BlueScope Steel (AIS) Pty Ltd v Australian Workers' Union, The [2016] FWC 1345 (16 March 2016) [2016] FWC 1345 FAIR WORK COMMISSION DECISION Fair Work Act 2009 s.739 - Application to deal with a dispute BlueScope Steel (AIS) Pty Ltd v Australian Workers' Union (C2015/7468) VICE PRESIDENT HATCHER SYDNEY, 16 MARCH 2016 Application to deal with a dispute. [1] BlueScope Steel (AIS) Pty Ltd (Bluescope) has applied for the Commission to exercise the dispute resolution powers conferred upon it by clause 35 of the BlueScope Steel Port Kembla Steelworks Agreement 2015 (Agreement) to vary a departmental work agreement known as “The Coke Guide” (Coke Agreement). Relevant to this application, the Agreement provides, in summary: Clause 39.1 permits Bluescope to enter into agreements with employees in a specific department or work area concerning work arrangements to apply in that department or work area. Predecessor agreements and awards have contained an equivalent provision. Clause 39.2 provides that work practices in place as a result of departmental work agreements entered into before the Agreement took effect are not displaced or affected, and continue to apply. Under clause 39.4, extant departmental work agreements may be terminated by agreement between Bluescope and a majority of employees in the relevant department or work area and their union, or in accordance with clause 35.2 Clause 35.2 is concerned with the introduction of workplace change. Clause 35.2.1(c) provides that the criteria for the introduction of any change are whether it is safe, efficient, legal and fair. Clause 35.1.8 confers on the Commission the power to arbitrate in respect of any disputed change. [2] The Coke Agreement was entered into in 2001. It was intended to address issues of low efficiency and morale, and a poor history of safety and industrial disputation. It introduced a number of efficiency changes, the most significant of which was a change from 8-hour to 12-hour shifts. It also involved improvements in remuneration, manning and training. There is no dispute that it delivered significant savings to Bluescope. [3] Clause 15.1.1.3 of the Coke Agreement required the performance of “hot seat changeovers”. This was defined as “relieving on the job (i.e. on the machine) by shift starting time”. Their purpose was to maintain the pushing schedule on the coke batteries across changes of shift, and they were said to “provide the opportunity for each team member to receive a personal shift handover improving the information sharing within and between shifts”. Employees were required to relieve on the job (that is, the machine) by the shift starting time, and to remain responsible for their machine or process until relieved. [4] Clause 15.3 of the Coke Agreement established a system of annualised salaries for employees. These salaries built in an assumed 5 hours overtime per week, of which 1.6 hours was assigned to hot seat changeovers. Although not expressly stated in the Coke Agreement, part of this 1.6 hours was to compensate for shower time. There is no dispute that the environmental conditions of the Cokemaking Department require that employees shower before leaving the site. [5] In 2010 there were further substantial changes in the Cokemaking Department which involved agreed modifications to the Coke Agreement. In addition to reductions in staffing levels and the amount of training days, the overtime element of the annualised salaries was reduced from 5 to the 1.6 hours per week paid to compensate for hot seat changeovers and shower time. [6] In 2015, as part of the memorandum of agreement (MOA) entered into to prevent the closure of the steelworks (clause 4.1), there was an agreement to abolish all pre-paid overtime, including pre-paid overtime arrangements in departmental agreements. The Agreement which was subsequently made reflected the terms of the MOA. During the process of seeking employee approval for the Agreement, a dispute arose about whether the agreement to abolish pre-paid overtime encompassed the 1.6 hours per week payment in the modified Coke Agreement. In a Recommendation issued by me on 25 November 2015, subsequent to the approval of the Agreement by the Commission, I expressed the view that clause 4.1 did not apply to the hot seat changeover payment in the Coke Agreement, and that if Bluescope wished to vary or terminate the Coke Agreement in order to remove the hot seat changeover payment it would need to utilise the dispute resolution procedure under the Agreement. That conclusion was based upon the following reasoning set out in the Recommendation: “[23] ... Pre-paid overtime is a fixed payment which is payable for overtime which may or may not in fact have to be performed and which in current circumstances is almost never justified by the amount of overtime actually worked. The hot seat changeover in the Cokemaking Department always has to be performed, and the payment is, in effect, a fixed advance estimate of the time necessary for this to be undertaken... Therefore I consider that clause 4.1 of the MOA does not apply to the hot seat changeover in the Cokemaking Department. The departmental agreement continues to apply under clause 5 and Annexure D of the MOA. If Bluescope wishes to alter this, it will be necessary to follow the procedure for varying or ending departmental agreements under clause 39.4 of the enterprise agreement. In that connection, there will need to be consideration as to whether 15 minutes constitutes a reasonable time estimate for carrying out a hot seat changeover ...” [7] The existing payment provided for in the Coke Agreement amounts to 30 minutes pay for each 12 hour shift worked, calculated at the relevant overtime rate. The variation to the Coke Agreement proposed by Bluescope would reduce this to a 15 minute payment to compensate for shower time only. This reduction was actually implemented on 10 January 2016, so the practical question is whether the payment should be restored. [8] As earlier stated, the criteria applicable to consideration of Bluescope’s proposal are whether it is safe, efficient, legal and fair. The Australian Workers’ Union (AWU), as the opponent to the implementation of the proposed change, bears the burden of demonstrating that it is not safe, efficient, legal or fair. 1 [9] The first three criteria do not require extensive consideration. I do not consider that there is any basis to conclude that the change would not be safe, since it involves changes only to remuneration and not work practices. In relation to legality, the AWU submitted that a requirement to perform hot seat changeovers in overtime on an unpaid basis would not be reasonable and would therefore contravene s.62 of the Fair Work Act 2009 (FW Act) as well as clause 39.4 of the Agreement. However, if the hot seat changeover payment is abolished, I would expect that Bluescope would comply with all the provisions of the Agreement relevant to payment for overtime. Bluescope confirmed in its submissions that it would. If there were to be any dispute as to whether any employees in the Cokemaking Department were being paid in accordance with the Agreement, the AWU could utilise the dispute resolution procedure in clause 35 of the Agreement or institute proceedings in an appropriate court to enforce the applicable provisions of the Agreement. I am therefore satisfied that the change would be legal. [10] In relation to efficiency, the evidence was that the change would save Bluescope $300,000 per annum. All other things being equal, that would constitute a significant gain in cost efficiency. However it was at least implicit in the AWU’s case that the introduction of the change, with the corresponding reduction in remuneration, might cause employees in the Cokemaking Department to cease cooperating in the flexible and self-guided work practices which are a feature of the current shift changeover system and strictly “work to the clock” to ensure that they did not perform any work in unpaid time, and that this would cause a loss of efficiency. I consider that there are three answers to this proposition. The first is that, provided Bluescope pays employees in accordance with the Agreement, I am confident that employees would accept the decision of the Commission and not engage in such conduct. Second, the flexibilities inherent in the current system, including in relation to shift start and finish times and the ability to occasionally leave early when the pushing schedule permits, would make it against employees’ own interests to depart from it. Third, I consider that conduct of this nature would constitute industrial action as defined in s.19(1)(a) of the FW Act (“ the performance of work by an employee in a manner different from that in which it is customarily performed ... the result of which is a restriction or limitation on, or a delay in, the performance of the work ”) which would not be protected and therefore amenable to an order under s.418(1) that it stop. I consider that the change would be efficient. [11] That leaves the question of fairness. The major issue in this respect raised by the AWU was that it would be unfair for Bluescope to retain all the savings and efficiencies achieved by the Coke Agreement but for employees to lose what they gained from it in return. Whilst in normal circumstances that submission might have some weight, the extremely difficult commercial situation which currently exists and is likely to exist for some time means that the submission cannot be accepted. To the extent that the current payment arrangement for hot seat changeovers involves payment for time that is not actually worked, that is a cost inefficiency which cannot be allowed to continue. Such cost inefficiencies were removed from all other parts of the steelworks as a result of the MOA, and were earlier substantially removed from the Cokemaking Department by the agreed changes to the Coke Agreement in 2010. It will not be fair to anyone in the longer term if inefficiencies in the steelworks’ cost structure prevent it from being as commercially competitive as it might otherwise be, with a consequent elevated risk to jobs. [12] I consider that the major issue relevant to the criterion of fairness is, as stated in my Recommendation of 25 November 2015, the extent to which the 15 minute hot seat changeover payment is justifiable on the basis of the time actually necessary to effect the changeover. If the existing payment represents a reasonable approximation of the time it takes, in addition to the 12 hour shift and the 15 minute shower time, to complete the changeover then, I consider it would be unfair to remove it. [13] In dealing with this issue, it is necessary to identify the various functional groups in the Cokemaking Department. They are as follows: (1) 5 Battery : employees consist of charger and ram drivers. (2) 6 Battery : employees consist of charger and ram drivers, general purpose operators (GPOs) and relief (across both 5 and 6 batteries). (3) 7 Battery : employees consist of charger, ram and extractor drivers, GPOs/operations assistants (OAs), and relief. (4) Gas Processing . (5) Regulators. (6) Coal and Coke Handling. [14] Evidence in relation to current changeover practices was given on behalf of Bluescope by Ross Schuback, the Coke Plant 2 (7 Battery) Operations Manager, and on behalf of the AWU by Mr Gregg Davies, a GPO/OA on 7 Battery, Mr David Bevan, a machine operator (ram and charger) on 5 and 6 Batteries, and Mr Jonathon Nelse, OA on 7 Battery. [15] The evidence demonstrated that, despite all employees in the categories set out above having received the hot seat changeover payment, many of them did not actually perform a hot seat changeover. The Coke Agreement, as earlier quoted, proceeded on the basis that a hot seat changeover involved relieving on the machine or process in order to maintain the continuity of the pushing schedule across the change of shifts. Only the charger, ram and extractor drivers relieve on a machine in the strict sense, and in addition it appears the gas processors are relieved at their stations, the regulators are relieved on the batteries, and the coke handling operators are relieved at the screen house. In the other cases (GPOs, OAs, and coal handling) there is a handover carried out at the crib room, bathroom or the car park. While there is no doubt operational value in such a handover, it does not in my view constitute the hot seat changeover contemplated by the Coke Agreement. That makes the continuation of the payment for GPOs, OAs and coal handling operators strongly problematic. [16] It was Mr Schuback’s evidence that the regulators and coke handling operators are nearly always able to take their shower during shift time, so that they are already showered when they conduct their handover. This evidence was not contradicted by the AWU. In their case therefore the payment of 15 minutes shower time, in circumstances where no time additional to the 12 hours’ paid shift time is usually spent actually having a shower, would be ample to compensate for any time spent conducting the changeover. Mr Schuback estimated this to be 4-5 minutes in the case of the regulators and 2 minutes in the case of the coke handling operators, but even if it took a full 15 minutes the same proposition would apply. Therefore I do not consider that there is any basis to retain the 15 minute hot seat changeover payment, for regulators and coke handling operators. [17] In relation to the other categories of employees, the evidence varied as to how long their hot seat changeover or handover took. Mr Schuback’s evidence was that the “likely duration” of the handover was not more than 2 minutes. However it is unclear the extent to which this was based on direct observation, or on reports from others, or was simply an estimate of how long it should take. The AWU witnesses gave evidence based on their own experience as to how long each handover took. The times they described ranged from 2 minutes to 20 minutes, with 5-10 minutes being said to be the most common time (noting that they described handovers occurring at both ends of the shifts). There is no suggestion that any of the AWU witnesses had undertaken a time and motion study of the process, and the times they gave involved a large degree of estimation. The evidence given on both sides was also no doubt self-serving to a certain degree. [18] The evidence which I found most persuasive was that given by the AWU witnesses concerning the total length of their working day. Mr Davies, a GPO/OA described himself, typically, as changed and ready to start work at the bathroom at the beginning of the shift at about 5.30, and having showered and ready to go home at the end of the shift at about 5.40. That is a total working day of 12 hours and 10 minutes. From this should be deducted the approximately 10 minutes in total (5 minutes each way) which it takes Mr Davies to drive from the bathroom to 7 Battery and back, which it is accepted is not paid time. Mr Nelse, also an OA, described commencing his handover at the bathroom at the beginning of the shift at about 5.20, and being showered and ready to leave at the end of the shift at about 5.45. This gives a total day of 12 hours and 25 minutes, from which a similar 10 minute deduction should be made. In neither case does it appear that any payment in addition to the 15 minutes shower payment is justified. I would assume that Mr Davies and Mr Nelse were representative of GPOs and OAs generally who, as earlier stated, do not in any case carry out hot seat changeovers in the proper sense. I also note the evidence of Mr Bevan, who said that when he performed the work of a GPO on 5/6 Battery the handover took place in the crib room and only took 2-5 minutes. I therefore do not consider that there is a case for retaining the hot seat changeover payment for GPOs and OAs. [19] The position described by Mr Bevan in relation to the work of a machine operator on 5/6 Batteries was quite different. His evidence was that he was ready for work at the bathroom at the beginning of the shift at about 5.30, but was not showered and ready to leave for home until about 6.20. Once a deduction is made for the walk from the bathroom to the battery and return, which in his case might take up to 10-20 minutes in total, there is a working day of 12 hours and 30 or 40 minutes in total. I again proceed on the basis that Mr Bevan’s evidence is representative of machine operators on all batteries, and I note that neither party suggested I should proceed otherwise. The evidence tends to demonstrate that for machine operators - that is ram, charger and extractor drivers - the payment is justified. [20] Bluescope pointed to the fact that, on 5 and 7 Batteries, the pushing schedule sometimes provided for “block breaks” to occur at the shift changeover time, meaning that employees could leave early. Bluescope estimated this occurred on about 30% of shifts. Mr Bevan’s evidence was however that delays in the pushing schedule meant that, in practice, only in a small proportion of that 30% of shifts was an actual early departure possible. Having regard to this evidence, I do not consider the occasional capacity to leave early vitiates the conclusion that the hot seat changeover payment remains justified for machine operators. I consider it would therefore be unfair to deprive them of the payment. [21] That leaves the gas processing operators and the coal handling operators. The former group, as earlier stated, actually carry out a hot seat changeover, and are required to do so on 100% of the shifts. Mr Schuback included them in the estimate of 2 minutes to carry out a changeover, but it is apparent that his evidence in this respect was not based on any direct observation or experience of their work. I am prepared to proceed on the basis that for gas processing, the position is similar to that of machine operators. By contrast, Mr Schuback’s evidence about the coal handling operators appeared to be based on direct observation. As earlier stated, his evidence was to the effect that they do not actually do a hot seat changeover, but rather they do a handover in the car park which usually took a couple of minutes. That evidence was not contradicted. I do not consider that there is any justification for retention of the hot seat changeover in their case. [22] My conclusion is therefore that the change to the Coke Agreement proposed by Bluescope, namely the abolition of the 15 minutes overtime payment for the hot seat changeover, is fair except in relation to the machine operators on 5, 6 and 7 Batteries and the gas processing operators. For these latter employees, I consider that the payment is justified and to permanently remove it would be unfair. [23] This conclusion does not align with the primary position of either party. I also note the alternative position advanced by the AWU to the effect that it would prefer to retain a reduced payment for all employees rather than have some employees keep it and others not. In that connection I accept that issues concerning employee morale and efficiency in the administration of the payment may arise if the payment remains for some and not others. [24] I consider that the appropriate course at this stage is to direct the parties to confer in relation to the conclusions I have reached and as to whether those conclusions should be implemented by way of machine operators on 5, 6 and 7 Batteries and the gas processing operators retaining the payment and other employees foregoing it, or by a reduced payment across the board. [25] The parties are further directed to provide a report as to the outcome of the discussions to my chambers in 14 days. If there is an agreed outcome, I will implement it. If there is not, I will determine a final outcome. VICE PRESIDENT Appearances : K. Brotherson solicitor with J. Fitzgerald and R. Nasta for BlueScope Steel (AIS) Pty Ltd. J. Blaxland and W. Phillips for the Australian Workers' Union. Hearing details: 2015. Sydney: 12 February. 1 BlueScope Steel (AIS) Pty Ltd v Australian Workers' Union and others [2015] FWCFB 5615 at [7] Printed by authority of the Commonwealth Government Printer <Price code C, PR577571>