[2019] FWCFB 2427
The attached document replaces the document previously issued with the above code on 16 April 2019.
Amending subject line and footnotes 7, 10, 13, 33 and 36 to refer to “[2018] FWCA 7624”.
Associate to Deputy President Gostencnik
Dated 16 April 2019
| [2019] FWCFB 2427 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.604—Appeal of decision
The Australian Workers’ Union
v
Alcoa of Australia Limited
(C2019/41)
DEPUTY PRESIDENT GOSTENCNIK |
SYDNEY, 16 APRIL 2019 |
Appeal against decision [[2018] FWCA 7624] of Deputy President Beaumont at Perth on 20 December 2018 in matter number AG2018/919 – appealable error identified – permission to appeal granted – appeal upheld – application remitted for redetermination.
Introduction and background
[1] Alcoa of Australia Limited (Alcoa) operates one of the world’s largest integrated bauxite mining, alumina refining and aluminium smelting systems, with its main operations in Western Australia concerned with mining and refining bauxite which is used in the manufacture of aluminium metal. 1 The Alcoa World Alumina Australia WA Operations AWU Enterprise Agreement 2014 (Agreement) covered Alcoa, The Australian Workers’ Union (the AWU) and various Alcoa employees. The Agreement was approved by the Fair Work Commission (Commission) on 10 March 20142 and commenced operation on 17 March 2014. It had as its nominal expiry date 31 March 2017.
[2] While in operation, the Agreement covered approximately 1,530 employees who are or are eligible to be members of the AWU engaged in various job classifications at Alcoa’s refineries and mines at Huntly, Willowdale, Kwinana Refinery, Wagerup Refinery, Pinjarra Refinery and Marrinup Nursery. These employees are also covered by the Aluminium Industry Award 2010 (Award).
[3] Alcoa is covered by three other enterprise agreements which have application to parts of its Western Australian operations. 3
[4] Bargaining for a proposed enterprise agreement began on 21 December 2016. 4 The AWU was a bargaining representative for the proposed agreement.
[5] During bargaining Alcoa pursued a proposed agreement which did not contain, or which altered, a number of provisions of the Agreement, because they were said by Alcoa to no longer be acceptable. These included:
• minimum manning (clause 24);
• supplementary shift requirements (clause 11);
• rates for labour hire personnel (clause 23);
• early retirement and redundancy (clause 17);
• hours of work and rostering requirements (clause 10);
• dispute settlement procedures (clause 19);
• disciplinary action requirements (clause 18);
• extended paid sick leave (clause 13.4); and
• union structures and arrangements. 5
[6] On 12 March 2018 Alcoa made application to the Commission pursuant to s.225 of the Fair Work Act 2009 (Act) to terminate the Agreement. The application was allocated to Deputy President Beaumont. In material filed in support of the termination application, Alcoa contended, inter alia, that termination of the Agreement would enable Alcoa to operate its mines and refineries at “more efficient and productive levels”, that the terms and conditions of the Agreement were preventing it from doing so and that the termination would facilitate the negotiation of a new enterprise agreement. 6 Filed with Alcoa’s application was an undertaking. The undertaking provided, inter alia, that Alcoa would maintain for each employee covered by the Agreement as at the date of its termination the current payment levels under the Agreement for a further six months or for a longer period determined by Alcoa from the date of the termination, subject to certain conditions.7
[7] Between 28 August and 6 September 2018, relevant employees voted on an enterprise agreement proposed by Alcoa but which was not supported by the AWU. 8 A substantial majority of relevant employees who participated in the ballot voted against the approval of the proposed agreement with the consequence that it was not made.9
[8] On 20 December 2018, the Deputy President issued a decision 10 (Decision) determining that the Agreement must be terminated because the preconditions in s.226 of the Act were met.11 The Deputy President was satisfied that it is not contrary to the public interest to terminate the Agreement and that she considered it appropriate to do so.12 The AWU has lodged an appeal against the Decision pursuant to s.604 of the Act for which permission must be first obtained.
[9] After setting out some brief introductory matters at [1]–[5] of the Decision, the Deputy President deals with a range of background and evidentiary matters at [6]–[220]. These concern Alcoa’s corporate structure and operations ([6]–[10]); Alcoa’s workforce and industrial instrument coverage ([11]–[18]); the various changes sought by Alcoa in bargaining for a proposed agreement ([19]–[189]); the position of the AWU during bargaining ([190]–[191]); the chronological course of bargaining for the proposed agreement ([192]–[214]); and the issue of concessions made by the AWU ([215]–[220]).
[10] At [221] of the Decision the Deputy President notes that Alcoa has proffered an undertaking and sets out in summary form the effect of the undertaking. At [222]–[234] the Deputy President discusses the financial position of Alcoa. At [235]–[244] the Deputy President sets out some of the relevant statutory provisions and summarises others.
[11] A summary of the submissions of each of Alcoa and the AWU is set out at [245]–[248] and [249]–[272] of the Decision respectively. The Deputy President then considers whether it is not contrary to the public interest to terminate the Agreement. The Deputy President observes at [274] of the Decision that:
“…factors considered to determine whether I am satisfied that the termination is ‘not contrary to the public interest’ are at times similarly considered when determining the ‘appropriateness’ of termination. This has arisen for the most part as a result of the submissions received. To minimise repetitiveness, when considering ‘not contrary to the public interest’ and ‘appropriateness’ in a later section of this decision, cross-references will be made only in so far that there is relevancy to the subclause of s 226 under consideration.”
[12] Next the Deputy President summarises the AWU’s submissions as to public interest, and notes that “the essence of what the AWU was contending was that in this current environment Alcoa should not be permitted by the industrial umpire to reduce its employee’s wages by 40% to 60%, because it was a profitable business, or rather, a significantly profitable business, while the Agreement operated”. 13 The Decision notes that the AWU maintained:
“…the matter was a critical one for the Commission and asserted that as a public institution for regulating employment conditions in Australia, the Commission needed to be particularly conscious of the problems with the Australian economy when undertaking its functions under the Act. Granting the Application would, according to the AWU, be another step toward entrenching low wages growth in Australia.” 14
[13] The Deputy President deals with these submissions as follows:
“[279] However, as observed, the AWU took issue with Alcoa’s profitability against a backdrop of what it considered was a consensus of wage growth stagnation and its move to decrease wages trough (sic) the termination. Yet it is the case that the abovementioned factors do not, in my view, weigh against a finding that the termination is not contrary to the public interest, as will be explained.
[280] The object of the Act is to promote ‘national economic prosperity’. However, that reference to ‘national economic prosperity’ sits within a section of the Act that refers to the object of providing a ‘balanced framework for cooperative and productive workplace relations’ that then ‘promotes national economic prosperity and social inclusion for all Australians’. I consider this point further at paragraphs 285 and 353, but observe that the promotion of national economic prosperity follows from a balanced framework for cooperation and productive workplace relations.
[281] I turn now to the AWU’s assertion of entrenching low wage growth. In exercising its powers under Part 2-4, Division 7, Sub-Division D of the Act, the Commission is not exercising the powers of setting minimum wages, varying modern awards to address any questions of ‘wages growth’, nor setting safety net standards. The sections giving the Commission power in relation to these matters are situated in other parts of the Act. In the context of considering s 226(a), the Commission’s regulation of employment conditions in Australia, such as its responsibilities for setting minimum wages, is not a relevant consideration.
[282] As to the maintenance of proper industrial standards, this would be achieved initially by the Undertaking proffered by Alcoa that safeguards rates of pay, allowances and superannuation. I note that the AWU voiced no objection to the content of the Undertaking, although it was acknowledged that its duration was for 6 months. Thereafter, the employees, if they have not negotiated another enterprise agreement or alternative arrangement, would have the benefit of the AIA. The AIA resulted from the modernisation process. In such circumstances, the presumption would appear correct that it sets a standard that is proper. Additionally, it is accompanied by the NES.” 15 [Endnotes omitted]
[14] The Deputy President then reasons that although the applicable modern award “is not as generous in its terms as those currently afforded to the employees under the Agreement … the generosity of those terms, or lack thereof, in comparison to that which the employees currently receive does not in turn mean that the relevant modern award does not set a proper industrial standard.” 16 The Deputy President says at [285] of the Decision that Alcoa’s profitability did not weigh against the termination of the Agreement particularly where Alcoa had a rational basis for pursuing the changes earlier outlined. In particular the Deputy President was satisfied that there were marked limitations and restrictions imposed by the Agreement on Alcoa’s ability to operate its business in a manner responsive to the nature of the industry and the commercial environment in which it operates.17 The Decision notes that there had at times been cooperation between the various parties covered by the Agreement, however the restrictions it imposed, when regard is had to the object of the Act, that is to provide a balanced framework for cooperative and productive workplace relations, did not “appear to epitomise that object”.18
[15] Next the Deputy President discusses the status of bargaining and considers whether there was an impasse in bargaining and the import of concessions said to have been made by the AWU. The Deputy President concludes that an impasse had been reached 19 and in so doing she reasons as follows:
“[302] It was not until the hearing was on foot that a response of the kind which Mr Gleeson referred to was forthcoming from the AWU. That response, a letter from Mr Zoetbrood, the Secretary of the AWUWA, was admitted into evidence. However, whether the Concessions appear in the witness statements, or the later letter they nevertheless appear, in parts, to lack clarity; and save for Alcoa’s witnesses being cross-examined on them, there has been no discussion between the parties with a view to understanding what precisely is being offered.
[303] It appears highly improbable that members of the AWU would prefer to be covered by the AIA in preference to their bargaining representative putting to Alcoa, in the context of bargaining, concessions of the kind already identified to achieve a much more beneficial outcome. This is particularly the case given what has been said regarding the lack of generosity provided by the AIA terms in comparison to the Agreement. While the evidence suggests that the Concessions did not go all the way in addressing the key issues between the parties, the evidence before me does not persuade me that the AWU or its members, or for that matter Alcoa, would take a foolhardy approach. Alcoa would clearly have much to lose regarding the trust and engagement of its employees, were it to take an unbalanced approach to the negotiations of future terms and conditions.
[304] I am persuaded that the AWU’s tenacious approach to preserve the ‘2005 Arrangements’ has, in part, contributed to the period of protracted bargaining. This, in combination with the timing of when the Concessions were made, their conditional character, the context in which they were made, their lack of specificity, and an absence of discussions between the parties concerning the content of the Concessions, has allowed me to arrive at the conclusion that an impasse has been reached.
[305] The impasse and the purported approach that would be adopted to further bargaining, observing what was said by Mr Price about bargaining in good faith should reversion to the AIA be imminent, are considerations that weigh toward a finding that termination of the Agreement would not be contrary to the public interest.” 20 [Endnotes omitted]
[16] The Deputy President concludes that “if the Agreement was terminated, bargaining would continue with a proper focus on the significant enhancement of terms and conditions being offered by Alcoa compared to those contained in the AIA. This is as opposed to a comparison being drawn to the terms and conditions in the ‘2005 Arrangements’ and key issues, factors which Alcoa has considered to be an inhibiting factor for negotiations to date.” 21 Next, the Deputy President:
• concludes that a resetting of the bargaining dynamic as a result of the termination of the Agreement would not be contrary to the public interest; 22
• rejects a contention that there was no operational necessity to terminate the Agreement; 23 and
• concludes that the termination of the Agreement would not be contrary to the objects of the Act. 24
[17] The Deputy President’s ultimate conclusion that she was satisfied that it was not contrary to the public interest to terminate the Agreement is to be found at [313] of the Decision.
[18] The Deputy President moves then to consider whether it is appropriate to terminate the Agreement taking into account all of the circumstances including the matters set out in s.226(b)(i) and (ii) of the Act. After summarising some relevant propositions derived from some of the decided cases concerning s.226(b), 25 the Deputy President concludes that:
• the AWU and its members oppose the termination of the Agreement and their opposition is not without a basis; 26
there would be no adverse effect on the AWU by the termination of the Agreement; 27
• employees affected by the termination of the Agreement would, for a period, have their wages unchanged but if a new agreement was not reached it may be the case that the Award would set the terms and conditions of employment; 28 and
• the AWU and its members remain able to continue their negotiations with Alcoa to secure what they consider a suitable deal. 29
[19] The Deputy President deals next with the issue of Alcoa’s profitability, and reasons:
“[322] These are not insignificant factors but, they must be balanced against the Undertaking that has been provided by Alcoa to maintain the rates of pay under the Agreement for six months. The AWU and its members remain able to continue their negotiations with Alcoa to secure what they consider a suitable deal. That deal may still include provisions directed toward job security. It remains open to the parties to avail themselves of the provisions under the Act that would assist them in securing such a deal. Concerns about the loss of financial benefits will only be a reality if a replacement agreement is not negotiated and approved within the six months of termination. The content of a new agreement will not be determined by termination of the Agreement, but will be in the hands of the negotiating parties.
[323] If, as the AWU asserts, the parties are very close to reaching a new agreement, then the termination of the Agreement is far less likely to have a negative impact or effect on employees covered by the Agreement. The proposed agreement, favoured by Alcoa, and upon which it invited employees to vote, contains increases in remuneration and allowances and other financial benefits, all of which may negate the argued adverse effects following on termination. The evidence supports a conclusion that the parties all want to put in place a new agreement. In these circumstances, I am of the view that these factors do not weigh against a finding that the termination of the Agreement would be appropriate.
[324] Much was made of Alcoa’s profitability during the operation of the Agreement. If the figures of Mint Global are to be believed, a drop in revenue whilst the Agreement was in operation was evident. More reliable, however, was the evidence of a significant decrease in the price of alumina in 2015 and 2016; this drop, and the uncertainty of the alumina price played into Alcoa’s approach to bargaining this time around.
[325] To reflect only on the profitability of Alcoa’s business in more recent times does not provide a fulsome picture of Alcoa’s susceptibility to a fluctuating market where product diversity is limited, and profits may, in part, arise from the exchange rate. It was acknowledged by Mr Kamper that while in general forecasts were positive for Alcoa, there was no way of predicting with certainty where the prices were going to end up this year or onward.
[326] Mr Kamper agreed that it was correct that there were no principles that suggested a company should not seek to make additional profits for its shareholders. Nevertheless, the AWU submitted that a profitable business such as Alcoa should not be permitted to succeed with an application that would entrench low wages growth. I do not intend to repeat myself, but simply refer to what I have written regarding the entrenchment of low wages growth when considering whether the termination is not contrary to the public interest. I consider it equally applicable here.
[327] The Act does not contemplate that profitability being achieved or sought should stand in the way of a termination application if there is merit for the removal of barriers that affect productivity and efficiency. As was said by the Deputy President in Loy Yang:
In the circumstances of this Application, I do not consider the fact that AGL Loy Yang is a profitable and productive business should weigh against termination of the Agreement. As outlined above, it has previously put two offers with the wage increases outlined and I consider it has a rational basis for pursuing the changes it seeks to make to the Agreement and it is legitimate for it to seek to become more efficient and productive through bargaining.
[328] On appeal, the Full Bench considered it was reasonably open to the Deputy President to treat the fact that AGL Loy Yang was a profitable and productive business as a neutral factor, rather than as something necessarily weighing against the appropriateness of termination of the agreement. When considering an argument that Alcoa has been profitable while the Agreement has operated, I do not consider that this weighs against its termination and therefore consider it a neutral factor.” 30 [Endnotes omitted]
[20] At [329]–[353] of the Decision the Deputy President deals with the reasons why bargaining had been protracted. At [355]–[359] the Deputy President distinguishes the circumstances which pertained to Alcoa’s application compared with those which were found to exist in Re Allen & O’Brien Pty Ltd 31 and Re Viterra Operations Pty Ltd32.
[21] The Deputy President then returns to the theme of the impasse in bargaining and the effect of the termination of the Agreement on bargaining and on cooperative and productive relations. The Deputy President observes:
“[360] Mr Price expressed the termination of the Agreement would have a major impact in many ways. Mr Price said that the AWU EBA Negotiating Committee had made the Concessions in good faith, to progress bargaining in an effort to reach a reasonable agreement and the membership had made it clear it was not a one way street. If the Agreement was terminated, then everything would be off the table, and the parties would be back to square one. As acknowledged, Mr Gleeson’s evidence was that the termination of the Agreement would ‘enhance’ the bargaining process.
[361] However, as observed, I considered that Mr Price’s evidence, when questioned in cross examination about prospective bargaining, made it clear that if the Agreement was terminated, the AWU continued to be committed to bargaining in good faith. The Convenors, who are also bargaining representatives, have worked at Alcoa for an extended period. While I have found that bargaining has been protracted and an impasse reached, I am satisfied that the termination of the Agreement would not result in the erosion of cooperative and productive relations.
[362] The AWU and employees are known to have adopted a cooperative approach at times. In fact, Mr Price gave evidence that the AWU regularly works collaboratively and productively with Alcoa to improve its operations. By way of example, Mr Price referred to an email from the Refinery Manager at Wagerup, who thanked employees for working ‘professionally and tirelessly’ during a power failure. According to Mr Price this type of effort from the employees continued despite the Application to terminate the Agreement.” 33
[22] After noting that the question of appropriateness requires an overall judgement based on all the relevant circumstances, the Deputy President concludes that it was appropriate to terminate the Agreement. 34 The Deputy President determined the termination of the Agreement with effect on and from 7 January 2019.35
[23] By its notice of appeal the AWU advanced nine grounds of appeal. By the time the appeal was heard the AWU no longer pressed grounds 1, 4, 5 and 8 but sought leave to amend its notice of appeal to add two supplementary grounds. In sum, by the seven grounds that remain the AWU contends as follows:
2. The Deputy President failed to take account of a relevant consideration, namely that the lack of wages growth in Australia was relevant in assessing whether it was not contrary to the public interest to terminate the Agreement, particularly in circumstances whereby it was established that Alcoa had generated significant profits while the Agreement had been operating;
3. The Deputy President acted upon a wrong principle in determining that the Act does not contemplate that profitability being achieved or sought should prevent the termination of an agreement if there is merit for the removal of barriers that affect productivity and efficiency;
6. The Deputy President mistook the facts when she concluded that bargaining was at an impasse;
7. The Deputy President mistook the facts when she concluded that “there has been an apparent unwillingness by the AWU, as borne out of the evidence, to work with Alcoa to address the key issues”; 36
9. It was an unreasonable and manifestly unjust result for the Agreement to be terminated given that Alcoa had been able to operate extremely profitably throughout the Agreement’s existence, including during periods where the alumina price dropped significantly and given the extensive concessions made during bargaining by the AWU’s members to address concerns raised by Alcoa;
S1. The Deputy President erred in concluding that “there would be no adverse effect on the AWU by the termination”;
S2. The Deputy President erred in weighing the undertaking made by the Respondent against the detrimental impact of the termination of the Agreement on the employees, in that the undertaking was to only operate for six months, and she failed to take into account that it did not mitigate the detriment to be suffered by the employees if an enterprise agreement with comparable wages was not reached within six months of the termination.
Permission to appeal
[24] An appeal under s.604 of the Act is an appeal by way of rehearing and the Commission’s powers on appeal are exercisable only if there is error on the part of the primary decision maker. 37 There is no right to appeal and an appeal may be made only with the permission of the Commission. It will rarely be appropriate to grant permission to appeal unless an arguable case of appealable error is demonstrated. This is so because an appeal cannot succeed in the absence of appealable error.38 However, the fact that the first instance decision maker made an error is not necessarily a sufficient basis for the grant of permission to appeal.39
[25] We are persuaded to grant permission to appeal in the instant case. We are persuaded grounds 6 and 7 of the AWU’s grounds of appeal raise an arguable case of appealable error. The errors identified in the notice of appeal are of the kind discussed in House v The King. 40 On the face of the Deputy President’s reasons for the decision these errors are arguable, and as will become clear below we have concluded appealable error has been established. We are not able to conclude that the errors we have identified would not have made any difference to the Deputy President’s conclusion to terminate the Agreement and it is therefore appropriate that permission to appeal is given.
Consideration
Nature of the appeal
[26] The approach to be taken in an appeal from a decision made under s.226 of the Act was discussed in Construction, Forestry, Mining and Energy Union v Peabody Energy Australia PCI Mine Management Pty Ltd 41:
“[16] The nature of the exercise of power under s.226 was explained by the Full Bench in AWX Pty Ltd ([2013] FWCFB 8726) as follows:
‘[18] We begin an examination of this aspect by noting that the application of s.226 of the Act is an exercise in discretion by the decision maker. The provision requires that an instrument must be terminated if the Commission is satisfied that it is not contrary to the public interest and after taking account of all the circumstances including the views of the employees, each employer, and each employee organisation (if any), covered by the agreement; and the circumstances of those employees, employers and organisations including the likely effect that the termination will have on each of them.’
[17] In identifying that s.226 required the exercise of a discretion, the Full Bench in AWX Pty Ltd referred to the following passage in the High Court decision in Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission ([2000] HCA 47; (2000) 203 CLR 194) (footnotes omitted):
‘[19] "Discretion" is a notion that "signifies a number of different legal concepts". In general terms, it refers to a decision-making process in which "no one [consideration] and no combination of [considerations] is necessarily determinative of the result." Rather, the decision-maker is allowed some latitude as to the choice of the decision to be made. The latitude may be considerable as, for example, where the relevant considerations are confined only by the subject matter and object of the legislation which confers the discretion. On the other hand, it may be quite narrow where, for example, the decision-maker is required to make a particular decision if he or she forms a particular opinion or value judgment.’
[18] Section 226 involves the exercise of a ‘narrow’ discretion of the type described in the last sentence of the above passage. Notwithstanding this, it remains the case that the evaluative assessments required by s.226(a) and (b) allow a degree of latitude on the part of the decision-maker as to the conclusions to be reached. For the reasons explained in Coal and Allied Operations, this means it is necessary in an appeal from a decision made under s.226 to demonstrate error in the decision-making process (ibid as [21]. The types of errors that might be demonstrated are those identified in House v The King ([1936] HCA 40; (1936) 55 CLR 499 at 505 per Dixon, Evatt and McTiernan JJ).” 42
[27] We turn to consider the appeal grounds.
[28] The second ground of appeal contends that the Deputy President failed to take account of a relevant consideration when she determined at paragraphs [279]–[281] of the Decision that the lack of wages growth in Australia was not a relevant consideration in assessing whether it was not contrary to the public interest to terminate the Agreement, in circumstances where it was established that Alcoa had generated significant profits while the Agreement was in operation. The AWU contended that a decision of the Commission to allow a very profitable business to reduce wages by 40 to 60 percent in a climate of low wage growth has implications for the broader community and was relevant to the Commissioner’s assessment of the public interest.
[29] Paragraphs [279]–[281] of the Decision the Deputy President are set out in [13] above.
[30] We do not consider the Deputy President reached the conclusion imputed to her by the second ground of appeal. It bears repeating that reasons for a decision under review are not to be construed minutely and finely with an eye keenly attuned to the perception of error. 43 The reasons must be read as a whole and considered fairly, so that that which might be characterised as infelicitous expression does not too readily give rise to the inference of error.44
[31] Reasons for a decision are thus not meant to be scrutinised upon over-zealous review by seeking to discern whether some inadequacy may be gleaned from the way in which the reasons are expressed. 45 These propositions relate to judicial review of administrative decisions and there is no reason why a different approach should be taken in an appeal under the Act.46
[32] The Deputy President did not determine that the lack of wages growth was not a relevant consideration. At [279] of the Decision the Deputy President refers to the AWU’s contention about the significance of Alcoa’s profitability and that which the AWU considered was a consensus that the economy presently is affected by wage growth stagnation. The Deputy President appears to accept the proposition that there is a consensus about wage growth stagnation. She says that ‘‘the above mentioned factors do not … weigh against a finding that the termination is not contrary to the public interest, as will be explained.’’ The “factors” to which she refers appear to include both the company’s profitability and wage growth stagnation.
[33] There follows at [280] of the Decision an explanation of this conclusion which is concerned with the object of the Act. There is no consideration at this point of why wage growth stagnation does not weigh against the termination of the Agreement. In broad terms, one might expect the proposition that wage growth has stalled to tell, at least to some degree, against the termination of the Agreement as it might presumably make it more difficult for employees to make up, through fresh bargaining, the difference between the previous rates of pay in the terminated agreement and the modern award rates. Other factors might well outweigh this consideration however specifically how they may have done so in this case is not the subject of any explicit analysis in the Decision. Nevertheless, we consider the Deputy President had regard to wage growth stagnation and concluded that it was outweighed by other factors. This conclusion was reasonably open to her, particularly in light of the fact that the actual reduction of wages would remain a matter of speculation for the first six months, during the currency of the company’s undertaking to maintain wages.
[34] The Deputy President continued at [281] of the Decision, stating that the Commission’s power to regulate employment conditions (by which she evidently means the power to set minimum wages and maintain the award safety net) was not a relevant consideration. In our view, this conclusion related to the AWU’s contention that termination of the Agreement would contribute to entrenching low wages growth, which was distinct from its broader submission that low wage growth, was a consideration telling against termination of the Agreement. We do not consider the Deputy President’s conclusion at [281] to relate to this latter submission. We would add that, in our opinion, the former, macro proposition that the termination of a particular enterprise agreement, even one covering a large number of employees, could contribute to entrenching wage growth stagnation nationally is of marginal relevance to the public interest; the statistical impact of the termination of a single enterprise agreement on the entrenchment of low wage growth would likely be very small.
[35] To our mind, the principal public interest relevance of wage growth stagnation (accepting for the moment, without deciding the matter, that such stagnation is a feature of the national economy at the present time) is that the termination of an enterprise agreement has a potentially harsher impact on employees than would otherwise be the case in a “normal” or buoyant wages market. Such disadvantage is a matter of public relevance, and goes beyond the interests of the parties to the particular matter. We consider the Deputy President took this into account, albeit not in any detail.
[36] The third ground of appeal contends that the Deputy President acted on a wrong principle in determining the following:
“[327] ‘The Act does not contemplate that profitability being achieved or sought should stand in the way of a termination application if there is merit for the removal of barriers that affect productivity and efficiency…’
In the circumstances of this Application, I do not consider the fact that AGL Loy Yang is a profitable and productive business should weigh against termination of the Agreement. As outlined above, it has previously put two offers with the wage increases outlined and I consider it has a rational basis for pursuing the changes it seeks to make to the Agreement and it is legitimate for it to seek to become more efficient and productive through bargaining.”
[37] The Deputy President continued at [328] of the Decision that on appeal, the Full Bench had considered it was reasonably open to the Member below to treat AGL’s profitability as a neutral factor, “rather than as something necessarily weighing against the appropriateness of termination of the agreement’’. She concluded that when “considering an argument that Alcoa has been profitable while the Agreement has operated, I do not consider that this weighs against its termination and therefore consider it a neutral factor.” 47
[38] The AWU submitted first that the Deputy President approached the question of Alcoa’s profitability as though there were some presumption or rule that profitability would ordinarily be a neutral factor. It contended that there is no support for any such test or principle of the kind referred to at [327] of the Decision and that this statement is contrary to that which the Act actually requires the Commission to consider, namely whether termination of the Agreement is not contrary to the public interest, and whether it is appropriate to terminate the Agreement taking into account all of the circumstances.
[39] In our view, the Deputy President did not purport to establish a decision rule or gloss, nor did she consider Construction, Forestry, Mining and Energy Union v AGL Loy Yang Pty Ltd t/a AGL Loy Yang 48 as establishing a general principle about the relevance of profitability. It plainly does not. The first sentence of [327] of the Decision seems to us to disavow rather that assume the existence of any presumption or rule of approach. The import of the sentence, read in the light of what is said at [328], is that the Act does not state that the profitability of the employer necessarily tells against an application to terminate an agreement, if there is otherwise merit in the application, such as removing barriers that affect productivity and efficiency.
[40] Although the profitability of an employer does not necessarily weigh against an application to terminate an agreement, it might do so in a particular case. We would note that the Act does not contemplate particular factual circumstances telling for or against an application to terminate an agreement. It conspicuously prescribes abstract considerations to which the Commission must have regard: the public interest and the appropriateness of terminating the agreement in all the circumstances, without emphasising any particular circumstances. This is to be contrasted with other provisions in the Act that are prescriptive of particular factual or circumstantial matters in framing the Commission’s jurisdiction, such as ss.318, 365, 387 and 394. The public interest and what is appropriate are more likely to be affected by the circumstances of the particular case than decisions of other Members of the Commission made in different contexts.
[41] The AWU’s second complaint was that the Deputy President did not conduct, or erroneously conducted, the weighing exercise required by s.226, in that the Decision simply noted the conclusion in AGL Loy Yang that profitability was neutral and reached the same conclusion.
[42] Having noted in the first sentence of [328] of the Decision that in AGL Loy Yang the Full Bench determined that it was reasonably open to the first instance decision maker to have concluded that the profitability of the company did not necessarily weigh against the appropriateness of the agreement being terminated, the Deputy President states that ‘‘when considering an argument that Alcoa has been profitable while the Agreement has operated I do not consider that this weights against its termination and therefore consider it a neutral factor’’. The Deputy President does not explicitly state the rationale for her conclusion that in the circumstances of this particular case, the profitability of the company is a neutral factor.
[43] However, these passages must be read fairly and in the context of the Decision as a whole. The passages above appear as part of the Deputy President’s consideration of the question of appropriateness, which begins at [316] of the Decision and ends at [363]. She proceeds to consider the various inflexibilities that according to Alcoa affect the question of appropriateness, and its broader rationale for seeking to terminate the Agreement. The Deputy President concludes at [363] by stating that the question of appropriateness requires an overall judgement based on all the relevant circumstances of the application, and that she is satisfied based on her consideration of the circumstances that it is appropriate to terminate the Agreement. The reasoning for her conclusion that the profitability of Alcoa was a neutral factor is connected with her assessment of these other factors. In our view it is not affected by error.
[44] The sixth ground of appeal contends that the Deputy President mistook the facts in the course of considering the public interest when she concluded at [300] of the Decision that bargaining was at an impasse. The AWU submits that it had recently made a substantial number of important concessions in respect of changes sought by Alcoa to the current agreement. These concessions were conditional on the Commission not deciding to terminate the Agreement, however in the AWU’s submission the concessions demonstrated substantial progress in the negotiations, as opposed to an impasse.
[45] In the course of considering Alcoa’s contention that bargaining was at an impasse, and that this was a consideration telling in favour of a decision to terminate the Agreement, the Deputy President noted at [300] of the Decision that the concessions had been made by the AWU during the course of the proceedings, apparently in contradistinction to concessions that might have been made in bargaining before the application to terminate the Agreement was filed in the Commission. We would note that Alcoa’s undertaking to maintain wages post termination was presumably also made in connection with the proceedings. The Deputy President also considered at [302] that the concessions lacked clarity, although in what respect they are unclear is not apparent to us. The Deputy President also said at [304] that the AWU’s “tenacious approach” to preserving the 2005 Arrangements had contributed to the period of protracted bargaining. And at [305] the Decision concluded:
“[305] The impasse and the purported approach that would be adopted to further bargaining, observing what was said by Mr Price about bargaining in good faith should reversion to the AIA be imminent, are considerations that weigh toward a finding that termination of the Agreement would not be contrary to the public interest.”
[46] The “Mr Price” referred to in this paragraph is an AWU convenor at Alcoa’s Huntly Mine who gave evidence for the AWU in the proceeding, including in relation to the concessions made by the AWU, and the condition that it had placed on them, namely that the concessions would be withdrawn if the Agreement were terminated. Of Mr Price’s evidence, and the significance of it, the Deputy President said:
“[299] However, Mr Price appeared to be providing straight answers when asked whether all of the Concessions would come off the table and he replied ‘well, I can't say what would come off the table and what wouldn't come off the table’. Whether the Concessions would or would not be withdrawn is difficult to say. On the one hand the witness statements of Messrs Allen, Price and King make the statement that the Concessions ‘will no longer apply’ on termination because ‘Alcoa will have dramatically altered the state of bargaining and the AWU cannot be held to previous concessions in those circumstances’, and Exhibit R8 purports the same approach, yet the evidence of Mr Price was that he could not say. The Commission should, when considering the public interest, be guided by the likely foreseeable consequences of termination rather than speculation about possible consequences. On the evidence before me, I cannot conclude that the likely foreseeable consequence of termination would be the withdrawal of the Concessions.”
[47] The Deputy President’s finding that the AWU would probably not withdraw the concessions if the Agreement is terminated is difficult to reconcile with her conclusion that the negotiations had reached an impasse. The Deputy President’s consideration of the likely foreseeable consequence of termination of the Agreement was in reference to an AWU contention that in fact the parties were close to reaching a new agreement and that if the Agreement is terminated, the likely outcome would be a lengthy and bitter dispute, and that the concessions made by the AWU would fall away (see at [296]). The Deputy President rejected this contention (see at [306]), partly because of her assessment that the AWU’s stated condition was in fact not a hard condition. But in our view this assessment points away from a conclusion of AWU intransigence and suggests rather a preparedness of the AWU to bargain, including on matters of central importance to Alcoa.
[48] In this regard, the concessions offered by the AWU concerned matters identified by the Deputy President at [332] of the Decision as terms that Alcoa sought to remove from the proposed agreement during bargaining and which were among the ‘inflexibilities and restraints’ (see at [341]) at which the application to terminate the Agreement was directed, and which formed a key part of Alcoa’s rationale (see at [354]) for seeking the Agreement’s termination.
[49] Alcoa pointed to the fact that the concessions were only made during the proceedings, rather than in bargaining, a point noted by the Deputy President. Perhaps it was suggested that the concessions were forensically tactical. But regardless, the Deputy President considered that the concessions would likely not be withdrawn if the Agreement is terminated and that the AWU was in fact even more willing to bargain than it had represented itself to be.
[50] We note that at [291] of the Decision, earlier in her consideration of the public interest, the Deputy President concluded that she was ‘‘not persuaded that the Concessions demonstrate movement in the bargaining given their conditional nature’’. This too we find difficult to reconcile with the conclusion at [299] that it was not likely that the AWU would actually apply the condition.
[51] Finally, even if the condition placed by the AWU on the concessions had been taken at face value, that condition had clearly not been activated at the time the Deputy President was considering the application to terminate the Agreement. It is difficult to see how the imposition of this particular condition could have formed the basis for a conclusion that the bargaining had reached an impasse (as opposed to a conclusion that they would be likely to reach in impasse later, after the Agreement was terminated).
[52] We consider that the Deputy President’s conclusion that the negotiations had reached an impasse is not supported by her evidentiary findings, and that she therefore mistook the facts and failed to take into account a relevant consideration. This ground of appeal is therefore made out.
[53] By its seventh ground of appeal, which effectively runs in parallel with the sixth, the AWU contends the Deputy President mistook the facts when she concluded at [330] of the Decision that there has been an ‘‘apparent unwillingness by the AWU, as borne out of the evidence, to work with Alcoa to address the key issues’’. The AWU submitted that it had made a substantial number of important concessions on all key bargaining issues identified by the company. It submitted that these concessions were inconsistent with a finding that the AWU was not prepared to assist Alcoa to address key issues.
[54] The Deputy President’s comments at [330] of the Decision formed part of her consideration of whether it was appropriate to terminate the Agreement in all the circumstances, and led into an examination of the provisions in the Agreement that Alcoa considered to give rise to or constitute inflexibilities or restraints. As part of this consideration, in the context of discussing the minimum manning requirements (one of the restraints that was of concern to Alcoa), the Deputy President stated at [337] that ‘‘until such time as the Concessions were made, and on that point I have previously addressed the problematic nature of the Concessions, there had been no movement by the AWU and its members regarding the minimum manning requirements’’. The Deputy President relies on her consideration of the concessions in the context of her earlier analysis of the public interest, discussed above.
[55] However, consistent with what we have said above, we do not consider the Deputy President’s finding that the AWU had been unwilling to work with Alcoa to address the key issues to be compatible with her conclusion that the concessions, which went to the key issues Alcoa sought to address, would likely remain on the table even in the event of a termination of the Agreement. It is also not compatible with the findings at [306] of the Decision about the likelihood of continuing bargaining occurring following the termination of the Agreement. This ground of appeal is also made out.
[56] Ground nine contends that the Decision brought about an unreasonable and manifestly unjust result, given Alcoa had been able to operate extremely profitably throughout the Agreement’s period of operation including during times when the alumina price dropped significantly, and in light of the extensive concessions made by the AWU to address concerns raised by Alcoa. We express no view about the outcome we might have reached on the merits of the application below, but we will observe that a conclusion that a decision is unreasonable or plainly unjust is not one which should be reached by an appeal bench simply as a means to substitute its own preferred outcome for that of a single member by inferring a failure to properly exercise the discretion. It must first be shown that upon the facts, the decision was unreasonable or plainly unjust. Questions of weight to be attached to relevant considerations are matters generally left to the first instance decision maker and absent appealable error will not warrant appeal bench interference. In any event we do not consider it necessary to deal further with this ground of appeal given our conclusion as to grounds six and seven which as we later explain are sufficient for us to uphold the appeal and to quash the Decision.
Supplementary appeal grounds 1 and 2
[57] As we have already noted, at the hearing of the appeal the AWU sought leave to amend its notice of appeal by adding two supplementary appeal grounds. The first contends that the Deputy President erred in concluding at [319]–[320] of the Decision that the AWU would not suffer any detriment from the termination of the Agreement. These passages refer to the role of the full-time union convenor under the Agreement. The Deputy President concluded that the termination of the Agreement would affect the individual convenor in question, but that there would be no adverse effect on the AWU as it could continue its representative role under the Act.
[58] The AWU contended that the termination of the Agreement removed other AWU rights, including the ability to have site delegates as recognised representatives, who could be released from duty on full pay to conduct AWU business, the right to conduct paid delegate meetings and mass meetings with members, and the right to have representatives provided with support to undertake their responsibilities. As to the site convenor, the AWU said that this person was the workplace-based representative of the AWU, the removal of whom would adversely affect its ability to represent members.
[59] Section 226(b)(ii) of the Act requires the Commission to take into account the circumstances of organisations covered by an agreement, including the likely effect that termination of an agreement will have on them. The Deputy President clearly considered this matter in the paragraphs referred to above. The Decision did not consider the matters identified in the first sentence of the immediately preceding paragraph; however, as Alcoa points out, these matters were not raised in submissions of the AWU below. Alcoa’s position before the Deputy President was that there would be no adverse effect on the AWU as a result of the termination of the Agreement as it would still continue its representative role, including in relation to the negotiations for a new agreement. 49 The AWU did not challenge this contention nor did it lead evidence in relation to adverse consequences that it might suffer as a result of termination of the Agreement.
[60] It is correct that there was some evidence from which it might have been concluded that the AWU would likely be adversely affected by the termination of the Agreement. That evidence is summarised at [169]–[189] of the Decision. But it is evident that this evidence was adduced by Alcoa through Mr Liam Smith 50 for the purpose of establishing restrictions, inefficiencies and costs imposts of the Agreement imposed on Alcoa and which it sought to remove. On our review of the transcript, the AWU did not put any proposition to Mr Smith to the effect that the matters he identified are provisions that are beneficial to the AWU, and that the termination of the Agreement resulting in their removal will likely have a deleterious effect on the AWU. Nor did it make any submission to that effect by reference to that evidence. No mention of it, save for the impact on the convenor, is to be found in its written submissions. The AWU’s oral submissions similarly do not rely upon the evidence given by Mr Smith to make good a submission that the termination of the Agreement resulting in the removal of the provisions identified will likely adversely affect the AWU. The AWU’s oral submissions on the likely effect of the termination of the Agreement on it were as follows:
“I turn now to the impact on employees and the union. I've already stated that employees stand to have their wages reduced by 40 to 60 per cent if the 2014 agreement is terminated. Although Alcoa has provided an undertaking for a six month period the Fair Work Commission could not be confident that a new agreement will be struck within a six month period if the 2014 agreement is terminated, particular given Mr Price confirmed in the witness box that the AWU's position if the agreement is terminated is that there's a clean slate and we start again. Mr Gleeson also made it clear in cross-examination that it is possible, and I have already referred to this, that Alcoa will adopt a more aggressive bargaining position if the agreement is terminated. He refused to concede that the agreement recently rejected by employees will remain on the table. It's entirely possible based on Mr Gleeson's evidence that Alcoa would respond a decision to terminate the agreement by going harder and taking a firmer bargaining position. And where that would end, I don't think any of us could know with certainty.
That being the case, we state that the Commission should find that a reasonably likely outcome of terminating the current agreement is that Alcoa will have the option of reducing wage rates for affected employees by 40 to 60 per cent. We say that is an unjust outcome given the financial situation of Alcoa. And also given the concessions that the union, that Alcoa's employees have already agreed to make subject to a decision to terminate the agreement. We say all that is further factors weighing against the finding that is appropriate to terminate the agreement.” 51
[61] Generally, a decision maker is required to resolve the claims made and no error is committed by a decision maker in not addressing issues of fact and law which are not the subject of argument. 52 The Deputy President was required to consider whether it was appropriate to terminate the Agreement taking into account all of the circumstances including, relevantly, the circumstances of the AWU including the likely effect that termination will have on the AWU. This the Deputy President did. The Deputy President cannot be criticised for not divining from the materials a detrimental effect on the AWU which it neither identified nor claimed. This ground of appeal is therefore rejected.
[62] The second supplementary ground of appeal contends that the Deputy President erred in weighing Alcoa’s undertaking to maintain wages for six months against the detrimental impact of the termination of the Agreement on the employees. The AWU contends that the Deputy President failed to take into account that the undertaking did not mitigate the detriment to be suffered by the employees in the event that an enterprise agreement with comparable wages was not reached within six months of the termination.
[63] At [323] of the Decision the Deputy President concluded that the detrimental effect on employees arising from the termination of the Agreement did not weigh against a finding that the termination of the Agreement would be appropriate. In reaching this conclusion the Deputy President explained at [322] that she was approaching the question of the detriment to be suffered by the employees by weighing this detriment against the undertaking. However it is quite clear that the Deputy President took into account the limited duration and scope of the undertaking, and understood that it was possible that the Agreement might not be replaced within the six month period (see at [221] and [321]). The AWU disagrees with the weight the Deputy President accorded to the detriment that would be suffered by employees if a new agreement were not reached within the six months period but that, without more, does not speak to error.
[64] We grant leave to amend the notice of appeal to add the supplementary grounds, but for the reasons stated we reject them.
Conclusion
[65] For the reasons set out above, Grounds 6 and 7 of the amended notice of appeal are to be upheld. We are not able to conclude that the errors we have identified would not have made any difference to the Deputy President’s conclusion that it was not contrary to the public interest to terminate the Agreement, and appropriate to do so. We consider that the appropriate course is for us to quash the decision, uphold the appeal and remit the application to terminate the agreement to Deputy President Beaumont for redetermination. The matters sought to be agitated by the first supplementary appeal ground may be pursued during redetermination.
Disposition
[66] We order as follows:
1. Leave is granted to the AWU to amend its notice of appeal by adding supplementary grounds 1 and 2.
2. Permission to appeal is granted.
3. The appeal is upheld on the basis of grounds 6 and 7 of the amended notice of appeal.
4. The decision in [2018] FWCA 7624 and the order in AE407184 PR703444 are quashed.
5. Alcoa’s application under s.225 of the Act to terminate the Alcoa World Alumina Australia WA Operations AWU Enterprise Agreement 2014 is remitted to Deputy President Beaumont for redetermination.
DEPUTY PRESIDENT
Appearances:
H Borenstein QC with Y Bakri of counsel for The Australian Workers’ Union
H Dixon QC for Alcoa of Australia Limited
Hearing details:
2019.
Sydney:
January 25.
Printed by authority of the Commonwealth Government Printer
<PR706768>
1 Appeal Book Vol 2 at pp 774-775, [14]–[15]
2 Alcoa of Australia Ltd T/A Aloca World Alumina Australia [2014] FWCA 1613, AE407184
3 Alcoa of Australia, WA Operations (Mechanical Trades) Agreement, 2017; Alcoa of Australia, WA Operations (CEPU Electrical Trades) Agreement, 2018; and Alcoa World Alumina Australia, Pinjarra and Wagerup Power Stations Enterprise Agreement, 2014.
4 Appeal Book Vol 2 at p 800, [127]
5 Appeal Book Vol 2 at p 781, [47], see also p 805 [142]
6 Appeal Book Vol 1 at p 360
7 [2018] FWCA 7624 at [221] and Annexure One thereto
8 Appeal Book Vol 1 at p 768
9 Appeal Book Vol 1 at p 766
11 Ibid at [3]
12 Ibid
13 [2018] FWCA 7624 at [275]
14 Ibid at [276]
15 Ibid at [279]–[282]
16 Ibid at [283]
17 Ibid at [285]
18 Ibid
19 Ibid at [304]
20 Ibid at [302]–[305]
21 Ibid at [306]
22 Ibid at [307]
23 Ibid at [308]–[309]
24 Ibid at [311]
25 Ibid at [314]–[315]
26 Ibid at [316]
27 Ibid at [320]
28 Ibid at [321]
29 Ibid at [322]
30 Ibid at [324]–[328]
33 [2018] FWCA 7624 at [360]–[362]
34 Ibid at [363]
35 Ibid at [364]–[366]
36 [2018] FWCA 7624 at [330]
37 This is so because on appeal the Commission has power to receive further evidence, pursuant to s.607(2); see Coal and Allied v AIRC (2000) 203 CLR 194 at [17] per Gleeson CJ, Gaudron and Hayne JJ
38 Wan v AIRC (2001) 116 FCR 481 at [30]
39 GlaxoSmithKline Australia Pty Ltd v Makin [2010] FWAFB 5343 at [26]–[27], 197 IR 266; Lawrence v Coal & Allied Mining Services Pty Ltd t/as Mt Thorley Operations/Warkworth [2010] FWAFB 10089 at [28], 202 IR 388, affirmed on judicial review in Coal & Allied Mining Services Pty Ltd v Lawler (2011) 192 FCR 78; NSW Bar Association v Brett McAuliffe; Commonwealth of Australia represented by the Australian Taxation Office [2014] FWCFB 1663 at [28]
40 (1936) 55 CLR 499
41 [2016] FWCFB 3591; see also Construction, Forestry, Mining and Energy Union v AGL Loy Yang Pty Ltd t/a AGL Loy Yang [2017] FWCFB 1019 at [29]–[30]
42 [2016] FWCFB 3591 at [16]–[18]
43 See for example, Minister for Immigration and Ethnic Affairs v Wu and Ors (1996) 185 CLR 259 at [271]–[272]
44 Ibid at [219]
45 Ibid at [272]
46 See for example, Baxter Healthcare Pty Ltd v Portelli [2017] FWCFB 3891 at [65] and Construction, Forestry, Maritime, Mining and Energy Union; The Australian Workers’ Union v LS Precast Pty Ltd [2019] FWCFB 1431 at [103]–[104]
47 [2018] FWCA 7624 at [328]
49 Appeal Book Vol 5 at p 3199, [27(e)] and Decision at [247]
50 Appeal Book Vol 4 at 2186 and particularly at 2232 – 2247, [186]–[245]
51 Appeal Book Vol 1 at 352, Transcript 20 September 2018, PN 2597 – PN 2598
52 See Commissioner of Taxation v Glennan [1999] FCA 297 at [82], 90 FCR 538 at [558 ]; Culley v Australian Securities and Investments Commission [2010] FCAFC 43 at [5], 183 FCR 279 at [283]; and Linfox Australia Pty Limited v Fair Work Commission [2013] FCAFC 157, (2013) 240 IR 178 at [48]