National Union of Workers v Qenos Pty Ltd [2000] FCA 1340

FEDERAL COURT OF AUSTRALIA

National Union of Workers v Qenos Pty Ltd [2000] FCA 1340

INDUSTRIAL LAW – certified agreements – whether injury to employees or alteration of their position to their prejudice because employees engage in protected action – whether injury to employees or alteration of their position to their prejudice for prohibited reason – whether employer intended to coerce union to agree to making an agreement WORDS AND PHRASES – "genuinely approved" Workplace Relations Act 1996 (Cth) ss 170LJ, 170LT, 170MU, 170NC, 298K

Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia (1998) 195 CLR 1 applied Re Australian Industrial Relations Commission; Ex parte Construction, Forestry, Mining and Energy Union (1999) 164 ALR 73 discussed NATIONAL UNION OF WORKERS v QENOS PTY LTD V 937 of 2000 FINKELSTEIN J MELBOURNE 21 DECEMBER 2000

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY V 937 of 2000

BETWEEN: NATIONAL UNION OF WORKERS

Applicant

AND: QENOS PTY LTD

Respondent

JUDGE: FINKELSTEIN J

DATE OF ORDER: 21 DECEMBER 2000

WHERE MADE: MELBOURNE

THE COURT ORDERS THAT: The application for an interlocutory injunction be dismissed.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY V 937 of 2000

BETWEEN: NATIONAL UNION OF WORKERS

Applicant

AND: QENOS PTY LTD

Respondent

JUDGE: FINKELSTEIN J

DATE: 21 DECEMBER 2000

PLACE: MELBOURNE

REASONS FOR JUDGMENT 1 The applicant, National Union of Workers, asks for an interlocutory injunction that will restrain the respondent, Qenos Pty Ltd, from making an application to the Australian Industrial Relations Commission under s 170LT of the Workplace Relations Act 1996 (Cth) to certify an agreement made under s 170LJ if, or to the extent that, such agreement deals with the terms and conditions of employment of those employees of the respondent who work at its Olefins plant at Altona. The application has been brought on during the court's vacation because of its urgency. In view of other pressing business that was listed, I did not give the parties the time they required to present their submissions in full. On the other hand, both sides filed lengthy written submissions and in their oral submissions dealt with the main issues in dispute. In the result I do not believe that either party has suffered disadvantage. 2 I do not propose to deal at length with the facts that have given rise to this proceeding. For the most part they are not substantially in contest on this interlocutory application, though the position will no doubt be different at trial. I will, however, set out a sufficient summary of the facts to explain the conclusions that I have arrived at. In the event, I have reached a firm view on the outcome of this application. But first the facts. 3 The respondent is the operator, on behalf of a joint venture, of the Olefins plant, where ethane is processed, and three chemical manufacturing plants, respectively a resins plant, an elastomers plant, and a plastics plant. It seems that the manufacturing plants take the processed ethane as raw material for the manufacturing process. The plants are connected by pipeline, but their operations are distinct. 4 The respondent has approximately 470 out of approximately 900 employees working at the four plants whose terms and conditions of employment are contained in a single award titled "Kemcor Australia Pty Ltd Altona Award 1996" and a single certified agreement known as the "Bridging Agreement" which was certified in 1999 and has as its nominal expiry date 29 February 2000. These "award based" employees, as I will call them, are members of one or other of the applicant union or three other unions, the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (CEPU), the Automotive, Foods, Metals, Engineering, Printing and Kindred Industries Union (AMWU) and the Australian Workers' Union (AWU). More than half of these members of the applicant union work at the Olefins plant. 5 Negotiations for a new certified agreement between the four unions and the respondent began in September 1999. On the unions' side, those negotiations were conducted by a group which included representatives of each union. The subject matter of the discussions was a new agreement that could cover all of the award based employees at the four plants. 6 By the end of September 2000 the union representatives and the respondent had arrived at a form of agreement which was regarded as sufficiently complete to be considered by the award based employees. A meeting was held on 4 October which was attended by approximately 377 employees. Around 200 voted in favour of the agreement, around 167 voted against and 10 abstained. It seems that about 90 employees who were eligible to vote did not attend the meeting. 7 Immediately following the meeting, the award based employees who worked at the Olefins plant held a separate meeting and passed a motion rejecting the agreement. They sought separate negotiations for a certified agreement limited to award based employees at the Olefins plant. For its part, the respondent was not willing to negotiate a separate agreement for those employees. 8 On 10 October the award based employees at the Olefins plant (or at least those who are members of the applicant union) resolved to take indefinite strike action to support their claim for a separate certified agreement. Following a notice given under s 170MO the employees commenced to strike on 14 October 2000. The strike is continuing. In response, the respondent served a notice of lockout under s 170MO but, of course, an employee who is on strike cannot be locked out. On the other hand, the effect of the lockout notice is that during its duration a striking employee cannot return to work. 9 In November the respondent announced the closure of two sections in the plastics and elastomers plants. These closures made it necessary for the respondent to dismiss a number of its employees. Instead of making redundant those employees who worked at the areas to be closed, the respondent adopted a "spill and fill" process of selecting employees for redundancy. The "spill and fill" applied to employees at all of the four plants. The unusualness of this method of selecting employees for redundancy, and the potential for this conduct to be in contravention of the Workplace Relations Act, led to the court granting an injunction at the suit of the applicant restraining the "spill and fill" being implemented. 10 The proposed agreement that had been negotiated between the group representing the unions and the respondent was an agreement that was to be made under s 170LJ. Under that section an employer may make an agreement with a union or unions provided each union has at least one member employed at the respondent's business whose employment will be subject to the agreement. Such an agreement must be approved by "a valid majority" of the employees whose employment will be subject to the agreement: see s 170LJ(2). 11 Notwithstanding the original intention of the parties, on 1 December 2000 the respondent notified its employees that it was intending to make the agreement under s 170LK. Under that section an employer may make an agreement with "a valid majority" of those of its employees whose employment will be subject to the agreement. A union is not a party to an agreement under the section. In the face of the present litigation the respondent has indicated that it will abandon its intention to proceed under s 170LK and will return to the original proposal, namely that the agreement be made under s 170LJ. 12 The applicant union does not intend to be a party to the agreement. Two of the other unions, namely CEPU and AMWU, may become parties to that agreement, but will do so conditionally upon the applicant becoming a party. However, AWU, which has many members working in the elastomers plant, the plastics plant and the resins plant, and some members working at the Olefins plant, will be a party to that agreement. That is sufficient for the agreement to be made. Of course the agreement will have no effect until it is approved by "a valid majority" of the award based employees who will be affected by it. For the purpose of obtaining their approval, the respondent proposes to conduct a ballot early in the new year. 13 If "a valid majority" of award based employees approve the agreement then it may be certified by the Commission under s 170LT. In this connection the Commission must be satisfied that "a valid majority" of employees have "genuinely approved" the agreement, before it can be certified: see s 170LT(5). I will return to mention an issue that arises out the need to have the agreement "genuinely approved". 14 The applicant contends that the respondent's attempt to have the proposed agreement certified in respect of award based employees working at the Olefins plant is conduct that is prohibited by a number of provisions of the Workplace Relations Act. It seeks an interlocutory injunction pending the trial which has been set down to commence in late January 2001 with a judgment expected in February 2001. I mention this merely to indicate that the period for which the applicant seeks the injunction is not long, on any view. The applicant proffers the usual undertaking in damages to indemnify the respondent against any losses it may suffer in the event that the interlocutory injunction it seeks is wrongly granted. 15 However, before one comes to consider the discretionary factors that must be taken into account in deciding whether to grant temporary relief (usually under the rubric of the "balance of convenience") it is necessary, first, to consider whether the applicant has a meritorious claim. Again adopting the now familiar language of the cases, the question is whether, as regards the alleged breaches of the Workplace Relations Act, there is a serious case to go to trial. 16 The applicant contends that seeking to have the proposed agreement certified is prohibited by ss 170MU(1) and 298K(1). Relevantly, s 170MU(1) provides that an employer must not dismiss an employee, injure an employee in his or her employment or alter the position of an employee to the employee's prejudice (or threaten to do so) wholly or partly because the employee is proposing to engage, is engaging or has engaged, in protected action. Section 298K(1) proscribes an employer, for a prohibited reason, from injuring an employee in his or her employment or altering the position of an employee to the employee's prejudice. The list of prohibited reasons is found in s 298L(1). Relevantly the applicant relies upon s 298L(1)(l) which provides that conduct is for a prohibited reason if "in the case of an employee, …, who is a member of an industrial association that is seeking better industrial conditions – [the employee] is dissatisfied with his or her conditions". 17 The applicant says there is sufficient evidence for the purposes of its claim for an injunction to find that it is arguable that the conduct complained of is being carried out because members of the applicant union are engaging in protected action which is causing significant harm to the respondent (s 170MU(1)) and that it is being carried out for a prohibited reason (s 298K(1)). In relation to the allegation that there is involved a contravention of s 298K the applicant also relies on s 298V which provides, in effect, that where an allegation of conduct for a prohibited reason is made it is sufficient for it to be presumed that the conduct was engaged in for that reason unless the employer proves to the contrary. Accordingly, the allegation made by the union must be accepted as establishing the fact, unless the respondent establishes otherwise. 18 I propose to proceed on the basis that the applicant can establish, sufficiently for present purposes, that the proposed conduct is being engaged in for a relevant purpose under s 170MU(1) and for a prohibited reason for the purposes of s 298K(1). But that is far from an end to the matter. The question whether the applicant has made out a serious case for trial depends upon it showing that it is sufficiently arguable that its members could be relevantly injured or prejudiced if the proposed agreement were certified. In this connection it must be accepted that the notion of injury or prejudice is broad and covers "not only legal injury but any adverse affection of, or deterioration in, the advantages enjoyed by the employee before the conduct in question": Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia (1998) 195 CLR 1 at 18. 19 To establish injury or prejudice the applicant points to what it says are reduced terms and conditions of employment in the proposed agreement. In fact the applicant makes a number of complaints. Here I will set out a passage from the affidavit of Mr Lyons, an organiser with the applicant union, who has close knowledge of the events. In a paragraph of his affidavit Mr Lyons describes what he says are the key issues of concern with the proposed agreement: "(a) The level of wage increases Qenos was prepared to agree to. In May 2000, the position of the NUW was that it sought a 15% increase in wages, effectively over a period of 3 years. Qenos was willing to only agree to an increase of 11% over the same time period; (b) A desire to retain current actual staffing levels which Qenos sought to reduce; (c) A rejection of Qenos' wish to change arrangements concerning "non-rostered work". The Bridging Agreement provided for a component of each employee's fortnightly wage to be in respect of certain defined types of overtime work. This meant that effectively, an employee was already being paid for certain defined or designated types of overtime, whether it was worked or not. Qenos sought to significantly reduce the limits and safeguards which restricted its ability to require employees to perform overtime work. The concern of the NUW members was that this would permit Qenos to require employees to perform substantially greater overtime work, thus reducing their leisure time; (d) The reduced staffing levels and changes to rostering arrangements proposed by Qenos posed a substantial occupational health and safety risk; (e) A rejection of Qenos' wish to be able to "cash out", by way of payment to employees, an existing health benefit insurance entitlement; (f) A rejection of Qenos' wish to widen the duty requirements of operators." 20 It may be accepted that there are provisions of the proposed agreement that are, or may be considered to be, unfavourable when compared with the provisions of the Bridging Agreement. But it is, in my opinion, a mistake to approach the issues raised by the two sections on such a comparison. In a case such as this, in order to reach a conclusion that an employee has been injured or prejudiced it would be necessary, notwithstanding the difficulty of the task, to compare the overall position of the employee under the proposed agreement with the overall position of that employee under the earlier agreement or, if relevant, the earlier award. If such a comparison is not undertaken it is likely that an erroneous conclusion will be reached. Take the following example. Under an award an employee is entitled to a modest weekly car allowance. Under a proposed agreement the car allowance is to be removed. Considered in isolation the removal of the allowance will result in prejudice. But what if the proposed agreement also provides that the employee is to be given the use of a motor car at the employer's expense? Overall the position of the employee has been much improved. But the applicant's approach would produce the opposite conclusion. 21 The applicant has made no attempt to compare the position of an award based employee under the proposed agreement with his or her position under the Bridging Agreement to show, if it is possible that it could be shown, that the employee would be worse off. On the other hand, Mr Harvey, an operations manager with the respondent, has examined the two agreements and has prepared a table showing their differences. According to Mr Harvey his table establishes that, "taken as a whole, the proposed s 170LA agreement substantially improves the terms and conditions of employment in respect of the Olefins members". In this state of the evidence I can only speculate whether there has been a contravention of s 170MU or s 298K. It is not permissible to grant interlocutory relief on the basis of speculation. 22 The applicant also contends that the respondent will contravene s 170NC if it goes ahead with its intention to certify the proposed agreement. Section 170NC relevantly provides that a person must not take any action with intent to coerce another person to make an agreement under Div 2 or 3 of Pt VIB. The proposed agreement is such an agreement. The applicant submits that the respondent's action in seeking to have the proposed agreement certified is being undertaken for the illegitimate purpose of exerting illegitimate pressure on the applicant and its members to agree to the proposed agreement. 23 It seems to me that this claim is without substance. If the respondent is able to have its proposed agreement approved by "a valid majority" it will be in a position to apply to the Commission to have the agreement certified and, subject to one matter that I will mention shortly, it is likely that the agreement will be certified. In virtue of the fact that the AWU has agreed to be a party to the agreement it is not necessary for the respondent to pressure or coerce the applicant union into playing any part in the making or certification of the proposed agreement. Thus I am unable to accept that the respondent has the intention of forcing the applicant or its members to agree to the proposed agreement. The course upon which the respondent has embarked is to have the proposed agreement come into effect in spite of any opposition by the applicant or its members. Indeed if it secures an approval for the agreement and then has it certified, that is precisely what will occur. 24 The final point the applicant relies upon is not found in its present originating application, but it has indicated that it proposes to amend the application to incorporate it. The point is an interesting one. It will be remembered that an agreement made under s 170LJ cannot be certified unless it has been "genuinely approved" by a valid majority. The applicant says that the form of the agreement is such that it is incapable of being "genuinely approved" and can never be certified. The reason the applicant says the agreement cannot be "genuinely approved" is, in substance, that employees who do not work at the Olefins plant and have no interest in the terms and conditions of employment of those who do, cannot approve those terms and conditions. The applicant calls in aid certain observations made in Re Australian Industrial Relations Commission; Ex parte Construction, Forestry, Mining and Energy Union (1999) 164 ALR 73. In that case, the facts of which need not be recited, Wilcox and Madgwick JJ said (at 111) that the obligation to obtain a genuine approval "plainly betokens a concern with the authenticity and, as it were, the moral authority of the agreement." They therefore concluded that there could hardly be fair agreement making between an employer and employees about wages and employment conditions in a workplace before both sets of parties have actual experience of the work and its place of performance. Thus they conclude that an agreement prematurely made was unlikely to be effective, measuring effectiveness by such matters as durability, aptness and comprehensiveness. 25 If the matter were free of authority I would have regarded the notion of "genuine approval" when compared with mere "approval" as permitting an inquiry into the mental element of approval so that the issue of approval is not confined to the objective outward manifestation of assent. Be that as it may, it seems that the authorities are to a different effect and the applicant may have a point. 26 However, in my opinion, no matter how strong that point may be, it does not warrant the grant of an interlocutory injunction. If the proposed agreement is approved by a majority of the award based employees which does not incorporate a majority of award based employees who work at the Olefins plant, and for that reason there has not been any genuine approval, the agreement cannot be certified. Whether this be so is an issue that should be first addressed by the Commission when the application for certification comes on for hearing. I note that the applicant union cannot be given leave to appear before the Commission at the certification hearing. However an adversely affected employee may be given leave to appear to raise the issue. I accept that such an employee cannot appear as of right and there is a risk that the Commission may decline to allow the intervention, especially if it is funded by the applicant. But I think the risk of this occurring is so slight that it may be ignored. I cannot conceive that the Commission would deny to one of the award based employees who will be affected by certification the right to make submissions concerning the power of the Commission to certify the agreement. The respondent has said that it will not oppose such intervention, nor will it oppose an intervener's request to be represented by a lawyer. If the Commission did decline intervention in these circumstances, it is likely that it would itself commit a reviewable error of law. 27 In the result the application for interlocutory relief will be dismissed.