FEDERAL COURT OF AUSTRALIA Construction, Forestry, Mining and Energy Union v Oaky Creek Coal Pty Ltd [2013] FCA 1465 Citation: Construction, Forestry, Mining and Energy Union v Oaky Creek Coal Pty Ltd [2013] FCA 1465 Parties: CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION v OAKY CREEK COAL PTY LTD File number: QUD 488 of 2013 Judge: DOWSETT J Date of judgment: 30 July 2013 Cases cited: Samsung Electronics Co Limited v Apple Inc [2011] FCAFC 156 cited Date of hearing: 30 July 2013 Place: Brisbane Division: FAIR WORK DIVISION Category: No catchwords Number of paragraphs: 10 Counsel for the Applicant: Mr S Crawshaw SC Solicitor for the Applicant: Maurice Blackburn Counsel for the Respondent: Mr J Murdoch QC Solicitor for the Respondent: Ashurst Australia IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY FAIR WORK DIVISION QUD 488 of 2013 BETWEEN: CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION Applicant AND: OAKY CREEK COAL PTY LTD Respondent JUDGE: DOWSETT J DATE OF ORDER: 30 JULY 2013 WHERE MADE: BRISBANE THE COURT ORDERS THAT: 1. the application for interlocutory relief filed 30 July 2013 is refused. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY FAIR WORK DIVISION QUD 488 of 2013 BETWEEN: CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION Applicant AND: OAKY CREEK COAL PTY LTD Respondent JUDGE: DOWSETT J DATE: 30 JULY 2013 PLACE: BRISBANE REASONS FOR JUDGMENT 1 The applicant, a trade union, seeks to prevent the retrenchment of 21 employees of the respondent, a coal mining company. The affected employees concerned have already been notified of their retrenchment. A question arises as to the extent to which the retrenchments should be of the respondent's own employees and contractors or those of contractors working on the site. The question is regulated by cl 32 of an enterprise agreement currently in existence. I shall return to that document. It is, however, worth setting out the eventual outcome of the retrenchment process. Of 216 persons employed by the respondent, 173 are to remain, 22 have been redeployed or taken voluntary redundancy and 21 are to be retrenched. Of 81 contractors' employees, 21 are to stay and 60 are to go. 2 The retrenchment process is, as I have said, regulated by cl 32 of the enterprise agreement. It provides, in part, as follows: In the event of a change to the Company's operational requirements, an employee's role may become redundant. If an employee's role does become redundant, the employee will be entitled to: (Entitlements are set out). Where a reduction in the number of employees is required, the Company will seek to reduce the number of forced retrenchments by utilising natural attrition and, subject to any contractual commitments and the requirements to maintain the skills necessary for an efficient and effective operation, by reducing contractor's labour. Where forced retrenchments are to be undertaken, the Company shall take into account the following factors: • Skills • Employee performance/work history • Length of service. 3 The question in dispute arises out of the passage commencing "Where a reduction in the number of employees is required". As I read the clause, it requires that the company seek first to reduce the number of forced retrenchments of its own employees by utilising natural attrition and then retrenching contractors' employees; subject to: any contractual commitments and the requirement to maintain the skills necessary for an efficient and effective operation. 4 The applicant submits that the proviso concerning contractors' labour requires the employer to identify, in an objective way, the skills necessary for the efficient and effective operation of the project, and then to identify its own employees as either having or not having those skills. In the event that they have such skills, any contractor's employee, also having such skills, is to be let go before any of the respondent's employees are retrenched. I see no justification for taking such a rigid view of the proviso. It seems to me that the respondent may maintain the skills necessary to the efficient and effective operation by retaining as many of its own employees as is consistent with that requirement. 5 This task would necessarily involve a degree of judgment. The approach adopted by the employer appears, from Mr Snape's affidavit, filed on 30 July 2013, at pars 62 to 68. He said at 62-68: 62 In order to determine which contractors were required to maintain the skills necessary for an efficient and effective operation as per clause 32 (Severance and Retrenchment), the Company undertook an assessment and comparison of the skills and individual contractors engaged on a permanent basis against the skills of individual permanent employees. 63 No other criteria, such as work history, performance or length of service were considered for either the individual contractors or individual employees when determining the skills necessary to be maintained for an efficient and effective operation. 64 Individual contractors and individual employees were assessed by a panel of up to three supervisors in relation to their skills. The supervisors each gave the individual contractors and individual employees a skills score from 1 to 5, 1 being the lowest and 5 being the highest. Those scores were then submitted to the Human Resources team who calculated an average of those scores in respect of each contractor and employee. The average score was then rounded to the nearest whole number. 65 Where contractors received a skill score of 3 or below, the company decided that it would not consider these contractors for roles on a permanent basis. 66 Where contractors received a skill score of 4 or higher, these contractors were ranked against the individual permanent employees in terms of their skill scores. The contractors and employees were ranked by their skills in order of highest to lowest. 67 The Company then reviewed the results of the skills rankings and made a determination as to which contractors were required to maintain the skills necessary for an efficient and effective operation as per clause 32 of the Agreement. 68 The Company determined that 21 contractors were required. 6 In the end, and according to Mr Snape's affidavit at paras 67 and 68, the number of contractors retained was the number required, in the respondent's view, to maintain the level of skills contemplated by cl 32 of the enterprise agreement. This was a matter of judgment, but in my view, that was contemplated by cl 32. In those circumstances, at least in the absence of bad faith, no breach of cl 32 could be demonstrated. Having regard to my construction of the clause, the applicant must fail at trial. 7 However I am not presently entitled finally to construe the clause. Rather I must assess the probability of the applicant's succeeding at trial, having regard to the consequences of granting or not granting interlocutory relief, and also having regard to the nature of the rights asserted. See the decision of the Full Court in Samsung Electronics Co Limited v Apple Inc [2011] FCAFC 156. Special leave to appeal from that decision was refused by the High Court. 8 I take into account in this regard the matters identified by Ms Thomas at para 76 of her affidavit filed on 30 July 2013, as the consequences of not granting interlocutory relief. I also take into account the fact that two of the retrenched employees hold significant union offices. Their retrenchment will necessitate their replacement in those offices. On the respondent's side, I am willing to infer that the retrenchments are for economic reasons. As much appears from Ms Thomas' affidavit at para 10. Obviously enough, the grant of injunctive relief as sought would have the effect of deferring the benefit which the respondent seeks to achieve by these retrenchments. 9 One is inclined to think that the balance of convenience is fairly even, so that the prospects of success are the major consideration in this exercise. I consider the applicant's prospects of success to be very low. Even taking into account the consequences for the employees of declining interlocutory relief, I do not consider that its prospects of success are sufficient to justify the interlocutory relief sought. Indeed, to grant such relief would probably be simply to put off the day of reckoning and probably create false hopes and expectations in the employees. The application for interlocutory relief is refused. 10 In giving these reasons I have noted that at [4], I use the expression "consistent with that requirement". I would have more accurately reflected my meaning if I had used the words "in order that the requirement be achieved." I certify that the preceding ten (10) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Dowsett. Associate: Dated: 20 March 2014