Industrial Relations Commission of New South Wales CITATION: BlueScope Steel (AIS) Pty Ltd v AWU [2006] NSWIRComm 248 PARTIES: BlueScope Steel (AIS) Pty Ltd Australian Workers' Union, New South Wales FILE NUMBER(S): IRC 2281 and 2282 of 2006 CORAM: Grayson DP CATCHWORDS: Industrial dispute - Introduction of change - Projected increase in levels of international and domestic competition - Ongoing need to maintain viability of plate mill as driver of change - Projected efficiency and productivity gains - Long line of arbitral authority as to employer's right to manage its operation - Commission will intervene only where consequence of change is unjust or unreasonable - Onus on union to prove such consequence - Held, no such consequence demonstrated - Nil redundancies - Status quo restriction removed - Implementation of change no longer impeded LEGISLATION CITED: Industrial Relations Act 1996 Australian Iron and Steel Pty Ltd v Federated Ironworkers Association of Australia, New South Wales Division (No 254 of 1977) BHP Steel (AIS) Pty Ltd - Port Kembla Restructured Ironworker Classification Rates of Pay Award (No IRC 582 of 1996) CASES CITED: Clancy v Butchers' Shop Employees Union (1904) 1 CLR 181 Re Cram; Ex Parte NSW Colliery Proprietors Association Limited (1987) 163 CLR 117 Re John Lysahght (Australia) Limited Port Kembla - Slit Recoil Line (IRC 2374 of 1994) Re Steel Works Employees and Engine Drivers, etc (Australian Iron and Steel Limited - Port Kembla) Awards [1956] AR 855 HEARING DATES: 27/07/06, 28/07/06 DATE OF JUDGMENT: 08/04/2006 NOTIFIER: Mr M Mead - Australian Industry Group LEGAL REPRESENTATIVES: RESPONDENT: Mr D Hancock - Australian Workers' Union JUDGMENT: - 1 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES CORAM: Grayson, DP 4 August 2006 Matter No IRC 2281 of 2006 Notification under section 130 by BlueScope Steel (AIS) Pty Ltd of a dispute with The Australian Workers' Union, New South Wales Branch, re introduction of change in Plate Mill despatch department Matter No IRC 2282 of 2006 Notification under section 130 by BlueScope Steel (AIS) Pty Ltd of a dispute with The Australian Workers' Union, New South Wales Branch, re introduction of change in Plate Mill processing department DECISION [2006] NSWIRComm 248 1 These matters are before the Commission by way of notification under s 130 of the Industrial Relations Act 1996 (the Act) and they proceed to arbitration in accordance with the terms of referral agreements into which the parties entered under the provisions of s 146A of the Act. 2 The dispute centres around proposals advanced by the Company and resisted by the union which involve firstly, the deletion of eight existing leading hand operator positions within the processing and despatch departments of the Plate Mill and secondly, in place thereof, the creation of thirteen senior operator positions. The new positions of senior operator are to be remunerated at the same rate as presently applies to leading hand operator and no complaint is made by the Union as to that aspect of the Company's proposal. 3 It is further proposed by the Company to remove the paid thirty minute shower break presently enjoyed by each employee during the course of each eight hour shift. In addition to the paid thirty minute shower break, employees presently enjoy two thirty minute crib breaks per shift making a total of ninety minutes of "break time" per eight hour shift for which the employees are presently paid. This is to be compared with the twenty minute paid crib break per shift per employee which is prescribed by the award ( see cl13.3.1 of the BlueScope Steel (AIS) Pty Ltd Port Kembla Steelworks Employees Award 2006). 4 The proposals advanced by the Company do not envisage the removal of existing shower facilities throughout the Plate Mill and in that regard, the Company warrants that it will continue to maintain those facilities for use by employees either at the conclusion of the shift or if employees so choose, during one or another of the two remaining thirty minute crib breaks. It may be observed here as the evidence revealed, that most employees do not presently shower during the shower break and conversely for reasons which to say the least are unclear, employees will sometimes shower during the shift and go back on the line for the remainder of the shift thus on the face of it, defeating the primary purpose of taking a shower in the first place. 5 The changes proposed by the Company are said to be in the interests of operational efficiency and productivity gains made necessary by projected higher levels of competition in both the domestic and international plate metal business, such gains being a means of maintaining the viability of the plate metal business going forward. 6 Following attempted albeit unsuccessful conciliation, the matters proceeded to hearing on 27 and 28 July 2006 in the course of which the Company moved the Commission to make dispute orders as follows:- A. Employees of BlueScope Steel (AIS) Pty Ltd engaged in the Plate Mill dispatch department and processing department shall remove the status quo restriction on the implementation of the following changes: (i) introduction of the senior operator position; (ii) reduction in the allocated paid breaks per shift from 90 minutes to 60 minutes. B. Employees of BlueScope Steel (AIS) Pty Ltd engaged in the Plate Mill dispatch department and processing department will, as directed by the Company, and without ban, restriction or other limitation, perform work in accordance with the terms of the BlueScope Steel (AIS) Pty Ltd - Port Kembla Steelworks Employees Award 2006 and their contracts of employment. Such work or direction may include: (i) The taking of shower breaks only following the completion of an individual employees designated shift times; (ii) The designated shower relief operator may be directed to perform other duties within their level of skill and competence when they are not relieving an employee for their crib breaks (iii) Performing the role of senior operator if required and so directed by the Company. C. Any other order the Commission deems appropriate in order to affect the changes sought by the Applicant. 7 In support of that application, the Company called evidence from Mr Paul Cugaly, Plate Processing Manager and Mr Steve Guy, Plate Despatch Manager both of whom were cross-examined on written statements they had prepared. 8 For its part, the Union called evidence from Mr Tim Kangas, an operator Level 4 with many years of experience and involvement in the operation of the Plate Mill. Mr Kangas was also required for cross-examination on the statement he had prepared. 9 In the interests of coming quickly to the heart of the matter it is the Company's contention that the changes proposed are changes it is empowered to make as a matter of management prerogative and are changes which would warrant intervention by the Commission only in the event that it was established that the implementation of the changes would visit unreasonable demands (including unsafe work practices) upon affected employees. 10 Given such a characterisation the fundamental principle to be applied is that an employer has the right to manage its operation as it deems appropriate providing that the consequence of exercising such a right does not place an unjust or unreasonable burden on employees. This proposition finds support through a long line of arbitral authority including but not limited to Re John Lysaght (Australia) Limited Port Kembla - Slit Recoil Line (IRC 2374 of 1994, Hungerford, J unreported) and Re Steel Works Employees and Engine Drivers, etc (Australian Iron and Steel Limited - Port Kembla) Awards [1956] AR 855. 11 In Re Lysaght, his Honour summarised the principle in this way: A question of manning is, it seems to me, concerned necessarily with the management of an employer's business. The long settled approach to such matters by the Commission is for it not to intervene by assuming the role of the employer but rather to assess whether what the employer proposes would impose unfair or unreasonable demands on employees, including unsafe work practices. So much was acknowledged in Re John Lysaght (Australia) Limited - Port Kembla - Slit Recoil Line - Rates of Pay Award when the present award was made. Specifically as to disputes about the level of manning, I refer to what was observed in the unanimous decision of the High Court in Re Cram; Ex Parte NSW Colliery Proprietors Association Limited (1987) 163 CLR 117 at 135 -137: Many management decisions, once viewed as the sole prerogative of management, are now correctly seen as directly affecting the relationship of employer and employee and constituting an "industrial matter". A dispute about the level of manning is a good example. It has a direct impact on the work to be done by employees; it affects the volume of work to be performed by each employee and the conditions in which he performs his work. So also with the mode of recruitment of the workforce. The competence and reliability of the workforce has a direct impact on the conditions of work, notably as they relate to occupational health and observance of safety standards. Employees, as well as management, have a legitimate interest in both these matters. These considerations indicate that the objection voiced by O'Connor J in Clancy to the regulation and control of business enterprises by industrial tribunals is not a matter that goes to the jurisdiction of the tribunals. Rather it is an argument why an industrial tribunal should exercise caution before it makes an award in settlement of a dispute where that award amounts to a substantial interference with the autonomy of management to decide how the business enterprise shall be efficiently conducted. 12 In Re Steel Works Employees, the position was described by Richards J at 859-860 in this way: Prima facie, the Company has a right to manage its business in its own way and is entitled to exercise its own discretion in the manning of its plant. In order to obtain an order against the Company in relation to the manning decided upon by it in a case of this kind, the Union carries the onus of establishing that the work which the employee is called upon to perform on his shift is more than a fair shift's work under the conditions in which the work is to be performed. 13 What was said by Richards J above was cited with approval by Watson J in Australian Iron and Steel Pty Ltd v Federated Ironworkers Association of Australia, New South Wales Division (No 254 of 1977) and later by Hungerford J in BHP Steel (AIS) Pty Ltd - Port Kembla Restructured Ironworker Classification Rates of Pay Award (No IRC 582 of 1996). 14 In this case the Company evidence describes in comprehensive detail, the rationale behind the proposed changes and the efficiency and productivity gains it projects as a direct result of the implementation of the changes. The Union case goes in broadly stated terms, to the question whether the changes proposed by the Company have the capacity or are likely to deliver the projected gains. Apart from that and perhaps some contest as to the frequency and regularity of the occurrences on the line and the take-up rate by employees of the opportunity to actually shower during the paid shower break, there is notably little difference between the parties as to the operational features of the processing and despatch departments. 15 In my opinion, it is not to the point that the efficiency and productivity gains projected by the Company may not be achieved by the changes proposed although much forensic energy was directed by the Union towards establishing such a prospect. The rejoinder to such a proposition must be, however, that any risk of increases in line stoppages or lost productivity attributable to the proposed changes is in a sense a risk which the Company must bear and the enquiry undertaken by the Commission will necessarily be confined to whether the changes proposed by the Company would or would be likely to impose unjust or unreasonable demands on an employee and/or render their working environment inherently unsafe. On balance, I am unable to so conclude. 16 Having said that, it is plain that the loss of a paid shower break will result in some diminution of existing employment arrangements but when that is contrasted with the practical use to which the shower break is put (in that many employees do not actually shower but rather use the time as extra crib) and when one considers that the award entitlement to paid breaks is less than one quarter of what is presently being afforded to employees by custom and practice, it is difficult to resist the rationale employed by the Company in proposing the removal of shower breaks. That rationale is essentially that the more operators there are at work for more time each shift, the more efficient and productive each shift will be. I note here the further gain which is projected to come from the fact that a relief operator will no longer have to cover shower breaks thus leaving the relief operator with substantial additional time per shift to assist with other operational requirements. 17 The proposition which was implicit in the cross-examination of Company witnesses (but which was not ultimately pressed by the Union) that in some way the removal of the paid shower break would preclude the taking of toilet breaks or the proper attendance to first aid or medical needs is simply not made out on the evidence. To the contrary, the Company warranted that such unscheduled breaks are and will continue to be permitted as a normal incident of employment and that no employee will be discouraged from answering the call of nature or attending as required to first aid or other medical needs. 18 In addition to that, the operators will benefit by having thirteen senior operator positions across the despatch and processing departments in the Plate Mill at the same level of remuneration but in place of the existing eight leading hand operator positions. Present incumbents of the leading hand positions are acknowledged by the Company as being front-line candidates for the new senior operator positions and no redundancies are planned or anticipated as a result of the proposed changes. Rather, there are five additional promotional positions to which Plate Mill employees may aspire. 19 The evidence indicates that when the leading hand position was introduced some years ago in the Plate Mill, it was envisaged that it would operate as a second layer of supervision (including performance management) of employees and that it would cover supervisors absent on annual leave. Employees appointed to leading hand positions (none of whom were called by the Union) have been reluctant or have declined to carry out such functions and are not, in the result, being utilised beyond 50-70% of the time on shift. 20 The new senior operator positions will not contain those supervisory functions but at the same time, will be deployed more fully (consistently with their level of skill and responsibility) on problem-solving, record keeping, compilation of reports and so on. As earlier observed, the new positions will be remunerated at the same level as the present leading hand positions. 21 For my part, I can see no basis upon which to conclude that the implementation of the changes proposed by the Company would or would be likely to impose an unjust or unreasonable burden on employees or to render the working environment inherently unsafe. 22 To the extent that the implementation of the changes which have been the subject of consultation as required by the award, is being impeded by what is described as the status quo restriction, I am comfortably satisfied that the restriction should be removed. I note in that regard from the attachments to the statements of the Company witnesses that the Union invoked the status quo provisions of the award by letter of 12 April 2006 (see attachment PC12 to Exhibit 1 and attachment SG15 to Exhibit 3). 23 I therefore direct as the outcome of these arbitral proceedings, that the status quo restriction on the implementation of the proposed introduction of senior operator positions (including the deletion of existing leading hand positions) and on the proposed reduction in allocated paid breaks per shift, be removed forthwith. The foregoing direction represents the determination of the issues before the Commission and subject to appeal, is final and binding upon the parties. 24 It follows therefore in the context of this dispute that employees of BlueScope Steel (AIS) Pty Ltd engaged in the Plate Mill despatch department and the Plate Mill processing department should now perform work as reasonably and lawfully directed by the Company without ban, restriction or other limitation in accordance with the terms of the BlueScope Steel (AIS) Pty Ltd - Port Kembla Steelworks Employees Award 2006 and their contracts of employment. 25 The proceedings are concluded accordingly. 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.