Industrial Relations Commission New South Wales Medium Neutral Citation: Australian Workers Union v BlueScope Steel (AIS) Pty Limited [2011] NSWIRComm 1018 Hearing dates: 18 April, 2011 Decision date: 26 May 2011 Jurisdiction: Industrial Relations Commission Before: Connor C Decision: Application for recalculation of a component of the annualised salary for employees rejected Catchwords: ANNUALISED SALARY - steelworks - hot strip mill - referral of an industrial dispute - application for recalculation of a component of annualised salary - wage fixation principles - equity - question of estoppel - laches - application rejected Legislation Cited: Industrial Relations Act 1996 Federal Fair Work Act 2009 Federal Workplace Relations Amendment (Work Choices) Act 2005 Cases Cited: Erlanger v New Sombrero Phosphate Company (1878) 3 App Case 1218 Holy Family School Dismissal Case (1975) AR 991 Hot Strip Mill Work Value Case - [2008] NSWIRComm 1071 Irvine v Shell Company of Australia Limited (1969) AR 187 New South Wales v Commonwealth of Australia (2006) 156 IR 1 Category: Principal judgment Parties: Australian Workers Union (Applicant) BlueScope Steel (AIS) Pty Limited (Respondent) Representation: Boris Baraldi Australian Workers Union Ken Brotherson Duncan Cotterill Lawyers File Number(s): IRC 1226 of 2010 DECISION PRELIMINARY 1Pursuant to the provisions of S.146B of the Industrial Relations Act 1996 , the Australian Workers Union has lodged a notification of an industrial dispute with BlueScope Steel (AIS) Pty Limited. The dispute concerns the calculations for public holidays for employees engaged by BlueScope Steel in the hot strip mill. The AWU argues that the calculations for public holidays for HSM employees on shifts (and on annualised salaries) is incorrectly calculated. 2The matter was allocated to me. I set it down for a conference on Wednesday, 10 November, 2011, Tuesday, 30 November, 2010 and Monday, 7 February, 2011. Conciliation failed to settle the matter. I programmed it for arbitration in a hearing on Monday, 18 April, 2011. All proceedings concerning this matter were convened in the Commission's premises at 90 Crown Street, Wollongong. In the hearing Mr Baraldi represented the AWU and Mr Brotherson represented BlueScope Steel. The matter proceeded on the written and oral submissions given by the parties. 3Whilst, of course, BlueScope Steel is a trading corporate within the meaning of S.51(xx) of the Commonwealth Constitution [ New South Wales v Commonwealth of Australia (2006) 156 IR 1], industrial disputes involving it in its Port Kembla steelworks operations have not been dealt with under the federal Workplace Relations Amendment (Work Choices) Act 2005 and the federal Fair Work Australia Act 2009 which has replaced it. The steelwork operations of BlueScope Steel have for some time been covered by a protocol by which industrial disputes are dealt with, initially by conciliation but ultimately, if necessary, by arbitration, by members of the State Commission. That protocol is now reinforced and facilitated by s.146B of the State IR Act (complimented by ss.738 and 740 of the FW Act). THE ISSUE 4Employment arrangements in place in the HSM from the middle of 2005 (with an agreement reached between the AWU and BlueScope Steel at that time formalised in the "HSM Work Redesign Implementation Document") were replaced on Friday, 29 October, 2010 (when a fresh agreement was reached between the AWU and BlueScope Steel formalised in the "HSM Business: Building a Future Together - Operating Document"). Mr Baraldi 's claim appears to have emerged in the light of a restructuring of the HSM shift crews in the period covered by the 2005 agreement. It is the AWU claim for what Mr Baraldi describes in his submissions as the "...restitution of monies owed..." to the HSM shift crews flowing from the 2005 restructure. 5However, Mr Brotherson argues that the claim now made on behalf of the HSM shift crews is misconceived and he sees the AWU claim as only "...historic in nature..." and not reflected by current employment conditions in the HSM. Mr Brotherson indicated in his written submissions that the 2010 agreement was the culmination of extensive discussions between the AWU and BlueScope Steel. He commented that at no time during the period between the 2005 agreement and the 2010 agreement, did the AWU raise the current issue now in dispute. 6The HSM shift crews are covered by the terms of the BlueScope Steel (AIS) Pty Limited Port Kembla Steel Works Employees Award (a preserved State agreement under the FW Act). As I indicated earlier in this decision, the HSM shift manufacturing crews are engaged on an annualised salaries package, consistent with many other BlueScope Steel employees in the Port Kembla steelworks, and those annualised salary arrangements are a feature of both the 2005 agreement and the 2010 agreement. They have not been formalised as a variation to the BlueScope Steel Award, however. 7Annualised salary arrangements for employees of BlueScope Steel are inclusive of all conditions of employment (as distinct from employees on an aggregate salary which contains compensation for some issues but excludes other issues, such as work on public holidays or overtime.) The annualised salaries of the HSM shift crews contain components to compensate for a range of issues - a base salary, payment for public holidays, weekend penalties, a shift allowance, payment for additional hours worked. Those components are set out in a number of steps - Step 1 to Step 8 - in the 2005 agreement. Relevantly, Step 2 provides: "The public holiday payment is 116 (hours per year) x base hourly rate." 8Also employees on annualised salary arrangements may receive bonus payments under the lump sum payment scheme provided in the BlueScope Steel Award [Clause 44]. 9As I see the position, Mr Baraldi 's claim refers essentially to the negotiations which culminated in the 2005 agreement for the HSM employees (in which he was involved as AWU delegate for the HSM employees at that time). In written submissions Mr Baraldi commented that: "....at the conclusion of the negotiations, the parties had reached agreement on all elements of the salary package arrangements with the exception of the public holiday payment. Agreement had not been reached between the parties in respect to what the correct hours of public holiday should be paid under the new agreement. The parties agreed to continue discussion with the object of reaching a position within the first six months of the new agreement rather than defer implementation. This arrangement between the parties, including additional outstanding matters, is the subject of official written minutes..." 10But he adds in his written submissions: "...The parties did not revisit the question of the public holiday payment and what the correct hours should be. There were many distractions at the time, including but not limited to the introduction of the second walking beam furnace and other major capital improvement works. A work value claim by the HSM operator group ultimately further distracted the parties, further exacerbated by the departure of the incumbent HSM throughput manager...in late 2006 and subsequent replacement...in January of 2007... The matter of the public holiday payment came back on the radar during the next restructure of the HSM shift employees. The restructure commenced in May, 2010 and a claim by the HSM shift employees in respect to the public holiday payment was placed before the company in July, 2010. The initial claim made during those negotiations by the HSM employees maintained that in 2005 all of the salary components had been calculated, with the exception of the public holiday that remained outstanding..." 11Mr Baraldi now seeks to revisit that issue with the current AWU claim before me in this hearing. In particular, he points out that the restructuring which took place in 2005 involved changes to the shift roster system for the employees from five crews to four crews and therefore a different roster pattern arose as a consequence. Mr Baraldi argues that with that change employees would be expected to be exposed to being rostered for more weekend and public holiday work than would have formerly been the case, ie where the spread of their rostered shifts would make them more frequently available for public holiday work as a matter of course. Mr Baraldi argues that the change justifies a reappraisal of the public holiday component of the annualised salaries. 12In his written submissions Mr Baraldi indicated that during the review period: "....The shift employees' annualised salary components dealing with the additional hours shift allowance payment were reduced. The additional hours component was reduced from 6 hours per week to 4 hours per week and the additional hours shift allowance reduced accordingly. This resulted in an overall reduction of the shift employees' salary..." 13And Mr Baraldi argues in his written statement that those changes justify a recalculation of the public holiday component to the annualised salary, viz: "...The company calculation of both the additional hours component and the additional hours shift allowance effectively opened all of the remaining annualised salary arrangements for review..." 14But the question remains whether that reappraisal is open to the AWU at this point of time: Mr Brotherson argues that it is not. He claimed that the right to reopen the annualised salary arrangement does not exist in the first place but, if it did, it has now been extinguished and/or the AWU is estopped from mounting the claim. Mr Brotherson submitted that the AWU claim in this hearing concerning annualised salary arrangements were a feature of the 2005 agreement and, whilst those arrangements were "rolled over" for the 2010 agreement, the power to review them was confined to the period of the 2005 agreement, ie from the middle of 2005 to the middle of 2010. CONCLUSION 15Firstly, I have to consider this AWU claim in the context of the current wage fixation principles. The fact that the BlueScope Steel protocol and s.146B authorises me to consider this matter and arbitrate the AWU claim does not mean that I am authorised to exceed my jurisdiction under the State IR Act as a member of the State Commission or the wage fixation principles which bind the parties in the State industrial jurisdiction - and me. 16To start with, Clause 5, No Extra Claims, of the BlueScope Steel Award provides as follows: "It is a term of this award that the unions (with whom this award is made) undertake, for the period until the nominal expiry term of the award, not to raise any further claims, award or overaward, including claims arising from national or State wage cases. There will be agreed scope to arbitrate, if necessary, unresolved issues about classification restructuring or work value claims." 17The outcome that Mr Baraldi is seeking in this hearing is essentially a readjustment of the annualised salary that the HSM employees currently receive. The AWU has already mounted a claim for an increase in wages for HSM operators based on work value considerations (permitted by Clause 5) which I addressed in my decision of Tuesday, 30 September, 2008 in the Hot Strip Mill Work Value Case [2008] NSWIRComm 1071. Whilst the issue of the annualised salaries was referred to in that decision (para.36), it was not contemplated as an issue to be factored into the work value assessment made. Looked at in isolation, the current claim before me appears to primarily be an overaward claim for a wage increase and as such outside what is permitted under Clause 5. 18Instead, Mr Baraldi had relied in that respect on the reviews available to the annualised salary arrangements flowing from the 2005 agreement. There were several opportunities for that review under the 2005 agreement. The terms of that 2005 agreement, which provided for the review of the public holiday component of the annualised salary for the hot strip mill employees, would take the matter outside the "no extra claims" commitment made by the AWU on behalf of its members covered by the BlueScope Steel Award. 19However, there were time limits imposed on that review. For instance, a review of the public holiday component in the annualised salaries under the 2005 agreement was available during the first six months (a "green inking period"). In that respect the 2005 agreement [Clause 19.1] provided: "During the first six months of this agreement (green inking period) a review will be conducted to determine whether to remain on the current pay package or change to a new arrangement which will be based on the principle of being paid for the amount of time actually worked, especially weekend and public holiday penalty hours." 20The 2005 agreement was also open to a further review, including the annualised salary arrangements in it, after a period of two years [Clause 19.2] and a consultative committee was set up to meet regularly to review the 2005 agreement - which it did. The 2010 agreement, which replaced the 2005 agreement, made no such provisions, however. The annualised salary arrangements under the 2005 agreement were simply "rolled over" into the 2010 agreement. 21Nevertheless, it is Mr Baraldi's claim that the public holiday component in the annualised salary should now be revisited and "recalculated". Mr Brotherson rejects that claim, pointing out in written submissions that: "...when the parties made the 2010 agreement they agreed to continue the annualised salary formula from the 2005 agreement. Therefore, the very public holiday and weekend component which the AWU now claims should be re-visited for the period from March, 2005 to September, 2010 continue unchanged with the 2010 agreement..." 22Mr Brotherson submitted that the AWU claim in this hearing is, in fact, inconsistent with the express terms of the 2005 agreement (and the 2010 agreement) and ignores the fact that reviews of the annualised salaries had already taken place. He asserts that the AWU was seeking to "cherry pick" one aspect of the annualised salary for the HSM crews. The annualised salaries were to that extent a total package arrangement and should be seen as such - and the reviews conducted under the 2005 agreement contemplated that. 23As Mr Brotherson highlighted in his written submissions, in terms of s.163(1)(c) I act "...according to equity, good conscience and the substantial merits of the case...", ie the Commission essentially considers the rights in equity of the parties coming before it. That means the adoption of a broad approach of common sense and fairness, eschewing all legal or other technicalities. But, to my mind, it also means that I should have regard to the customary rules applying generally in equity jurisdictions. Two issues emerge in that respect. 24Mr Brotherson submitted that the AWU was indeed now estopped from arguing for a recalculation of the public holidays component of the annualised salary for the HSM shift crews. The AWU was active in the review process under the 2005 agreement but at no time did it raise in issue the current claim it now makes. Instead, Mr Brotherson argues that the AWU is attempting to establish an entitlement for an increase in a salary six years later. Mr Brotherson takes the view that the AWU must be seen as having addressed the issue it now raises in these proceedings within the reviews contemplated in the 2005 agreement. He commented in his written submissions that the AWU "...should properly be seen as having long ago abandoned or lost any right to claim the particular review of the annualised salary of the type it now does...". In that respect, he referred to the unreported decision of the Full Bench of the Commission (Cahill J - Vice President, Hill and Marks JJ) on Friday, 26 September, 1997 in Payne v Howison [Matter No.IRC 5432, 5433 and 5434 of 2006 at pp.22 to 26] 25Also to my mind an issue of significance in this hearing is the question of delay on the part of the AWU in pursuing the claim it now makes. As Sheehy J of the former State Industrial Commission held in Irvine v Shell Company of Australia Limited (1969) AR 187 at p.189 it is appropriate to have regard to equity law with respect to laches . That is to say, equity aids the vigilant and not the indolent - vigilantibus, non dorientibus, iura subveniunt [ Erlanger v New Sombrero Phosphate Company (1878) 3 App Case 1218 at p.1279]. 26In the Holy Family School Dismissal Case (1975) AR 991 Dey J of the former Commission, having regard to the requirement for members of the Commission to act "...in equity and good conscience...", commented (at p.997): "....I do not consider that a case such as this under the general arbitral powers ought to be determined by a too rigid application of the precise terms in which the doctrine of laches has been expounded by the equity courts, but undoubtedly the delay in bringing the proceedings is a matter proper to be taken into account..." 27But I conclude, in fact, that the AWU has slept on its rights in the matter before me. Negligence or unreasonable delay in asserting or enforcing a right in equity customarily extinguishes it: a court of equity has always refused its aid to stale demands - and the AWU claim before me in these proceedings is stale, in my opinion. It is made well outside the review period permitted under the 2005 agreement. 28I would not wish those comments to in any way be taken as a criticism of the AWU in these proceedings but the claim now mounted by it should also be considered from the point of view of BlueScope Steel which I believe was entitled to take the view that this matter was not something now open for reassessment. For those reasons, I see no justification for the AWU claim in this hearing and I dismiss it. 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. Decision last updated: 26 May 2011