Industrial Relations Commission of New South Wales CITATION: Australian Workers Union v. BlueScope Steel Limited [2006] NSWIRComm 1142 APPLICANT Australian Workers Union PARTIES: RESPONDENT BlueScope Steel Limited FILE NUMBER(S): IRC 708 of 2006 CORAM: Connor C CATCHWORDS: industrial dispute - referral agreement for dispute - breakdown of crane - change to manning - refusal of duties - suspension of employees - claim for lost time refused LEGISLATION CITED: Industrial Relations Act 1996 Federal Workplace Relations Amendment (Work Choices) Act, 2005 Australian Workers Union v. BlueScope Steel Limited [2005] NSWIRComm 1194 Australian Workers Union v. BlueScope Steel (AIS) Pty Limited [2005] NSWIRComm 1151 Automatic Fire Sprinklers v. Watson (1946) 72 CLR 435 Csomore v. Public Service Board of New South Wales (1986) IR 275 CASES CITED: Electricity Commission of New South Wales v. Swieringa (1975) AR 504 Furnace Demolishers Case (1960) AR 670 Labor Council of New South Wales v. Axis Metal Roofing (2004) 131 IR 272 Shop, Distributive and Allied Employees' Association v. Wollongong UniCentre Limited [2005] NSWIRComm 1138 Transport Workers' Union of New South Wales v. Chubb Security Services Limited (2005) 147 IR 199 HEARING DATES: 04/09/2006, 15/09/2006, 25/09/2006 DATE OF JUDGMENT: 10/12/2006 APPLICANT Branko Giorgevski Australian Workers Union LEGAL REPRESENTATIVES: RESPONDENT Trent Sebbens Blake Dawson Waldron DECISION: INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES CORAM: CONNOR C Thursday, 12 October, 2006 Matter No IRC 708 of 2006 Australian Workers Union and BlueScope Steel Limited Notification under S.130 of the Industrial Relations Act, 1996 re suspension of employees on the paintline without pay Referral agreement of an industrial dispute under S.146A of the Industrial Relations Act, 1996 by the Australian Workers Union and BlueScope Steel Limited DECISION [2006] NSWIRComm 1142 Preliminary 1 A notification of an industrial dispute under S.130 of the 1996 Industrial Relations Act was lodged by the Australian Workers' Union on Tuesday, 14 February, 2006. The dispute, involving BlueScope Steel Limited, concerned the standing down of employees on the No.3 paint line - A and B crews - without pay on night shift on Monday, 13 February, 2006 and the day shift on Tuesday, 14 February, 2006 for their refusal to work with a reduced number of operators following the breakdown of a crane. The employees are covered by the terms of the BlueScope Steel Limited - Springhill and CRM Employees Award. 2 The matter was allocated to me and I set it down for a conference on Tuesday, 14 February, 2006. (Those proceedings and all subsequent proceedings in this matter were convened in the Commission's premises at 90 Crown Street, Wollongong.) At that time the employees were stood down and remaining in the crib shed. Until the crane was brought back into service - something which I understood was to occur shortly - I recommended that the employees resume work without prejudice to their overall claims and I directed the parties into further discussions to address the appropriate manning levels should there be a breakdown of a crane in future. The crane came back into service and the work resumed. A further mention was convened before me on Tuesday, 21 February, 2006. 3 Conciliation failed to settle this industrial dispute which ultimately concerned whether or not the employees should be paid for the period that they had been stood down. I programmed the matter for arbitration, issuing the certificate of attempted conciliation required by S.135, lodging it in the prescribed manner. Two further mentions were convened before me - on Tuesday, 28 March, 2006 and Monday, 1 May, 2006 for programming the matter. It was scheduled for hearing on Tuesday, 13 June, 2006 and Wednesday, 14 June, 2006 but those hearing days were vacated at the request of the parties. There had been delays in the filing of evidentiary material which had made the scheduled dates for the hearing unsuitable. Further hearing dates - Monday, 31 July, 2006 and Tuesday, 4 August, 2006 - were also vacated at the request of both parties. 4 The hearing was ultimately set down instead on Monday, 4 September, 2006 and Tuesday, 5 September, 2006. Mr Gorgievski represented the AWU in the hearing. He called five operators as witnesses in the hearing: Mr Darren Reynolds, Mr Martin Stephens, Mr Bill Trajcevski, Mr Ljube Vickoroski and Mr Brad O'Hare. Mr Sebbens represented BlueScope Steel in the hearing. He called Mr Gary Meta, the operations manager for the paintline operations of BlueScope Steel and two shift supervisors - Mr Ilce (Ivan) Bosevski and Mr Shaun Farrelly - to give evidence in the hearing. 5 Mr Giorgevski required Mr Stephens to assist him on Friday, 15 September, 2006 when he was cross-examining Mr Meta, Mr Bosevski and Mr Farrelly. Work commitments precluded Mr Stephens being present in the hearing. At Mr Giorgevski's request, I vacated the hearing on Tuesday, 5 September, 2006 and adjourned it for Friday, 15 September, 2006 when Mr Stephens was available to attend the hearing to assist Mr Giorgevski. There was a further adjournment of the matter on Monday, 25 September, 2006 for final submissions. 6 When from Monday, 27 March, 2006 the 2005 Federal Workplace Relations Amendment (Work Choices) Act and the regulations made under it came into effect, certain restrictions were imposed on issues before members of the Commission. Work Choices would have no effect on matters notified under S.130 before that date, however - as was the case with this matter. Moreover, as I understand the AWU claim, it is confined to what the AWU considers to be the preservation of an existing entitlement, ie payment of wages which the AWU claimed should have been made to the employees but which BlueScope Steel has refused. Notwithstanding Work Choices, as I understand the situation, that is something which still remains within jurisdiction in S.130 proceedings. 7 In any event, the parties had provided me with a referral agreement in accordance with S.146A and Practice Direction No.18 to arbitrate the following matter: "...whether the docking of pay for A and B crews on Monday, 13 February, 2006 should stand..." Strictly speaking, A crew's shift started on Monday, 13 February, 2006 and extended to Tuesday, 14 February, 2006 and B crew worked essentially on the day shift on Tuesday, 14 February, 2006. The S.146A referral agreement speaks only of Monday, 13 February, 2006. But clearly the intention of the parties is to address both Monday, 13 February, 2006 and Tuesday, 14 February, 2006 and that fact was clarified in proceedings by Mr Meta. 8 According to Mr Giorgievski, discussions over the appropriate procedure and manning levels should there be a breakdown of a crane have not taken place but that issue is not raised by the AWU in this hearing and the S.146A referral agreement is confined only to consider one issue: the question of whether or not wages should be paid to the employees on the paintline who had been stood down without pay. I would nevertheless recommend to the parties that, independent of these proceedings, there be further discussions between BlueScope Steel management and the AWU with a view to formulating suitable guidelines in the event that there is equipment failure in future. Mr Giogievski has proposed such a course and I believe it to be sensible. I am informed that a breakdown of the crane is a rare occurrence but nevertheless it is inevitable that there will be plant failure in future. It would therefore be prudent for the parties to attempt to address this issue to avoid any further unnecessary industrial disruption - loss of wages by the employees and loss of production by BlueScope Steel. The Dispute 9 The paint line operations are a continuous process. The operators engaged on the paintline are paid an annualised salary which includes a component for a level of additional hours worked to meet unexpected operational needs, eg replacement for absent employees, attendance at meetings by employees, trade union duties or unforeseen extra workloads. In his unreported decision of Wednesday, 14 December, 2005 in Australian Workers Union v. BlueScope Steel Limited [Matter No.IRC 1206 of 2004], O'Neill C determined the appropriate manning level for the paintline operators, reducing it from thirteen employees to nine employees to run under normal operational circumstances or, alternatively, eight employees to run with co-ordinated crib breaks. But O'Neill C was not called upon to address what should occur in the event of a breakdown of any equipment and he did not do so. He was concerned only with normal paintline operations. 10 On Friday, 10 February, 2006 one of the automated cranes required for the operations [No.73] broke down. That crane is ordinarily used to remove coils from the end of the paintline process. It became apparent to BlueScope Steel management that it would take several days to repair and return the crane to service. Mr Farrelly consulted Mr Meta and made the decision to operate a forklift to remove the coils from the finishing line. It was Mr Farrelly's assessment that the paint line operations could continue with the engagement of two additional operators - a forklift driver and one turnstile/strapper operator - whom he called in on overtime. 11 Since the paintline operators were on annualised salaries which included a component for work beyond ordinary hours to meet unforseen circumstances, Mr Meta asserted that, strictly speaking, overtime was not really required for the two additional operators who were called to operate the forklift and act as the turnstile/strapper operator. A concession was made on that occasion that overtime would be paid to the two employees. However, Mr O'Hare asserts that in the past when the No.73 crane has broken down additional employees have been brought in on overtime. 12 As I indicated earlier in this decision, notwithstanding the decision of O'Neill C on Wednesday, 14 December, 2005 over the manning levels for the paintline operations, when the No.73 crane broke down on Friday, 10 February, 2006 there still appears to me to have been some unresolved dispute over manning levels for the paintline. I deduce that the decision of O'Neill C on Wednesday, 14 December, 2005 in Australian Workers Union v. BlueScope Steel Limited dealt with sensitive issues for the employees. Mr Meta asserted in a written statement which accompanied his evidence that: "...throughout the previous weekend the crew had maintained the position that the required manning to run the paintline continuously would be eleven employees. This figure includes the eight employees for continuous operation and that has become the required manning... Then on top of this, three employees would be required to operate the two newly created positions, with one of these employees acting as crib relief. The shift crew's further maintained the position that, if the company could not supply eleven employees, then working with ten employees could run the line stopping for crib breaks..." 13 Mr Farrelly attended the crib room to explain the changes for the operation of the paintline, saying words to the following effect: "With the No.73 crane out of action for an extended period of time, we are going to have to operate a forklift and turnstile operator at the finishing end. I have called in two operators on overtime. You guys need to operate with these numbers without delay. I will let you all have a talk about the situation for ten minutes. If there are any safety concerns, I will look at them." 14 A number of safety concerns were raised by the employees following their meeting. They also raised in issue the appropriate manning for the work. There were ten operators engaged on the shift. Mr Farrelly told them: "You need to work with the manning levels we have tonight. We can work together to address the safety concerns you guys have raised." Whilst he did not believe that the requirements of the work justified it, in the interests of restarting the line, Mr Farrelly made a further concession - reluctantly, he claimed in his evidence - that the crew could stop for a co-ordinated crib break for the remainder of the shift. That manning was consistent with past practice on the paintline. The crew then worked through a number of other safety concerns and then began normal operations at approximately 12.00 midnight. 15 On Saturday, 11 February, 2006 it was not possible to call in another two operators on overtime. Discussions between BlueScope Steel management and the paintline crew were conducted in an effort to resume production. BlueScope Steel put forward the proposal of operating with nine employees with the paintline stopping for co-ordinated crib breaks. That proposal was rejected by the crew, insisting that either eleven operators or, alternatively, ten operators with a co-ordinated crib break, should be required to operate the paintline. BlueScope Steel management made the commitment that it would attempt to call in two operators on overtime, as it had done on Friday, 10 February, 2006. However, it believed that its attempts in that respect would fail (as indeed had its attempts earlier in the shift) and, in those circumstances, it again pressed that the paintline run with nine operators stopping for co-ordinated crib breaks. The crew again rejected that proposal. 16 Ultimately, BlueScope Steel reluctantly agreed to run the line with ten employees, stopping for a co-ordinated crib break but Mr Meta claimed that the concession made in that respect was "...conditional for only the current day shift, after which further discussions were to be held...". Attempts to find the additional employees to bring the manning up to eleven employees failed and it became necessary for the shift supervisors to source the additional manning needs from outside the paintline department. The paintline had been stopped for five hours on Saturday, 11 February, 2006 whilst this issue was resolved. Mr Meta estimates that the loss of production was approximately $60,000.00. But on Sunday, 12 February, 2006 the paintline operated with ten employees, stopping for co-ordinated crib breaks. 17 Up to 10.00pm on Monday, 13 February, 2006 the paintline manning level was operating continuously but shortly after that A crew on the night shift was to be reduced to nine employees when one of the employees from another department brought in to work overtime had completed his shift. It was Mr Meta's decision that, with co-ordinated crib breaks and utilising the delivery end crib relief operator, there were sufficient numbers (nine employees) to run the paintline. At 8.45pm Mr Bosevski instructed the crew to put a threader in the paintline to permit Mr Meta to address the operators to communicate to them his decision on the matter. 18 Mr Meta met the employees in the conference room and put before them a plan as to how the paintline would operate after 10.30pm when the additional operator on overtime was to cease work. Mr Meta recorded in his written statement that: "...I took this opportunity to explain how the line could operate with the present number of employees. Throughout my presentation employees raised a number of concerns. These, however, were not based on my plan being unsafe but based on the concern that the crew did not know how the other crews would react to a change from the weekend's manning position. This consultation process took several hours to exhaust, whilst the crew discussed their position. During this time an employee who went home sick was required to be replaced. After another employee had been called in on prepaid overtime, I directed the crew that nine employees were available to run the line. 19 The operators rejected the proposal advanced by Mr Meta to run the paintline with nine employees, whilst stopping for a co-ordinated crib break. The employees' proposal was essentially for the work to be performed in the same manner as had occurred over the weekend and for a conference between BlueScope Steel management and the AWU to be convened at the earliest possible opportunity. They raised four options for Mr Meta's consideration, viz: (i) that the employees work in the same manner as had occurred with the earlier crews engaged since the crane was taken out of service, with a meeting to be conducted between BlueScope Steel and the AWU at the earliest possible opportunity; (ii) that the employees work with a crew of nine employees and fill up all of the coil stands, which they estimated would take over two hours to perform, stopping the line to unload; (iii) that the employees work with a crew of nine employees, stop for a co-ordinated crib and not drive the forklift: if the forklift driver was needed to get paint or unload a truck, the line would stop; or (iv) that the paintline run with customary manning levels or that the employees perform housekeeping duties. Mr Meta rejected those options. 20 As a consequence, Mr Bosevski informed the employees that, since they had refused Mr Meta's directions to restart the line, they would be taken off pay as at 11.30pm. The employees remained at work and at 12.50am on Tuesday, 14 February, 2006 Mr Stephens and another employee presented Mr Bosevski with the resolution of the employees, viz: "The crew refused to run the line with nine operators. We will, however, start the line back up if or when No.73 crane starts up again and will run with a crew of eight. The crew will remain at work and wait for the crane to start." 21 There was some prospect that the crane would, in fact, shortly be brought into service but that did not happen. It is Mr Giorgevski's suspicion that Mr Meta's decision to work with reduced manning levels was because he believed, incorrectly as it turned out, that the crane would be brought back into operation and he would not need the greater manning levels demanded by the employees. 22 The employees were off pay from 11.30pm on Monday, 13 February, 2006 to 5.30am on Tuesday, 14 February, 2006. They remained in the crib room for that time. Mr Stephens and the other employee argued with Mr Bosevski that their wages should not have been docked from 11.30pm but at midnight since they had not had their crib. Mr Bosevski's response was: "Mr Meta only ever authorised a ten minute meeting. You guys were talking in the crib room for much longer than that. Therefore the original docking time will stand." 23 Mr Stephens indicated in his evidence that he believed that the matter should have been resolved earlier, that the arrangements over the weekend should have been preserved at least and that the ground rules had been changed for a new crew on Monday, 13 February, 2006. He pointed out in a written statement that: "...The company had made their minds up and that was it. The employees tried everything to work with the company but all the company wanted was their way and that is it. All of us were willing to work and stayed there all night. We even went and saw Mr Bosevski about three or four times during the night only to be told no. All proposals were answered with a straight no... Mr Meta just wanted 9 men and that is it - no talking. He was making out he was talking but he already had made his mind up. I also believe they were hoping we would go out on strike to break our orders from the court. We were all there all night, except for one employee that went home sick about 9.30pm..." Mr Stephens is referring in his written statement to dispute orders imposed by Macdonald C to which I will refer in more detail later in this decision. 24 The crew for the day shift on Tuesday, 14 February, 2006 also took the view that nine operators were insufficient to run the paintline. Mr O'Hare requested a meeting with Mr Meta. At 8.00am Mr Meta addressed the employees and explained the situation in the same manner as he had done for the previous night shift. The crew considered the request by Mr Meta but refused to work on that basis and were also taken off pay until 5.00pm when the crane which had been out of service became fully operational. Mr O'Hare asserted in his evidence that the crane had, in fact, been brought into service at 4.00pm but that fact had not been communicated to the employees until an hour later. 25 In their evidence Mr Reynolds, Mr Stephens, Mr Trajcevski, Mr Vickoroski and Mr O'Hare all share the same view: they believe that the A crew - the night shift on Monday, 13 February, 2006 - and the B crew - the day shift on Tuesday, 14 February, 2006 - were being treated differently than the earlier shifts where arrangements had been made with respect to which they would have been more comfortable. For instance, Mr Vickoroski commented in a written statement that formed the basis of his evidence that: "...we believe this was unfair procedure as we were told to work with less men. Our view on how the company should have dealt with the dilemma was to fix the problem on Friday, 10 February, 2006 when the dilemma started - not to leave it until night shift Monday, 13 February, 2006 with a new crew which was six shifts after the crane broke down..." Mr Trajcevski and Mr Reynolds recorded in their written statement that: "...the company should have fixed (the problem) when they paid overtime on Friday, 10 February, 2006 - not six shifts later and our first shift back since day shift on Thursday, 9 February, 2006..." Mr Trajcevski described what occurred as a "ploy" by BlueScope Steel management. Conclusion 26 On Friday, 3 February, 2006 Macdonald C had issued dispute orders under Ss.137 and 138 which, among other things, directed the paintline employees to: "...immediately cease and refrain from taking any form of industrial action, including any strike, stop work meeting, ban, limitation or restriction on the performance of work..." Those dispute orders were to remain in force until Thursday, 16 February, 2006. The AWU claim on behalf of the paintline employees must be considered in that light. Also the claim must be considered in the context of S.143(1), viz: "An employer who pays any remuneration or provides any other financial benefit to an employee in respect of time spent by the employee in engaging in industrial action is guilty of an offence." 27 Mr Giorgevski indicated that the employees in A and B crews were ready and willing to perform all the work required of them on Monday, 13 February, 2006 and Tuesday, 14 February, 2006 provided that what they regarded as appropriate manning levels were provided to them or, at least, those manning levels which BlueScope Steel management had authorised for the earlier shifts whilst the crane was out of service. He believed that the manning arrangements that had been accepted by BlueScope Steel for earlier shifts should have been preserved for the A and B crews. Instead, BlueScope Steel had, to his mind, moved the goalposts. They were laying down different rules for different shifts. 28 The employees had not left the site but had remained in the crib shed waiting to resume work on the manning levels that they had advanced. He argued that consequently there was no industrial action by the employees and they should be paid for the time that they had been stood down without pay. It seems to me that what had influenced the employees to remain in the crib shed throughout the entire shift was the dispute orders that were in place at the time, restraining them from taking any form of industrial action. Mr Stephens ruefully claimed it was the longest shift he "worked". It was clearly the employees' belief that by remaining in the crib shed for the entire shift, they were not breaching the dispute orders made by Macdonald C. 29 But were the employees engaged in industrial action by refusing work on the basis that Mr Meta had advanced for them? I have formed the opinion that the employees actually believed that they were not taking industrial action with their refusal of duties. Their action is consequently not something that I would be prepared to raise to the level that it constituted a wilful breach of the dispute order imposed by Macdonald C - a position which Mr Sebbens appeared to accept in his submissions. But Mr Sebbens argued that the employees were still embarking on industrial action and I believe that he is correct in that assertion. 30 The employees had received a direction by Mr Meta and had refused to perform work according to that direction. That was a collective action across two shifts and it constitutes industrial action, in my opinion. In my unreported decision of Friday, 30 September, 2005 in Australian Workers Union v. BlueScope Steel (AIS) Pty Limited [Matter No.IRC 5641 of 2004] I commented in that respect (at p.8): "... Any employment contract involves mutual obligations by employers and employees. It is the obligation of the employee to perform all work reasonably given to him by the employer and the obligation on the employer to pay wages for that work. The payment of wages is essentially dependent upon the employee providing a service and no employer is obliged to pay employees for times when they are refusing to perform work required of them [ Automatic Fire Sprinklers Pty Limited v. Watson (1946) 72 CLR 435 at pp.465 and 466 and Csomore v. Public Service Board of New South Wales (1986) IR 275 at p.281]. That is to say, the refusal of an employee or a group of employees to perform any work which they are properly directed to perform is tantamount to a strike..." Employees who refuse to perform work as directed must appreciate that, as a consequence, they may deprive themselves of payment of any wages whilst their refusal remains in place. That was a view I expressed in my unreported decision of Friday, 23 September, 2005 in Shop, Distributive and Allied Employees' Association v. Wollongong UniCentre Limited [Matter No.IRC 2799 of 2005 at p.11] to which Mr Sebbens referred in his submissions. 31 In Electricity Commission of New South Wales v. Swieringa (1975) AR 504 the Full Bench of the former State Industrial Commission (McKeon, Cahill and Dey JJ) commented (at p.514) that: "...in order to be entitled to payment of the wage which the terms of the employment prescribe, an employee must be ready and willing and able to perform in accordance with the lawful and reasonable directions of his employer the service for which he contracted, and that any failure on his part to do just that of itself, and so long as the failure continues, disentitles him to such payment..." As the words I have highlighted above indicate, the direction must, of course, be both lawful and reasonable. Mr Meta's directions were lawful and, whilst it seems to me to be desirable to standardize manning requirements across the shifts and undesirable for BlueScope Steel management to have different rules applying for manning of the paintline for different shifts, I consider that the direction was also reasonable in the circumstances. 32 The direction must, of course, also be safe for the employees [Labor Council of New South Wales v. Axis Metal Roofing (2004) 131 IR 272 and Transport Workers' Union of New South Wales v. Chubb Security Services Limited (2005) 147 IR 199]. S.143(3) authorises me to order payment of wages lost by employees in terms of S.143(4)(a): "...only if the applicant satisfies the Commission that the relevant industrial action was based on a reasonable concern for health or safety..." In his submissions Mr Giorgevski did emphasise safety as an issue over which the employees were concerned and a reduction in manning levels often does raise issues of workplace safety. But it would appear to me from the evidence that any safety concerns on the part of the employees were effectively addressed and resolved. What was left in dispute no longer concerned issues of workplace safety, in my opinion. 33 When the employees refused to work according to Mr Meta's directions, I am satisfied from the evidence before me that their concerns were essentially industrial, ie they were seeking to preserve existing manning levels and not break down an existing employment condition. They did not wish to undermine what they saw had been achieved by crews on earlier shifts. They did not want to be treated differently than the other shift crews. They wished to establish the more generous standard manning level for occasions when the crane had broken down. They saw BlueScope Steel's management as attempting to break down their working conditions. 34 I consider that it would have been better for all concerned if BlueScope Steel management had adopted the same approach to this manning issue across all of the shifts. I am not convinced that arrangements could not have been made consistent with what had occurred on the previous shifts to man the paintline - including, if necessary, bringing in employees from other departments on overtime. 35 Clearly, Mr Farrelly's interests were originally directed chiefly to productivity when he made the concession to the employees for the manning of the shift - a sensible approach for him to take in my opinion, bearing in mind that his primary goal was to have the paintline operational. Once a decision was taken by Mr Farrelly on Friday, 10 February, 2005 over how to man the paintline with the crane out of service, it would have always been open to BlueScope Steel management to preserve that type of arrangement across all shifts in the interests of industrial harmony, rather than set one shift up against another with different conditions. But that does not take what occurred on previous shifts to the level of customary procedure on which the paintline operators on the A and B crews may rely [the Furnace Demolishers Case (1960) AR 670 at p.681]. 36 The employees' resistance to the changes to the manning levels for the shifts on Monday, 13 February, 2006 and Tuesday, 14 February, 2006 is in those circumstances understandable. But I am satisfied that it was purely industrial action that they took and in light of the strict provisions of S.143(1) and the principles which I have outlined earlier in this decision, I must dismiss the AWU application made on behalf of the employees and I do so. Nevertheless, as Mr Giorgevski suggested in his submissions, I propose to direct the AWU and BlueScope Steel into further discussions to avoid any further disputes over issues should there be a breakdown in equipment for the paintline in future. 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.