T4613 and T4654 - 8 February
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TASMANIAN INDUSTRIAL COMMISSION Industrial Relations Act 1984 The AWU-FIME Amalgamated Union and Australian Municipal, Administrative Clerical and Services Union with Pasminco Metals - EZ
Industrial Dispute - quantum of redundancy REASONS FOR DECISION INTRODUCTION Following the announcement by Pasminco-Metals EZ (hereinafter referred to as EZ or the Company) on 4 October 1993 that a large number of employees were to be retrenched the Commission conducted many formal and informal conferences in the hope of achieving equitable outcomes for all concerned. The Commission recognised in the preceding months during which an operational review was undertaken by EZ that in all likelihood some retrenchments were most likely to take place. In the opinion of the Commission that general view was shared by the unions represented in this matter. Employees were also aware that in all likelihood some retrenchments would occur consequential to the outcome of the review process. However the magnitude of the retrenchments, it was announced that between 300 and 350 jobs (Exhibit PMEZ 28 - refer Appendix 4) would be cut, took most people by surprise and had a devastating effect on most. In the course of these proceedings Mr Nally appearing for EZ said on a number of occasions that in his "wildest dreams" he had not anticipated that so many employees would lose their jobs. The numbers involved, the short time-frame within which the retrenchments were to occur and only the partial reliance on a voluntary retrenchment process to ease the force of the announcement were heavy blows which at the time created some animosity and resentment against the Company. It was in this environment that the Commission took a pro-active stance with a view to keeping the parties focused on the real issue which was to cushion the impact of the retrenchments on employees as much as was possible whilst at the same time recognising that the Company wanted to make itself more cost competitive against international competition. In many respects the Commission was able to achieve a defusion of tensions between the parties and during the peak of the dispute there was only a minor and very short disruption to the transport of superphosphate from EZ. The fact that this was able to be achieved when emotions were high speaks highly for all involved in the negotiating processes. It was unfortunate that in the circumstances some temporary employees were appointed by EZ to the permanent staff around the time of the dispute. This was contrary to an agreement entered into between EZ and unions and in the end contributed significantly to the protraction of this dispute. That was unfortunate especially since the Commission made it very clear early on after the announcement of the retrenchments that it would not and indeed could not support the Company's position on that issue. Another exacerbating factor was that the voluntary retrenchment program was only available for a limited period and the pressure of forced retrenchments understandably added to the fear that people had of losing their jobs. It is now some sixteen months ago since the retrenchments were made and some five months since the hearings were concluded. The only residue issue for the Commission is to determine the adequacy or otherwise of the retrenchment package offered by EZ. Accordingly what follows is a comprehensive summary of the submissions made by the parties in these proceedings and a finding on those submissions and on the extensive material that was presented during the various hearings which concluded in August 1994. The background to this dispute was that on 1 November 1993, after exhaustive conferences and formal proceedings concerning the quantum of the retrenchment package offered by the Company, the Commission recommended the acceptance of the package in the terms outlined in Appendix 1. The package reflected the outcome of protracted negotiations but subsequently the Commission was informed that it had been rejected by union members with the exception of members of the Construction, Forestry, Metals and Energy Union (CFMEU). Mr Cooper, appearing at that time for the Federation of Industrial, Manufacturing and Engineering Employees, Tasmania Branch (FIMEE) informed the Commission on 8 November 1993 that the:
Mr Nally informed the Commission of the Company's disappointment at the rejection of the recommendation which was arrived at following extensive meetings between all of the parties conducted by the Commission. Mr Nally emphasised that the recommendation was a package and that EZ had not rejected any single aspect of it. He informed the Commission that a Memorandum of Understanding (Appendix 2) was prepared and provided to Unions setting out the recommendations of the Commission. The document in Appendix 2, tendered as Exhibit PMEZ 2, spelled out EZ's acceptance of the Commission's recommended package on the basis of it being a one-off agreement. A provision on future employment security, consistent with the Commission's recommendation, was also included. Mr Nally said that EZ was still committed to developing such an agreement (transcript p115) even though the recommendation was rejected. Mr Nally informed the Commission that the package recommended by the Commission was offered, in respect of quantum, to those former employees who had already left EZ since the announcement of the retrenchments in October 1993. He said that it was disappointing that in all of the circumstances the negotiated package arrived at in the Commission was not supported at the mass meeting of union members. Mr Cooper raised the issue of the Commission arbitrating this matter given my extensive involvement in conciliation and private conference proceedings. He referred to the undertaking given to the Commission that there would be no objection to the Commission proceeding in that way (transcript p106). Having regard to the wishes of the parties that I deal with this matter to finality, I outlined some further reasons for proceeding at pages 117 to 119 of transcript. UNION SUBMISSIONS Mr Cooper commenced his submissions on 24 November 1993 in respect of application T.4163 of 1993 which outlined the claim by the FIMEE in the following terms:
Exhibit FIMEE 1 contained the following claims.
Mr Cooper informed the Commission that retrenched employees received the retrenchment benefits contained in the PMEZ Redundancy and Retrenchment Package dated 26 June 1991 (hereinafter referred to as the 1991 PMEZ Retrenchment Package or the Package). The Commission was told contrary to the terms of the 1991 PMEZ Retrenchment Package, tendered as Exhibit FIMEE 5, no prior discussions were held in respect of the enforced retrenchments. Mr Cooper submitted that this should have been the case given the introductory clause in that document, which inter alia, contained the following:
Additionally Mr Cooper contended that the Objectives and Principles of the 1991 PMEZ Retrenchment Package were not observed by EZ. In outlining the benefits contained in the Package Mr Cooper informed the Commission that the FIMEE sought an outcome between those and the claim in Exhibit FIMEE 1. As a preliminary issue also Mr Cooper drew the attention of the Commission to the job protection termination and change case heard by a Full Bench in matter T.125 of 1985 (the Job Protection Case). He emphasised what he considered to be an important point in the decision where the Full Bench said:
It was submitted by Mr Cooper that the foregoing comments by the Full Bench meant that matters in respect of job protection, termination and change needed to be made having regard to circumstances in Tasmania. Mr Cooper also brought to the attention of the Commission other aspects of the Full Bench decision including that as much notice as possible should be provided to employees where technological or other change resulted in redundancy or otherwise impacted on the nature of work, including the character of work of existing employees. The Full Bench pointed out that there was a moral obligation to consult with employees and that as much forward advice should be provided as was reasonably possible and that it would respond positively to any situation which on subsequent examination was shown to have involved a case of unfair, unjustified or unreasonable treatment. Mr Cooper quoted from the Full Bench decision as follows:
Mr Cooper reiterated that the Full Bench had concluded that each case should be considered on its merits and where an employer had acted unfairly that might be a factor to be taken into account when dealing with the quantum of payment for retrenchment. The Commission was referred to a number of decisions by the Commission as variously constituted. A decision by the Deputy President in matter T.2410 of 1990 (Exhibit FIMEE 8) was tendered to demonstrate reliance on the Job Protection Case in the context of adopting a case by case approach and that the Full Bench had laid down a number of principles to apply in deciding future cases. The Deputy President stated, inter alia, that:
Mr Cooper indicated that he would be referring to the Deputy President's comments to contrast the manner in which EZ dealt with the retrenchments in October 1993. HISTORICAL ASPECTS To set the scene Mr Cooper informed the Commission of some key dates impacting on EZ. These related to the formation of Pasminco Metals-EZ; the award restructuring processes; the consequential reclassification of employees; the formalisation of the Auxiliary Resources Agreement; the commencement of the Reduce All Costs at EZ (RACE) program in April 1992; the operational review in 1993 and the announcement of retrenchments in October 1993. In specific terms Mr Cooper focused on Exhibit FIMEE 10 which showed that in 1989, 23 per cent of employees interviewed had spent most if not the whole of their working life at EZ. In respect of the Auxiliary Resources Agreement Mr Cooper said that one of its objectives were to reassure employees that they had job security and that they would not be replaced by supplementary labour. In the opinion of the Commission it was unfortunate that this commitment appeared not to have been honoured by EZ when it appointed a number of supplementary labour employees to permanent status at the time the retrenchments were set to take place. In respect of the RACE program Exhibit FIMEE 12 showed that as at 8 March 1994 $45,406,147 was saved as a consequence of idea implementation and other saving initiatives. Mr Cooper said that this demonstrated significant steps towards achieving reform and achieving savings in the workplace. On 16 July 1993 a notice to all employees was issued by Mr Salmon, General Manager Operations, EZ Exhibit FIMEE 13. Mr Cooper submitted that:
The next exhibit tendered by Mr Cooper, Exhibit FIMEE 14 dated 4 October 1993, was an "Info-Share Bulletin" a regular information sheet for employees, which informed employees that employment numbers would be reduced by between 300 and 350 people. The reductions to be effected by voluntary and compulsory retrenchments. Mr Cooper informed the Commission that a number of employees found out about the retrenchments by reading about it in the Mercury Newspaper (Exhibit FIMEE 15). Attention was also drawn to a further Mercury Newspaper article dated 5 October 1993 which stated that workers had four days to decide whether to nominate for voluntary retrenchment. This was later extended by a further six days. The aim of Mr Cooper was to demonstrate public perception of the announcement by EZ to reduce by retrenchment processes up to 350 employees. One particular Mercury Newspaper article in a group of articles contained in Exhibit FIMEE 15 dealt with stress and tension on employees attributed to the retrenchments announcement by EZ on 4 October 1993. Exhibit FIMEE 17, Info-Share Bulletin No 30, outlined the intention of EZ to adhere to the 1991 PMEZ Retrenchment Package and that it would give consideration to the additional payment of a number of weeks notice. Further public commentary was referred to by Mr Cooper as reported in the Examiner Newspaper of 18 October 1993. He highlighted the following:
The thrust of the submissions put by Mr Cooper were that the events from 4 October 1993 when the Info-Share Bulletin was issued informing employees that job reductions would take place demonstrated "an element of unfairness" (transcript p162). He also submitted that from the date of the announcement on 4 October 1993 to the negotiated end period for taking of voluntary retrenchment applications on 15 October 1993 there was insufficient time for employees to seek appropriate advice as to their available options. Mr Cooper submitted that if more time had been allowed by EZ:
and later
It was contended by Mr Cooper that the actions of EZ in opting for the processes it did to effect retrenchments should be assessed against the "environment" that would impact upon them. The environment was said to include job opportunities, the nature of the employment with EZ, the age of employees retrenched, their experience and their ability to obtain work. In considering these issues Mr Cooper referred the Commission to a 1990 report prepared by the Centre for Regional Economic Analysis (CREA) which, inter alia, commented on EZ's contribution, to Tasmanian employment, wages income, value adding to Australia's balance of trade and to Australian and Tasmanian tax revenues. Mr Cooper illustrated by reference to the CREA report that EZ made a very significant contribution to the economy of Tasmania and that the reduction of the workforce by 300 to 350 employees would impact on the capacity for value adding and the loss of wages would have a significant flow-on effect on the economy and the spending capacity of those employees who were retrenched. This would make it even more difficult for those who lost their jobs. THE TASMANIAN ECONOMY Mr Cooper provided extensive economic material which he submitted was important for the Commission to take into account in this matter. He referred to a number of documents including:
In respect of Exhibit FIMEE 21 Mr Cooper highlighted a number of passages in the document and sought to draw a number of conclusions. He referred, inter alia, to the following extracts:
Mr Cooper said that whilst large resource based industries would assist Tasmania's economic development, niche markets and small business would become the major contributors to Tasmania's economic well-being. The skills of those retrenched by EZ were acquired in a different setting. The projected economic growth in Gross State Product was estimated at two per cent for 1993-94 with a forecast acceleration during 1994-95. Mr Cooper referred to unemployment forecasts which were predicted to be around 12 per cent as at June 1994. In respect of the 1993-94 Tasmanian Budget, Exhibit FIMEE 22, Mr Cooper contended that the forward estimate in the growth of Gross State Product i.e. 3 per cent in 1994-95 and 2.5 per cent 1995-96 and 1996-97 was "fairly weak in terms of sustaining high rates of employment or an improvement to the unemployment rate."(transcript p175) He submitted that advice given to him was that growth of around 3 per cent or better would be required to sustain an improvement in employment growth. Mr Cooper submitted that the Commission should take this into account as it impinged on the ability of those who were retrenched to secure new employment. Other economic background data placed before the Commission by Mr Cooper included Exhibit FIMEE 24 which was a document prepared by unions in this matter to demonstrate workforce reductions in Tasmania over the past 2 to 2½ years up to November 1993. Mr Cooper submitted that in the private sector the most significant job reductions had occurred in the manufacturing area which, he said, included EZ by reference to the document titled Tasmania's Economic Outlook (Exhibit FIMEE 21). The thrust of Mr Cooper's submissions were that with significant job contraction in mining, manufacturing, agriculture, forestry and community services and given where job expansion was forecast i.e. in the areas of retail/wholesale, recreation, finance and property, employment opportunities in the areas of work previously undertaken by those retrenched would be more difficult to achieve. With regard to unemployment Mr Cooper informed the Commission that according to the data in the document Tasmania Economic Insights and Outlook 1992-93 Annual Review, 26,400 people or 12.2 per cent of the workforce were unemployed. He said that figure had increased to 13.4 per cent in August 1993 (Exhibit FIMEE 25). Other details referred to by Mr Cooper related to the shift away from full time to part time employment. Also, that the number of persons participating in the labour force was 2 to 3 percentage points below the national participation rate of 62.7 per cent (1992-93). The difference was attributed to lifestyle influences in Tasmania and the higher unemployment rate provided some discouragement to searching for employment. By reference to Exhibit FIMEE 27 a report by the Industry Commission - Impediments to Regional Industry Adjustment, Mr Cooper reiterated that income per person was lower in Tasmania and that this impacted on the standard of living given that food costs were generally higher in this State. It was acknowledged that comparatively the cost of housing was lower. Mr Cooper also stated that the document confirmed a considerably higher unemployment rate for Tasmania. Of particular concern was the statistic in Exhibit FIMEE 27 which indicated that the long term unemployment rate for Hobart was 21 per cent (people out of work for 12 months or more). The lowest rate was Melbourne 15.9 per cent and Perth and Brisbane 17 per cent. Mr Cooper said that this painted a "fairly difficult picture as far as people living in or around Hobart"(transcript p207). Exhibit FIMEE 31, the 1993 Pasminco Annual Report, was referred to by Mr Cooper to demonstrate a number of factors. These included:
6.1 The real progress in improving competitiveness across the group, thanks to efforts of Pasminco employees. 6.2 Emphasis continued on reducing costs and that this would lead to greater prosperity when metal process improved to anywhere near historical average levels. 6.3 Acknowledgment of the hard work of employees during the year during which retrenchments became necessary.
7.1 Reduction in group net debt from $561 million to $521 million. 7.2 Reduction in operating costs including a reduction in employment levels throughout the Group by 733 people.
Mr Cooper submitted that the report demonstrated that EZ improved its performance despite a number of major factors which inhibited profitability. REDUNDANCY/RETRENCHMENT AGREEMENTS Mr Cooper produced a number of agreements as Exhibit FIMEE 32 with the objective of demonstrating some industry standards. Mr Cooper stated that he recognised however that this case would have to be dealt with on its merits. He spent considerable time and effort in these proceedings to reiterate to the Commission that in Tasmania the Full Bench in the Job Protection Case decided in exactly that way, i.e. each application would be dealt with separately and having regard to the relevant circumstances in each particular case. SUMMARY OF FIMEE SUBMISSIONS Mr Cooper in concluding his principal submissions made the following points:
Up to 10 years service: 97 employees x 2 weeks pay for each year of service In excess of 10 years and up to 15 years service: 68 employees x 2 weeks pay to each year of service up to 10 years. In excess of 15 years service: 74 employees x 2 weeks pay for each year of service up to 10 years
FURTHER UNION SUBMISSIONS ON QUANTUM Mr Adams appearing for the Automotive, Food, Metals and Engineering Union, (AFMEU) predicated his submissions on the federal Termination Change and Redundancy Case (Print F6230) and the Supplementary Decision in that matter contained in Print F7262. By reference to Print F6230 Mr Adams canvassed some of the submissions made by the ACTU in that case in support of its claims. Also Mr Adams addressed aspects of the decision in print F6230 relating to decisions taken at various times by then members of the Australian Commission The thrust of Mr Adams' submissions were that retrenchment pay should take into account factors such as financial hardship or the fear of it, disruption to a workers routine and impact on social contact, the competitive disability of long term employees as a result of opportunities foregone in continuous service with their employer, the coming to an abrupt end of legitimate expectations through no fault of the employee. Mr Adams contended that since the 1991 PMEZ Retrenchment Package was negotiated circumstances had changed in that job prospects would be difficult to find and that it would be "very hard for employees who had been used to a heavy industry background for a number of years to change to any other sort of job."(transcript p283) Mr Adams presented calculations on the cost to EZ of retrenching employees in October 1993. He estimated that EZ paid out $4,404,960 excluding statutory payments. It was estimated that this cost, based on the existing package and including 1 weeks notice would increase to $5,372,949 if the Commission determined that the following formula should apply.
Mr Adams indicated that the foregoing was the subject of considerable discussions with EZ prior to the matter being brought to the Commission for determination. I was also informed by Mr Adams that a satisfying outcome in this matter would be a payment of 3 weeks for every year of service plus four weeks notice. Based on an average weekly wage of $576.00 the amount of retrenchment pay, excluding statutory payments was assessed at $5,970,982 (Exhibit AMEU 5). Mr Adams contended that payout of statutory entitlements should not be counted or included in assessing the quantum of retrenchment pay for employees. It was submitted by Mr Adams that having regard to savings that would be made by EZ in not having to keep the retrenched employees on the payroll amounted to $7.1 million dollars in one year, i.e. $576 average weekly earnings multiplied by 239 employees, multiplied by 52 weeks. Accordingly Mr Adams argued that the $1.5 million extra cost of improving the retrenchment payment along the lines indicated above would pale "into insignificance" (transcript p288). Mr Adams also pointed out that the overall savings would be far greater than the $7.1 million in wages because employee on-costs would also be saved by EZ. Mr Adams said that the 5 per cent wage increase offered by EZ to their employees who were not retrenched added a further $326,000 per annum to its wages bill. It was submitted by Mr Adams that the improvement in the quantum of retrenchment pay was justifiable on the basis of the savings that would accrue to EZ. Also because job prospects were not that good and that the impact of retrenchment was severe. EZ SUBMISSIONS Mr Nally outlined the broad parameters of the submissions he intended to make. in the following terms:
Exhibit PMEZ 2 outlined the intended submissions as follows: 1. Preliminary Submissions. 2. Objective 3. Background 4. Public Interest (a) Economic Position of the Industry 5. Outlines of Actual Process and PMEZ Redundancy Scheme Improvements 6. Reply to Union Submissions
7. Summary and Final Wrap Up. Mr Nally backgrounded his submissions by submitting that there was no need to deviate from the 1991 PMEZ Retrenchment Package which had been applied in "recent years" (transcript p304). Exhibit PMEZ 4 demonstrated employee level reductions over the period 1973/74 when in excess of 2,400 employees were employed by EZ to 19 January 1992 when around 1100 were employed. Mr Nally said that the current level (as at 10 January 1994) was about 750 employees. He said:
Exhibit PMEZ 5 indicated the number of retrenchments over the period 1989/90 to 13 October 1993. This showed 330 award staff and 69 non award had either been voluntarily or selectively retrenched. In addition to those numbers Mr Nally said other employees had indicated prior to 13 October 1993 their willingness to be retrenched on a voluntary basis. Mr Nally submitted that when in 1985/86 modernisation of the plant was contemplated discussions between unions and EZ resulted in a voluntary redundancy agreement being put together. Mr Nally informed the Commission that the agreement was to ensure that reductions in the workforce would be achieved in a manner compensated by the payment of certain benefits. He said:
Mr Nally indicated that the Redundancy Agreement was reviewed in 1991 and the unions had an opportunity to be involved in that review. Mr Nally indicated that during the period of the structural efficiency principle case conducted in the Commission in about 1991/92 there was not an expectation that employee numbers would fall below 1048. Indeed Mr Nally stated that during the mid 1980's the expectation was that the employment level would be 1143 employees. Subsequently the need to modernise the EZ site became imperative and then the "structural efficiency principles came along and obviously we built with our submissions and our discussions and our Agreements with unions et cetera discussions with employees, the fact that we needed to find a way of getting to that number to be competitive"(transcript p310). Mr Nally submitted that at that time productivity was at 15 hours to produce 1 tonne of zinc. The target was 10 hours and after a modernisation program had been undertaken leading into the structural efficiency exercise productivity was around 11 hours per tonne of zinc whereas the best in the world were producing one tonne of zinc every 5 hours. Mr Nally said that this resulted in a continuous need to revamp and to examine EZ's competitive position. However in respect of that situation Mr Nally said:
Exhibit PMEZ 6 was a graph of the total Smelter Cash Costs per tonne of zinc produced. This showed that in 1990/91 the total smelter cash costs of production for EZ were $723 per tonne compared to its competitors which incurred costs ranging from $609 to $416 per tonne. The RACE program attempted to improve EZ's performance to $609 per tonne by 1992/93 and to pass Akita in Japan which was operating at $531 per tonne. Exhibit PMEZ 7 relating to current controllable cost showed the improvement made in productive output by EZ resulting in controllable costs being reduced from $723 to $681 per tonne. The anticipated RACE benefit was estimated at that time in 1991 at providing a cost reduction of $181 per tonne of zinc. This in turn would have reduced production costs to $500 per tonne (in 1992/93 dollars) compared to $450 (1994 dollars) per tonne controllable costs which was estimated to reflect world best practice. Mr Nally said that this was the figure being aimed at by EZ It was indicated by him that out of the RACE benefits of $181 per tonne of zinc produced, $36 a tonne accounted for the benefits derived from the organisational review including retrenchments. Mr Nally informed the Commission that the RACE data base was to go to March 1994 but was extended to June 1994 when it was expected to achieve all of the identified RACE benefits with the objective of achieving a $500 cost per tonne of zinc produced and to make inroads towards the best practice figure of $450 per tonne. Mr Nally submitted that to fully achieve that efficiency level would have taken a further 12-18 months from June 1994. PUBLIC INTEREST Mr Nally referred me to Sections 20 and 36 of the Act. These Sections are as follows:
Having regard to Section 36(2)(a), Mr Nally submitted that he would first like to address the economic position of the industry. He said that this was not good as retrenchments were necessary for EZ "to remain afloat" (transcript p317). Mr Nally informed the Commission that EZ had many options available to it and whilst some might complain about the severity of the retrenchments others had praised the Company for remaining in Hobart and attempting to make the industry viable to continue to provide much needed economic impetus to Tasmania and to the balance of payments for Australia. Mr Nally explained the effects of the world and the Australian recession on EZ which were that zinc prices were at the lowest levels in 30 years and commodity prices were down. A further complicating factor was that the London Metal Exchange stocks of zinc had risen to about 600,000 tonnes. As EZ is a price taker high stock levels contributed to prices being pushed to an all time low. Mr Nally tendered Exhibit PMEZ 16 which demonstrated that stock levels were at 875,000 tonnes in December 1993. It was submitted by Mr Nally that competition with EZ as a zinc producer had also increased. Mr Nally stated that if a $250 million dollar investment to modernise the plant had not been undertaken in the late 1980s and early 1990s the plant would have been on its "knees". He said shareholders had not received any return in the last 3 years which he said impacted on the capacity to pay submissions made by Mr Cooper. Mr Nally also submitted that EZ had borrowed money to fund the retrenchments and that it would be a year or more before any borrowed funds could be repaid. Mr Nally stated that it would take time for the benefits of the retrenchments to flow through to the Company. Exhibit PMEZ 9 highlighted the cost in $US of the price of zinc per tonne over the period 1988/89 to 1993 and up to the time of this case in September 1993. This showed a decline from a high of $1600 - $1608 a tonne in 1988/89 to $980 a tonne in January 1994. With regard to the debt position of Pasminco Limited Exhibit PMEZ 11 indicated a rising debt from around $200 million in 1989 to in excess of $500 million as at June 1993. This resulted in the downgrading of Pasminco Limited credit rating from AA to A. I was informed by Mr Nally that a small debt reduction was achieved in 1993 over 1992 by the sale of assets. He said the strategy of asset sales and downsizing was not a sustainable strategy for obvious reasons. Other economic data relevant to Pasminco Limited was contained in Exhibit PMEZ 12 which showed a severe decline in profit after tax and in cumulative profit over the period 1989/1993. Exhibit PMEZ 13 demonstrated in graphic terms significant operating losses in the financial years 1991 through to 1993.($47.6, $58.6 and $86 million dollars respectively) THE ECONOMY OF TASMANIA (Section 36 (2)(b)) Mr Nally submitted that the unique circumstances of Tasmania were recognised in the Job Protection Case which were that each case should be considered on its merits. Mr Nally referred me to another CREA report which considered the contribution made by Pasminco Metals-EZ to the Tasmanian Economy in 1992/93 (Exhibit PMEZ 15). It was highlighted by Mr Nally that whilst the report was based on 1178 persons employed that even with the reduction to around 750 people the contribution by EZ to the economy of Tasmania would not in the aggregate of direct and indirect jobs be too far away from 1.96 per cent of aggregate of employment in this State which was the figure when 1178 direct jobs and 2556 indirect jobs were attributed to EZ in 1992/93. He said that the indirect contribution of 2556 may have swelled because of work being outsourced commensurate with EZ moving out of "non core" activities and focusing only on "core activities." Mr Nally extrapolated the foregoing to the extent that there may not be a huge effect, if any, on the unemployment position of Tasmania. He said:
In response to comments made by the Commission Mr Nally produced Exhibit PMEZ 17 which showed the relative severance payments at the various Pasminco Limited sites in Australia. Mr Nally referred the Commission to various aspects of the exhibit. He said that at 5 years of service EZ was second only to Broken Hill where 13 weeks was paid per 10 years of service. EZ was clearly ahead and for 15 and 20 years of service EZ is way ahead in weeks of pay for years of service. Beyond 20 years differing arrangements applied. Mr Nally submitted that the exhibit demonstrated that for people with 5 years of service or more the 1991 PMEZ Retrenchment Package was "quite generous" (transcript p354). Mr Nally pointed out that the Pasminco Mining - Broken Hill and Pasminco Metals - BHAS retrenchment benefits had been in operation for some time and had applied to the recent retrenchments the first of which were around 500 people in January 1993 at Broken Hill. Dealing with the issue of the level of employment as envisaged in Section 36(2)(b) of the Act Mr Nally submitted that the Tasmanian economy relied on a number of large employers apart from the public sector. He said three of the most important employers, EZ, APPM and Comalco had all wound back job numbers and in that context what was happening at EZ was not unique; and that it was also occurring in the public sector. Mr Nally submitted that it was hoped:
Mr Nally stated that to grant an increase over and above what was contained in the 1991 PMEZ Retrenchment Package would be a fairly powerful sign to industry in terms of industrial practice that an agreement that was in place had been varied by the Commission. He said:
It was contended by Mr Nally that large retrenchment payments for EZ could potentially make Tasmania a very unattractive place to invest. Mr Nally submitted that companies may be inclined to invest in other parts of Australia if retrenchment obligations in Tasmania are greater as a rule than the federal TCR standards. Mr Nally submitted:
ANY OTHER MATTER (SECTION 36 [2][c]) Mr Nally submitted that the Commission had in the past supported that retrenchment agreements between parties should be upheld and that parties should settle the terms of retrenchment between themselves. He said the Commission had demonstrated a reluctance to intervene. It was put by him that Part 4 and 4A of the Act made it clear that parties should come to their own agreement. Various exhibits were presented in support of this part of Mr Nally's submission including Exhibits PMEZ 18-20 and 22. Additionally Mr Nally stated that whilst a case by case approach applied in Tasmania and that the Commission could arbitrate, it should not determine outcomes ahead of the federal TCR prescription. If the Commission did arbitrate more favourable outcomes then: 1. It would create relativity problems between State and Federal award employees which would create industrial friction. 2. It would be inconsistent with attracting investment to Tasmania. Mr Nally submitted that where the TCR standard had been exceeded in respect of federal cases it was done so by consent of the parties. Exhibit PMEZ 23 dealt with that and that the TCR was a uniform standard prescription. Mr Nally emphasised that there was no need for the Commission to arbitrate to vary the current 1991 PMEZ Retrenchment Package. He said:
However Mr Nally did accept that the Commission could arbitrate. He submitted earlier in the proceedings:
It was also pointed out by Mr Nally in respect of the federal TCR case that the majority of the mining industry operated under federal awards and were influenced by the federal TCR decision. He informed the Commission that EZ operations and particularly the mine operating within the context of its federal award neighbours was:
Mr Nally said that the mine had already exceeded federal TCR standards by increasing severance payments to the level applicable at EZ. It was submitted that a further increase in what applied at EZ would not be tolerated and would increase pressures for flow on, including at Rosebery. CONSIDERATION OF THE EZ OFFER Mr Nally outlined the offer made to unions which was as follows:
2. Three weeks payment in lieu of notice beyond the week paid for the period 18-25/10/93. 3. Pro rata long service leave for employees with 1 year of service and more (5 years or more in the 1991 PMEZ Retrenchment Package.) Exhibit PMEZ 24 (Appendix 3) was said by Mr Nally to demonstrate that within the mining industry EZ provided severance payments which were still among the highest in the State's mining and mineral processing industry. Exhibit PMEZ 25 was an Australian Mines and Metals survey document which Mr Nally said supported that within the mining industry, in the majority of cases the federal TCR decision had application or 2 weeks per year of service. In that regard Mr Nally pointed to the fact that EZ severance payments were in excess of those payments. With regard to payment in lieu of notice Mr Nally said:
Mr Nally acknowledged that he could not claim that employees were given specific notice of the impending retrenchments however he said there was an understanding that the workforce would reduce but that he:
However Mr Nally contended that the actual offer of payment in lieu of notice compensated for that. With regard to the offers made by EZ to settle this matter Mr Nally said these were exceptional given the six Commission hearings where on each occasion EZ improved its offer which was rejected by the unions. Mr Nally indicated that all previous offers had now lapsed and were "off the table". The one qualification made by Mr Nally related to notice. He said:
Mr Nally submitted that there were no special or exceptional circumstances which would entitle employees to an increase in retrenchment benefits. He said any increase should be individually justified which was not done in this case. Mr Nally emphasised that in the Full Bench decision in Clerical and Salaried Staff (Wool Industry) Award case CNo 0071 of 1975 and CNo 33147/1990, Exhibit PMEZ 23 it was restated that the federal TCR standard should apply unless manifestly distinct circumstances can be demonstrated. The risk of flow on was also canvassed. Mr Nally submitted that as an industrial principle standards or conditions which were regarded as fair, equitable and well established should not be departed from unless there were manifestly distinct circumstances. Accordingly as these circumstances did not exist in the case of the retrenchments in this case there was no reason to alter the benefits or to risk the pressure of flow on to other areas of the mining industry. When questioned by the Commission on whether the retrenchments which occurred in October 1993, constituted special or manifestly distinct circumstances, Mr Nally said:
The response by Mr Nally is analysed in the following manner: 1. The October 1993 retrenchments were different in that it was not a process whereby people knew over a long period of time that their jobs would be made redundant upon the introduction of technology and the changing process. 2. Those type of pressures (over a long period) are far greater than people simply knowing what is expected, or what their future holds. 3. People in respect of the October 1993 retrenchments wanted to know what their future was. 4. Even though the circumstances regarding the October 1993 retrenchments were different, given the support provided by the Company most did not want the issue to drag on. 5. A long period i.e. knowing that in 18 months "you might lose your job" or 6 months or 3 months was agony for people who went through the RACE program. 6. Many employees wanted to know whether they had a job or not and that they should be advised. 7. "And so although it was different, I'm not - I don't accept necessarily that it was different in a negative sense and that it was - that it was manifestly distinct and unique circumstances in a pejorative connotation at all." (transcript p.391) 8. The advice to EZ was that the manner in which the retrenchments were conducted was "the best way to go" (transcript p391). 9. An acknowledgment by Mr Nally that the circumstances were different and needed different treatment. His submissions on the questions of difference were outlined in transcript at pages 309 and 391 and were summarised above. The following comment by Mr Nally is also worth noting:
SUPPORT PROVIDED BY EZ Mr Nally informed the Commission of the Employee Assistance Scheme which was put in place sometime ago and was "run up to September 1993" (transcript p394) to assist individuals separating from the Company. The objectives were said to be: 1. To provide a cushion to assist EZ and employees to achieve reductions in an efficient but caring manner, and 2. To make employees aware of their entitlements, taxation implications, who was available for investment, government assistance, re-employment and training opportunities. Workshops were held to advise and inform employees on these issues. Up until September 1993, 85 employees attended. As well the industrial chaplaincy service was available to employees. In addition advice was provided on small business planning, resume writing, job hunting. Some employees attended other organisations for computer training, transport and heavy rigid license driving. In October 1993 Mr Nally said another initiative was undertaken and which was refereed to as the Organisational Review Support Function - October '93 - January '94. (Exhibit PMEZ 27). The Commission was informed that the services provided to employees before and after the retrenchments improved the "retrenchment package obligations" (transcript p394). For example CES, social security and taxation sessions were conducted. The 177 people that attended were informed of a "One Stop Shop" concept. The One Stop Shop was held at the Derwent Entertainment Centre where Social Securities, CES, Superannuation, Outplacement and Chaplaincy services provided advice on request. Details on Commonwealth job programs such as Jobstart and Newstart were mailed to employees. Mr Nally also explained that the waiting time for people to claim unemployment benefits was reduced to a maximum of 4 weeks. Accordingly as 1 week was paid in lieu of notice this left a period of 3 weeks that anyone would be left without pay, which was a contributing factor in EZ offering additional notice payment which was rejected by unions. Career transition seminars were also held which were designed to equip people to take control of their future. Mr Nally said those services were maintained and available. Also he informed the Commission that contact was being maintained with a reasonable number of people who were retrenched. Where it was found through networking that individuals were having concerns, contact was being made to follow them up. Mr Nally said small business seminars would be conducted over a number of months to give people the opportunity to set up their own business to provide services to either EZ or others. Also EZ was instrumental in establishing with the Glenorchy City Council the Glenorchy Business Enterprise Centre. The objective of the Centre was to encourage new enterprises and employment initiatives within the Glenorchy and Hobart areas. I was informed that support would be provided to former employees to develop strategies and opportunities for development and employment through the activities of the Centre. The Defence Force Recruiting Office made enquires as to whether any former employees between the ages of 17 and 35 years of age wished to be recruited. Mr Nally said:
Exhibit PMEZ 28 were copies of Employee Information Info Share Bulletins May 1993 to October 1993. These bulletins were used as a direct communication link with employees. During the period May to October 1993, 34 Bulletins were issued covering a wide range of topics e.g. industrial agreement arrangements, metal prices, issues concerning the EZ organisational review including retrenchment matters. Exhibit PMEZ 29 outlined among other things employee numbers targeted for retrenchment. This indicated that the plan was that as a consequence of the organisational review 141 employees would be transferred between various operating areas on the site whilst 361 were earmarked for retrenchment on either a selective or voluntary basis. At the time of hearing this matter the final picture was not absolutely clear. 176 employees opted for voluntary retrenchment and 185-189 were targeted for selective retrenchment. The cost of retrenchment was identified as $5,502,322 exclusive of statutory entitlements and one week's pay in lieu of notice whilst the all up payment was estimated be in the order of $7 - $8 million dollars. This amount also included 4 weeks pay in lieu of notice paid to non award staff which was said to be part of their Contract of Employment. EZ employed a firm of consultants, Morgan and Banks Pty Ltd to advise it and provide assistance with the retrenchment processes. Exhibit PMEZ 30 was to inform the Commission of the view Morgan and Banks had of the overall retrenchment process adopted by EZ and it commented on the level of support provided to employees who were retrenched. The Exhibit also outlined the desire of EZ to 'get it right" and to treat employees who would be retrenched fairly and to let them leave with dignity. Comment was made in the Exhibit on the advisability of undertaking the retrenchment process on one day as against spreading the period over several days. The decision to hold all retrenchments on the one day was addressed as follows:-
Morgan and Banks also stated that the time put in to the decision making process by managers to ensure equity, fairness and to preserve the dignity of employees was unequalled by any other organisation that the writer of the letter had worked with. Of concern to managers was what they should say to the individuals to be retrenched on 18 October 1993. This was addressed as follows:
Mr Nally addressed the letter from Morgan and Banks (Exhibit PMEZ 30) in some detail to reinforce the level of EZ support provided to retrenched employees. In respect to the One Stop Shop referred to earlier this was said by Morgan and Banks to be an innovative idea. Also that employees who attended the Shop were invited to a seminar to assist them to find alternative employment. Attendances were not as high as expected, however employees were invited several times. Mr Nally informed the Commission that EZ was committed to continue to run these seminars where the need existed. A memorandum issued by EZ's "Communications and Welfare Superintendent" (transcript p435) Exhibit PMEZ 31 was a resume of the Counselling and Support provided to employees who were not retrenched and to those that were. The memorandum was issued five weeks after the retrenchments were made on 18 October 1993. It concluded that the One Stop Shop was considered a great benefit and that ongoing follow up support and counselling was being provided. That the "Buddy System" was being used, i.e. "people contacted us and spoke to us about people who were having some concerns or had queries or difficulties" (transcript p435) and we then approached those retrenched employees directly. Mr Nally said:
REBUTTAL OF UNIONS SUBMISSIONS Mr Nally reiterated that the level of support provided by EZ should ameliorate the impact of the retrenchments and that this should be taken into account by the Commission in determining whether or not there was any need for the Commission to intervene. Mr Nally confirmed that the 1991 PMEZ Retrenchment Package was indeed the package of benefits applied to employees at EZ and was also applied to employees retrenched in October 1993 apart from non award employees who were paid under a different Benefit Scheme. Mr Nally refuted that the objectives and principles of the 1991 PMEZ Retrenchment Package were not observed by EZ. The Commission was referred to page 3 of Exhibit FIMEE 5 (the Package) which outlined the various circumstances that could arise resulting in the loss of jobs. Mr Nally submitted that the procedures required to be observed by EZ related to retrenchments (as this "would be the definition of what occurred on that day" (transcript p445). He said that the 1991 PMEZ Retrenchment Package dealt with retrenchments in paragraph 5(b) and by reference to paragraph 4(b). Paragraph 5(b) contained the following:
The Commission was informed by Mr Nally that EZ employees were given options and that 141 employees were transferred to either changed departments which entailed a changed role for the employees concerned or they remained in the same department but their role changed. Mr Nally also refuted that employees became aware of employee reductions as a result of newspaper reports. It was contended that Info Share Bulletins outlined the intention of EZ to review its numbers. Exhibit PMEZ 28 which was Info Share Bulletin 5 dated 11 June 1993 outlined that a review of operations would commence on 21 June 1993. Mr Nally said that this constituted notice to employees of EZ's intention to review its numbers. The restructuring of the management team in August 1993 was said by Mr Nally to be the "first formal evidence of the company giving notice to employees that an organisational review will be undertaken" (transcript p446). Info Share Bulletin No. 19 dated 30 August 1993 outlined that the new management team would over the next month or two develop the next stages in the review process. The Commission put to Mr Nally that notwithstanding the information in those Info Share Bulletins the extent of any reductions in employment numbers was not known at that stage. Mr Nally indicated that he was attempting to demonstrate that there was a process of communication. He said that he was not making the point "about final numbers" (transcript p447) but that it was known for some time that numbers of employees would have to reduce. Mr Nally also submitted that unions, the Commission and employees were aware that there had been discussions that productivity had to achieve the level of 350 tonnes per man with a capacity of 220,000 tonnes per annum and that a simple mathematical sum would yield about 628 employees to be the world's best. Mr Nally said that target was not able to be achieved given the current structure of the Cell Room. Mr Nally gave further qualification to the thrust of his submissions on this issue in the following terms:
However Mr Nally indicated that it was correct to say that the number of retrenched exceeded his expectations. He said that in his "wildest dreams I didn't realise that it would be to (that) level" (transcript p451. Mr Nally also informed the Commission that quite apart from the Info Shares the communications and presentations made to employees made it obvious that there would need to be a rationalisation. The time frame for this was identified in Info Share Bulletin No 22 which stipulated that the review process would take some 1 to 2 months from 13 September 1993. Hotline telephone numbers were also provided to enable employees to discuss issues. Mr Nally also refuted that no further discussions took place between the parties in respect of the retrenchments. He submitted that as a result of discussions in the Commission with FIMEE and other unions following the 4 October 1993 retrenchment announcement, the voluntary retrenchment period was extended and that this constituted further discussion as outlined in the Introduction to the 1991 PMEZ Retrenchment Package. The Commission was also referred to that part of the submissions where Mr Cooper had outlined what FIMEE was seeking by way of improved benefits. Mr Nally said there was an obvious uncertainty as to what the union was claiming as Mr Cooper had indicated that the improvement should be somewhere between FIMEE 1 (the claim) and FIMEE 5 (the Package). Also that Mr Cooper categorised the claim as grandiose. It was the contention of Mr Nally that EZ believed it had delivered an in between outcome in the offer that was fashioned involving the Commission but which was rejected by employees. He also submitted, given there were improvements already made to ameliorate the impact of the retrenchments, the Commission should not now intervene. It was submitted that the "nothing to lose syndrome" (transcript P468) had overtaken union considerations. In reality however Mr Nally acknowledged that FIMEE 5 (the Package) was less than what was negotiated leading to the Commission's recommendation (Appendix 1) and in that regard retrenched employees could lose out. Mr Nally submitted that EZ had not acted unfairly and Mr Cooper did no more in his submissions than to refer to this by reference to the Job Protection Case. With regard to the decision by Deputy President Robinson in matter T2410 of 1989 which was relied upon by Mr Cooper to indicate the parameters and principles that should be taken into consideration in the event of retrenchment, Mr Nally contended that the Commission should take into account that EZ had:
Exhibit FIMEE 10 which was an employee profile was said to be out of date, that it was almost irrelevant and a more accurate profile was made available by the Company. Exhibit FIMEE 12 relating to the RACE Program was updated by Exhibit PMEZ 33 which showed that up to approximately early December 1993 $47.1 million was the cumulative value of ideas implemented against a plan of $54.03 million by January 1994. Mr Nally pointed out however that as 40 per cent of operating costs related to wages and associated costs that employee numbers needed to be targeted together with how the business operated in order to achieve greater competitiveness. Mr Nally submitted that not a great deal of weight could be given to Exhibit FIMEE 19 which was an article in the Examiner Newspaper dated 18 October 1993. Mr Nally said that for Mr Cooper to rely on this article to demonstrate the impact of the retrenchments was "stretching" (transcript P479) it. Mr Nally submitted that the impact was known and that support systems were put in place and adequate compensation was paid to ameliorate the impact of the retrenchments. Mr Nally stated that Mr Cooper was not able to offer any solutions as to how the retrenchments could have been handled better; notwithstanding that he acknowledged the difficulties involved. With regard to unemployment statistics relied upon by Mr Cooper and the economic data he referred to Mr Nally said:
Additionally Mr Nally provided information to indicate that "jobs growth" appeared set to accelerate early in 1994. Also that the ANZ Bank data (job add series) showed higher seasonally adjusted job vacancies with Tasmania showing an increase of 16 per cent for December 1993. The fact that the highest level of skilled vacancies since August 1990 were recorded in December 1993 and the 1.3 per cent fall in Tasmania's jobless rate in December 1993 and the creation of 5700 Tasmanian jobs in the same period showed an improvement on the jobs front both prior and post the organisational review. Mr Nally submitted that the only weight that could be put on this was to contrast what Mr Cooper had submitted and that the information he provided augured well for some of those retrenched looking for employment. With regard to the CREA. report, Mr Nally said this demonstrated what the impact would be if EZ closed. He said this did not happen and that EZ had changed its philosophy to concentrate on its core business of making zinc. This meant that some activities would be outsourced. ANNUAL REPORT Mr Nally submitted in respect of the Pasminco Annual Report, Exhibit FIMEE 31, that the financial data referred to by Mr Cooper related to Pasminco Limited and it was not possible to reach any financial conclusions relating to EZ. Also that it was not a vehicle for determining capacity to pay. It was pointed out by Mr Nally that if the balance sheet was to be used at all, it should be noted that shareholders' equity had fallen by $269.7 million in 1993 which would not support any capacity to pay. The liquidity ratio was said to be 1.01 for Pasminco Limited. This ratio, low by comparison to what is regarded as "healthy" (transcript p487) is an indicator of the ability to meet current obligations but said nothing about future capacity. Mr Nally said that with the losses incurred by Pasminco Limited over the last three years it was not in a position to consider additional payments. It was stated that cumulative profit and percentage rate of return over the past three years had declined to 0.1 per cent. On that basis Mr Nally submitted Mr Cooper's conclusions on capacity to pay were incorrect. The Commission was also referred to Pasminco's high debt to equity ratio. This necessitated strenuous efforts to reduce costs, contain working capital and restrict capital spending. With regard to savings resulting from the retrenchments Mr Nally submitted these were difficult to calculate because of the extent of increase in contractor charges as a result of outsourcing. Mr Nally informed the Commission that it was accepted, as a rough guide, that after allowing for contracting costs there would be a net saving of $7 to $8 million a year. Mr Nally also indicated that since 1993 the Company had paid out millions of dollars in retrenchment pay. By reference to Exhibit PMEZ 29 it was estimated that the total cost for 361.89 employees retrenched was $5.5 million. REDUNDANCY AGREEMENTS Mr Nally submitted that in the Job Protection Case it was decided that each case should be considered on its merits. Even so the 1991 PMEZ Retrenchment Package compared very favourably with what applied in the Mining Industry, albeit some of the other Agreements presented by Mr Cooper were more generous. As to improving the 1991 PMEZ Retrenchment Package as claimed by the unions, Mr Nally said they had failed to demonstrate any unique circumstances. Mr Nally submitted that no real evidence had been put forward in support of the claim. GENUINENESS OF UNION CLAIM In respect of the 12 week notice period referred to in Exhibit FIMEE 1, Mr Nally made the point that the maximum time retrenched employees were required to wait for Unemployment Benefits was a period of up to 3 weeks (transcript p512) over and above the period for which notice payments were provided by EZ. He said that was a long way short of the 12 weeks claimed by FIMEE. Mr Nally was critical of the FIMEE claim and referred to the interchange between Mr Cooper and the Commission where the genuineness of the claim was questioned by the Commission. He said that he also questioned its genuineness and suggested that it was fanciful. The Commission was referred to a High Court decision on this matter where it was found that "a log may be so far fetched, so lacking in industrial reality that it cannot possibly be taken seriously" (transcript p515). Mr Nally submitted that the FIMEE claim for 12 weeks notice and 6 weeks per year of service or part thereof fell into that category. As well as depicting the FIMEE claim as grandiose, fanciful and lacking genuineness and making the point that the Commission could only deal with aspects of the claim not related to statutory entitlements, Mr Nally was very critical that the unions in this matter had created unrealistic expectations in those retrenched. He said:
Mr Nally stated again that in a general sense employees were aware that downsizing would take place and he referred to comments made in the proceedings by the applicants and the Commission that this was the case. Mr Nally submitted that this was an extremely important point. He said:
Mr Nally conceded however that the question of what notice period should have been given was a "vexed question" (transcript p525) but that he believed that EZ had fulfilled its obligations. It was also pointed out by Mr Nally that as 140 employees had opted for voluntary retrenchment, this had suggested that the 1991 PMEZ Retrenchment Package was fair and reasonable. REBUTTAL OF AFMEU SUBMISSIONS Mr Nally submitted that whilst Mr Adams was happy to analyse the general philosophy of the federal Termination Change and Redundancy case he made it clear he was not satisfied with the quantums determined in that case. Even so Mr Nally submitted that the 1991 PMEZ Retrenchment Package was extremely generous by comparison to the federal TCR standards. Also that the ACTU submissions referred to by Mr Adams were put before the Australian Commission and notwithstanding resulted in an outcome far less than what was applied by EZ. In response to the submissions made by Mr Adams that the Commission should review the 1991 PMEZ Retrenchment Package on the basis that circumstances had changed significantly since it was put in place Mr Nally stated that many changes had been made from the time the benefits were agreed in 1991. He said that the changes made were for the "good of employees" even though changes in weeks per year of service were not altered. Mr Nally emphasised in Exhibit PMEZ 37 the grades (classification) distribution as at April 1989 and October 1992 for tradespersons and production service persons. He said that this showed that a one and a half upward grade reclassification had taken place. That movement was over and above any State Wage Case or structural efficiency increase in wages. This had meant that a significant upward shift in the amount of money paid to retrenched employees. Mr Nally submitted that this supported the fact that the retrenchment formula could remain intact and yet still yield higher benefits. Mr Nally submitted that employees were aware of what their retrenchment benefits were. This was further illustrated by reference to AMEU 1 where 26 employees out of 49 in that exhibit relating to AMEU members had opted for voluntary retrenchment. Mr Nally indicated that the only improvement employees could have expected was as outlined in Info Share Bulletin No. 30 where it was indicated that there was a preparedness by EZ to review the number of weeks notice to be paid. On that basis, given the number of employees who volunteered for retrenchment, Mr Nally submitted that this meant they were satisfied with the 1991 PMEZ Retrenchment Package. In response to the argument advanced by Mr Adams going to the very long length of service of some of the retrenched employees, Mr Nally said that they were compensated by the payment of weeks per year of service with no ceiling apart from the fact they could not receive any more than if they had remained to retiring age. Mr Nally stated that there was no logic to the submissions of Mr Adams in respect of Exhibit AMEU 4 which contained a union proposal for additional weeks of pay per years of service. It was submitted by him that there was no rationale and no convincing argument why the Commission should apply that proposal or intervene at all. He said:
In fact Mr Nally said there was a further proposal based on 3 weeks per year in service in Exhibit AMEU 5 which was costed by Mr Adams at $5.420 million excluding payment for notice. Mr Nally submitted that he was not sure whether the proposals applied to all unions or only AMEU members. Mr Nally challenged the costings supplied by Mr Adams and via Exhibit PMEZ 38 indicated that there would be an additional cost of around $1.5 million dollars exclusive of notice if Mr Adams' proposals were adopted by the Commission. Mr Nally submitted that the Commission should reject what amounted to a scattergun approach by the AMEU and also FIMEE given that the latter organisation described its position as seeking an outcome somewhere in between Exhibit FIMEE 1 (the claim) and Exhibit FIMEE 5 (the 1991 PMEZ Retrenchment Package). SUMMARY OF EZ SUBMISSIONS At this point of his submissions Mr Nally turned to issues relating to retrenchment benefits for non award employees. This matter was the subject of separate application joined to this matter for hearing purposes. I intend to deal with all of the submissions in respect of non award employees under the one heading i.e. Non Award Employees. But before addressing that issue I intend to complete the remaining part of Mr Nally's submissions, which is in fact a summary of what he said concerning in the main award employees. As will be noted from what follows the summary does not impede the flow of the material that was presented both in respect of award employees and that which was put by all of the parties in respect of non award employees. Having regard to the foregoing, Mr Nally's submissions may be summarised as follows:
NON AWARD EMPLOYEES The application in matter T4654 of 1993 by the Australian Municipal, Administrative, Clerical and Services Union, Tasmanian Branch (AMACSU) was, inter alia in the following terms:
This application was joined with matter T4613 of 1993 for hearing purposes. Mr Adams informed the Commission that salaried staff employees (hereinafter referred to as non award employees) were paid a uniform 12 weeks retrenchment -pay in addition to all other statutory entitlements. The submissions of Mr Adams were that the 100 non award employees involved and who were retrenched should have received the weeks per year of service payment contained in the 1991 PMEZ Retrenchment Package and subsequently any improvement resulting from these proceedings. Exhibit AMEU 6 highlighted the difference in payment between a blanket 12 weeks per year of service and retrenchment pay based on the existing Package. The differences ranged from $16,000 to $71,500 less per non award employee compared to what would have resulted if the weeks per year of service from the 1991 PMEZ Retrenchment Package had been applied. Mr Adams contended there was a significant inequity in the way non award employees were treated. Mr Grubb for AMACSU supported the submissions of Mr Adams. He indicated that AMACSU was seeking retrenchment pay for non award employees in respect of weeks per year of service on the same basis that was made available to award employees. The Commission was informed that at some earlier stage non award employees were paid 40 or 44 weeks retrenchment pay and this subsequently moved to 12 weeks pay. Mr Grubb sought to draw the distinction between 12 weeks pay being available to those non award employees who had planned to go voluntarily in circumstances not related to the October 1993 retrenchments and those non award employees involved in the October 1993 employee reductions. He said:
Mr Nally submitted that the claim by the AMEU and AMACSU was that the weeks per year of service formula should be applied to non award employees. Mr Nally said that in making comparisons between what was paid to award and non award employees the unions had ignored the significant superannuation benefits paid to non award employees. Mr Nally informed the Commission that:
The point was made by Mr Nally that as far back as October 1991, Exhibit PMEZ 32, employees were made aware of what the different superannuation arrangements were and other retrenchment benefits. Also that non award employees who had been transferred from the award would not be disadvantaged. Exhibit PMEZ 39 was tendered as further confirmation to the then Federated Clerks Union that different arrangements were in place. Exhibit PMEZ 21 relating to matter T3766 of 1992 was a decision of the Commission as constituted in this matter regarding redundancy/retrenchment provisions for clerical employees. In that decision reference was made to a decision of Mr Commissioner Imlach in matter T3561 of 1991 where he quoted from the federal TCR in the following terms:
Mr Nally submitted that the decision in matter T3766 of 1992 went on to state that:
Mr Nally stated that it would be unfair to EZ not to take into account the significant additional superannuation benefit for salaried non award employees. He said that this aspect was totally ignored by Mr Adams and Mr Grubb. Mr Nally tendered a number of exhibits to demonstrate that an employer was entitled to offset retrenchment benefits against superannuation benefits and also that no special circumstances existed to justify a departure from the provisions which were applied. Mr Nally informed the Commission that his intention was to show that no inequity existed, indeed in the event the submissions of Mr Adams and Mr Grubb were successful that would penalise EZ as there would be double counting. Exhibit PMEZ 40 related to Jackson v Atco Industrial Limited. In essence the finding in that matter was that the amount that was paid by way of superannuation should be brought into calculation. Indeed that the total package offered should be considered. Exhibit PMEZ 41, Mockford v Evins Stores Pty Ltd reinforced that point also i.e.:
Mr Nally submitted that the Pasminco Superannuation Trust Deed enabled EZ to request the superannuation fund to pay a significantly better benefit in circumstances where employees were retrenched. Mr Nally indicated that this information was made available as far back as 1991 to the then FCU which was advised because the benefits accruing to employees under the superannuation fund were significant, the benefit based on weeks per year of service would no longer apply. In other words there was a deliberate change to superannuation arrangements which ensured that those retrenched would receive a significantly better benefit. Exhibit PMEZ 43 dealt with the issue of a refusal for clerical workers to be paid the same as production workers as special and exceptional circumstances had not been established. Mr Nally submitted that in the case of salaried or non award employees no special or exceptional circumstances existed which would entitle them to an increase or a greater benefit than what was paid. It is not proposed to further address in detail the exhibits tendered by Mr Nally supporting the above findings regarding the ability to offset superannuation benefits against retrenchment payments or that special and exceptional circumstances should exist to warrant a departure from established standards. Suffice it to say I have examined all of the exhibits in question and make the following brief comments in respect to them. Exhibit PMEZ 44 discussed the right to set off superannuation benefits. Exhibit PMEZ 45 that payments made under superannuation schemes:
Exhibit PMEZ 46 clearly dispelled the arguments advanced by Mr Adams that non award employees "were down the drain" compared to award employees in respect of weeks per year of service. Mr Nally informed the Commission that each of the employees referred to by Mr Adams in Exhibit AMEU 6 was better off than if they had been paid in accordance with the 1991 PMEZ Retrenchment Package. Mr Nally submitted that there was no inequity. He said that taken in isolation the submissions of Mr Adams which were, inter alia,:
would have resulted in a reduction in their benefits. Mr Nally pointed out that employees could not get the benefit of both the non award and award retrenchment packages. The total benefit in each package needed to be considered. Mr Nally said:
In response to Mr Grubb seeking to attribute weight to a newspaper article (Exhibit AMACSU 2) that EZ had indicated that it would ensure that the final retrenchment Package agreed to in talks (before the Commission) with unions would be applied to all workers, Mr Nally made the point that this related to notice only. Mr Nally was critical of AMACSU because it appeared to EZ that the concept of a final package recommended earlier by the Commission (refer Appendix 1) was not put by Mr Grubb to non award employees. He said:
Mr Nally submitted that it simply was not valid for either the AMEU and AMACSU to claim that they had the right to pick the eyes out of the benefits applicable to non award or award employees. He said that the unions wanted the best of both worlds. Mr Nally said that this would be inequitable and that would amount to double counting and an unacceptable unjust cost on the Company. UNION RIGHT OF REPLY Mr Cooper submitted that the unions in this case were not given the opportunity to review the 1991 PMEZ Retrenchment Package prior to the October 1993 retrenchments. He said that it was implicit in the Introduction to the term of the Package for prior discussions to take place. The point was made by Mr Cooper that the only involvement the unions had was in discussions and conferences conducted by the Commission following the announcement of the retrenchments. The absence of prior consultation was submitted by Mr Cooper to be contrary to the Job Protection Case. Accordingly Mr Cooper rejected that it had not been demonstrated that special and unique circumstances existed with respect to these retrenchments. He made the point that these proceedings were necessary, given that no prior consultation had occurred. Mr Cooper said the facts were that:
Mr Cooper reiterated that whilst in a general sense it was known that numbers would reduce it was not known numbers were going to come down by over 300 people. Mr Cooper said:
The specific benefit Mr Cooper was discussing related to applications for paid leave for up to 16 hours for the purpose of job interviews. Additional leave could also be granted where it was demonstrated this was required. Mr Nally pointed out that the additional leave would have been unpaid. Mr Cooper also made the point that Mr Nally had referred to a philosophical change in the operations of EZ which was to focus on its core activities of producing zinc. He said that this philosophical change without prior consultation on the 1991 PMEZ Retrenchment Package was unfortunate and was one of the "main reasons we are here arguing (in) the Commission" (transcript p697). Mr Cooper submitted that if the situation was such that the retrenchments were necessary for EZ "to remain afloat" (transcript p317) the unions should have been extended the courtesy of discussions. He said the record of FIMEE and other unions was to adopt a realistic and responsible approach in similar situations faced by it. He said:
With regard to flow on implications in respect of what may be determined by the Commission in this matter this was rejected by Mr Cooper. He said each case must be dealt with on its merits and anything that arose out of this case would not put industry on notice to review their benefits. Mr Cooper argued that the magnitude of the retrenchments and the re organisation of work at EZ meant that in the context of the philosophical change adopted by EZ, that the retrenchments constituted exceptional circumstances. In respect of the union claim in FIMEE 1 not being able to be fragmented as suggested by Mr Nally when he submitted that it was either accepted or rejected by the Commission, Mr Cooper stated that the claim outlined in Exhibit FIMEE 1 was the subject matter before the Commission. In the AMEU'S right of reply -
Mr Adams then highlighted that part of the Introduction to the 1991 PMEZ Retrenchment Package which stated, inter alia, that if there should be, for whatever reason enforced retrenchments, then the parties would enter into further discussions. Mr Adams said:
Mr Adams submitted that EZ had disregarded scores of employees who had given long and loyal service. He said there was no opportunity for those employees to go through a proper retrenchment process. It was submitted that whilst unions were aware of change at EZ, it was the magnitude of the change which really impacted in this case and stood out from what had been taking place over the previous 5 to 6 years. Mr Adams contended that EZ was only interested in outcomes in terms of how it was going to effect the Company and that it was not concerned with an orderly or organised program of downsizing. He submitted that the unions had been involved in many exercises of significance where downsizing had occurred, e.g. Mt Lyell, Renison, Comalco, Temco, Aberfoyle and where there had been closures such as Wander. In those cases Mr Adams submitted the unions were involved and consequently employees were included in the decision making processes. Mr Adams stated that the support services provided by EZ were too little too late and that support was needed earlier. He informed the Commission that some retrenched employees he had contact with had still not recovered some 8 or 9 months after the October 1993 retrenchments. Mr Adams submitted that EZ had not operated within accepted standard industrial relations practices such as appropriate consultation, negotiation, compassion and compromise. He said that those considerations were only applied after the event in an ad hoc fashion. Mr Adams made the point that the terms of the 1991 PMEZ Retrenchment Package had previously applied where there had been agreement that people would leave and the effect on the remaining workforce was minimal. With regard to the Info Shares, Mr Adams said that this:
and further -
Mr Adams contended that the retrenchments were not handled in a correct manner and therefore a genuine case existed for improving the retrenchment benefits for all employees who were retrenched in October 1993, including non award employees. Mr Adams contended that as there was no retrenchment component in the WERAF superannuation payments made to award employees it could not then be argued that the superannuation retrenchment benefit contained in the payments made to non award staff should be taken into account by the Commission. Mr Adams submitted in essence that it was not valid to reduce retrenchment benefits because of superannuation payments as the latter payment was for retirement purposes. He argued that the superannuation benefit for retrenchment was nowhere near the retrenchment benefit for award employees because it (the superannuation retrenchment benefit) was only a component of the amount paid. Mr Adams assured the Commission that any increase in retrenchment benefits determined by the Commission would be regarded as one off and would not set a precedent for the future. In the AMACSU right of reply Mr Grubb referred to the 1991 PMEZ Retrenchment Package where it was stated in paragraph 3 - Principles that:
Mr Grubb supported the submissions of Mr Adams who had stated that no prior negotiation or consultation occurred. He submitted that regard should be had to the Wynn's Winegrowers Pty Ltd V Foster Case, Exhibit 42, where at page 362 it was stated five months notice should have been given. Mr Grubb made some submissions concerning the parameters that should be taken into account in respect of superannuation contributions. He questioned whether non award employees gained significantly better superannuation payouts because of retrenchment than what would otherwise have been the case. He said no evidence was produced by Mr Nally to support this. Mr Grubb said that the issue was whether or not superannuation could be taken into account in respect of determining a retrenchment package. He contended that the onus of proof had not been properly discharged by Mr Nally. Mr Grubb made much of the fact that superannuation trust deeds were not made available to the Commission and therefore it was not possible for it to determine exactly what should be taken into account in respect of the superannuation component in the overall retrenchment payments made to non award employees. It was emphasised by Mr Grubb that only employer contributions could be taken into calculation in respect of retrenchment. He said no information was put before the Commission to enable a reasoned conclusion to be achieved. FINDING In this matter the parties made extensive submissions and presented numerous exhibits. All of the material has been comprehensively summarised and addressed in this decision. It becomes abundantly obvious that EZ's competitive position in the international market place was in urgent need of redress. The RACE program went part of the way towards achieving a more productive outcome but in the end significant labour savings were still required to bring EZ closer to world best practice. Effectively the material before the Commission demonstrated that EZ was in a precarious position having regard to the overall position of Pasminco Limited. The circumstances were that world zinc stocks had risen to around 600,000 tonnes (875,000 tonnes a little after the October 1993 retrenchments) which pushed zinc prices to an all time low. Pasminco Limited debt had increased from $200 million to $500 million in the period 1989 to June 1993 and operating losses reached $86 million dollars in 1993 after consecutive losses of $47.6 and $58.6 million dollars in 1991 and 1992 respectively. It is clear that something had to be done. The unions for their part argued that they had acted responsibly whenever a company approached them in respect of improving productivity even where that meant that retrenchments had to be made. Various examples of pro active union involvement were provided to the Commission as evidence of a constructive approach by the unions in matters of this kind based on consultation and prior input. In the case of EZ the unions argued that contrary to the provisions of the 1991 PMEZ Retrenchment Package they were not consulted ahead of the retrenchments. The evidence supports that case. Mr Nally submitted throughout the course of these proceedings that it was well understood by employees, unions and indeed the Commission that the operational review conducted by EZ would inevitably result in some job losses. Whilst he is correct to say that, the fact is this was speculation only and no concrete evidence manifested until the announcement on 4 October 1993. A fundamental tenet of the Job Protection Case is the requirement to give as much notice as possible to employees about to be retrenched and to consult with them with a view to cushioning the effect on them of losing their jobs. In that regard EZ failed with the October 1993 retrenchments being handled completely differently to these necessitated as a consequence of RACE program initiatives where in the main retrenchments were made on a consultative basis and where long notice was provided. In my opinion it is stretching it too far for Mr Nally to conclude that Info Share Bulletin No 5 dated 11 June 1993 constituted notice to employees of EZ's intention to review its numbers. The relevant parts of that Info Share were as follows:
It cannot be construed that this communication to employees signalled the intention by EZ that it intended to cut jobs, let alone that it provided notice that this would be the case. Similarly with other Info Shares no specific details on job numbers were provided and this was acknowledged by Mr Nally. The Commission is moved to wonder given the lead up to the announcement of retrenchments on 4 October 1993 why discussions were not held with unions. If as Mr Nally continued to submit that employee numbers were going to reduce and that this was the expectation, then why did EZ choose not to provide unions an opportunity to have an input and at the very least facilitate discussions on the 1991 PMEZ Retrenchment Package?. It is obvious from the material before the Commission that extensive planning was undertaken by EZ ahead of the retrenchment announcement. As late as 13 September 1993 in Info Share Bulletin No 22 the Company urged employees to "clarify" any rumours they heard. This demonstrates beyond question that employees, unions and indeed the Commission were left to speculate the outcome of the operational review. Considerable submissions were made by Mr Nally concerning Public Interest issues. I have already addressed some of the factors impinging on Pasminco Limited and as a consequence on EZ i.e. low zinc prices, high stock levels, Pasminco debt. With regard to the Economy of Tasmania (Public Interest Section 36(2)(B) of the Act) the Commission recognises that EZ continues to play a vital role in this State. Whilst there may be a tendency for some to consider the retrenchments in isolation from anything else, the contribution made by EZ to the economic well being of Tasmanians should not be overlooked. Notwithstanding the retrenchments and having regard to significant outsourcing of work that is now taking place, it is an acceptable assumption for EZ to make, taking into account CREA data, that in the aggregate of direct and indirect jobs, it sill contributes approximately 1.96 per cent to all employment in Tasmania. This counteracts to some extent the economic submissions made by Mr Cooper which were that high unemployment levels and job contraction in the mining industry would make it difficult for those that were retrenched to find new jobs. Obviously there is substance to that type of argument but it has to be weighed against the reality that the retrenchments generated job opportunities elsewhere. The economic data provided by Mr Cooper demonstrated beyond question that the economic climate at the time of the retrenchments was difficult. To an extent this was offset by Mr Nally when he informed the Commission that skilled vacancies in December 1993 were the highest since August 1990. Weighing all of the circumstances the Commission has to consider the action the Company took to ameliorate the impact of the retrenchments in what were difficult times. In that regard the Company is to be commended for the extensive and ongoing support it provided to those that were retrenched. The support mechanisms enlisted by EZ included counselling, professional advice, immediate access to welfare services in the One Stop Shop, the One Stop Shop concept itself, establishment of the Glenorchy Business Enterprise Centre, CES programmes, the Industrial Chaplaincy Service and others. So whilst the economic circumstances were indeed difficult the creation of new jobs through outsourcing of work and the extensive support provided to those retrenched served to mitigate against the economic factors referred to by Mr Cooper. The Company sought to show that it acted in a caring manner and this is accepted by the Commission. This was further illustrated through the "buddy system" which was the follow up of individuals who were retrenched and who were experiencing difficulties. Clearly people were not left to fend for themselves after they lost their jobs. A wide range of services were provided and continued to be provided. In my opinion these initiatives by EZ should not be ignored in respect of determining whether or not the 1991 PMEZ Retrenchment Package should be improved. The benefits that were provided in the context of weeks per year of service were fair and reasonable given that there was no ceiling in the Package apart from the fact that no employee could receive more than if they had worked to retirement age. The fact that EZ did not adhere strictly to the terms of the 1991 PMEZ Retrenchment Package is to be regretted. There is no doubt it had an obligation to discuss the retrenchments with the unions during the course of the operational review. That breach of acceptable industrial conduct however does not justify, in my opinion, the imposition of a penalty to the extent of increasing weeks of pay per year of service. The existing benefits in respect of that aspect were, as I have said, fair and reasonable. However I am of the very strong opinion that the period of notice provided was totally inadequate. In my opinion a reasonable period of notice to employees that retrenchments were going to take place would have been at least six weeks given the extensive period over which the operational review was carried out. As it was the announcement ending the speculation of retrenchments was made on 4 October 1993. Those that were to be retrenched were finally informed on 18 October 1993 and were paid out at that time and in addition received one weeks additional pay in lieu of notice. In my opinion it is reasonable to deduct from the six weeks notice period the three week period between 4 to 25 October 1993. This leaves a period of 3 weeks notice to be paid at the rate applied by EZ for the period 18 to 25 October 1993. The submissions in respect to non award employees to be paid the same weeks per years of service benefit as that which was paid to award employees is rejected. There is overwhelming material before the Commission which supports the position of EZ that in considering retrenchment benefits superannuation entitlements are able to be offset. There is no doubt that non award employees were not disadvantaged and it simply is not an option for them to receive benefits from what amounts to two separate packages. Also it is noted that the change to non award employee benefits was communicated to non award employees and the then Federated Clerks Union (FCU) as early as October 1991. In the proceedings Mr Nally was extremely critical of the claim or in his opinion the claims advanced in this matter. His submissions were extensively summarised at pages 37 to 39 of this decision. In my opinion the subject matter of the application, as amended, enabled the Commission to reach a conclusion on all of the issues raised in it. Whilst different union proposals were put I do not regard this to vitiate the application by FIMEE or the capacity of the Commission to deal with it. I have based the foregoing findings in respect of the period of notice and weeks per year of service on the particular circumstances applicable at EZ. This is in keeping with the Job Protection Case which determined that each case should be considered on its merits. Accordingly questions of flow on do not arise. Finally having regard to the period of notice I have determined for award employees I consider that it is appropriate for non award employees to receive the same period of notice. In calculating any entitlement for non award employees regard should be had for the actual notice period they were actually given and only the difference , should be paid. I do not intend to issue an order in this matter at this stage but merely indicate that a reasonable period for the Company to arrange for the notice payments to be made would be within fourteen days from the date of this decision.
R K GOZZI Appearances: Date and Place of Hearing:
APPENDIX 1 TASMANIAN INDUSTRIAL COMMISSION Industrial Relations Act 1984 Federation of Industrial, Manufacturing and Engineering Employees, and Pasminco Metals-EZ
Industrial dispute - retrenchment and redundancy at Pasminco-EZ Risdon RECOMMENDATION Following many conference proceedings between the parties and the Commission where improvements to the retrenchment package offered by Pasminco Metals-EZ (EZ) were discussed, the position has now been reached where talks have been exhausted. It is the strong opinion of the Commission that no further conciliated gains in retrenchment benefits can be achieved. The Commission has come to that view after extensive rounds of negotiations during the course of which not insignificant advancements in the total payments available to employees were conceded by EZ. These included increases in paid notice from 25 October 1993 to 29 October 1993 and payment in lieu of notice from 1 week to 3 weeks pay. The net effect of this is that employees who were retrenched on 18 October 1993 will be paid to 29 October 1993 and in addition receive a further 3 weeks pay in lieu of notice. Also pro rata long service leave will be paid from 12 months employment onwards. Having regard to the outcome of the negotiations and the improvements in the quantum payment now available to retrenched employees I recommend that the following revised package be accepted: (a) Period between 18.10.93 when retrenchments were made and 29.10.93 inclusive to be regarded as time worked. (b) Three weeks pay in lieu of notice. (c) Employment from 12 months and onwards to be counted for long service leave purposes. (d) Weeks per years of service to remain unaltered. (e) The above benefits (a) to (d) are to be regarded in the context of a one-off package conciliated by the Commission in respect of this particular matter. Job Guarantee For the sake of completeness I acknowledge the intention of the parties to enter into written job guarantee proposals for remaining employees post the finalisation of the current retrenchment program. The Wharf and Fertilizer Departments are not included in these arrangements. Transfers This recommendation confirms the agreed arrangements whereby those employees transferred to other jobs have 3 weeks to accept the new arrangements without prejudicing their option of taking a voluntary retrenchment package. Volunteers Employees who have volunteered for retrenchment before the close of voluntary applications on 15 October 1993, and who have confirmed their intention to leave should be permitted to do so on request. In addition I recommend that in the event other employees wish to take voluntary retrenchment, and provided the final number of employees to be retrenched in this matter has not yet been reached, those employees be permitted to leave the employment of EZ ahead of any other employees who may otherwise be forcibly retrenched. This recommendation is not intended to apply to the Wharf or Fertilizer Departments which are subject to separate discussions. Forced Retrenchments There are a number of applications before the Commission concerning claims for unfair dismissal on behalf of employees forcibly retrenched. It is my recommendation that the parties discuss those claims ahead of reinstatement proceedings in the Commission. Regard should be had in those discussions to the by now well established Commission principles applicable to cases of this nature. Inference should not be drawn from this latter comment that the overall number of retrenchments would be reduced in the event a reinstatement claim is successful. The most likely outcome would be, leaving my recommendation on volunteers to one side, that a further retrenchment selection would be required to be made. This would be by far the worst option and therefore the parties are urged to seriously apply themselves to this issue. ARA Agreement Clearly there is a need to review the Auxiliary Resources Agreement and its implications for the use of contractors. I recommend that appropriate arrangements commensurate with a reduced trades workforce be pursued between EZ and appropriate unions. Skills Acquisition Given changed working arrangements and expectations of employees it may be that training matrixes require fine-tuning to properly comprehend training for the acquisition of additional skills consequential to job redisign. This should be co-operatively reviewed by the parties as a matter of some priority. Other Retrenchment Issues I noted that the Automotive, Metals and Engineering Union and the Australian Municipal, Administrative, Clerical and Services Union wish to retain their rights to pursue retrenchment arrangements for "non award" and clerical employees identical to the above package recommended by the Commission. Leave reserved is granted to those organisations on that issue. Conclusion The foregoing recommendations are the product of many hours of intense negotiations under the guidance of the Commission. I am of the view that all of the issues have been considered in great depth to the extent that I feel satisfied that the interests of those who have been retrenched have been fairly balanced against the future interests of EZ and those employees in ongoing employment. A report back hearing has been set down for 9.30 am on 8 November 1993.
R.K. Gozzi Appearances: Date and Place of Hearing:
APPENDIX 2 MEMORANDUM OF UNDERSTANDING OCTOBER 1993 We the undersigned being parties to the Electrolytic Zinc Award and the PMEZ Redundancy/Retrenchment Package Agreement of 1991, hereby acknowledge and accept the following conditions, which we believe are consistent with the recommendations of Commissioner Gozzi on the 1.11.93, in respect of award staff redundancies and retrenchments undertaken in October 1993 (including those advised and not yet completed): 1. The terms of the 1991 Redundancy and Retrenchment package apply to all eligible award staff employees separating from PMEZ during and as consequence of the October 1993 Organisational Review. The Wharf employees situation is subject to further discussions but they will be eligible for the same benefits. 2. As a one off Agreement employees will receive the following benefits: (a) Employees who have left will receive payment of the balance for the period 18 - 29 October 1993, at the average weekly rate (18 - 25 Oct. already having been paid). (b) An additional amount of 2 weeks will be paid over and above the one weeks' notice contained in the EZA, giving a total of 3 weeks. (c) The pro rata Long Service Leave benefit will be improved to apply from 12 months service. (d) Any employee who leaves due to the review after the 18 October 1993, will receive up to 9 days paid leave for the purpose of finding new employment or seeking financial advice. This is in lieu of the provision outlined in (a) and any unused leave will be paid out upon completing their employment. Note: EZ Fertilizers are subject to separate discussions. 3. The Full WERAF will be paid: . Company contributions ) (100% vested 4. EMPLOYMENT SECURITY PMEZ is committed to working towards employment security for its workforce. The development of an employment security policy should not be the sole responsibility of senior management, but rather involve all employees and their representatives. Once completed the Operational Review will represent a significant step, which will help PMEZ become world-class, and will contribute to the employment security of all employees. PMEZ is confident that the Company, its employees and their representatives are now in a strong position to achieve this outcome, which will ensure a secure and rewarding future. 5. Parties agree to consult on issues raised by Commissioner Gozzi in his recommendation of the 1st November 1993 to an agreed timetable.
APPENDIX 3 As at December 1993 TASMANIAN REDUNDANCY PROVISIONS - MINING INDUSTRY
APPENDIX 4 INFO-SHARE BULLETIN A Regular Information Sheet for Employees OPERATIONAL REVIEW While our $225 million modernisation programme over the past seven years has moved the company some way towards becoming a world-class refinery, we still lag in terms of labour efficiency. As you know, our cost reduction programme RACE has improved our efficiency, but it has not delivered change at the level or speed required. Because of this, we are conducting a review of our business to see what steps are needed to close the productivity gap and ensure the future of PM-EZ. Employee Reductions The management team has determined that we must reduce our employee numbers by between 300 and 350 people - and we must do this quickly. This will involve voluntary redundancies and, unfortunately, compulsory retrenchments. The pain of change will be shared across the plant by employees at all levels from management to the shop floor. We are committed to helping those who will be leaving, through counselling, retrenchment payments and assistance in finding alternative employment. Voluntary Process The management team wants to finalise its plans as soon as possible, but before we do, we want to take into account each employee's preferences. So anyone interested, is invited to apply for voluntary redundancy by speaking to his or her manager. Those contemplating applying for voluntary redundancy should be aware of the following:
Next Steps Once the management team has considered applications for voluntary redundancy, an employee assessment system, based on performance and skills, will then be applied to determine who will be compulsorily retrenched. Until these processes are completed, it is not possible for each individual's situation to be clarified, but all employees will be notified of their own position by the end of October at the latest. How will PM-EZ operate in the future? To ensure that PM-EZ is viable into the future and continues to contribute to the Tasmanian community, significant changes in working arrangements, organisational structure and attitudes will be necessary. We will be a smaller team and be more focussed on our core business of making zinc. However, these changes will also mean that we need employees who will work towards making PM-EZ the best refinery in the world, and who are prepared to actively contribute every day. We need a team that has a total commitment to PM-EZ and is continually looking at ways to improve our performance. We must achieve our own security and be motivated to tackle the challenge of competing with the best in the world. Conclusion The next three weeks will be an extremely difficult time for everybody, and I apologise for the uncertainty of the ongoing review process. We must go through these changes as they are the only way the company can improve the security of the employees who remain and all those in Tasmania who depend on PM-EZ's continuing operation. (Sgd.) Issue No 25 4 October 1993 |