SUBMISSION TO THE FAIR WORK ACT REVIEW
PANEL
Dave Sproule, General Manager Employee Relations
17 February 2012
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(electronic or otherwise) without the specific written consent of Woodside. All rights are reserved.
Submission to the Fair Work Act Review Panel
Table of Contents
1.
INTRODUCTION
3
1.
ABOUT THE WOODSIDE GROUP
3
1.1
PEOPLE
4
1.2
MAJOR PROJECTS
4
1.3
DEVELOPMENTS
5
2.
EXPERIENCE OF WORKPLACE RELATIONS UNDER THE ACT
5
2.1
BARGAINING - PLUTO LNG PROJECT
5
2.2
BARGAINING - KARRATHA GAS PLANT
7
2.3
RIGHT OF ENTRY - PLUTO LNG PROJECT
7
2.4
RIGHT OF ENTRY - KARRATHA GAS PLANT
8
2.5
UNPROTECTED INDUSTRIAL ACTION AT PLUTO
8
3.
UNSATISFACTORY OUTCOMES IN INDUSTRIES IN WHICH WOODSIDE'S
CONTRACTORS OPERATE
9
3.1
UNSUSTAINABLE WAGE CLAIMS
9
3.2
BARGAINING REPRESENTATIVES
10
4.
ISSUES WITH THE ACT
10
4.1
AGREEMENT MAKING
10
4.2
CONTENT OF AGREEMENTS
11
4.3
RIGHT OF ENTRY
11
4.4
INDUSTRIAL ACTION
11
5.
THE ACT IS NOT OPERATING IN ACCORDANCE WITH ITS OBJECT
12
6.
SUGGESTED IMPROVEMENTS
12
6.1
EXPANDED AGREEMENT OPTIONS TO FACILITATE EFFECTIVE AGREEMENT
MAKING
12
6.2
IMPROVED BARGAINING RULES
13
6.3
LIMITATION ON THE CONTENT OF AGREEMENTS
13
6.4
PROTECTED INDUSTRIAL ACTION
14
6.5
UNLAWFUL INDUSTRIAL ACTION
15
6.6
RIGHT OF ENTRY
15
6.7
UNION REPRESENTATION
15
7.
CONCLUSION
16
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1.
INTRODUCTION
Woodside Energy Ltd (Woodside) welcomes the opportunity to make a submission to the Fair
Work Act Review Panel, as we consider the effective operation of Australia's workplace
relations system to be critical to the continuing viability and success of our business. The
legislative framework governing workplace relations is a significant factor in Woodside's
further investment decisions, and continued contribution to the Australian economy.
In this submission Woodside provides evidence of our own experience, and the experiences
of Woodside's contractors, of the industrial relations framework under the Fair Work Act 2009
(Cth) (Act). Woodside identifies a number of unsatisfactory outcomes, which have arisen as
a result of shortcomings of the Act and which demonstrate that the Act is not currently
operating in accordance with its objects. Finally, Woodside suggests a number of ways in
which the Act could be improved to address the identified problems, and better meet the
object of the Act.
1.
ABOUT THE WOODSIDE GROUP
Woodside is the largest operator of oil and gas production in Australia. We are also
Australia’s largest independent dedicated oil and gas company. Throughout Woodside’s 57
year history, we have strived for excellence in our safety and environmental performance and
we aim to ensure that wherever we operate, the community benefits from our presence.
Woodside produces around 700,000 barrels of oil equivalent each day from an extensive
portfolio of facilities which we operate on behalf of some of the world’s major oil and gas
companies. Our operated facilities include six liquefied natural gas (LNG) trains1, four
offshore platforms2 and four oil floating production storage and offloading (FPSO)facilities. To
build them today would cost more than US$80 billion.
We are the most active exploration company in the deepwater provinces of Australia, having
participated in around 40% of Australia’s deepwater exploration wells. We have been
operating our landmark Australian project, the North West Shelf Project, for more than 27
years and it remains one of the world’s premier LNG facilities. Woodside is one of the world’s
largest non-government operators of LNG plants.
The natural gas we produce and market, helps meet the demand for cleaner energy from our
customer countries, including Australia, Japan, China, Republic of Korea and other countries
in the Asia Pacific region.
In 2012, Woodside will begin production from the Pluto LNG Project. At full capacity, it will
add more than 100,000 barrels of oil equivalent a day to our operated production. We are
seeking to expand the Pluto facilities and build new standalone projects including our Browse
and Sunrise LNG developments.
Woodside’s contribution to the Australian economy is significant. In 2010 Woodside’s total
expenditure was approximately US$4.5 billion. Of this amount, approximately 83% was spent
in Australia on materials, goods and services purchased, employee payroll and training, and
capital and exploration expenditure. In addition more than US$1.1 billion was paid in
royalties, excise and taxes to governments, most of which was paid to the Australian
Government.
Woodside also delivers broader societal benefits by employing people, paying wages,
investing in the skills of its people, paying taxes to governments, purchasing goods and
1
Five LNG trains in operation and one in the commissioning phase.
2
Three platforms in operation and one in the commissioning phase.
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services through its supply chain and producing products that satisfy the needs of its
customers.
1.1
People
Woodside directly employs more than 3,800 employees in Australia. In addition, many
thousands of employees are engaged by contractors in Woodside operations in Australia.
Woodside's workplace culture has developed from core principles of strong performance, care
and respect, integrity and trust, initiative and accountability, creativity and enterprise, and
working together.
Woodside has a history of innovative workplace arrangements, including the establishment of
market leading terms and conditions for its employees, and utilisation of a wide range of
industrial agreement making options under prevailing legislation, including some of the first
enterprise flexible agreements under the Industrial Relations Act 1988 (Cth).
Woodside's approach to workplace relations is not driven by a particular ideology, but by
finding practical solutions that benefit all stakeholders.
Woodside has traditionally
approached workplace relations with a view to working cooperatively with employees and their
representatives. For example, Woodside has demonstrated a willingness to engage with
unions to deliver continuity of operations and supply. Woodside is also a party to a number of
industrial agreements, including agreements which involve union parties.
1.2
Major Projects
North West Shelf Project
Woodside is one of six participants in Australia's largest oil and gas resource development,
the A$27 billion North West Shelf Project. The project is located in the Carnarvon Basin on
Australia's North West Shelf. It currently accounts for approximately 40% of Australia's oil and
gas production and generates revenue equivalent to approximately 1% of Australia's GDP.
Woodside operates the Karratha Gas Plant on behalf of the North West Shelf Venture. The
Karratha Gas Plant is located 1,260km north of Perth, Western Australia. It consists of five
LNG processing trains, two domestic gas trains, six condensate stabilisation units, three
fractionation units and storage and loading facilities for LNG, liquefied petroleum gas and
condensate.
The North West Shelf Project's offshore production facilities include the North Rankin A and
Angel platforms, and the oil producing Okha FPSO facility. Hydrocarbons from the offshore
production facilities are transported to the Karratha Gas Plant for processing via two subsea
pipelines. Oil produced from the Cossack, Wanaea, Lambert and Hermes fields is processed
offshore on the Okha facility.
Approximately 1,000 people are employed by Woodside or its contractors at the Karratha Gas
Plant onshore operations, North West Shelf Venture offshore operations and at offices in
Perth. In addition, approximately 450 mariners are employed on the North West Shelf
Project's LNG shipping fleet.
Pluto LNG Project
The Pluto gas plant is located near Karratha, Western Australia. The project was approved
for development in July 2007 and construction started in November 2007.
The first LNG cargo from Pluto is targeted for March 2012. Gas will be piped in a 180km
trunkline to the onshore facility, located between the North West Shelf Project and Dampier
Port on the Burrup Peninsula.
The offshore facilities at Pluto currently comprise an offshore platform which is connected to
five subsea wells on the Pluto gas field. The onshore facility comprises the plant and
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associated infrastructure, a single LNG processing train and storage and loading facilities,
including two LNG tanks and a condensate export jetty.
The Pluto LNG Project involved approximately 15,000 workers during construction with a peak
workforce of around 4500, and it is expected that approximately 300 workers will be employed
by Woodside or its contractors during operations.
Australia Oil
Woodside’s oil fields (owned and/or operated) in the Exmouth Basin, North West Shelf and
the Timor Sea produced 19.7 million barrels of oil in 2010 – about 27% of Woodside’s total
production.
Woodside owns and operates four FPSO facilities and also holds a minority stake in the
Mutineer-Exeter oil fields north of Dampier.
1.3
Developments
Woodside’s future developments include the expansion of the Pluto LNG Project, and two
stand-alone LNG projects – Browse in Australia’s Kimberley region and Sunrise off the
northern coast of Australia.
2.
EXPERIENCE OF WORKPLACE RELATIONS UNDER THE ACT
Woodside has considerable direct experience of workplace relations processes and outcomes
since the commencement of the Act. Woodside has not traditionally sought to rely on
legislation dealing with employment related matters in setting our preferred approach to direct
engagement of our people and our workplace relations generally. However, the legislative
environment has the potential to significantly influence the possible outcomes.
In this submission, we seek to identify a number of workplace relations outcomes which
Woodside considers to be unsatisfactory, and how, in our experience, the workplace relations
framework under the Act has directly contributed to those outcomes.
2.1
Bargaining - Pluto LNG Project
The initial stages of construction work on the Pluto LNG Project were governed by the former
Workplace Relations Act 1996 (Cth). In Woodside's view this significantly contributed to
underlying structures that were consistent with generally stable workplace relations on the
project. In particular, prior to the commencement of work on the project, contractors were
generally able to establish a set of market leading terms and conditions of employment in
secure industrial arrangements that covered the length of their work on the project, utilising
the range of industrial instruments available under the former legislation, including employer
greenfields agreements.
Woodside and its contractors were open to unions being involved in agreement making on the
project. Attempts were made by contractor representatives to establish a highly competitive
set of terms and conditions of employment for the project that could form the basis for
negotiations between unions and individual contractors, however the relevant construction
unions did not agree to the proposals. As such, some contractors were exposed to the
agreement making regime under the Act, following the Act's commencement in 2009. This
significantly impacted construction work on the Pluto LNG Project.
One such example was Mammoet Australia Pty Ltd, a contractor engaged by Woodside to
carry out heavy lift and transportation operations and provide transportation and cranage
services for the onshore component of the Pluto LNG Project. The work Mammoet was
contracted to perform was crucial for the performance of work by most other contractors on
the project, and for the completion of the project generally.
Mammoet had made an employer Greenfields Agreement under the former Workplace
Relations Act 1996 (Cth) with a term limited to 12 months (to September 2009). The
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Mammoet agreement was in terms consistent with market leading terms and conditions of
employment set out in other industrial agreements applying to other contractors working on
the project. Mammoet's work on the project was not completed within the 12 month period,
and the CFMEU, acting as bargaining representative for a group of 12 of Mammoet's
employees engaged as crane and forklift drivers, sought to bargain with Mammoet for a new
agreement.
An outline of the conduct of bargaining and significant periods of disruptive industrial action is
set out in reasons for decision issued by Fair Work Australia in Mammoet Australia Pty Ltd v
Construction, Forestry, Mining and Energy Union [2010] FWA 4389, Woodside Burrup Pty Ltd
& Kentz E & C Pty Ltd v Construction, Forestry, Mining and Energy Union [2010] FWA 4880,
and CFMEU v Woodside and Kentz E&C Pty Ltd [2010] FWAFB 6021.
Ultimately, after approximately two months of industrial action and with the prospect of
continuing industrial action, in circumstances where the CFMEU was seeking terms and
conditions of employment significantly in advance of the terms and conditions of employment
set out in industrial agreements applying to other contractors on the project, Woodside made
an application to Fair Work Australia for orders suspending protected industrial action on the
basis that third parties were being significantly harmed by the industrial action. At the time of
the application, it was estimated that Mammoet had approximately four to six weeks of work
left on the project.
Evidence before Fair Work Australia went to the following impact on Woodside which was
either happening or threatened as a result of the industrial action:
(a)
a delay in the commencement of the revenue stream from LNG sales estimated to be
in the order of millions of dollars per day;
(b)
an increase in the number of days it would take to complete the project and
consequent costs to Woodside of $3.5 million per day to run the project and sitebased services;
(c)
costs from the extension of time to contractors and associated delays; and
(d)
costs of additional resources brought in to finish the work within the allocated contract
dates.
Ultimately, Woodside's application was refused by Fair Work Australia (following an appeal by
the CFMEU). The Full Bench, in overturning the decision of Deputy President McCarthy at
first instance, found that the industrial action of Mammoet employees did not threaten to
cause "significant harm" to Woodside. The Full Bench held that the threshold for satisfying
"significant harm" must be "exceptional" and out of the ordinary, and an order would not be
made where the industrial action is merely causing loss, inconvenience or delay.
It has been acknowledged that the test applied by Fair Work Australia to set the threshold for
establishing "significant harm" for the purpose of obtaining a suspension of industrial action
was too high.3 Woodside respectfully agrees. However, ultimately, there was no utility in
seeking to appeal the Full Bench's decision. Mammoet reached an agreement with its
employees shortly after the Full Bench's decision and industrial action ceased. That
agreement was in terms consistent with the terms and conditions set out in industrial
agreements applying to other contractors on the project, and not the premium conditions
originally sought by the CFMEU.
Regardless of whether the decision is considered to be a correct application of the relevant
provisions, the parameters of the Act permitted a finding that the evidence from the hearing at
first instance before Fair Work Australia of the impact on Woodside, summarised above, was
3
See for example: Submission to the Fair Work Act Review Panel by Dr Graham Smith (paragraph 16, page 4); Submission to
the Fair Work Act Review Panel by the Master Builders Australia (paragraph 12.10, page 62); AMMA Publication "Early
employer experiences of early enterprise bargaining under the Fair Work Act, October 2010 (paragraph 8.93, page 42).
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not sufficient to establish "significant harm". In Woodside’s view, this is at least in part
because it is not clear under the Act that the mechanisms for making agreements (including
good faith bargaining and protected industrial action) are secondary to the objective of
facilitating effective agreement making with a view to setting terms and conditions and
minimising the potential for industrial disputation.
This example represents clear evidence of an unsatisfactory outcome under the Act.
Woodside respectfully submits that the possibility of similar outcomes under the current
wording of the relevant provisions of the Act concerning the suspension and termination of
protected industrial action should be addressed.
The Mammoet dispute also provides an illustration of the impact of a lack of agreement
options under the Act, and in particular the need to have viable options for securing industrial
agreements which cover an employer's work on a project.
2.2
Bargaining - Karratha Gas Plant
Since about October 2009, Woodside has been involved in bargaining for an enterprise
agreement to apply to employees working at the Karratha Gas Plant. Certain issues alleged
to have arisen recently are currently the subject of proceedings before Fair Work Australia,
and Woodside does not intend to comment on those issues in this submission. However,
Woodside's experience is that some earlier parts of the bargaining process under the Act
were not efficient or effective:
2.3

The initiation of bargaining was unclear and complex. In particular, in circumstances
where a union simply asserted that part of the workforce wished to make an
agreement, it was difficult to ascertain, without formal proceedings, who was
represented by the union and what proportion of the workforce genuinely wished to
make a new agreement. The absence of a clear requirement under the legislation for
an instrument of appointment of a bargaining representative and an objective means,
such as a secret ballot, for establishing who wished to bargain, were significant
barriers to efficient and effective initiation of bargaining.

Negotiations have been long and protracted. In particular, in common with many
recent bargaining disputes in other industries, new claims for greater restrictions on
matters not regulated by the existing industrial instrument, and which would generally
be considered to be matters of management prerogative, are significant obstacles in
bargaining. It is also not always clear which issues are pursued by bargaining
representatives on behalf of the employees they purportedly represent and which
issues are merely relevant to the interests of the bargaining representatives
themselves. In Woodside's view, this experience has been facilitated by the Act
provisions allowing expanded agreement content to be the subject of the bargaining
process and the provisions in the Act concerning bargaining representatives.
Right of entry - Pluto LNG Project
Woodside engages the Foster Wheeler WorleyParsons Joint Venture (FWW) to manage
construction work on the Pluto LNG Project. In the period immediately after the Act was
introduced, FWW was inundated with union right of entry notices in respect of the Pluto LNG
Project site. In the period between 1 July 2009 and 27 October 2009, FWW received 217
right of entry notices from the four main unions with coverage of workers at the Pluto LNG
Project.4
FWW developed a comprehensive right of entry management protocol, in order to deal with
the large number of right of entry requests in a way that was consistent with the safe and
efficient management of the site. On 24 July 2009, the CFMEU filed an application with Fair
Work Australia challenging the right of entry protocol implemented by FWW at the Pluto LNG
4
CFMEU v Foster Wheeler Worley Parsons (Pluto) Joint Venture [2010] FWA 2341.
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Project site.5 The challenge was ultimately unsuccessful, but involved considerable cost and
inconvenience.
The increase in right of entry notices was a direct result of the provisions in the Act which
allow union officials right of entry for discussions with workers merely where the relevant
union is eligible to represent the workers, rather than where the relevant workers are covered
by an industrial instrument to which the relevant union is a party. The proliferation of right of
entry notices, and the need to implement a comprehensive process for managing the high
number of right of entry notices from a wide variety of unions, which ultimately FWW had to
defend in lengthy proceedings before Fair Work Australia, caused significant inconvenience
and expense. It is evidence of the unsatisfactory operation of the right of entry provisions
under the Act.
2.4
Right of Entry - Karratha Gas Plant
Transfield Worley is an integrated service contractor which, at the time of the introduction of
the Act, was, and had been for a considerable period of time, engaged by Woodside to
provide maintenance work at the Karratha Gas Plant.
CFMEU representatives sought to enter the Karratha Gas Plant to hold discussions with
certain Transfield Worley employees on the basis that the CFMEU asserted coverage of
particular employees of Transfield Worley. Whilst other unions had been active in
representing workers on the site and were parties to industrial agreements applying to those
workers on the site, the CFMEU had not previously been involved in representing workers on
the site.
Woodside disputed the right of entry on the basis that Transfield Worley did not employ
persons at the Karratha Gas Plant who were eligible to be members of the CFMEU on the
basis asserted by the CFMEU. As such, Woodside's position was that the CFMEU was not
eligible to represent the industrial interests of any of the relevant workers employed by
Transfield Worley, and was not entitled to enter the site on this basis.
In September 2009, the CFMEU commenced proceedings in Fair Work Australia seeking
orders that Woodside not refuse right of entry to CFMEU officials seeking to enter the
Karratha Gas Plant to hold discussions with the relevant workers employed by Transfield
Worley. Ultimately, very shortly before the listed hearing, the CFMEU withdrew the
application, without explanation. However, Woodside's defence of the application, against a
union that had not traditionally been involved in representing workers on the site, and in
circumstances where the coverage asserted by the CFMEU under its rules was far from clear,
involved considerable expense and inconvenience. In Woodside's view, this is further
evidence of the unsatisfactory outcomes caused by the right of entry provisions under the Act.
In Woodside's experience, the changes introduced to the right of entry provisions under the
Act, without proper explanation or justification, have significantly increased the scope of the
provisions and contributed to competition amongst unions, disrupting longstanding
arrangements for the representation of workers. Further, the provisions fundamentally rely on
eligibility provisions in union rules, many of which are outdated, contradictory and confusing.
2.5
Unprotected industrial action at Pluto
In the period since the commencement of the Act, Woodside has experienced employees of
contractors engaged on the Pluto LNG Project taking unprotected industrial action.
Woodside was able to obtain remedies against a union and union official in relation to
particular unprotected industrial action by utilising the provisions of the Building and
Construction Industry Improvement Act 2005 (Cth) (BCII Act).
November 2009 strike
5
CFMEU v Foster Wheeler WorleyParsons (Pluto) Joint Venture [2010] FWA 2341.
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In November 2009, construction contractors working on the Pluto LNG Project informed their
employees that new accommodation arrangements known as “motelling” would apply from
4 January 2010. Representatives of the CFMEU met with employees in late November and
encouraged the workers to strike if Woodside did not reverse the decision to implement
motelling. The decision to introduce motelling was not reversed, and on 1 December 2009,
approximately 1200 employees went on strike at the Pluto LNG Project.
Woodside brought proceedings in the Federal Court seeking pecuniary penalties against the
CFMEU for engaging in unlawful industrial action in contravention of section 38 of the BCII
Act.6 Justice Gilmour held that the CFMEU should be permanently restrained from taking
industrial action at the Pluto LNG Project site. The CFMEU was ordered to pay Woodside
$1.5m, including as compensation for damage suffered as a result of the unlawful industrial
action, and 25% of all liabilities, costs and expenses in relation to any claims by contractors
against Woodside (to a maximum of $500,000).
January 2010 strikes
On 22 January 2010, approximately 1400 contractor employees stopped work at the Pluto
LNG Project site.
The contractors chose to apply to Fair Work Australia pursuant to section 418 of the Act to
stop the industrial action and on 24 January 2010, Commissioner Cloghan made an interim
order preventing industrial action from being taken from 24 January 2010 until 28 February
2010.7
Despite Fair Work Australia’s order, the employees continued to strike. On 27 January 2010,
13 contractors applied to the Federal Court for injunctions, penalties and compensation. It
was necessary for the contractors to commence proceedings against individual workers. The
Court granted an order restraining workers from taking industrial action.8 When the strike
ended on 30 January 2010, over 1500 contractor employees had participated in strike action.
The substantive penalty proceedings are not yet concluded.
The different outcomes achieved by Woodside pursuant to the BCII Act and the contractors
under the Act illustrate the need to maintain the provisions under the BCII Act relating to
unlawful industrial action. In its Federal Court proceedings, Woodside was able to obtain
significant penalties and compensation, and also admissions concerning the liability of the
union and the union official for their conduct, in reliance on particular provisions which are not
replicated under the Act.9
The outcome in the case of the contractors also illustrates that, where unlawful industrial
action occurs, a speedier conclusion must be achievable such that a return to work cannot be
drawn out.
3.
UNSATISFACTORY OUTCOMES IN INDUSTRIES IN WHICH WOODSIDE'S
CONTRACTORS OPERATE
In addition to Woodside's direct experiences under the Act, Woodside has also been impacted
by poor bargaining outcomes under the Act in industries in which Woodside's contractors
operate.
3.1
Unsustainable wage claims
Key aspects of the agreement making regime under the Act, including the limited range of
available agreement options, the relative ease with which protected action can be taken within
the bargaining process and the difficulty associated with meeting the tests relating to stopping
6
Woodside Burrup Pty Ltd v Construction, Forestry, Mining and Energy Union [2011] FCA 949.
7
AGC Industries Pty Ltd and Others v AMWU and CEPU (2010) FWA 847.
8
United Group Resources Pty Ltd v Calabro [2010] FCA 22.
9
See in particular, s 49 BCCI Act (penalties) and s 69 BCCI Act (responsibility for conduct of members).
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protected action, have combined with practical pressures in industries characterised by labour
shortages, time critical work and a need for large capital investment, to create distortions in
bargaining. Extravagant wage claims by unions have been conceded by employers with few
alternatives. Examples include vessel operations, offshore construction and most recently
dredging. In Woodside's experience, the Act has allowed unions in these industries to take
advantage of this environment during bargaining, by pursuing premium outcomes. In
particular, this has occurred when employers seek to negotiate greenfields agreements for
new project work, which in turn has led to excessive increases in wages and conditions with
no foundation in improved productivity. This has a very significant cost impact on Woodside,
as an end consumer of the services provided by these contractors on Woodside's projects.
An example of this is Woodside's North Rankin Redevelopment (NR2) at the North West
Shelf. The project involves the recovery of the remaining low pressure gas from the North
Rankin and Perseus gas fields by installing a second platform (North Rankin B) to connect to
the existing North Rankin A project, and achieve a single integrated facility. The NR2 is an
example of a project on which Woodside has faced significant increases in costs, based on
new wage rates applying elsewhere in the industry, as negotiated by the maritime and
offshore construction unions at other unrelated projects.
Examples of such cost increases are:
3.2

For offshore construction labour, the cost from the Pluto LNG Project in 2010 to the
NR2 Project in 2012 involved an increase of 36%;

For marine labour, the cost from the Pluto LNG Project in 2010 to the NR2 Project in
2012 involved an increase of 37.4%; and

Recent dredging industry agreement settlements, depending on type of dredge and
previous agreements, have resulted in 40% to 55% labour cost increases.
Bargaining representatives
In addition to Woodside's direct experience of difficulties around the commencement of
bargaining and the identification of bargaining representatives under the Act, contractors in
some industries have experienced difficulties with union officials seeking to represent workers
in bargaining who are not eligible to be members of their union, purportedly on the basis that
the union official is acting in his or her personal capacity. This is clearly a sham, leading to
competition amongst unions, and providing an incentive for bargaining representatives to
pursue extravagant and short term outcomes rather than outcomes consistent with
improvements in productivity and long term relationships with the relevant employers. The
MUA's attempts to represent remote operated vehicle operators in bargaining is one
example.10
4.
ISSUES WITH THE ACT
Woodside's experiences with the Act set out above, demonstrate in a real and practical way
the effect of the legislation on Woodside's business and illustrate a number of shortcomings of
the Act.
4.1
10
Agreement making

Woodside's experience is that there are real problems with agreement making in the
industries and sectors in which it operates.

In particular, Woodside considers that the current bargaining framework does not
promote the discussion and uptake of measures to improve workplace productivity.
See Technip Oceania Pty Ltd v W. Tracey [2011] FWAFB 6551.
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4.2
4.3

Further, the Act has reduced the options available to employers in formal agreement
making which, in the industries in which Woodside and its contractors operate,
characterised by labour shortages, time critical work and large capital investments,
leads to distortions in bargaining.

In particular, the difficulties associated with making greenfields agreements prior to
the commencement of new projects have the potential to jeopardise Woodside's
ability to achieve commercial certainty and security in relation to its projects.

It has been common practice for unions to insist on significantly improved wages and
conditions in the context of negotiations for greenfields agreements to apply to new
projects. Usually the union claims are not related to productivity and merely represent
a demand for a premium and even super-premium wage outcomes.

Further, in relation to bargaining for enterprise agreements generally, the initiation of
the bargaining process, including appointment of bargaining representatives, is
confused and unclear. There is no clearly defined and logical sequence regarding
various points in the process. The case of JJ Richards & Sons Pty Ltd v Transport
Workers' Union [2011] FWAFB 3377 is a clear example.
Content of agreements

The Act provides for significantly expanded agreement content, which allows more
issues to be introduced in bargaining, including claims relating to an employer's
flexibility to manage its own workforce.

Woodside considers that removing the list of "prohibited content" and allowing a wider
range of matters to be included in enterprise agreements and be the subject of
protected action, has had a significant impact on bargaining and productivity. In
particular, it has often led to a more complex, lengthy and protracted negotiation
process, increasing the likelihood of disagreement, and potentially industrial
disputation.
Right of entry

4.4
While Woodside recognises the role of unions in entering workplaces to meet with,
and investigate breaches of legislation relating to members, the introduction of the Act
precipitated a deluge of right of entry notices and union visits at the Pluto LNG Project
site which had to be managed against a backdrop of managing the challenging
logistics of a large and potentially hazardous workplace. Implementing systems and
processes to manage those requests involved Woodside and FWW incurring
significant expense and inconvenience.
Industrial Action

While Woodside recognises that industrial action may be appropriate for parties
involved in a bargaining process in some circumstances, Woodside considers that
employees are able to resort to protected industrial action more easily and quickly
since the passage of the Act.

Further, stopping protected industrial action once it has commenced has, in
Woodside's experience, proven very difficult.

The Act provides unions and employees with a right to take protected industrial action
over a wider range of pursued content, and where action is "reasonably believed" to
pertain to permitted matters.

Under the Act, employees can qualify as "genuinely trying to reach agreement" before
bargaining has commenced.
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5.

Further, protected industrial action can be taken by unions and employees where
extravagant claims are being pursued and negotiated outcomes have not yet been
fully explored.

The Act does not provide an effective deterrent to unlawful industrial action,
particularly in the construction industry, and it is necessary to maintain the greater
penalties11 and other provisions relating to the circumstances in which unions will be
liable for the conduct of officials and members12 under the BCII Act.
THE ACT IS NOT OPERATING IN ACCORDANCE WITH ITS OBJECT
The purpose of the review is to carry out an assessment of the operation of the Fair Work
legislation, and the extent to which its effects have been consistent with the objects set out in
section 3 of the Act.
In its most fundamental sense, under section 3, the object of the Act is to provide a balanced
framework for cooperative and productive workplace relations that promotes national
economic prosperity and social inclusion for all Australians by a range of more specific
means.
Woodside submits that its experiences under the Act demonstrate that the provisions of the
Act have directly contributed to a number of outcomes which are inconsistent with this object.
In particular:
6.

One of the means of achieving the object of the Act is to facilitate effective agreement
making with a view to setting terms and conditions and minimising the potential for
industrial disputation. In Woodside's experience the Act has not achieved this
objective, but rather, has rendered agreement making an arduous process, and
caused an escalation in industrial disputation and excessive outcomes in enterprise
bargaining.

While one of the means of achieving the object of the Act is to enable fairness and
representation at work, in Woodside's experience, there is an imbalance in the way
the role of unions has been recognised under the Act. For example, under the current
framework, union representatives are entitled to exercise rights of entry where
employees are simply eligible to join the union, rather than there being any concept of
the particular union being actively involved in representing the relevant employees.
SUGGESTED IMPROVEMENTS
The Review Panel has been asked to examine and report on areas where the evidence
indicates that the operation of the Fair Work legislation could be improved consistent with the
objects of the legislation.
Woodside submits that there are a number of ways in which the Act could be improved to
address the problems identified above and better meet the object of the Act.
Woodside sets out below a number of specific changes to the Act, but in doing so, Woodside
wishes to emphasise that the unsatisfactory outcomes Woodside has experienced are the
result of the interaction of a number of different and sometimes subtle changes introduced
under the Act, rather than specific technical issues that can be identified in individual
provisions. A combination of solutions will be necessary to address the particular problems
Woodside has identified above.
6.1
Expanded agreement options to facilitate effective agreement making
Alternative forms of agreement options should be introduced. For example:
11
See s 49 of the BCCI Act.
12
See s 69 of the BCCI Act.
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6.2
6.3

An employer who is proposing to embark on a new business or undertaking should
have the option of making a greenfields agreement with a relevant union with a term
of at least three years that would be tested against the relevant modern award and
the National Employment Standards (NES).

An employer who is proposing to embark on a new construction project with an
estimated start and finish date (for example the Pluto LNG Project) should have the
option of making a greenfields agreement with a relevant union for the full duration of
the project that would be tested against the relevant modern award and the NES.
There should be the ability to extend the agreement where there are project
extensions, subject to terms and conditions remaining current.

In either circumstance if negotiations for a greenfields agreement are unsuccessful,
the employer should be entitled to apply to Fair Work Australia for approval of a set of
terms and conditions of employment prior to the commencement of the project,
business or undertaking.

Fair Work Australia must approve the set of terms and conditions of employment as
an enterprise agreement provided the employer is able to demonstrate that it has
genuinely tried to reach agreement with a relevant union (and not all unions with
potential coverage) in accordance with the established tests and that the agreement
is not significantly inconsistent with prevailing terms and conditions of employment
offered in the market.

Industrial action must not be permitted during the term of the agreement however the
existence of such a greenfields agreement should not preclude a new agreement
being reached between an employer and its employees (represented by a union or
unions if they wish) that will override the greenfields agreement.

Either of these options would allow employers to achieve commercial certainty and
security regarding major project investments which, relevantly for Woodside may
include for example, the expansion of the Pluto LNG Project and the Browse LNG
Development.

In addition to specifically introducing additional provisions as suggested above
concerning greenfields agreements, the Review Panel should give active
consideration to ensuring that the Act provides at least the same options for making
collective enterprise agreements as were available under the previous legislation.
Improved bargaining rules

There should be a logical sequence to bargaining, with clear and objective
requirements concerning the determination of majority support, the scope of
bargaining and the commencement of bargaining.

To the extent the concept of good faith bargaining is retained in the Act, it should
continue to relate to procedural aspects of bargaining and not to parties’ substantive
positions. Woodside makes further suggestions below concerning the substantive
positions taken by parties and the ability to take protected industrial action.
Limitation on the content of agreements

The range of matters that can be included in industrial agreements should be limited.

Restrictions should be placed on provisions in enterprise agreements that do not
pertain to the employment relationship.

Unions should not be entitled to seek the inclusion of terms in enterprise agreements
that:
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
6.4

purport to regulate the terms and conditions to be observed by contractors, or
limit an employer's right to engage contractors; or

deal with any matter that is already the subject of a comprehensive code of
regulation under the Act (such as right of entry).
Restrictions should be introduced against content in enterprise agreements that fails
to increase the productivity of an enterprise.
Protected industrial action

To ensure that the fundamental object of the Act concerning cooperative and
productive workplace relations is met, there should be a higher threshold for
commencing protected industrial action.

In particular, Fair Work Australia should be given powers to ensure that protected
industrial action can only be taken:

as a genuine last resort in bargaining;

over provisions in an agreement that pertain to the employment relationship;
and

after Fair Work Australia has had a reasonable opportunity to identify the
outstanding matters in bargaining and conciliate in relation to those matters.

Whilst a higher threshold for commencing protected industrial action could support the
retention of the current provisions in the Act concerning the suspension and
termination of protected industrial action by the parties to bargaining, these provisions
should give far greater regard to the potential for negative impact of protected
industrial action on third parties.

Where third parties are affected by protected industrial action Fair Work Australia
should, on its own motion or application by an affected third party:

DRIMS #7924668

Order a suspension of protected industrial action to allow a period of cooling
off including having regard to any disproportion between the impact of the
industrial action on the third party and the claims being pursued by (and the
conduct of) the parties in bargaining; and

Suspend or terminate protected industrial action (under section 424 and
section 426 of the Act) where protected industrial action is causing or has a
real potential to cause a level of economic or other harm to the third party
which is unacceptable having regard to the fundamental object of the Act to
promote cooperative and productive workplace relations.
The term
"significant harm" does not appear to have facilitated achieving this. The
exact form of the words – whether that is "substantial or significant harm" or
“material harm” – is less important than appropriate drafting which embodies
this concept.
Whatever matters may be the subject of bargaining (whether that range of matters is
more restricted as Woodside has suggested, or remains as broad as the Act has
introduced), the concept that protected action may be taken in relation to a claim
where a party merely believes the matter can be included in an agreement is
unhelpful. The procedures Woodside suggested above will assist in ensuring there is
an objective assessment as to whether matters that might be the subject of protected
action can be included in an agreement. If those procedures are not adopted, the
“reasonably believed” test should be removed.
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
6.5
6.6
6.7
13
Regardless of the ultimate outcome in the litigation in the JJ Richards case, and
whatever other amendments might be recommended by the Review Panel concerning
bargaining processes, it should at least be clear under the Act that a majority support
determination must be a prerequisite before a union or employees can take protected
industrial action in situations where bargaining has not yet commenced.
Unlawful industrial action

There should be no tolerance for industrial action that is not protected industrial action
under the Act. Employers and third parties should not have to seek an order from
Fair Work Australia and wait to have that order breached, prior to obtaining an
injunction from a Court in order to secure a return to work and, ultimately, penalties
and compensation in relation to the conduct.

Further, penalties in these circumstances should be substantial, and unions should be
liable for the conduct of officials and members, consistent with the provisions that
currently operate under the BCII Act.
Right of entry

While Woodside recognises the role of union officials in entering workplaces to meet
with members and investigate breaches of legislation in relation to members,
Woodside considers that this right should be more appropriately balanced with the
rights of the occupier of the site and any employer or other person on the site to go
about their business on the site without undue inconvenience or interference, and in
particular from unions not involved in representing members at the site.

Woodside supports union right of entry to hold discussions with members during
breaks where the union is covered by an industrial agreement that applies to work
being done by members on the site.

Noting this may impact on union members who wish to be represented in bargaining
where there is no industrial agreement that applies to work on the site, Woodside
proposes that, following commencement of bargaining or a majority support
determination, an official of a union that has members on site who are bargaining
should be allowed to enter the site to hold discussion with members during breaks.
Union representation

Woodside considers that the Act should be amended so that a union can bargain for
employees only when appointed as a bargaining representative or agent, and not as a
default representative as is currently the case. There should be a clear process for
the employer to be given notification as to who each employee is represented by in
bargaining.

A union or other person appointed as a bargaining representative should then be
required to act consistently with being an agent for the employee or employees who
have appointed them (and not as an independent party to the bargaining process).

Further, just as employers and other bargaining representatives cannot control
employee bargaining representatives13, bargaining representatives should not be
under the influence of unions that are not eligible to represent the industrial interests
of the employees concerned. Officers and employees of a union should not be able
to be appointed as bargaining representatives for employees who are not eligible to
join that union by virtue of the work they do for the relevant employer.
See regulation 2.06 Fair Work Act Regulations 2009 (Cth).
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7.
CONCLUSION

Woodside respectfully requests the Panel to consider the evidence-based issues
raised above, in making its recommendations following the Fair Work Act Review.

Without adjustment, the Act does not provide a framework that promotes economic
prosperity or productivity improvement.

Woodside would welcome the opportunity to participate in any further consultations.
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