Chasing productivity can be done, but employers need to do it right!
A recent decision by BlueScope Steel to outsource a component of their operation at their Port Kembla bulk berth facility was found to be fair and most importantly, was done the right way, despite the fact it results in the unfortunate loss of eight fulltime jobs.
In 2020, BlueScope Steel made an initial decision to outsource the trimming and machining function, conducted in the hatches of docked ships. The trimming and machining function is where the employee utilises a Front-end Loader, a shovel and a broom to remove left over material from the walls and crevices inside the hatch, to allow for the Crane Operator to complete their work of removing the material.
Because the trimming and machining function can only be done at a certain stage of the process, BlueScope Steel planned to outsource the work to allow for the ability to flex-up and flex-down the labour pool to align with the needs of the operation. A decision to implement major change in the workplace is likely to be met by the requirement to consult with employees and in the case of BlueScope Steel, the requirements are laid out in their Enterprise Agreement that covers the employer and the impacted employees.
BlueScope Steel consulted with employees and unions through the use of two letters.
- The first letter provided written notice to employees and the union of the concept of outsourcing the work to contractors and that the change would likely impact the employment of people on the crews. The letter also communicated the establishment of a committee whose sole purpose was to consult on the issue at hand and consider any proposals.
- The second was provided some time later, which confirmed the outcome of the consultation process, what had been done to mitigate the impact and finally what it meant to the employees on the crew.
Ultimately, the two letters provided information to the employees on the proposed change, the impact of the proposed change and provided avenues for them to raise any mitigating circumstances for consideration.
When reviewing this matter Commission Riordan utilised, what has come to be known as the SELF test, which for this matter played out as follows:
- Safe – The Commissioner reviewed the practices of BlueScope Steel both in the way they will engage contractors into the role and how they will, if applicable, retrain those employees who are displaced. Ultimately the Commissioner stated that, “I am satisfied that the outsourcing of the trimming and machining function at the Department is safe”.
- Efficient – The Commissioner considered the efficiency of the change and ultimately stated, “I accept there will be additional efficiencies which have not been costed due to improved labour utilisation, contract labour flexibility and the removal of highly skilled full-time employees undertaking the manual tasks of trimming and machining. I accept that all of these measures will assist the Respondent in alleviating its expensive demurrage costs and provide for the efficient utilisation of its berth.”
- Legal – In considering the position put by the Applicant that BlueScope did not comply with their legal obligation under the applicable Enterprise Agreement the Commissioner stated, “There has been more consultation about this reform than any other I have seen in my 9 years as a member of the Commission.”
- Fair – In considering the fairness of this matter the Commission weighed up fairness from both sides, but ultimately stated, “I am satisfied and find that it would be unfair to deny the Respondent the option of introducing the proposed change. It would not be fair to exclude the Respondent from achieving the financial benefits of the improved labour flexibility that the proposed change delivers.”
What does this mean for employers?
While we may not have seen the last of this, with avenues open for appeal, this BlueScope Steel matter does highlight to employers that it is ok to seek out, and implement, operational efficiencies in the workplace, even if it means an unfortunate reduction in headcount.
More importantly, it also highlights the need to do it right, to follow employer obligations to properly consult with effected employees and to consider any proposals put to the business by those employees.
Had BlueScope Steel not followed their obligations to consult with impacted employees, or worked through a sub-standard, ‘tick-the-box’, consultation process, the considerations under the SELF test may have been quite different, resulting in a less than favourable outcome for the employer.