T11345 and T11356
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TASMANIAN INDUSTRIAL COMMISSION Industrial Relations Act 1984 The Australian Workers' Union, Tasmania Branch Construction, Forestry, Mining and Energy Union, Tasmanian Branch and Pasminco Hobart Smelter (Administrator Appointed)
Industrial dispute - alleged breach of registered agreement - workgroup agreements - found not to be legally enforceable - obligation to record agreements and consult on any subsequent review REASONS FOR DECISION [1] On 19 February 2004 and 26 February 2004 The Australian Workers' Union, Tasmania Branch (AWU) and the Construction, Forestry, Mining and Energy Union, Tasmanian Branch (CFMEU), respectively, applied to the President, pursuant to Section 29(1) of the Industrial Relations Act 1984, for a hearing before a Commissioner in respect of an industrial dispute with Pasminco Hobart Smelter (Administrator Appointed) (Pasminco) arising out of the alleged breach of the Pasminco Hobart Smelter (Administrator Appointed) Agreement 2002 (the agreement). [2] The matters were listed for a conciliation conference on 2 March 2004. Mr R Flanagan appeared for the AWU and Mr M Reeves appeared for the CFMEU. Mr R West, of Minter Ellison, Lawyers, appeared with Mr M Double for Pasminco. In the subsequent hearing on 18 March 2004, Mr B Stirling appeared for the CFMEU. [3] These matters concern the standing of workgroup agreements referred to in Clause 7.7 of the agreement. Viz:
[4] This dispute had its genesis in correspondence from the AWU to the company dated 5 February 2004, which reads:
[5] The company responded by letter dated 11 February:
[6] And followed with further correspondence dated 20 February:
[7] The AWU and CFMEU lodged s29(1) applications asserting that Clause 7.7 had been breached. [8] During the conciliation conference on 2 March 2004 it became apparent that the matter was unlikely to progress until the Commission determined a threshold question as to the appropriate standing of the workgroup agreements. [9] The matter was set down for hearing on 18 March 2004 with directions for the parties to identify the question/s to be determined. [10] At the commencement of proceedings Mr West tendered the following written statement:1
[11] It was apparent however, from the ensuing submissions, that the parties had somewhat differing approaches to the question to be determined. An Historical Perspective The 1996 Agreement [12] This agreement was approved by Imlach C on 2 May 1996.2 Significantly this agreement introduced the concept of annualised salaries known as the stable income plan [SIP]. Appendix 8.4 of this agreement, "SIP Framework Document" contained in Clause 8.2 the following:
[13] I was informed that the workgroup agreements applicable to Purification3 and Electrolytic4 resulted from the process identified in Clause 8.2 above. The 1998 Agreement [14] This agreement saw the introduction of a clause relating to workgroup agreements in identical terms to Clause 7.7 in the current agreement. In a decision approving the agreement dated 11 February 19985, Imlach C noted that workgroup agreements was one of the matters to receive particular attention. [15] During proceedings Ms Rallings for the company said:6
The 2000 Agreement [16] The 2000 agreement, again containing an identical clause to the current 7.7, was approved by Imlach C in a decision dated 17 April 2000.7 The following extracts from the transcript are pertinent to workgroup agreements:8 MR COOPER (AFMEPKIU): ....
[17] This was opposed by Mr Fitzgerald (for the company) who said:9
[18] Imlach C ruled on the union application as follows:10
[19] It is fair to say that Mr Cooper strongly protested this ruling but did not persuade the Commissioner to change it. The 2002 Agreement [20] This agreement, which is the current agreement, was approved by Imlach C on 4 June 2002.11 Mr Becker for the CEPU, had this to say about workgroup agreements:12
2003 Consultations [21] The following memorandum dated 15 July 2003 from the General Manager in relation to manning levels for Electrolysis Operating Teams is also of some relevance to this issue:13
Submissions Mr Stirling, for the CFMEU: [22] The terms of the existing agreements are not cast in stone to be observed in perpetuity, but Clause 7.7 does create an obligation to enter into a process of negotiation and consultation with employees and their union. [23] The agreements cannot be unilaterally determined by the company based on the notion of changed circumstances. If current circumstances suggest that change is necessary or desirable, there is an obligation to consult. [24] Whilst not binding on the Commission, guidance can be found in the literal rule of interpretation, as explained by Higgins J in Amalgamated Society of Engineers v Adelaide Steamship Co Ltd:14
[25] In this context the crucial issue is the intention of the parties when making the agreement. On the face of the words in Clause 7.7 the clear intent of the parties was to negotiate and consult. [26] According to Statutory Interpretation in Australia, 4th Edition:15
[27] Clause 7.7 uses the word "shall", thus imposing an affirmative obligation on the company to consult. [28] If there was an intention by the Company not to be bound by the workgroup agreements, why then was the clause included when the agreement was registered in 2002? [29] There should be recognition that these are industrial arrangements, not necessarily attended by the force of common or contract law, but rather by a clear agreement between the parties to come to agreed arrangements on these matters. The strict legal approach as to enforceability is inappropriate. [30] Clause 7.7 does not require the parties to reach agreement, only to consult with the objective of reaching an agreement. [31] Clause 7.7 provides for a review in the event of changed business circumstances. It cannot therefore be said to be outside the framework of the EBA. Mr Flanagan, for the AWU: [32] The registered agreement is enforceable as if it were an Award. [33] It is well established that a requirement for consultation is an industrial matter (see FCU of Aust v Victorian Employers Federation16and Manufacturing Grocers' case17). [34] In this case we have an enabling provision requiring the parties to identify what the working arrangements are. Having agreed on the working arrangements, should there be a need to vary the agreement, Clause 7.7 imposes an obligation on the parties to consult. In the event that agreement was not reached, Clause 2.4 - Problem Solving Procedure, would be invoked. [35] The workgroup agreements are couched in terms that are not vague and are enforceable in their current terms. [36] Clause 7.7 does not require the parties to reach agreement, only enter into consultations. It is not an agreement to agree, and hence should be distinguished from the proposition raised in Masters v Cameron. [37] Clause 7.7 is an enabling provision which is not inconsistent with s.59 of the Act as it relates to variation of registered agreements. Mr West, for the company: [38] To be enforceable a workgroup agreement must be either expressly incorporated in the registered agreement, or in the alternative, the registered agreement must contain a provision requiring the parties to observe the terms of a workgroup agreement. On the language of Clause 7.7, neither of those mechanisms is employed. [39] The law does not recognise a contract to enter into a contract (See Masters v Cameron18). It follows that if Clause 7.7 is construed as an agreement to agree, it is unenforceable. [40] Clause 7.7 is no more than an expression of an intention by the parties to deal with certain matters outside the registered agreement. [41] The language of the workgroup agreements consists of bullet point headings, incomplete sentences and abbreviated statements. The documents are not written in a style that suggests they were intended to be legally enforceable. [42] In the general law contracts or agreements may fail for want of certainty (see G Scammell & Nephew Ltd v Ousten19 and Upper Country District Council v Australian Chilling and Freezing Co Ltd.20) [43] There is no evidence that it was intended by the parties to be legally enforceable. [44] The workgroup agreements have not been scrutinised, approved or registered by the Commission. To suggest that they are legally enforceable in such circumstances would mean that the Commission has abrogated its responsibilities under the Act. [45] Clause 7.7 contemplates the workgroup agreements being varied without reference to the Commission. This is inconsistent with s.59 of the Act. Findings [46] The question the Commission is asked to determine has a narrow focus. It is however unfortunate that the parties appear to have divergent views as to what the parameters of this aspect of the dispute, as outlined in Exhibit R1, actually are. [47] On the one hand the company contends that the only issue to be determined is whether or not the workgroup agreements are enforceable. That is, would a breach be capable of prosecution under criminal law. [48] On the other hand the unions presented argument as to the slightly wider issue of what legal obligations (if any) flowed from Clause 7.7 of the registered agreement. [49] In my view both constructions of Exhibit R1 are open. [50] The history of Clause 7.7 and the workgroup agreements is of interest in a contextual sense. Nonetheless the critical issue is that Clause 7.7 is a part of the 2002 registered agreement which remains on foot as of today. In this context it is largely immaterial that the company considered the workgroup agreements to be outdated as early as 1998, or that the unions' preferred position was to have the agreements registered. [51] The factual position before me is that all parties, for their own reasons agreed to include Clause 7.7 in the 2002 agreement registered by the Commission. [52] It is quite clear that the workgroup agreements are not registered pursuant to s.56 of the Act. [53] I also acknowledge Mr West's point that Clause 7.7 contemplates variation to the workgroup agreements without reference to the Commission. [54] I do not consider these two points to be fatal to the notion of enforceability, provided Clause 7.7 imposed a clear obligation on the parties to observe the terms of the workgroup agreements. For example, it is not unusual for an award or agreement to contain a term requiring the payment of regular (monthly) superannuation contributions consistent with relevant Commonwealth legislation. Such a term would in my view be legally enforceable. [55] Clause 7.7 states that "business objectives, KPIs and working arrangements shall be maintained in the form of a workgroup agreement ..." [56] In this context the word "maintained" equates with the word "recorded". Whilst an expectation that the parties would observe their own agreement can reasonably be implied in this phrase, on the ordinary and natural meaning of the words used, it is not open to conclude that the terms of the workgroup agreements are binding on the parties in a legally enforceable sense. [57] I also accept Mr West's contention that the style of a language used in the documents is not consistent with an intention to impose legally enforceable obligations. I instance for example the following in the Casting workgroup agreement:
[58] Whilst this could reasonably be interpreted as an agreed statement of intent as to manning levels, it is not in my view couched in language capable of legal enforcement. [59] For the above reasons I conclude that the workgroup agreements are not legally enforceable in the context of a failure to observe a term being capable of prosecution as a breach against the Act. [60] This finding is to be distinguished from an order made pursuant to s.31 of the Act in settlement of an industrial dispute, which is a quite different jurisdictional question. [61] There are however certain other legal obligations which flow from Clause 7.7. [62] It is clear that the word "shall" imposes an obligation to "maintain" certain identified matters "in the form of a workgroup agreement between the employees who are members of the workgroup, their union and the company". This has in fact been done and is reflected in the workgroup agreements of which Exhibits A1 and C1 are examples. [63] The second paragraph of the clause states that the "workgroup agreements may be subject to review by the parties in response to changing business circumstances". [64] Clearly this expression contemplates a review by all the parties, not the unilateral action of one party. [65] Consistent with rules of interpretation, the use of the word "may" means in my view that the parties choose whether or not there is to be a review. It cannot on the longest bow be construed as meaning that it is open to one party to conduct the review unilaterally. [66] In summary: 1. Clause 7.7 imposes a legally enforceable obligation to record certain matters in a workgroup agreement. That has been done. 2. The workgroup agreements in their current form are not legally enforceable. 3. The workgroup agreements may be reviewed by the parties, not by one party acting unilaterally. [67] I so order. [68] It must be emphasised that this decision is a reflection of the legal position as I see it. Under no circumstances should it be construed as a finding on the industrial merits of the dispute, one way or the other. [69] The files shall remain open pending further advice from the applicants.
Tim Abey Appearances: Mr R Flanagan for The Australian Workers' Union, Tasmania Branch. Date and Place of Hearing: 1 Exhibit R1 |