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Industrial Relations Act 1984
s.29 applications for the hearing of an industrial dispute

The Australian Workers' Union,
Tasmania Branch

(T.3194 of 1991)

Metals and Engineering Workers' Union
(T.3195 of 1991)


Pioneer Silicon Industries Pty Ltd



16 August 1991

Industrial dispute - termination of employment - redundancy payments


These applications made by The Australian Workers' Union, Tasmania Branch and the Metal and Engineering Workers Union, Tasmanian Branch (the MEWU) under Section 29 of the Act for dispute hearings, were joined at the outset. They related to a failure by the parties to reach agreement over redundancy payments for workers soon to lose employment by the closure of the Pioneer Silicon Industries Pty Ltd's works at Electrona south of Hobart (the Company).

The Commission was advised that the decision to close the Company's Electrona works had been a purely commercial one, the reasons mainly being that during its lifespan the operation had never made a profit and for the present and the foreseeable future the price of silicon on the international market was expected to be depressed.

At the hearing the arguments centred around a proposed redundancy agreement which had been put to the unions by the Company. The unions considered that certain parts of the proposed agreement were inadequate and they sought alternative rulings on those by the Commission.

The Tasmanian Confederation of Industries (the Confederation) appeared for the Company and its key submission was that the original decision of the Australian Industrial Relations Commission (then known as the Conciliation and Arbitration Commission) on the matter of redundancies ought to be the test as to what was appropriate in this case: this was based on the overwhelming Federal jurisdiction involvement of the Company in its many other activities throughout Australia.

The Confederation pointed out that the Company had acted in accordance with a number of current requirements in redundancy circumstances: actual notice of the intention to close the works had been given about eight weeks ago (on 4 June 1991), attempts had been made to find alternative work, but in the present economic climate that was understandably unsuccessful and time off had been made available for employees seeking other jobs.

As part of its preliminary submissions the Confederation advised that the close-down of the works was primarily the result of a commercial decision. The Company recorded its gratitude for the cooperation of the unions during the short period of life of the works, but said that did not obviate the need for the hard decision to close. There had been a number of attempts to keep the works operational but they had failed. The financial plight of the Company had been well known to all for some time.

The Confederation also submitted that because of the short period of life of the operations at Electrona (commencing in 1987) and the fact that the Company had never made a profit in that time, it was inappropriate for the unions to correlate the proposed settlement with those reached with companies which had traditionally operated for longer periods at a profit. In this latter context also the Federal Termination, Change and Redundancy (TCR) decision was more appropriate as it favoured employees with shorter periods of service.

The Company's proposed agreement was produced as an exhibit by the Confederation and its merits and demerits, as seen by both sides, were well canvassed.

The unions, for their part, sought three weeks pay for each year of service together with full payment of sick leave entitlements (whereas the Company in fulfilment of a previous commitment, offered a pro-rata payment based on the extension backwards of a scale that had originally been agreed in the expectation of a much longer life for the Electrona works) plus a long service leave payment based upon a pro-rata entitlement commencing to accrue after one year's service.

The unions also sought to counter the arguments of the Confederation, for example it was noted that not all companies that had made better redundancy settlements had operated at a profit - Savage River Mines for some time had not.

There was some discussion during the hearing as to the interpretation or application of the "weekly pay." The Confederation sought what could be termed the flat award weekly rate for all employees and produced an exhibit in support of its submission that the words "ordinary time rate of pay" meant exactly that. The unions sought for shift workers that their weekly pay be assessed according to what their roster would have provided.

I note that all parties signified that they would accept the ultimate decision of the Commission in this matter.

I do not accept the Confederation's submission that I should take the Federal TCR decision as my guide in deciding this application. I propose to proceed on the basis of the decision of this Commission in matter T No. 125 of 1985 which in essence said that each case concerning job protection, termination and change in this jurisdiction would be decided on its merits separately. I consider that the Company has been inextricably bound up in the life of this State in the majority of its activities, for example, the supply and use of power, materials, wages, taxes, local employees and contractors. The Company also operated under the terms of an industrial agreement registered in this Commission. For those reasons I consider it inappropriate to rely solely on the Federal decision.

However, be that as it may, I propose to arbitrate by way of recommendation only on those matters specified by the unions and on the understanding that all other matters contained in the Company's original settlement proposal will stand.

I decline to interfere with the Company's offer as to payment for sick leave entitlements accrued: payment in lieu for sick leave is not a matter appropriate for the Commission to decide. Nor, in this context, is it appropriate for the Commission to interfere with the application of the Long Service Leave Act 1976 and I therefore decline to decide on that matter too.

As to the weekly rate of pay to be used in the calculations I recommend that for day workers the rate should be the weekly award rate plus any regular work value based allowances and for shift workers the amount of wages they would have received had they been at work. In either case, if the weekly wage is unable to be assessed on the above criteria then the average over the last three months should be applied.

The one remaining item for decision, therefore, is that of the actual redundancy payment. I recommend that the union's claim be accepted except that the Company's offer of 4 weeks pay for the first year should stand. This would mean that the scale of severance payments would be as follows:

Years of Service

Company Offer

Recommended Severance Pay

4 and over

4 weeks pay
6 weeks pay
7 weeks pay
8 weeks pay

4 weeks pay
6 weeks pay
9 weeks pay
12 weeks pay

In making this recommendation I have had in mind the expectation employees would have had on engagement that an enterprise such as the silicon works would have continued somewhat longer than it did. Further, in the present economic climate it is reasonable to assume that many of the redundant employees in this case will find it very had to obtain other employment within a short period of time.


P A Imlach

V Jacobs for The Australian Workers' Union, Tasmania Branch.
D Harding for the Metals and Engineering Workers' Union.
T Abey with M Ellsemore for Pioneer Silicon Industries Pty Ltd.

Date and place of hearing:
July 31.