Industrial Relations Commission of New South Wales CITATION : BHP Steel (AIS) Pty Ltd - Maintenance Restructuring Award and other matters [2001] NSWIRComm 245 APPLICANT: Electrical Trades Union of Australia, New South Wales Branch Australian Workers' Union, New South Wales PARTIES : Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union, New South Wales Branch RESPONDENT: BHP Steel (AIS) Pty Ltd FILE NUMBER: IRC 5840 of 2000 & IRC 1598 & 6267 of 2001 CORAM: Walton J Vice-President Industrial Disputes - Application for a new award - Review of maintenance at Port Kembla Steelworks - Contracting out of employees engaged in maintenance - Conciliation resulted in agreement as to mechanism to resolve dispute - Certificate of attempted conciliation issued - Preliminary question - Prior agreements of parties - Steel Industry Agreement - Parties agreed to be bound by decision - Arbitration of question - Resumption of conciliation - Agreement reached as to arrangements for review of maintenance - Public interest - Industrial Merit - Unnecessary to finally resolve preliminary question - Preliminary decision - Interim orders made - Directions given - Report backs - Working party reports - Assessment of Alliance Partners - Further orders - Company evaluation - Further conciliation - Settlement by award - Industrial dispute resolved - Orders rescinded CATCHWORDS : New Award - Application arising from settlement of industrial dispute by conciliation - Award represents proper balancing of interests - Appropriate means introducing contracting with protections for employees - Orders revoked - Suppression orders - Award made LEGISLATION CITED : Industrial Relations Act 1996 s130 CASES CITED : Electrical Trades Union of Australia, New South Wales Branch and others v BHP Steel (AIS) Pty Limited [2001] NSWIRComm 70 HEARING DATES: 12/07/2000; 12/12/2000; 02/05/2001; 02/07/2001; 02/16/2001; 03/05/2001; 03/06/2001; 03/13/2001; 03/30/2001; 03/31/2001; 04/01/2001; 04/02/2001; 04/03/2001; 06/15/2001; 06/25/2001; 07/17/2001; 09/05/2001; 09/12/2001; 09/18/2001; 09/24/2001 EXTEMPORE JUDGMENT DATE : 09/24/2001 APPLICANT: Mr A Gillespie Australian Workers Union, New South Wales Mr W Tomlins Electrical Trades Union of Australia, New South Wales Branch LEGAL REPRESENTATIVES: Mr W Phillips Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union, New South Wales Branch RESPONDENT: Mssrs A Morris and K Brotherson Blake Dawson Waldron JUDGMENT: - 1 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES CORAM: WALTON J, VICE-PRESIDENT Monday 24 September 2001 Matter No. IRC6267 of 2001 BHP Steel (AIS) Pty Ltd - Maintenance Restructuring Award. Application by BHP Steel (AIS) Pty Ltd for a new award. Matter No. IRC5840 of 2000 Notification under section 130 by the Electrical Trades Union of Australia, New South Wales Branch and others of a dispute with BHP Steel (AIS) Pty Ltd re contracting out of maintenance. Matter No. IRC1598 of 2001 Notification under section 130 by BHP Steel (AIS) Pty Ltd of a dispute with The Australian Workers' Union, New South Wales and others re strikes and bans. DECISION (Extempore) [2001] NSWIRComm 245 1 By notification of an industrial dispute filed 1 December 2000 pursuant to s130(1) of the Industrial Relations Act 1996 ("the Act"), the Electrical Trades Union of Australia, New South Wales Branch ("the ETU"), the Australian Workers' Union, New South Wales ("the AWU") and the Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union, New South Wales Branch ("the AMWU") ("the unions") notified the existence of an industrial dispute with BHP Steel (AIS) Pty Ltd ("the company") as to the "contracting out of maintenance staff" at the Port Kembla Steelworks. The unions also raised an issue as to the failure of "management" to abide by "[a] Statement of shared commitment document, as agreed to by the union(s) and BHP management". 2 On 28 February 2001 the company notified the existence of an industrial dispute pursuant to s130 of the Act and requested a concurrent listing with the dispute proceedings initiated by the unions. It was identified in that notification of industrial dispute that there was an ongoing campaign of industrial action by employees of the company engaged at the Port Kembla Steelworks in connection with "the review of maintenance by the company". The company also identified that the industrial action had caused significant disruption and interference to the company's operations and to the company's relationship with its customers. 3 On 6 April 2001, the Commission gave a decision in relation to those disputes: Electrical Trades Union of Australia, NSW Branch and others v BHP Steel (AIS) Pty Ltd [2001] NSWIRComm 70. That decision concerned a preliminary issue in those proceedings which was identified in the form of a question in the following terms: Whether the Company's maintenance review process for investigation and analysis through to ultimate letting of any contracts with Alliance Partners conflicts with existing obligations and undertakings (eg the Statement of Shared Commitment and the Steel Industry Agreement). 4 In the Commission's decision of 6 April 2001, it was noted that the parties had reached an agreement as to a set of arrangements in resolution of the question [at 37]. It was further observed that the agreement reached between the parties obviated any requirement for the Commission to determine the question. The preliminary matter arising for determination in the proceedings was thereby resolved by the agreement. However, the Commission determined that it was nonetheless appropriate for orders to be made in the proceedings. Those orders were in the following terms: 1. This order shall apply to the Australian Workers' Union, New South Wales ("the AWU"), the Electrical Trades Union of Australia, New South Wales Branch ("the ETU"), and the Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union, New South Wales Branch (referred to collectively as "the unions") and the members of those unions employed by BHP Steel (AIS) Pty Ltd ("the Company") at the Port Kembla Steelworks and the Company. 2. BHP will continue with its current investigation of the potential establishment of Alliance Partnerships. The nature and process of that investigation is outlined in paragraphs 28 - 39 of exhibit A of these proceedings. One of the steps necessary to enable the process to be carried out is providing access to short listed potential Alliance Partners to enable such organisations to fully appreciate the work for which they are submitting a proposal to BHP. These processes are presently expected to be completed within approximately 3 months. 3. There shall occur a further evaluation and review of internal maintenance arrangements with a view to having those arrangements tested at an appropriate time against the engagement of contractors. To this end: a) The working parties shall be recommissioned and reconstituted with a view to answering a single question, namely, what steps are available to be taken in relation to the performance of maintenance by BHP employees which would make those arrangements most competitive in relation to the use of contractors. The working party shall not be required to evaluate the use of contractors or make any comparison between the use of contractors and internal maintenance. Upon answering the question, the working parties shall be disbanded. The original working parties will be reconstituted, with some variations where the company had previously selected employee representatives. Replacement employee representatives are to be elected from the shop floor. Further, participation by working party representatives shall be on a voluntary basis. b) A joint consultative forum (the JC forum) shall be established by the company and the unions. The main purpose of the JC forum is to facilitate the efficient and effective completion of the work of the working parties. The forum shall be the initial means to resolve any difficulties associated with the activities of the working parties. The JC forum shall comprise a management and employee representative from each working party, a nominated representative of each union (ETU, AWU and AMWU) and two nominees of the DLT. c) The JC forum shall meet initially on 12 April 2001 and weekly thereafter, or as determined by the forum. The forum may be assembled at short notice to deal with urgent matters. The JC forum shall provide communication to all employees about the review. (Note: the individual working parties will communicate with employees in the areas to which the working party relates). d) Where issues arise in the JC forum which are not able to be resolved by agreement, they shall be quickly referred to the Commission for resolution. 4. When BHP receives proposals from potential Alliance Partners it will be in a position to determine whether to adopt any Alliance partnerships taking into account the performance of maintenance using the arrangements then prevailing including any outcomes from the steps in paragraph 3 above. The target date of this evaluation by BHP is the week beginning 2 July 2001 although the date will be kept under active review by the Commission in its scheduled report backs. 5. If the unions wish to challenge evaluations undertaken by BHP in accordance with paragraph 4 above, they should notify BHP; in which case consultation shall proceed in accordance with paragraph 40 of exhibit A in the proceedings. 6. The voluntary redundancy program will remain in place. However, the parties shall issue a joint communication to maintenance employees about these arrangements which specifies that those employees should be mindful of the review process provided for in these arrangements in considering any application for voluntary redundancy. The voluntary redundancy program shall be the subject of consideration in the scheduled report backs to the Commission. 7. Any employee who becomes surplus as a direct result of these arrangements shall be covered by the provisions contained in clause 10 of the current Steel Industry Agreement. 8. There shall be no industrial action taken in relation to the review of maintenance and the various matters provided for in this document. 9. Any issues or disputes between the parties that arise in the implementation of these arrangements shall be referred to the Commission for resolution by conciliation, and if necessary arbitration in accordance with the procedures identified for resolving the question. 10. These orders shall operate on and from 9 April 2001 and shall remain in force until 6 July 2001 or until further order of the Commission. 5 The Commission monitored the implementation of the orders through report-back procedures. Further, the orders made by the Commission on 6 April 2001 were extended on various occasions in order to permit all steps required by the orders to be finalised. 6 Eventually, the proceedings reached a juncture at which two important developments occurred, as follows: 1. The working parties delivered their reports to the company; 2. The company announced that its preferred Alliance Partners were Transfield Services (Australia) Pty Limited and Fluor Global Services Pty Limited (through a joint venture with Goninan). 7 It was at this juncture that discussions were completed in the joint consultative forum. The company then undertook an evaluation of the respective proposals. 8 At this time, the Commission extended the orders in three significant respects, as follows: 1. A new order 4A was added in the following terms: The company shall not give effect to any such evaluation (including entering into any contract for the carrying out of maintenance work arising out of the evaluation) before 21 August 2001. 2. The orders were extended to apply to the Construction, Forestry, Mining and Energy Union (New South Wales Branch) ("the CFMEU") corresponding to the granting of limited intervention rights to that union. 3. The newly made orders were made to operate until 21 August 2001, or until further order of the Commission. 9 The company ultimately made an evaluation in the light of the working party reports and proposals received from contractors which, in essence, favoured the engagement of contractors in order to carry out that part of the maintenance work of the company which had been determined appropriate for contracting out arrangements. 10 In accordance with paragraph 5 of the orders, the unions then challenged the evaluation undertaken by the company. What then followed was extensive conciliation processes under the supervision of the Commission. 11 During the course of those conciliation processes the Commission extended the operation of the orders so that the orders would run indefinitely until further order of the Commission. This had the effect of preventing the company from entering into any arrangements with the Alliance Partners until the conciliation processes before the Commission were exhausted. 12 Those conciliation processes proved to be successful. The parties agreed upon the terms of a draft new award which was designed to regulate the implementation by the company of Alliance Partnerships with other companies for the performance of maintenance work at the Port Kembla steelworks and the entitlements of employees of the company affected by that implementation. The draft award, however, was subject to acceptance by the affected memberships of the AWU, ETU, AMWU and CFMEU and, as will be evident from today's proceedings, left some relatively small matters of detail for discussion. 13 In anticipation of the prospect of consent of the unions, the company filed an application on 21 September 2001 for the making of an award to reflect the outcome of conciliation processes and thereby proposing the ultimate form of the award. 14 The Commission was advised today that a meeting of the members of the AWU, ETU, AMWU and CFMEU approved consent being given to the proposed award but raised issue with one aspect of the detail of the proposed award. Further, conciliation then ensued which has resulted in final agreement between the parties, albeit that the company has indicated some concerns about revision to clause 10 of the proposed award. Those concerns, however, will be attended to, if required, through the leave reserved provisions of the award. 15 Thus, the Commission now has before it (in Matter No IRC 6267 of 2001) an application for a consent enterprise award. This decision deals with that application, together with the final resolution of the matters concerning industrial disputes and orders made by the Commission in relation to Matters No. IRC5840 of 2000 and IRC1598 of 2001. 16 It should be noted that the application proceeded upon the basis of an amendment made to the application by the applicant, in part, reflecting some last minute conciliation process described above. 17 I have no hesitation in granting the application for a consent award in these matters. It emerges from extensive conciliation and arbitration processes before this Commission during which the Commission has closely monitored the progress of the parties towards this ultimate settlement. The resultant award is a testament to the good sense of those persons involved in representing the interests affected by these proceedings and to the maturity of the industrial relationships existing at the Port Kembla Steelworks. 18 There can be no doubt that the award ushers in very significant changes in the company's operations at the Port Kembla steelworks which will have significant implications for both the company and the employees affected by the changes referred to in that award (and other employees concerned with the viability of the company's operations). However, the changes have been brought about in an orderly and considered way by the processes of the Act. The arrangements reached, as reflected in the proposed award, offer, therefore, substantial prospects for a successful outcome both in terms of the economic benefits to be derived from the changes and the tempering of any adverse consequences for employees. The award represents a careful balancing of the interests of the company and the employees affected by the changes. 19 I note that the orders made by the Commission are now spent. However, in order to ensure the smooth transition to the new arrangements the parties have sought that a limited suppression order be made. Further, the industrial disputes are resolved by the making of the awards. 20 In all the circumstances, the Commission makes the following award and orders: 1. The Commission makes a new award in terms of the application filed on 21 September 2001, as amended. 2. The Commission rescinds the orders made on 6 April 2001 (as extended and amended by orders made on 17 July and 5 September 2001). 3. By consent of the parties, the Commission orders that the terms of this award shall be suppressed until 9.00am Tuesday 25 September 2001. 4. The dispute proceedings in Matter Nos. IRC5840 of 2000 and IRC1598 of 2001 are concluded upon the basis of the settlement reached between the parties as reflected in the award, so made. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.