Industrial Relations Commission of New South Wales CITATION: Australian Workers Union v. BlueScope Steel Limited [2007] NSWIRComm 1088 APPLICANT Australian Workers Union PARTIES: RESPONDENT BlueScope Steel Limited FILE NUMBER(S): IRC 6727 of 2005 CORAM: Connor C CATCHWORDS: industrial dispute - steelworks - claim for an increase to rates of pay on work value grounds - jurisdictional issues - status of a State enterprise award - referral of a matter for determination - delay in proceedings - application dismissed LEGISLATION CITED: Industrial Relations Act 1996 Federal Workplace Relations Amendment (Work Choices) Act, 2005 Council of the City of South Sydney v. Horiatopoulos (1992) 47 IR 95 New South Wales v. Commonwealth of Australia (2006) 156 IR 1 CASES CITED: Soup and Candle Makers Case (1946) AR 264 State Wage Case (2005) 142 IR 337 State Wage Case [2007] NSWIRComm 118 HEARING DATES: 03/12/2007 EXTEMPORE JUDGMENT DATE : 3 December 2007 APPLICANT Andy Gillespie Australian Workers Union LEGAL REPRESENTATIVES: RESPONDENT Trent Sebbens Blake Dawson Waldron DECISION: INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES CORAM: CONNOR C Monday, 3 December, 2007 Matter No IRC 6727 of 2005 Australian Workers Union and BlueScope Steel Limited Notification of an industrial dispute under S.130 of the Industrial Relations Act, 1996 re rates of pay for the Coupled Pickled Cold Mill Referral of an industrial dispute under S.146A of the Industrial Relations Act, 1996 by the Australian Workers Union and BlueScope Steel Limited DECISION [2007] NSWIRComm 1088 Introduction 1 On Wednesday, 21 December, 2005, acting pursuant to the provisions of S.130 of the 1996 Industrial Relations Act, the Australian Workers Union lodged a notification of an industrial dispute with BlueScope Steel Limited. At issue is the remuneration paid to employees of BlueScope Steel Limited engaged as operators at the Coupled Pickled Cold Mill (the CPCM) of the Springhill works. The AWU claim is that there have been changes to the skills and responsibilities of the CPCM operators which warranted an adjustment to the rates of pay for them in accordance with the Work Value Changes principle of the wage fixation principles flowing from the decision of the Full Bench of the Commission (Wright J - President, Walton J - Vice President, Harrison and Sams DPP and Boland J) in the 2005 State Wage Case (2005) 142 IR 337 at pp.354 and 355], viz: "Changes in work value may arise from changes in the nature of the work, skill and responsibility required or the conditions under which work is performed. Changes in work by themselves may not lead to a change in wage rates. The strict test for an alteration in wage rates is that the change in the nature of the work should constitute such a significant net addition to work requirements as to warrant the creation of a new classification or upgrading to a higher classification. In addition to meeting this test a party making a work value application will need to justify any change to wage relativities that might result within the relevant internal award structure but also against external classifications to which that structure is related. There must be no likelihood of wage leapfrogging arising out of changes in relative positions. These are the only circumstances in which rates may be altered on the ground of work value and the altered rates may be applied only to employees whose work has changed in accordance with this principle." The current Work Value Changes principle following the decision of the Full Bench of the Commission (Wright J - President, Walton J - Vice President, Harrison DP, Boland J, Tabbaa and Bishop CC) in its decision of Friday, 8 June, 2007 in the 2007 State Wage Case [Matter No.IRC 3608 and 3613 of 2006] is to similar effect. The Impact of Work Choices 2 This AWU claim has an extraordinary, complex history which I believe that it is necessary to set out in some detail in this decision. The AWU claim on behalf of the CPCM operators has been complicated principally by the 2005 Federal Workplace Relations Amendment (Work Choices) Act, which came into effect on and from Monday, 27 March, 2006. As a result of Work Choices, certain restrictions on the State industrial jurisdiction arose with respect to employment conditions in foreign, trading and financial corporations within the meaning of S.51(xx) of the Commonwealth Constitution, ie BlueScope Steel in this hearing [ State of New South Wales v. Commonwealth of Australia (2006) 156 IR 1]. 3 Work Choices had the effect of converting a State award, insofar as it affected employment in S.51(xx) corporations into a "notional agreement preserving a State award" [NAPSA]. But that did not apply to the BlueScope Steel Award. By a 2006 amendment to the State IR Act the BlueScope Steel Award became an enterprise agreement and, as such, it became a "preserved State agreement" [PSA] under Work Choices and not a NAPSA. 4 The S.130 notification by the AWU was allocated to me and it was the subject of a conference on Monday, 16 January, 2006. That conference and all subsequent proceedings were convened in the Commission's premises at 90 Crown Street, Wollongong. I adjourned the proceedings until Monday, 30 January, 2006 and again on Monday, 6 February, 2006. Conciliation failed to settle the matter. I programmed it for arbitration, issuing the certificate of attempted conciliation required by S.135 and lodging it in the prescribed manner. In fact, I inspected the operations of the CPCM on Monday, 20 March, 2006 and set proceedings down for a further mention on Monday, 1 May, 2006 for the purpose of programming the matter for arbitration. 5 On Monday, 1 May, 2006 Mr Sebbens, representing BlueScope Steel, raised a jurisdictional issue of some substance which flows from the new industrial regime flowing from Work Choices. In particular, S.16(1) of Work Choices purportedly proscribed the variation of the BlueScope Steel Award. Mr Sebbens had relied on Work Choices to, in effect, abort the proceedings at that time. 6 I adjourned the proceedings on Monday, 1 May, 2006 and Monday, 8 May, 2006 to give the parties the opportunity to consider their respective positions with the matter. Those dates for mention were vacated at the request of BlueScope Steel due to the unavailability of a BlueScope Steel representative at that time. I reconvened the proceedings on Monday, 22 May, 2006, standing the matter over generally at that time to await further developments. However, on my own initiative, I set the matter down for further mentions on Tuesday, 13 June, 2006 and Tuesday, 1 August, 2006. The attitude of BlueScope Steel remained unchanged. 7 The 2006 amendment to the State IR Act also provided that a member of the Commission may be empowered to exercise additional functions - conciliation or arbitration - conferred upon that member by the parties to a dispute themselves by virtue of S.146A. Such a matter takes the form of a common law collective agreement. In particular, S.146A(1)(a) provides for a referral agreement over the following class of matters: "...a dispute about any conditions of employment or industrial matter between an industrial organisation of employees and one or more employers (or industrial organisations of employers)..." Mr Sebbens subsequently indicated that at that time BlueScope Steel was not prepared to provide a S.146A referral agreement to permit the arbitration of the AWU claim to go forward. The question remained whether or not the matter may remain on foot without such a referral agreement - or, alternatively, whether the parties would be able to resolve the dispute between themselves by the processes of further negotiation or conciliation, something which I considered most unlikely, having regard to the progress of the matter to date. 8 That issue was therefore to go forward for a determination of the question of jurisdiction, ie whether the matter may proceed independently of a S.146A referral agreement. Mr Gillespie had in the proceedings on Tuesday, 13 June, 2006 foreshadowed an application to refer this matter to a Full Bench and I reserved his position in that respect but directed the parties to provide written statements of contention in support of their argument on jurisdiction with the matter being set down for a further mention for programming on Tuesday, 3 October, 2006. 9 Bearing in mind that I had conducted an inspection of the site on Monday, 20 March, 2006 as a prelude to the arbitration of the AWU claim on behalf of the CPCM employees, the argument with this particular matter centred on whether or not the issue was part-heard at the time that Work Choices came into effect. If that were so, the matter may proceed to arbitration according to transitional arrangements in Work Choices. It would seem to me that it was open to conclude that the inspection of the operation of the CPCM on Monday, 20 March, 2006 formed an integral part of the hearing of the claim and that, in fact, the AWU claim was therefore part-heard. That was the position taken by the AWU. 10 In that respect, for instance, I note that in Council of the City of South Sydney v. Horiatopoulos (1992) 47 IR 93 at pp.95 to 98 the Full Bench of the Commission (Cullen and Glynn JJ and Patterson CC) considered that a claim was part-heard at the point where certain evidentiary material - a letter - was received in proceedings. Consequently, if the inspection was a part of the evidence in these current proceedings - and I think it was - then the matter would have remained within jurisdiction as a part heard matter, notwithstanding that Work Choices had intruded in the meantime. The Development of the Protocol 11 But in any event, such an argument became otiose. A protocol was ultimately developed between BlueScope Steel and trade unions representing its employees that, subject to compliance with the dispute settlement procedure in the State BlueScope Steel Award, claims made may be processed in the State Commission by means of a S.146A referral agreement. The referral agreement ultimately provided to me was in the following terms: "...The dispute concerns rates of pay of employees of the company working at the Springhill site on the Coupled Pickle Cold Mill line..." 12 Clause 7 of the referral agreement, consistent with the protocol that has been developed, provided that unless the parties agree to waive the requirement, leave of a Presidential member would be required as a prelude to arbitration, viz: "...an application for leave for the matter to be arbitrated will be heard by a Presidential member of the Commission..." In a letter dated Thursday, 28 September, 2006 Mr Sebbens sought that I refer the matter in accordance with that clause. I therefore directed the parties to file brief written submissions concerning their claim for the consideration of Grayson DP and referred the file to him for his consideration. 13 Grayson DP considered the matter in chambers on Thursday, 12 October, 2006. The Deputy President recorded on the file that: "...having regard to the competing contentions, leave is granted to arbitrate in accordance with Clause 7 of the referral agreement in this matter..." Remaining Jurisdictional Difficulties 14 Notwithstanding the S.146A referral agreement, however, there still remained a jurisdictional issue flowing from the restrictions imposed by Work Choices. Any adjustment to the wages of employees of BlueScope Steel would ordinarily require variation to the BlueScope Steel Award which was made in the middle of 2005 and was therefore still within its nominal term. That, in itself may have produced some difficulties for the AWU in mounting its claim on behalf of the CPCM operators. It is, of course, a long established policy of State industrial tribunals that State awards should not be opened within their nominal term unless there are good and cogent reasons to do so, especially when, as is the case of the BlueScope Steel Award, it was made by consent of the parties and presumably contemplated all issues in dispute between the parties, including the rates of pay of the CPCM operators, at that time [the Soap and Candle Makers Case (1946) AR 264]. 15 But in any event, Work Choices purportedly prohibited any such variation to State awards - NAPSA or PSA, without the consent of the parties - which immediately raised the important question of how any business may be able to address any fundamental change in its operations where the employer and its employees were unable to reach agreement. The way forward in the past was for the matter to proceed to arbitration and for the State award which bound them to be varied accordingly. Work Choices placed restrictions on that course of action. 16 As I indicated earlier in this decision, the BlueScope Steel Award has become a PSA, ie an agreement, recognised and enforceable under the State IR Act which, unlike a NAPSA, as far as I can see, may be altered only by a further agreement between the parties to meet changed circumstances from time to time. But in my view, inevitably a PSA may not be the subject of arbitration (unless the parties themselves agree to be bound by the determination of a person appointed as a mediator and/or arbitrator of any dispute between the parties). That is where the procedure flowing from a S.146A referral agreement becomes so important. But it does not permit variation to the BlueScope Steel Award. 17 At the present time, one method by which any changes to employment conditions in a PSA may be achieved by way of arbitration in accordance with S.146A is by producing a separate document representing a common law agreement to give effect to an arbitrated decision as an annexure to the PSA. That would be the course available to the parties in this hearing. The Further Adjournments of the Proceedings 18 The file was returned to me. I set the matter down for a mention and programming on Tuesday, 24 October, 2006 but vacated that day at the request of BlueScope Steel, and with the concurrence of the AWU. The matter proceeded to mention on Monday, 30 October, 2006. I made directions for the filing of the necessary evidentiary material and set the matter down for a further mention for programming on Tuesday, 12 December, 2006. 19 The hearing was originally set down on Monday, 26 February, 2007 and Tuesday, 27 February, 2007 but was vacated at the request of the AWU which sought more time to consider its response to evidentiary material provided for and on behalf of BlueScope Steel. Ultimately, the matter was set down for arbitration in a hearing on Tuesday, 15 May, 2007 and Wednesday, 16 May, 2007. The hearing on Tuesday, 15 May, 2007 was abandoned to permit the parties to confer further with respect to the jurisdictional difficulties which had been thrown up by the AWU claim in the light of the restrictions imposed by Work Choices. 20 The matter resumed before me on Wednesday, 16 May, 2007. A further inspection of the CPCM was arranged at the request of Mr Gillespie for Tuesday, 12 June, 2007. The matter was set down for hearing on Monday, 25 June, 2007 and Tuesday, 26 June, 2007 but because of Mr Gillespie's absence at that time due to his ill health the AWU sought that the hearing be adjourned yet again. I set the hearing down on Monday, 24 September, 2007, Tuesday, 25 September, 2007 and Wednesday, 26 September, 2007 instead but it became necessary to also vacated those days as well. Ultimately, the hearing was scheduled for Monday, 3 December, 2007, Tuesday, 4 December, 2007 and Wednesday, 5 December, 2007. But that hearing did not proceed. 21 At the commencement of the hearing on Monday, 3 December, 2007, Mr Gillespie sought a further adjournment of the hearing. He indicated that he wished to brief counsel to advance the claim on behalf of the CPCM operators. Mr Sebbens opposed that further adjournment. He had written to the AWU on Friday, 30 November, 2007 in the following terms: "...We do not accept that the unavailability of counsel you now wish to brief, at this late stage, in circumstances of the AWU having at least six months to consider the relevant issues and accordingly brief counsel, is a reasonable basis for your application. Our client will be prejudiced by any further delay due to a key witness...having retired since the proceedings commenced and who is about to begin an extended trip around Australia. It will be significantly difficult to have (that witness) attend any future hearing dates should the matter be adjourned. Further our client is prejudiced by continuing costs of preparation, briefing of witnesses and mentions for each adjourned hearing. It is in the interests of both parties to bring the proceedings to a conclusion. In the circumstances, we would not oppose the withdrawal of your application to that end and invite you to do so..." Conclusion 22 In the circumstances, I see no good purpose in preserving this long outstanding matter. The only reason I can see to retain the existing S.130 matter as a live matter is to ensure some retrospectivity on any increase to wage for the CPCM employees in accordance with S.15(3)(a), ie from the date of lodgement of the S.130 notification. Such retrospectivity would, of course, be lost by the frequent adjournments of these proceedings, at the initiation of the AWU. The AWU would have the right to pursue its claim in due course, in a fresh notification under S.130, if it chose to do so. And, in the circumstances, I reserve its right to do so. But I dismiss the current S.130 notification. P J CONNOR Commissioner 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.