, Paintline, Manual Packing and Tension Levelling, and each area has a discrete workforce dedicated to the performance of duties in that area. In that context, training employees in one operational area to acquire the skills to perform duties in a different operational area as required from time to time must necessarily be characterised as a change which has “substantial effects” on “the skills required of employees” (clause 35.2.2(c)(ii)). Therefore the procedures in clause 35.2.3 of the 2015 Agreement and/or the 2012 Agreement applied to the changes in relation to the Despatch operators.

[54] The AWU submitted that the changes also had significant effects on employees in other parts of the PFD who might be required to work alongside Despatch operators who had been trained in the way proposed by BlueScope. I do not accept this submission. There was no evidence of such significant effects, and the case in this respect did not rise above the level of assertion. No employee from the Packline was called by the AWU to give evidence about this. Mr Meta gave evidence that in the past year he had had labour hire employees (referred to as “contractors”) brought in to perform the station 5 function on the Packline and the manual packing tasks, and there was no suggestion that this had any significant effect on other Packline or manual handling employees. Accordingly I do not consider that BlueScope was required to undertake the consultation processes under clause 35.2.3 with any employees in the PFD other than the Despatch operators.

[55] That makes determination of the second question necessary. The starting point is the following statement made by the Full Bench in BlueScope Steel (AIS) Pty Ltd v AWU and Ors 7 in relation to the 2012 Steelworks Agreement (footnote omitted):

[56] No party submitted that any different approach should be taken to the criterion of legality contained in the 2015 Agreement or the 2012 Agreement. Therefore it is necessary to determine whether either agreement positively prohibits the implementation of any change which is significant in nature where the introduction of change processes in clause 35.2.3 have not been complied with. This question is analogous to one that often arises in the context of statutory interpretation, namely whether an act done in breach of procedural requirements conditioning the exercise of a statutory power is invalid. In Pearce and Geddes’ Statutory Interpretation in Australia 8, the learned authors summarised the principles applying to this analogous question as follows:

[57] In a number of respects, clause 35.2.3 of the 2015 Agreement strongly indicates that it was not intended that proposals for significant change could be implemented without the prior consultation processes required by the clause having been engaged in. Firstly, the clause is, in general, detailed and prescriptive as to the processes for consultation required such as to make it unlikely to have been intended that BlueScope could simply bypass those processes and still be permitted to introduce any significant change which it proposed. Secondly, clause 35.2.3(a) specifically provides that the procedures set out in clause 35.2.3 “govern the introduction and management of change which is significant in nature” (underlining added). The use of the word “govern”, which read in its context bears its ordinary meaning of “control” or “regulate”, indicates that compliance with the consultation processes in the clause was intended to condition the introduction of significant change. Thirdly, the provisions which permit agreed changes to be implemented immediately (clause 35.2.3(m)) and prohibit the implementation of disputed changes for a defined period, subject to the making of a further restraining order by the Commission (clause 35.2.3(p)) could only have a useful operation if significant changes could not be introduced other than by following the prescribed consultation processes in the provision. The equivalent provisions of clause 35.2.3 of the 2012 Agreement would dictate that the same conclusion applies to it.

[58] However I consider what is required (under both the 2015 Agreement and the 2012 Agreement) is substantial compliance, not strict compliance, in that the information sharing and consultation required by the clause must in substance occur before any final decision is made to introduce the proposed significant changes. For example, the “Letter 1” referred to in clause 35.2.3(f) of the 2015 Agreement is required to “outline the broad objectives of the change and the possible effects that the change is likely to have on employees, to enable further Consultation”. The substantive purpose of the requirement is to provide affected employees with relevant information in writing so as to permit meaningful consultation to occur. Provided that the relevant information is provided, it does not seem to me that it was intended that the subsequent implementation of a proposed change can be regarded as not “legal” because, even though there was meaningful consultation, the information was not contained in a single document, or the document containing the information was not described as being the Letter 1 for the purposes of clause 35.2.3(f). An overly technical approach would defeat the intention of clause 35.2 overall to “facilitate the timely and efficient implementation of change” (clause 35.2.1(d)) without adding anything of substance to the benefits of consultation conferred by the clause.

[59] For these reasons I will approach the matter on the basis that a proposed significant change will not be “legal” if there has not been substantial compliance with the consultation processes of clause 35.2.3 of the applicable agreement.

[60] If the process for the introduction of the proposed changes here had occurred in a period during the whole of which the 2015 Agreement was in operation, then on the evidence before me it could not be concluded that clause 35.2.3 of the 2015 Agreement had been substantially complied with. The “first phase” of consultation to which I have earlier referred which was introduced by the 2015 Agreement simply did not occur. At no stage did BlueScope identify to employees a “problem” which was “likely to lead to a significant change” (clause 35.2.3(c)), establish a “work team” to “investigate the problem and ... seek solutions using problem solving techniques” (clause 35.2.3(d)), or take into account “the contribution of the work teams” (clause 35.2.3(f)). BlueScope’s submission that my recommendation of 27 April 2016 in some sense validated any prior failure to consult in accordance with the 2015 Agreement cannot be accepted. As earlier stated, that recommendation was intended to facilitate the resolution of a dispute which at that stage was about an alleged failure to consult; it could not have the effect of excusing any non-compliance with the provisions of the 2015 Agreement. Section 739(5) of the Fair Work Act 2009 prohibits the Commission, in the exercise of its dispute resolution function, from making a decision inconsistent with the provisions of an applicable enterprise agreement, and acceptance of the BlueScope submission in this respect would amount to an infringement of that prohibition.

[61] However that is not the end of the matter, because the BlueScope proposal for Despatch operators to perform other duties in the PFD was initiated at a time when the 2012 Agreement was in effect, with the consultation process then continuing beyond 25 November 2015 when the 2015 Agreement took effect. It is plain that the 2015 Agreement could not have retrospective effect, and no party contended otherwise. The 2015 Agreement does not contain any transitional provisions in relation to the introduction of significant changes first proposed prior to the 2015 Agreement taking effect. Therefore it is necessary to approach the matter on the basis that the relevant provisions of the 2012 Agreement applied to those stages of the introduction of the proposed changes which occurred prior to 25 November 2015, and the 2015 Agreement applied to those stages which occurred on or after 25 November 2015. The most significant consequence of this approach is that the “first phase” of consultation prior to “Letter 1” introduced by the 2015 Agreement has no application to a proposed change in relation to which a “Letter 1” was issued prior to 25 November 2015.

[62] BlueScope’s letter of 9 September 2015 initiated a restructure of the Despatch area of PFD, and was explicitly described as a “Letter 1”. That letter referred to significant changes to staffing arrangements in the Despatch area and contained a non-exhaustive list of the effects the changes were likely to have on employees. The August 2015 discussions which preceded the letter, as well as the subsequent discussions, made it apparent that the training of Despatch operators to perform other duties in the PFD was an aspect of that proposal, but that was not expressly identified as part of the changes in the letter itself.

[63] On that basis, the AWU argued that the requirements of clause 35.2.3(d) of the 2012 Agreement had not been complied with. However that submission looks at the 9 September 2015 letter in isolation and divorced from its context, including the context of the preceding discussion in which the proposal was first raised. As earlier recited, shortly after this letter was issued BlueScope advised employees in the consultation meetings which the letter indicated would occur that part of the proposed new staffing arrangements would be that Despatch operators “May be required to assist in other PFD operations work as required. E.g: Packline (base level operator training will be provided)”. This was done in a PowerPoint presentation, and confirmed the proposal which Mr Meta had verbally explained to employees in August 2015. I consider this amounted to substantial compliance with clause 35.2.3(d) at least insofar as the proposal involved Despatch operators performing basic Packline duties: the information was in writing and conveyed both the broad objective and the likely effect on employees of the proposal, namely that they would undergo basic training and be required to work on the Packline. That BlueScope was proposing a change of this nature (that is, that employees be trained to perform basic Packline duties) was well understood by employees, as demonstrated by the reactions it elicited from employees as described above. I consider that consultation about this proposal in accordance with clause 35.2.3 of the 2012 Agreement occurred in August and September 2015 and on 11 November 2015, and there was further consultation under the 2015 Agreement in April and May 2016. Letter 2 was issued once this consultation failed to result in any agreement, and I consider that the 5 May 2016 letter contained the information required of a “Letter 2”.

[64] Therefore I find that, insofar as BlueScope proposed that Despatch employees perform basic duties at station 5 of the Packline, the introduction of change processes in clause 35.2.3 of the 2012 Agreement and the 2015 Agreement (as they applied at different stages of the introduction of change process) were complied with. The proposed changes are, to that extent, legal for the purpose of clause 35.2.1(c) of the 2015 Agreement.

[65] That finding covers the first two of the proposed changes (itemised by dot points) identified in the letter of 5 May 2016. The position is different with the remaining items (concerning the performance of manual pack duties, the despatch of vertical coils by forklift, and any other duties in the PFD as reasonably directed). The first two of these changes were not identified in writing until the letter of 18 March 2016, and the last was identified in the 5 May 2016 letter for the first time. Mr Meta gave evidence that the manual packing aspect of these changes was first raised verbally by him in September 2015. If so, the evidence does not suggest that this led to any meaningful consultation about it. My note of the 23 September 2015 mediation session, and the notes for the meeting of 11 November 2015, only disclose discussion about the performance of duties on the Packline. I do not consider that this amounted to substantial compliance with clause 35.2.3 of the 2012 Agreement, and I find that the proposal for Despatch operators to perform manual packing duties was not clearly identified to employees until the 18 March 2016 letter. Mr Meta accepted that the other items were not raised until during 2016. For the reasons earlier stated, it is plain that, with respect to changes that were not proposed until after the 2015 Agreement took effect, clause 35.2.3 of that agreement was not complied with.

[66] I recognise that the PowerPoint presentation of 9 September 2015 referred to a proposed requirement to work in the PFD as required, with base level work on the Packline given as an example. However, leaving aside the specific Packline example, I do not consider that stating a proposal with that level of generality was sufficient for the purpose of clause 35.2.3 of the 2012 Agreement to allow meaningful consultation to occur under that agreement, nor did it occur (except in relation to the Packline aspect of the proposal).

[67] Accordingly I find that the last four itemised proposed changes in the 5 May 2016 letter are not “legal” because neither clause 35.2.3 of the 2012 Agreement nor clause 35.2.3 of the 2015 Agreement were substantially complied with in relation to those changes.

[68] Because only the proposal for Despatch operators to perform basic duties at station 5 on the Packline has been found to be “legal”, it is therefore only necessary for me to proceed to consider whether that particular proposal is also safe, efficient and fair.

Safety

[69] With the benefit of the evidence and an inspection of the work required to be performed which I undertook at the Springhill Plant on 20 June 2016, I consider that the tasks which Despatch operators would be required to perform on station 5 of the Packline may fairly be characterised as basic. It fundamentally involves manually placing “donuts” on coils of varying sizes, with some ancillary tasks associated with monitoring station 4 (mainly consisting of occasionally topping up the glue pot). I emphasise that in describing this work as basic, I am not referring to the duties of operators permanently stationed at the Packline, who are generally graded at Level 3 under the 2015 Agreement and perform the whole range of duties at all the Packline stations on a rotational basis.

[70] I do not consider that there is any evidence before me to suggest that Despatch operators may not be trained to perform this work safely. There was some argument before me about the extent of the training that would be required in order for this work to be performed safely. To that extent, the AWU referred to the training and accreditation requirements for a Level 1 operator on the Packline (whose duties include but are not limited to the operation of station 5). However it has been made clear in the proceedings that it is not proposed that Despatch operators be trained to meet the requirements for a Level 1 operator, but only to perform the functions I have described. In that respect, the evidence is that contractors have been trained on the job to perform this basic work, and no difficulty or concern about safety was identified in that respect. Provided that the training properly deals with the situational safety risks associated with station 5, I have no reason to conclude that the proposal cannot proceed safely. I note that BlueScope proposes to consult with employees about training plans for them to perform the Packline tasks, and I am confident that such consultation will allow any residual safety concerns to be addressed.

[71] I reject the AWU’s submission that safety concerns may arise because Despatch operators will only be performing Packline duties infrequently and would not be able to develop and maintain their skills sufficiently. That submission might have some force if the tasks were complex, but they are not. I also reject the AWU’s submission that difficulty may arise in the interactions between Despatch operators and the team members on the Packline. There was no evidence of any such difficulty arising when contractors performed basic tasks on the Packline.

[72] I find that the proposal for Despatch operators to perform Packline duties would be safe.

Efficiency

[73] The proposal is intended to use Despatch employees who are under-utilised to perform duties in the Packline in circumstances where it might otherwise be necessary to bring in a Packline operator on overtime or hire a contractor. The proposal will therefore save costs, and for that reason I find it would be efficient.

Fairness

[74] I do not consider that there is anything inherently unfair about requiring an under-utilised employee to perform other duties in the Springhill Plant for which they have been appropriately trained. Clause 32.4 of the 2015 Agreement provides that “Employees must perform such work as the Company may, from time to time reasonably require”. The AWU suggested that it was not reasonable to require an employee in the PFD to perform duties beyond his or her assigned operational area, having regard in particular to the terms of the 1998 Agreement for the Restructure of the Finishing Department which assigned defined working boundaries for each operational area. I do not accept this. Multi-skilling has long been accepted as a reasonable working practice to improve efficiency and productivity in industry, and having regard to the commitments to ongoing change in clause 35.2.1 of the 2015 Agreement I do not consider that multi-skilling across operational areas is unreasonable simply because it may not have been contemplated in a 1998 departmental agreement.

[75] No issue of fairness arises in respect of pay levels. The Despatch operators are all, or nearly all, graded as Level 3 under the Finishing classification structure. The basic tasks envisaged to be performed at station 5 of the Packline may be performed by a Level 1 Operator, or perhaps even an Entry Level Operator, at significantly lower rates of pay.

[76] I do not accept the AWU submission that requiring Despatch operators to perform Packline duties on an occasional basis is unfair because it runs the risk of them making mistakes and then being disciplined or dismissed. I do not accept that mistakes are likely, having regard to the simplicity of the work, if appropriate training is provided. There was no evidence that BlueScope has a practice of disciplining or dismissing employees for simple one-off mistakes.

[77] For these reasons, I find the proposal to be fair.

Conclusion

[78] For the reasons stated, BlueScope’s proposal for Despatch operators to be trained to perform basic station 5 duties on the Packline satisfies the criteria of safety, efficiency, legality and fairness. Accordingly BlueScope may proceed with the implementation of that proposal forthwith.

[79] In respect of the other proposals for change itemised in BlueScope’s letter of 5 May 2016, BlueScope has not complied with the introduction of change processes in clause 35.2.3 of the 2012 Agreement or clause 35.2.3 of the 2015 Agreement. Implementation of those changes would therefore not satisfy the criterion of legality. It will be necessary for BlueScope to recommence consultation about these matters. While that consultation needs to occur on a genuine basis, I do not envisage that it would take an extensive period of time having regard to the history of this matter as earlier outlined. It may be that the parties can reach an agreement about these matters with the benefit of the findings contained in this decision. The parties are of course at liberty to request the further assistance of the Commission in relation to these matters at any time.

al of the Fair Work Commission with the memeber's signature.

VICE PRESIDENT

Appearances:

A. Howell of counsel for the Australian Workers’ Union.

K. Brotherson solicitor for BlueScope Steel (AIS) Pty Ltd t/a BlueScope Steel.

Hearing details:

2016.

Sydney:

10 June.

 1   The BlueScope group consists of a number of corporate entities. The corporate entity which operates the Springhill Plant is BlueScope Steel Limited. In this decision I shall refer to the BlueScope group and any relevant corporate entities within it generically as “BlueScope”.

 2   A copy of this was retained in the Commission’s file for the mediation.

 3   [2006] NSWIRComm 318, (2006) 157 IR 93 at [17]-[20]

 4   [2015] FWCFB 5615 at [7]

 5   Re Chamber of South Australian Employers Inc (No 2) (1991) 43 IR 424 at 441-442, quoted with approval in Teterin v Resource Pacific Pty Limited t/a Ravensworth Underground Mine [2014] FWCFB 4125, (2014) 244 IR 252 at [24]; see also Coal and Allied Operations Pty Ltd v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union (1997) 73 IR 311 at 317

 6   [2015] FWCFB 5615 at [7]

 7   [2015] FWCFB 5615 at [7]

 8   Seventh edition at [11.34]

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