[2022] FWC 2727

The attached document replaces the document previously issued with the above code on 14 October 2022.

Typographical error at footnote 21 corrected.

Appearances corrected.

Associate to Commissioner Bissett

Dated 14 October 2022

[2022] FWC 2727
FAIR WORK COMMISSION

DECISION


Fair Work Act 2009
s.424 - Application to suspend or terminate protected industrial action - endangering life etc.

Qenos Pty Ltd
(B2022/1519)

COMMISSIONER BISSETT

MELBOURNE, 14 OCTOBER 2022

Application to suspend or terminate protected industrial action – section 424 of Fair Work Act 2009 – action endangering life, personal safety or health, or welfare of part of the population – industrial action suspended

[1] On 25 September 2022 the Australian Workers’ Union (AWU) gave notice to Qenos Pty Ltd T/A Qenos (Qenos) pursuant to s.414 of the Fair Work Act 2009 (FW Act) that employees of Qenos who were to be covered by the proposed agreement for which bargaining was occurring, and for whom the AWU was the bargaining representative, intended to take protected industrial action in the form of “a stoppage of the performance of all work for an indefinite period commencing at 5.30am on 3 October 2022” (employee claim action). That action commenced at the nominated time with none of the employees rostered to work attending for their shift (except for the team leaders). 1

[2] In response, and commencing at 5.30pm on 3 October 2022, Qenos took employer response action in the form of a lockout in relation to all employees who would be covered by the proposed agreement except for the STLs (as defined in the notice) (employer response action). Notice of this was provided to employees and the AWU. 2

[3] Both forms of action are said to be protected industrial action, complying as each does with the relevant provisions of the FW Act.

[4] On 6 October 2022 Qenos made an application to the Commission pursuant to s.424 of the FW Act for the Commission to suspend or terminate the employee claim action and the employer claim action on the grounds that the action is threatening or would threaten “to endanger …the welfare…of the population or of part of it”.

[5] As the application was made on 6 October 2022 by the operation of s.424(3) of the FW Act it must be determined by 11 October 2022 and, if not, an interim order must be issued suspending the industrial action.

[6] The application was heard by me on 11 October 2022. Following the conclusion of the hearing I issued an Order 3 to suspend the industrial action being undertaken by Qenos for a period of 30 days.

[7] These are the reasons for my decision to issue that Order.

SUBMISSIONS AND EVIDENCE

[8] In response to the application my chambers issued directions to the parties which required each to file and serve of an outline of submissions and witness statements.

[9] In reply to these directions Qenos filed submissions and witness statements from the following:

[10] The AWU filed its submissions and a witness statement of the Mr David Swan, Lead Organiser, AWU.

[11] Prior to the hearing of the application I granted both parties permission to be represented by lawyers pursuant to s.596(2) of the FW Act, being satisfied that it would enable the matter to be dealt with more efficiently.

LEGISLATIVE PROVISIONS

[12] Section 424 of the FW Act provides:

[13] In carrying out its legislative task the Commission must first be satisfied that the industrial action meets the jurisdictional requirements in s.424(1) of the FW Act. If those requirements are met the Commission must either terminate or suspend that industrial action. The Commission does not have the discretion to do neither. Whether the protected industrial action should be terminated or suspended is a discretionary decision of the Commission. 4

[14] A decision to suspend the industrial action is a “non-permanent conclusion to the disputation” with the parties free to resume their industrial action at the conclusion of the suspension.

[15] A decision to terminate the industrial action brings with it the processes associated with an industrial action workplace determination (s.266 of the FW Act). No more industrial action may be taken if the industrial action is terminated.

ACTION FOLLOWING THE MAKING OF THE APPLICATION

[16] At 5.30pm on 7 October 2022, the day after the application before me was made, the AWU notified Qenos that it “withdrew its employee claim action” in the form of the indefinite stoppage and advised Qenos that its members could return to work at 5.30pm that evening if Qenos ceased its employer response action. The AWU also requested that Qenos withdraw its application made to the Commission. Qenos advised by correspondence to the lawyers for the AWU that it did not intend to cease its employer response action or discontinue the application to the Commission.

[17] Importantly, and as clarified in correspondence to the Commission, Qenos said that it would “no longer seek relief” in relation to the employee claim action but that the grounds on which it seeks relief have not changed.

[18] The Commission proceeded on this basis – that is that Qenos sought an order terminating or suspending the employer response action that it had notified to and was taking against the relevant employees.

[19] I would observe that suspension or termination of the employer response action will mean that the AWU will be unable to take protected industrial action in support of the proposed agreement during the period of the suspension because such action could not meet the common requirements for industrial action to be protected industrial action because an order under Division 6 of Part 3-3 of the FW Act will be in operation (see s.413(7) of the FW Act).

THE FACTUAL CIRCUMSTANCES SURROUNDING THE APPLICATION

[20] The following information is taken from the evidence before the Commission.

[21] Qenos receives ethane from Long Island Point, a facility operated by Esso.

[22] The ethane is received at the Qenos olefins plant which processes the ethane into ethylene. The ethylene is processed in the resins plant to produce polyethylene which is then used in in the manufacture of plastics.

[23] Qenos has the capacity to store a limited amount of ethylene but this storage will meet its capacity on or about 20 October 2022. Qenos has no capacity to store ethane. The limited storage capacity means that Qenos has advised Esso that it can only accept 300 tonnes of ethane a day from Long Island Point 5 where, in normal conditions, Long Island Point produces 580 tonnes per day.6 Qenos is the only facility that takes ethane from Long Island Point.

[24] The ethane is shipped to Qenos via a dedicated pipeline from the Long Island Point fractionation faciality.

[25] Long Island Point undertakes fractionation of natural gas liquids (NGLs). This process separates the NGLs into butane, propane and ethane. The butane and propane are sold on the market as consumable gas products while the ethane is sent to Qenos. Ethane is a by-product of the fractionation process.

[26] The NGLs are shipped to Long Island Point from Esso’s processing plant at Longford.

[27] Long Island Point does not have capacity to store the NGLs or ethane. Long Island Point can dispose of small quantities of ethane through other means but these processes do not have the capacity to consume the ethane at the rate it is produced at Long Island Point. Qenos is the only facility that takes ethane from Long Island Point.

[28] Longford processes hydrocarbons from Bass Strait to extract “natural gas” for supply to the East Coast Gas Grid (Gas Grid). A natural by-product of natural gas extraction is the NGLs. Longford disposes of all of its NGLs by piping them to Long Island Point. Whilst Longford can dispose of a limited amount of NGLs by other means it cannot do so at the rate at which the NGLs are produced. Longford has no capacity to otherwise store the NGLs it produces.

[29] As Longford cannot store the NGLs and if it cannot dispose of the NGLs through piping them to Long Island Point, Longford would have to cease the extraction of natural gas and would no longer be able to supply natural gas to the Gas Grid. Longford also has no capacity to store natural gas.

[30] Longford supplies the “significant majority” of south-east Australia’s natural gas demand. This is “primarily used for domestic and commercial hot water and heating, power generation, and a range of industrial and agricultural processes including pulp and paper manufacturing, oil refining, chemicals manufacturing, food and dairy processing and glassworks furnaces.” 7

[31] If Longford was to cease the supply of natural gas to the Gas Grid it would have “significant and immediate” consequences for South Eastern Australia creating a level 5 emergency event under the Emergency Procedures (Gas) and would result in there being insufficient natural gas to meet demand in Tasmania, Victoria and New South Wales.

[32] David McCord of Esso says that Esso considers it will cease gas production on 23 October 2022 at the latest if the current industrial situation continues. This will result in a total cessation of the supply of natural gas to the Gas Grid.

[33] In summary, if Qenos cannot accept any more ethane this will effect Long Island Point’s ability to take NGLs from Longford which will effect Longford’s ability to extract and supply natural gas to the Gas Grid leading to an inability to meet demand.

THE HISTORY OF BARGAINING

[34] The employees who had been taking employee claim action are covered by the Qenos Altona Enterprise Agreement 2018 8 (2018 Agreement). The 2018 Agreement has a nominal expiry date of 30 June 2022.

[35] Bargaining for a new agreement (replacement agreement) commenced in early April 2022 and Qenos issued a notice of employee representation rights on 5 April 2022.

[36] There have been a number of bargaining meetings held between the parties. Qenos also made an application to the Commission pursuant to s.240 of the FW Act for assistance with bargaining.

[37] Mr Laslett of Qenos gave evidence that there have been 3 conferences held pursuant to the s.240 notification and about 13 bargaining meetings directly with the AWU. He says that there are currently 26 claims of the AWU that remain outstanding. Of these 8 are described by the AWU as being “critical” to an agreement. 9 Mr Laslett says that the AWU have moved on some of their claims “recently” but a number of the claims the AWU say are “critical” and which Qenos cannot agree to, remain unresolved. Mr Laslett says the positions of the parties and the cost of the claims of the AWU make the parties’ positions “irreconcilable”.10

[38] Mr Laslett maintained that there are still a substantial number of issues between the parties. He gave evidence that the offer made by Qenos to the AWU on 30 September 2022 11 was conditional on the industrial action (notified by the AWU) not occurring.12 Mr Laslett agreed however that Qenos did not tell the AWU in its meetings on 3 and 7 October 2022 that everything was off the table because of the industrial action.

[39] Mr Swan of the AWU gave evidence that bargaining on substantial matters did not commence until June 2022 with meetings prior to that being primarily in relation to the scope of the agreement. Following the resolution of the scope issue (such that the proposed agreement will only cover operational employees in the resins and plastics plant 13) Mr Swan said that the parties have met 16 times14 since the scope was resolved, including most recently on 3 and 7 October 2022. Following the most recent meeting with Qenos Mr Swan said the AWU received an email from Mr Peter Todd, the Workplace Relations Manager, who indicated that the “AWU response was a move in the right direction.”15

[40] Mr Swan also says that there have been 4 conferences in the Commission. He says that these have “helped the parties move closer towards reaching an agreement.” 16

[41] Mr Swan’s evidence is that there are three key outstanding issues in bargaining – the “bank hours”, wage increases and the inclusion of fatigue management provisions in the agreement. 17 The bank hours and wage increases are “critical” and fatigue management “important”18 while there are also some minor issues which Mr Swan considers can be “easily resolved”.19

[42] Mr Swan does not consider that the parties positions are “irreconcilable” or that bargaining was at an “impasse”.

THE INDUSTRIAL ACTION

[43] At the time the application was made by Qenos the AWU had provided a notice of intention to take industrial action and had commenced industrial action in the form of “a stoppage of the performance of all work for an indefinite period commencing at 5.30am on 3 October 2022.”

[44] In response Qenos notified its employees that it would be commencing employer claim action and that it would lock employees out from 5.30pm on 3 October 2022.

[45] Mr Laslett’s evidence is that Qenos “has no intention of ending the lockout until a replacement agreement is reached.”

[46] Mr Laslett also gave evidence that, should the AWU take any future industrial action (in the form of a stoppage) Qenos would shut down the resins plant indefinitely. His (not contradicted) evidence is that the plant cannot operate without “sufficiently trained and competent employees working at the plant” and that it takes 24 to 36 hours to shut down and 24 to 36 hours to re-start the plant. Regardless of the length of any future stoppage which may be notified by the AWU he says the plant would need to be shut down as it would not have the required “competent and skilled” employees on site to operate the plant. For every stoppage it would need to go through the shut down and start up process. His evidence is that, for this reason, should the AWU notify any further stoppage Qenos would indefinitely lock out its employees.

[47] The AWU have provided an undertaking in writing and in transcript, that it will not give notice again of an indefinite stoppage of work as part of its protected industrial action. 20

HAVE THE REQUIREMENTS OF THE FAIR WORK ACT 2009 BEEN MET SUCH THAT AN ORDER MAY BE ISSUED?

Is the industrial action protected?

[48] Qenos no longer seeks an order to suspend or terminate the employee claim action.

[49] I am satisfied that Qenos has engaged in industrial action in that it has indefinitely locked out its employees who were (at the time of the notice of employer response action) engaged in protected industrial action. Further, I am satisfied that the action meets the common requirements for industrial action to be protected pursuant to s.413 of the FW Act and that Qenos properly notified its industrial action in accordance with s.414(5) of the FW Act.

[50] I am therefore satisfied that the employer response action is protected industrial action.

Is the protected industrial action being engaged in?

[51] The employer claim action commended at 5.30pm on 3 October 2022. It had not ceased at the time I issued my Order. I am therefore satisfied that employer claim action is industrial action that is being engaged in.

Is the protected industrial action threatening to endanger the welfare of a part of the population?

[52] I am satisfied that, should the industrial action continue and the holding tank of ethylene at the Qenos facility reach its capacity, the flow on effects to Longford would result in an endangerment to the welfare of part of the population.

[53] The supply of natural gas to domestic and business users across (parts of) Victoria, Tasmania and New South Wales is critical for cooking, heating and manufacturing. The loss of that supply would have devastating effects.

[54] I note that circumstances are not yet at the point where that endangerment will be realised but the threat is real.

Conclusion

[55] The Respondent does not dispute that the jurisdiction prerequisites for the making of an order have been met.

[56] Given my findings above I am satisfied that the requirements of s.424(1) of the FW Act have been met. That is, the employer response action is protected industrial action, is (at the time of hearing) being engaged in and is threatening to endanger the welfare of a part of the population. In these circumstances the Commission is required to suspend or terminate the industrial action.

SHOULD THE INDUSTRIAL ACTION BE SUSPENDED OR TERMINATED?

[57] Both Qenos and the AWU say that the matters that I should consider in deciding whether to suspend or terminate the protected industrial action being taken by Qenos are the status of bargaining and the likelihood of further industrial action. Neither of these matters is determinative of the question but are relevant matters to take into account in reaching my decision.

[58] Qenos submits that I should terminate the industrial action because:

•  The parties have been bargaining unsuccessfully for an agreement since April 2022 but have been unable to reach agreement. Bargaining is now at an impasse with a number of critical matters on each side unresolved. This favours termination of the industrial action as, if the action is only suspended, hostilities may resume;

•  A suspension of the industrial action would leave open the potential for a reoccurrence in which the wellbeing of the population is again at risk;

•  The only industrial action available to the AWU is strike action (of varying duration). Qenos’ response to any strike will be to lock the employees out indefinitely. This will inevitably lead to a further application to the Commission to terminate the industrial action. The severity of the implications of such further industrial action made termination more appropriate.

[59] The AWU submits that bargaining on the substantive claim has been ongoing for 4 months. In that time it says concessions have been made, compromises offered and the parties have moved in their positions. It says that the movement of the parties is evidence from the meetings on 3 and 7 October 2022 and the acknowledgement of Qenos, arising from those meetings, that the “AWU response was a move in the right direction.”

[60] The AWU says that, at this point in time, it has no plans for further industrial action. The AWU submits that, even if there is industrial action in the future I should not accept that this will result in a future lockout. It submits that the evidence does not support that an indefinite stoppage would be necessary as Qenos would have storage capacity for the ethylene.

[61] The AWU submits that, should I find that the conditions necessary for a suspension or termination of the industrial action have been met, I should suspend the industrial action for a nominal period of 1 day (or such other nominal period as I see fit). The result of this is that the lockout will cease and the asserted threat to the welfare of the population caused by the actions of Qenos will be removed. It will then be a matter for the AWU to notify any further protected industrial action. Such a notification will not include any further indefinite strike.

[62] The AWU also submits that termination will not be appropriate as it will remove the valuable right of employees to take protected industrial action in the course of bargaining.

[63] In considering whether the Commission should suspend or terminate the industrial action I have had regard to a number of factors identified by Deputy President Hamberger in Essential Energy v Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia 21(Essential Energy). In that decision the Deputy President considered a number of decisions where Members had grappled with the question of whether they should terminate or suspend industrial action22 before concluding:

•  the length of time negotiations had been going on;

•  the progress that had been made in negotiations;

•  whether there had been prior industrial action;

•  the views of the parties (especially where both parties agree on the appropriate course of action); and

•  the potential for further industrial action that would endanger the general welfare etc.

[64] I note that bargaining has been underway for a relatively short period of time of 6 months at most but, as to the substantive issues between the parties, for 4 months. It is, in my experience, not unusual that bargaining has not been completed in 4 months, particularly in circumstances where the parties are well experienced in bargaining and each side has a considered list of claims it wishes to pursue. I have also taken into account that the parties continue to meet – including during the period of the employer response action – and has each committed to further meetings.

[65] Progress in bargaining has been slow but again, it is, in my experience, not unusual for a party to not concede matters as having been finalised until the entire agreement is complete. I do note that the AWU appears to have prioritised its claims which would generally assist in the bargaining process. I note the costing of the claims of the AWU as provided in evidence by Mr Laslett but, again, see no reason why this should impede continued bargaining.

[66] The parties have sought the assistance of the Commission in bargaining. This appears to have been of some benefit to the parties and this avenue remains open.

[67] There has been no other industrial action except for the employee claim action and the employer response action, both of which commenced on 3 October 2022. The employee claim action finished 4 days later on 7 October 2022.

[68] Qenos submits that the Commission should terminate the industrial action as bargaining is at an impasse, the employees opted for indefinite strike as its first action to which Qenos responded with an indefinite lockout, suspension of the industrial action would leave open the possibility of a recurrence of employee claim action and employer response action and the implications of such industrial action are severe.

[69] Qenos submits that the observation of Vice President Watson in Minister for Industrial Relations for the State of Victoria v AWU 23 are apposite where the Vice President said:

[70] I have noted and taken account of the indication of Qenos that any further industrial action by the AWU will result in another, indefinite, lockout. While it is unfortunate that this may be the course taken by Qenos I have made my decision in full knowledge of this. I do not consider it a reason, in and of itself, to not consider a suspension.

[71] While the observations above of the Vice President in the matter he was considering are informative I would observe that the factual matrix in that matter is quite different to that before me. In the matter before him the Vice President noted:

[72] While it is true that the termination of the industrial action, as sought by Qenos, would “move the parties” from what it says is an impasse, I am not convinced that the circumstances are such in this matter that, after only 4 or 6 months of bargaining, the matter should move to the extent of terminating the industrial action.

[73] I am satisfied that matters are progressing in bargaining and that, beyond assertion, there is little reason to consider that an impasse has been reached. That the witnesses in the hearing of this application could not agree on how far apart they were in bargaining is not determinative of the matter, either by itself or in combination with other matters raised. As Counsel for Qenos put it in submissions, I need to determine where the parties are in bargaining. In considering all of the material I am not convinced that they cannot further negotiate towards an agreement.

[74] I have also taken into account the scheme of the FW Act in relation bargaining and the inherent role of protected industrial action as part of that process. A decision to terminate industrial action – and hence the right to take any further action in relation to the proposed agreement – is not one that should be taken lightly.

[75] This is a highly unusual application in that Qenos is asking the Commission to do something that is fully within its own control – that is, cease the industrial action that is threatening the welfare of a part of the population. The harm that Qenos says is inflicted, or soon to be inflicted, on a part of the population is of Qenos’ own making. I am mindful of the evidence of Mr Lasslet who said that, while he considered the current state of affairs to be caused by a combination of the employer response action and the employee claim action 24 (without the latter the former could not have occurred), the intention of Qenos in continuing with its application, after the AWU advised that its notified action would cease, is to get a [workplace] determination without interruption to its operations.25 Whilst that may have been the objective of Qenos it is not, in my view, a necessary step at this stage. The FW Act provides an alternative to termination (and likely arbitration) and that is suspension.

[76] Suspension of the industrial action being taken by Qenos will allow the parties to continue bargaining and I consider they should be given that opportunity without the immediate threat of Qenos of a further indefinite lockout.

CONCLUSION

[77] For the reasons given above I issued an Order to suspend the protected industrial action being taken by Qenos for a period of 30 days. This period does, in my opinion, provide the parties with an opportunity to find resolution to the matters in dispute between them such that the threat posed by Qenos’ industrial action does not eventuate.

Seal of the Fair Work Commission with member's signtaure.

COMMISSIONER

Printed by authority of the Commonwealth Government Printer

<PR746724>

Appearances:

M. Follett and J. McLean of counsel for the Applicant
P. Boncardo of counsel for the Respondent

Hearing details:

Melbourne.
11 October 2022.

 1   The industrial action notified by the AWU was only in relation to the resins and plastics plant at the Qenos facility. The olefins plant was not affected.

 2   Witness statement of Witness statement of Duncan Laslett, attachment DL-4. An STL is defined in the notice as “an employee who is employed by Qenos in the SISS Level 12, 13 or 14 classifications in the Qenos Altona Enterprise Agreement 2018.”

 3   PR746699

 4   The only industrial action that may be terminated by such an application is protected industrial action that has the essential characteristics as described in s.424(1) of the FW Act. Industrial action that is not having the effect as described in s.424(1)(c) and (d) cannot be subject to an order that it be suspended or terminated.

 5   Witness statement of David McCord, paragraph 20

 6   Witness statement of David McCord, paragraph 12

 7   Witness statement of Matthew Clemow, paragraph 12

 8   AE505603

 9   Witness statement of Duncan Laslett, paragraph 9

 10   Witness statement of Duncan Laslett, paragraph 13

 11   See witness statement of David Swan, attachment DS-O1, pages 134-154

 12   Transcript PN164

 13   Witness statement of David Swan, paragraph 33 and attachment DS-01, page 14

 14   Witness statement of David Swan, paragraph [38]

 15   Witness statement of David Swan, attachment DS-01, page 196

 16   Witness statement of David Swan, paragraph [53]

 17   Witness statement of David Swan, paragraph [73]

 18   Witness statement of David Swan, paragraph [87](c)

 19   Witness statement of David Swan, paragraph[74]

 20   The effect of such an undertaking was not subject to other than quite preliminary views in these proceedings

 21   [2016] FWC 3338

 22   Ibid, [32]-[36]

 23   [2016] FWC 8826

 24   Transcript PN86

 25   Transcript PN92-PN94