T10668
|
TASMANIAN INDUSTRIAL COMMISSION Industrial Relations Act 1984 DECISION APPEALED - SEE T10893 The Australian Workers' Union, Tasmania Branch and Barminco Pty Ltd
Industrial dispute - registered agreement - wages review provision - alleged failure by employer to give appropriate weight to general industry and community and wage movements - whether terms of agreement breached - jurisdictional issues - whether disputes settling procedure allows arbitration - whether wage increase can be ordered - order issued REASONS FOR DECISION [1] On 15 January 2003, The Australian Workers' Union, Tasmania Branch ("the union"), applied to the President, pursuant to s.29(1) of the Industrial Relations Act 1984 ("the Act"), for a hearing before a Commissioner in respect of an industrial dispute with Barminco Pty Ltd ("Barminco") arising out of the alleged failure of the company to place appropriate weight on general industry and community wage movements when conducting a wages review pursuant to Clause 12.3 of the Barminco (Copper Mines of Tasmania) Mining Production Agreement 2000 ("the Agreement"). [2] On 20 January 2003, the President convened a hearing at the Commonwealth Law Courts, 39-41 Davey Street, Hobart, before myself, to commence on Friday 14 February 2003 at 10.30 am. At the request of the respondent and with the consent of the applicant the hearing was adjourned until 10.30 am Friday 21 February 2003. There was a further adjournment at the request of the respondent until Tuesday 4 March 2003. On that occasion Mr R Flanagan appeared for the union and Mr W FitzGerald appeared for the respondent. There was a further hearing day in Hobart at 2.00 pm on Thursday 13 March 2003 and another at the Magistrates' Court, Queenstown at 9.00 am on Monday 24 March 2003. [3] The application was expressed in the following terms:
BACKGROUND [4] Barminco is a mining contractor. It is a privately owned company, owned by Mr Peter Bartlett of Western Australia. Barminco obtained a contract for the Copper Mines of Tasmania ("CMT") Mt Lyell site in Queenstown, to commence from 30 September 2000, effectively taking over all mining functions that had previously been performed by another contractor. [5] On 21 September 2000 Mr W FitzGerald of the Australian Mines and Metals Association and Mr R Flanagan of the union made application (T9215 of 2000) to the Commission for the approval of the Agreement, pursuant to s.55(2) of the Act, asking that the matter be listed for hearing as a matter of urgency, in order to ensure certainty of employment arrangements when Barminco commenced at the site. [6] A hearing was conducted on 3 October 2000, at which Mr FitzGerald, for Barminco, said:
[7] Those submissions were supported by Mr Wakefield, of the union. [8] The Agreement was approved by Imlach C, with an operative date of 1 October 2000, to remain in force for a period of three years. Therefore it will cease to have effect as at midnight on 30 September of this year. [9] Clause 5 of the Agreement - Parties Bound - identifies Barminco Pty Ltd, of Western Australia and the Tasmanian Branch of the union as the parties to the Agreement. [10] Clause 4 - Application of the Agreement - states that the Agreement shall apply to the employment of all persons engaged by Barminco in mining production activities conducted at the Mt Lyell operations of CMT engaged as "Mining Industry Employees". [11] Clause 12 sets out the remuneration for "Mining Industry Employees":
[12] On 24 July 2002 the union notified a dispute to the Commission (T10330 of 2002) in which they said:
[13] Whilst the dispute was in relation to the alleged unilateral reduction of rates of pay, the union claimed that, amongst other things, Barminco had failed on two occasions to comply with the provisions of 12.3 of the agreement, namely, to conduct the wages review. The union said that, since 7 August of 2001, their every endeavour to have the wages review had been frustrated by the company. They had indicated to Barminco that the operative date of any increase that would flow from the wages review would be 1 October 2001. [14] There have been no upward movements in relation to the Base Rate or the Incentive Rates since the making of the Agreement in October of 2000. [15] In relation to the dispute in matter T10330 there was a hearing in Hobart on 7 August 2002, followed by a conciliation conference, conducted with the assistance of the Commission over two days in Queenstown on 27 and 28 August, 2002. There was a further hearing in Hobart on 8 October 2002, which took the form of a report from both parties on the progress of the matter. On 4 November 2002 there was a conference in Hobart. A further conference in Queenstown, with the assistance of the Commission, took place on 16, 17 and 18 December 2002. [16] On 24 December 2002 I issued the following Order, with the consent of the parties:
[17] The Order, if complied with, settled the dispute in Matter T10330 of 2002. [18] That is by way of history. The wages review did take place, as ordered, on 14 January 2003. The dispute now before me is in relation to the alleged failure of the company, at the review, to have appropriate regard for, and to place appropriate weight on general industry and community wage movements, factors required to be taken into account as outlined at the second dot point of clause 12.3 - Review Period - of the Agreement. [19] The dispute has been brought before the Commission in accordance with Clause 7 - Grievance Resolution Procedure - of the Agreement, which says:
[20] The referral to the Commission was made pursuant to Section 29 (1) of the Act, which says:
[21] "Industrial dispute" is defined, at section 3 of the Act, as:
[22] "Industrial matter" is defined as: "...any matter pertaining to the relations of employers and employees and, without limiting the generality of the foregoing, includes - [a] a matter relating to - the mode, terms and conditions of employment; or ... [b] a breach of an award or a registered agreement - ..." [23] The union is seeking an order that the rates of pay in the Agreement be increased in accordance with the provisions of clause 12.3 of the Agreement and that the amount of that increase be 9.8% applied to the Base Rate and the Incentive Rates. JURISDICTIONAL ISSUES [24] Mr FitzGerald, for the respondent, submitted that there were threshold issues in respect of jurisdiction that needed to be dealt with and determined first in order to establish whether or not the case should proceed. The Respondent's Submissions [25] Mr FitzGerald submitted that the only breach of agreement the Commission can deal with is whether or not there has been a wage review. The Commission, in terms of breach of agreement, can do no more than make an order for the review to occur. The Commission can go no further than it has already gone. [26] The parties have complied with the order in relation to the wage review mechanism, but that did not presume any wage outcome. The parties met in good faith. The company has abided by its obligations under the review mechanism. The Commission can go no further, except pursuant to section 61 by agreement between the parties. Section 61.4 provides the nexus between section 55, the agreement-making section of the Act, and section 61 which is private arbitration. [27] Section 61.4 states:
[28] Any referral under step 4 of the dispute clause in the Agreement must be subject to the provisions of the Act. The inclusion of the word "arbitration" in the clause does not mean compulsory arbitration. In Mr FitzGerald's submission, it means consent arbitration. [29] It is not open to the Commission to assume some sort of de facto jurisdiction by construing the word "arbitration" as an automatic right to proceed because step 4 makes it clear that it is subject to the Act. The only construction that can be put upon the words "as appropriate" [after the word "arbitration] is if both parties feel it is appropriate to grant new rights of private arbitration pursuant to s.61. The way the agreement is written, unless the company agrees to private arbitration, the rights are restricted to conciliation. Forcing de facto, or pseudo, compulsory arbitration, is limiting the parties' rights under the Act. [30] The only powers the Commission has in respect of wages outcomes are under section 23 [application for awards or variations of awards] or through section 61, private arbitration. [31] Section 29 of the Act is the disputes settling provision. It is universally recognised that the Commission has no power to make an award pursuant to section 29. The Commission has two separate and distinct heads of power; under section 23 which is an award-making power, and under section 29, which is the dispute-settling power. [32] What the application is seeking to do, effectively, is make an award by way of a wage increase of 9% (sic). A new obligation is created by a new wage rate. That can only be done under section 23, not under section 29. Section 31(2)(b) [which deals with orders arising from hearings brought under section 29] specifically states that a Commissioner shall not make an order that makes an award or that varies or creates a provision of an award. [33] Section 31(3) says that a Commissioner may make an order requiring that application be made under section 23. That is a specific reference. The only way that the Commission can legitimately hear the matter is if the union seeks to make an application under section 23 for the making of a Barminco Enterprise Award. [34] Mr FitzGerald agreed that the Commission had the jurisdiction to enforce an agreement registered with the Commission, but, he said, that is not what this application is seeking to do. The increase sought is not an existing obligation, it is a new obligation. The Applicant's Submissions [35] Mr Flanagan said that there are three fundamental steps involved in the proceedings before the Commission. The first question is: does an obligation exist and, if so, what is the obligation? The second step is the question of whether or not that obligation has been breached by the employer. The third step is, what the remedy is. The union has identified its preferred remedy, but the decision in relation to remedy is at the discretion of the Commission. [36] Section 29(1) provides the union with the capacity to make the application in respect of an industrial matter. There has been a breach of an agreement, a breach of a reasonably unique provision, which gives rise to the Commission's capacity to intervene and order a remedy. [37] The union does not accept that what is being sought is the creation of a new obligation. It is to enforce an existing obligation. Whilst it is accepted that section 31(2)(b) prevents the Commission from issuing an order which has the effect of making an award or varying an award, that is not the exercise the Commission is being asked to perform in the context of this dispute. [38] Mr Flanagan agreed that the union cannot use the disputes procedure within an agreement to invoke the jurisdiction of the Commission where the Act makes it clear that jurisdiction is wanting. That would be correct if what was being relied upon was an agreement provision which was inconsistent with the provisions of the Act, in which case, the Act would override the provisions of the agreement, but that is not the case on this occasion. There is no inconsistency between the two. [39] Mr Flanagan rejected the proposition that the reference in clause 7 of the Agreement to arbitration refers to consent arbitration under section 61. The words in the Agreement must be given their ordinary meaning, and to try to artificially insert the word "consent" has no legitimacy or foundation. The only interpretation that can be placed on the word "arbitration" in clause 7 is that any arbitration available under the Act is available through the mechanism of the Agreement. One means of arbitration is through private arbitration pursuant to section 61 and the second means of arbitration available is by way of an application under section 29, which is the case with the current application. There is a third arbitration mechanism for an application made pursuant to section 23, which would be available if it were an award matter, but it is not. Decision on Jurisdictional Questions [40] My decision in relation to the issues raised was delivered orally on the first day of hearing, to be confirmed in writing. The decision and reasons are as follows: [41] Section 19 is the section that confers the jurisdiction of the Commission. It says at 19(1):
[42] and, at section 19(2)
[43] What is before me is a dispute application under section 29(1). It is an application from an employee organisation in respect of an industrial dispute. An employee organisation has a right to bring an application under that section in respect of an industrial dispute. [44] The application concerns the alleged failure of the employer to give appropriate weight to factors they are required to take into account as part of the wages review, for which provision is made in clause 12.3 of the Barminco (Copper Mines of Tasmania) Mining Production Enterprise Agreement 2000 The Agreement is registered pursuant to section 55 of the Industrial Relations Act 1984 (T9215 of 2000). [45] Section 3 of the Act defines an "industrial dispute" as "a dispute in relation to an industrial matter". [46] An "industrial matter" is:
[47] On the face of it, the Commission clearly has jurisdiction to hear the matter. [48] Mr FitzGerald has said, quite rightly, that the Commission has no power to make an award in settlement of a dispute brought under section 29 of the Act. The Commission is able to make an order, but it cannot make an award. [49] The union has indicated that what they seek in settlement of the dispute is an order that the employer to pay to its employees, employed under the terms of the Agreement, a wage increase of 9.8%. Mr FitzGerald says that to do this would be beyond power because it would be creating a new obligation and, in effect, making an award. He says that this cannot be done unless an application is made under section 23 for the making of an enterprise award for Barminco. Mr Flanagan, in his submissions, said that the union was not seeking to create a new obligation, rather, to enforce an existing obligation contained within the agreement. [50] An award is defined at section 3(1) as: [51] "...an award made under this Act by the Commission and includes a variation of such an award." [52] Section 31(2) dealing with orders arising from a hearing under section 29 says that:
[53] In my view, it cannot be determined, without hearing the evidence and the merits of the case, whether Mr FitzGerald is right in saying that there would be a new obligation, or whether Mr Flanagan is right in saying that there would not be one. [54] I agree with Mr FitzGerald that the Commission is without power to make an award in settlement of a section 29 dispute (which I have found this is). Any order that I might make in settlement of the dispute is dependent upon the arguments put, the merits of the case and the powers conferred upon me under the terms of the Act. [55] However, the question of what order is made, if any, is a matter for me to determine after, and only after, I have afforded the parties at the hearing a reasonable opportunity to make any relevant submissions; after I have considered the views expressed; and after I have considered whether anything is required to be done, or whether any action is be required to be taken to prevent or settle that dispute. This is clearly stated in section 31(1) of the Act [56] Briefly put, I have to hear the dispute, before making an order to settle the dispute. If there is an argument as to whether or not such an order is within power, the appropriate time to raise it is after the hearing and the issuing of the order. To use an argument about what remedy might be ordered in settlement of a dispute as an argument in support of the proposition that the Commission should not hear the dispute, is to put the cart before the horse. In characterising a dispute one does not look to the remedy sought. [57] Mr FitzGerald, in his submissions, questioned whether the union is able to bring the dispute before the Commission under the terms of the grievance procedures set out in the Agreement. Leaving aside the fact that the union is able to bring a dispute under section 29(1) (as I have already found), in my view the wording in the Agreement at clause 7, step 4, enables the parties, if they are unable to resolve a dispute or a grievance, to go to the Commission for conciliation or arbitration. I agree with Mr Flanagan, that step 4 of clause 7 does not refer to section 61(4) or to consent arbitration. It does not say that arbitration, or conciliation, can happen only when the parties to the agreement consent to that conciliation or arbitration. Mr FitzGerald said that clause 7.4 says that arbitration can only be by consent. I reject that part of Mr FitzGerald's submissions. The agreement does not say that. It says:
[58] The clause does not give either party the power of veto regarding a reference to the Commission. The only proviso is that no parties' rights under the Act are limited by such a referral. The union, or indeed, the company, is able, under the terms of the Agreement and under section 29 to invoke the jurisdiction of the Commission. [59] Inherent in that, of course, is that the jurisdiction can only be invoked where it exists. I have already found that it does. It is an industrial dispute about an industrial matter. [60] I find that the Commission has jurisdiction to hear and determine the matter before it. [61] After delivering the above preliminary decision, I then adjourned the matter, which continued on Thursday 13 March 2003. EVIDENCE Documentary Evidence [62] Mr Flanagan, for the applicant, tendered two documents, going to the earnings and contract rates of the mining production employees.3 He contended that they showed that any increases in rates of pay were due to the fact that individuals had moved up the classification structure, and were not because pay rates had increased. [63] He also presented a number of documents going to general and community wage movements, which documents, with one exception, had also been provided to Barminco at the wage review meeting of 14 January 2003: Wage Cost Indexes 20024 [64] Mr FitzGerald, for the respondent, tendered a number of confidential documents concerning the financial situation at the Mr Lyell operation: Exhibits R1, R2, R3 and R4. I have considered, and taken into account, the information contained in these documents, but I shall not refer to them in this Decision, except in broad terms. Witness Evidence [65] Witness evidence was given by Mr Ian Wakefield, Branch Secretary of the Australian Workers Union, Tasmanian Branch, and by Mr Garry Mayes, Operations Manager for the Southern operations of Barminco, including Tasmania and Victoria. Mr Mayes has been a senior manager with Barminco for eight years, and has held the position as Operations Manager for two years. Mr Wakefield's Evidence [66] Mr Wakefield testified that he had extensive involvement with and knowledge of the Beaconsfield Gold Mine, over a period of three to four years. He said that Beaconsfield has been in receivership since 2001 and remains so. The company has not yet repaid its debt and is looking for buyers. The employees at Beaconsfield had received a three per cent increase to their salaries in mid-2002. [67] He said that he had a long involvement, covering 24 years (15 as an employee and as nine as a union organiser) with the Pasminco Rosebery Mine. The mine has been in administration for two years and remains so. It currently has debts of close to 4 billion dollars. During the last 12 months he had been involved in negotiating an enterprise agreement. As part of the negotiations the employees receive a 3 per cent increase for each of the two years covered by the agreement. The decision to pay the increase applied Australia wide. He said that the workers at Barminco would probably be $20,000 to $30,000 [per annum] worse off than the employees at Pasminco. [68] The union had endorsement from the union members at the Mt Lyell site to seek a pay increase, but not endorsement for a specific amount. [69] He said that the agreement with Barminco had been negotiated in good faith and he had believed that wage increases would be delivered to the employees. In the negotiations regarding the wage review clause, the union had been very clear in its intent that there would be wage increases. In his experience, when there had been wage reviews the outcome had always been a pay increase. The only wage review he had ever participated in where there had not been a wages outcome was the review of 14 January 2003, ordered by the Commission. [70] Mr Wakefield did not agree with Mr FitzGerald that a wage review did not necessarily mean a wage outcome. The clause in the Agreement indicates that there will be an increase in line with general community and industry wage movements. Over two years there has been significant community wage movement. Why have a wage review clause if there is to be no wage movement? he said. He agreed that the clause did not specifically say that there would be a wage increase but, he said, it does oblige the company to take into account community wage movements and other factors. [71] He had been present at the wage review on 14 January this year, which had been ordered by the Commission. The union had put its case and had presented the required documents, such as the National Wage Case, and wage movements, and the company had responded by presenting their financial position. The company had demonstrated that they were losing money at Mt Lyell. The union had accepted, on the evidence supplied, that that was the case. It had been agreed that some of the information supplied would be treated as being given in confidence. [72] It was Mr Wakefield's opinion that the losses were caused by the company having under-tendered and gone into the contract too cheap. That is how mining contractors operate, he said, they go in and buy a job, lose money on that and make it up on another job. A record amount of ore was being extracted from the mine. Whilst it seemed that CMT may have changed the terms of the contract, causing some problems, he had been told by Neil Volk of CMT that there was a rise and fall clause in the contract which meant that Barminco could pass on additional costs. Mr Wakefield agreed that a 9.8 per cent increase would increase the company's losses, but, he said, it was not reasonable not to pay any increases to employees. They had now missed out on not one, but two, increases. [73] Mr Wakefield said that Barminco operated at several sites in Tasmania and would have the ability to offset the cost of one site against the others. They may not be making money at Queenstown, but they could be making money elsewhere. [74] Six to twelve months earlier there had been a meeting at the Australian Mines and Metals office at which the union had been told by the company that they could have a wage review, but that they would not get anything, he said. [75] Whilst the wage review meeting [of 14 January 2003] had been conducted civilly, there was no doubt in Mr Wakefield's mind that the company representatives were just going through the motions to satisfy the order of the Commission and that there would be no wage outcome. His belief was that the result was pre-determined and that they were not there to genuinely discuss the quantum of a pay increase. The company had made it quite clear in the past that they were not going to give a pay increase. [76] Mr Wakefield that he did not feel that anything the union had to say had any impact on what the employer was going to do. At the review meeting the company had listened and had said that they understood what the union was saying, then there had been a break and the company had rung Western Australia and got instructions.
[77] Mr Wakefield said that the reason he knew that the company did not put appropriate weight on community wage movement factors was because the people in the room seemed to be thinking one thing, but the bloke on the phone in Western Australia said something else. He believed that they put more weight on the fact that the company was losing money. It was definitely the case that the decision was made by somebody who was not at the wage review. The union had no capacity to influence the decision Mr Bartlett made. Mr Mayes' Evidence [78] Mr Mayes gave detailed evidence, which is contained in transcript-in-confidence, in relation to the financial position of Barminco, the contract with CMT, current negotiations in relation to that contract, the nature of the workforce and the development of the mine. [79] During the open hearing he testified that he had played a role in the negotiation of the contract with CMT at Mt Lyell. He said that the contract had been a very difficult one. The client had changed the scope of the operation, altering the schedule and the mining strategy. This resulted in a downturn in development, reduced turnover and reduced productivity. As a result, Barminco had been forced to make a number of employees redundant. [80] Mr Mayes did not agree that Barminco had under-tendered for the contract, which, he said, had always been a tight one, based on 8 per cent profitability. Instead they were losing 6½ per cent. Had they had a more compliant client they would probably not be in the current situation. [81] Mr Mayes said that he was aware of wage increases being given by Beaconsfield Gold, Australian Bulk Minerals and Pasminco, but, he said, those scenarios were totally different to Barminco's because they were listed companies and raised their capital through the stock exchange. Barminco is a privately-owned company, does not raise capital through the stock exchange and is driven through profit and increased opportunity. [82] He said that he did not consider the information provided by the union in relation to the Australian Bureau of Statistics figures showing average weekly earnings in 2001 and 2002 and wage cost indexes to have any relevance to Barminco's operations at Mt Lyell, which were sustaining heavy losses. [83] Mr Mayes said that clause 12.3 did not oblige Barminco to pass on any general industry and community wages movements:
[84] He said that the employees were just happy to have a job and that their wages had not been eroded. Although there had been a downturn in the company's earning capacity, it had not been reflected in the employees' wages. Whilst the company would like to give the workers an increase, the viability of the operation denied the company that opportunity. [85] Mr Mayes said that there had been a wages review in 2002, but that it had deteriorated into a volatile slanging match and nothing came of that meeting. He attended the review arising from the Commission's order in January 2003. [86] The review meeting was held in good faith, he said, and the parties got along well on that day. The union had put their claim forward in line with wage movements in the community. The company had presented the Profit and Loss statement and their current financial situation. The company's presentation had taken a couple of hours, as had the union's. There was no predetermined outcome, he said. [87] During the meeting, Mr Mayes had rung Mr Ross Bailey to confer with him, but he, personally, had the authority to negotiate and to give a yes or no in relation to a wage increase. Mr Mayes said that Mr Bailey is the group general manager, but they were on the same level and both reported to Mr Peter Bartlett. He had not spoken to Mr Bartlett during the meeting because he was not available. [88] He said, during cross-examination, that he was the person who had to make the decision, in consultation with his colleagues. He had considered the union's position and taken it all on board, he said. The decision not to award a wage increase was:
[89] Mr Mayes said that his concern was primarily with Barminco's commercial viability at Mt Lyell. He agreed that the review clause required the company to balance the performance of the company with general industry and community wage movements.
[90] When asked how long he expected employees to continue without a wages increase, he said:
[91] Mr Mayes agreed that the shift bosses at Mr Lyell had received a pay increase and said that the date of that was the pay period ending 15 January 2003. He said that supervisors employed by Barminco had not had a pay increase for eight years, whereas the pay rates [for the mining production employees] at Mt Lyell had been established for less than three years. [92] Mr Mayes said that he had been involved in the negotiation of the Agreement with the union, and he agreed that the company was happy for a wage review to take place on a twelve-monthly basis. He agreed that the first wage review would have been due on 1 October 2001 and that the operations had been profitable up until December 2001. [93] Initially, Mr Mayes said that the rise and fall clause in the contract with CMT did not require CMT to pick up any increased wage costs to Barminco. Later, he agreed that there was a capacity for Barminco to have discussions with CMT about the rise and fall arrangements and the capacity to recover from Copper Mines of Tasmania increased costs based on several elements, including wages. Mr Mayes said:
[94] He had been part of the team that negotiated the commercial contract with CMT and that had occurred prior to the enterprise agreement negotiations. [95] When asked what wage increases had been factored in as part of the commercial arrangements, Mr Mayes replied:
[96] Mr Mayes was referred to clause 12.3 [review period] of the Agreement, which says that all rates will be reviewed on an annual basis, but, he said that did not include the base rate:
[97] When it was indicated to Mr Mayes that clause 12.3 says that both the base rate and the incentive rates will be reviewed, he said that he wasn't completely aware of the extent of the Agreement. SUBMISSIONS For the Respondent [98] Mr FitzGerald, for the respondent, said that if a wage outcome is provided by the Commission as a result of these hearings, then that would create a new obligation which is in the nature of an award and which is in excess of the jurisdiction of the Commission. [99] It is a nonsense for the union to proceed by way of clause 7 - grievance procedure, he said. It is an attempt to get some sort of de facto jurisdiction. Clause 7 does not provide a mechanism for compulsory arbitration. This flies in the face of a settled agreement made under section 55 of the Act. If there is a dispute during the term of the agreement then the only way it can be resolved "compulsorily" is where the parties agree to arbitration under section 61 [of the Act]. [100] The Commission's powers in this matter are limited to clause 12(3) of the agreement. The only issue to be determined is whether the parties to the Barminco Agreement complied with clause 12.3. The clause simply states that there will be a review, not a wage increase. Simply because there is a review with various factors [to be considered] does not mean that there will be a positive wage outcome. The Commission's role is to be satisfied that the review took place and that the Commission's order had been complied with. That is the limit of the jurisdiction. The previous order that the Commission made satisfied the previous claim and the obligations under the Act. That claim had related to a unilateral reduction of wages. The current claim is that the company did not place enough weight on certain evidence put forward by the union. The two claims are one and the same. Barminco has complied with clause 12(3) by participating in the review, and in so doing, they have complied with the order, and that should be the end of the matter. [101] There is some issue as to whether the parties had regard to the two dot points relating to the financial performance [of the company] and general industry and community wage increases. There is clear evidence that the parties exchanged material and took time to consider that material. There was no pre-determination of the issue. The evidence was that Mr Mayes had the authority [to make the decision], that he consulted with another of his colleagues, but that does not mean that he discounted or disregarded the evidence, as has been suggested by Mr Flanagan. [102] The evidence shows that the company did not approach the exercise capriciously or not in good faith. It was not a token last minute exercise; the company went to great expense to get people to Hobart, to prepare their evidence and to hear the union. [103] Mr Mayes' evidence was that, despite the material provided by the union at the review meeting, what was paramount was the difficult financial circumstances that the company found itself in at Mt Lyell. It was open to Barminco within the meaning of clause 12.3 of the Agreement to consider the ongoing viability of the contract as the paramount issue. What is not open to them is to just dismiss the evidence put by the union and that simply did not occur. Equally, it could be said that the union did not consider the position put by Barminco in terms of their financial circumstances. [104] The evidence of Mr Mayes in terms of the financial circumstances should prevail over that of Mr Wakefield, which smacks of "me too-ism", or comparative wage justice. The notion that increases that are awarded to employees of one company should apply across the board is contrary to the whole notion of enterprise bargaining. There is a clear distinction between publicly listed companies and Barminco, which is a contracting company, there for the short term, and not in a position to plan for a longer term. [105] The words in clause 12.3 clearly do not mandate an increase. If that were the case, the words would say so. The clause is couched in such a way that it can deliver a neutral outcome, or, conceivably, a reduction. It was conceded by Mr Wakefield that the clause does allow for the possibility of a neutral outcome. [106] The issue of the quantum [of a pay rise] is not one the Commission can adjudicate on. If the Commission does not find favour with those submissions, the only claim the Commission can possibly adjudicate on is the 9.8% increase. There has been no material put to justify any other claim. In the context of general community standards that is far in excess of what employees have been receiving under safety net increases, and is far in excess of those that have been passed on to companies in Tasmania. [107] The anecdotal evidence was that the claim of 9.8% has not received the general endorsement of the workforce at Barminco. The evidence of Mr Mayes is more reliable than that of Mr Wakefield. Mr Mayes' evidence was that he had consulted his own workforce and they, in the main, recognise the circumstances that Barminco find themselves in and they are happy to work under the incentive payment system in order to preserve ongoing employment. The exhibits have shown that the incentive payment system has delivered reasonable outcomes for the employees. For the Applicant [108] Mr Flanagan said that at clause 12.3 of the Agreement, there are two dot points that identify the criteria to be applied by the parties in the conduct of a [wages] review. One is the productivity, efficiency and financial performance of Barminco at Mt Lyell, and the other is general industry and community wage movements. [109] The fact of the Consent Order setting out the matters to be relied upon by the parties in respect of those criteria represents an acknowledgement by the parties that those are indicative criteria that should be applied to the process. [110] The Agreement states that "all rates" shall be reviewed on a twelve-monthly basis from the commencement of the agreement; both the wage rate and the incentive rates. There has now been a review, but not annually as prescribed; it was an attempt to do two reviews in one. [111] As to what should take place at the review, there are a number of elements. The first is that the company will consult with the union in relation to the review of rates. Consult does not mean listen to and ignore. It means that the view expressed by the union must have some capacity to influence the outcome. Commissioner Smith of the Australian Industrial Relations Commission considered what was meant by the term "consult" in the case of Community and Public Sector Union and Vodaphone Network Pty Ltd ("Vodaphone").23 [112] At paragraph 25 the Commissioner said:
[113] The second obligation contained in the review clause of the Agreement is that regard will be had for factors which set out the clear objective criteria. "Regard" means to take into account. Given the material provided to the company by the union, no ordinary person in the street would believe that the obligations imposed upon the employer had been met. [114] It is clear that an obligation exists and it is clear that that obligation has been breached. [115] At Step 4 of clause 7 there is a mechanism within the Agreement to deal with circumstances where there is disagreement. [116] The union has notified the dispute and has a right to seek an order under section 31 of the Act. Another relevant section of the Act is section 20(1)(d) which requires the Commission to have regard to the public interest. It is clearly not in the public interest for employers to be able to flout their obligations under the Agreement. [117] The evidence of Mr Mayes shows that the staff employees who work in the same business unit as the production employees have received a wage increase. At the same time the company is saying that its production employees should not receive a wage increase because the company is losing money. [118] His evidence also showed that for the first twelve months the company made a profit. Community wage movements for that period varied from between 3 to 4½ per cent. Both of the components which the agreement refers the parties to for the purposes of the wage review demonstrated positive outcomes, yet the rates of pay for the employees at the end of that twelve month period remained static. [119] It was eventually conceded by Mr Mayes, contrary to his original evidence, that the contract between Barminco and Copper Mines of Tasmania has provision for a rise and fall review on a six monthly basis. [120] Mr Mayes made it clear that he had significant influence in the decision [not to increase the wage rates]. He also believes that the key indicators of community wage movements were simply not relevant. This is despite the very clear requirements for the company to take into account a number of components, not just the financial performance of the company. [121] It was clear from Mr Mayes' evidence that the company was aware of its commercial arrangements at the time that they entered into the industrial agreement with the union, which provides for a wages review annually. Mr Wakefield's evidence was that it was the union's expectation that the review would be a mechanism for wage increases. [122] It is inconsistent that a wage review clause would be placed in an industrial agreement at the same time as the company's view, as expressed by Mr Mayes, is that the wage rates would remain static. His view was that you get an increase at Barminco when you move up the classification structure. That is also inconsistent with the concept of a review and reinforces the proposition, as does the other evidence, that the union had no real opportunity to influence the decision that Barminco made. [123] Mr Fitzgerald is wrong in his contention that the only capacity the Commission has is to determine whether or not the review took place. This is inconsistent with the established principles of interpretation. It is trite law that all of the Agreement must be read as a whole and that the effect of clause 12.3 must be read in conjunction with 12.2 and those clauses must also be read in conjunction with clause 7. [124] Clause 7 clearly empowers the Commission to resolve a dispute by conciliation or arbitration. The union is not seeking the making of an award. Clause 7 deals with resolving disagreements. An arbitrated decision is sought that certain things must be done, namely that the rates being paid by operation of the formula contained in clause 12.2.2 be increased by 9.8%. What the union is asking is that the Commission settle an industrial dispute consistent with the settlement procedure agreed to by the parties and operative since 1 October 2000. [125] The Commission is not restricted by the 9.8% claim. Section 20 [of the Act] provides a clear path for the Commission to order an alternative outcome. FINDINGS [126] The respondent argued that the present claim and the previous one [T10330 of 2002] are one and the same and that the previous order, which settled the earlier claim, means that the matter does not need to be heard any further. I disagree. The issuing of an order settled the earlier dispute, which was in relation to an alleged unilateral reduction of rates of pay. The order, which was by consent, reflected an agreement that, in settlement of that dispute, the wage review would take place. The order stipulated the information to be provided and, implicitly, to be considered by the parties at the review. The present dispute is in relation to the outcome of that review and the alleged failure of the company to comply with the terms of the agreement during the conduct of that review, in that they allegedly failed to have appropriate regard for, and to place appropriate weight on general and community wage movements. They are different matters and there is now a new dispute. [127] Mr FitzGerald, for the respondent, submitted that the provisions of the Agreement in Step 4, Clause 7 - Grievance Resolution Procedure - do not confer upon the Commission the jurisdiction to compulsorily arbitrate the dispute and that the only way that this could occur is if the parties agreed to a consent arbitration pursuant to section 61 of the Act. In my preliminary decision on jurisdictional matters referred to earlier in this decision, I said that either party is able under the terms of the Agreement [if there is an unresolved matter] and under section 29 of the Act [where there is an industrial dispute in relation to an industrial matter] to refer the matter to the Commission. [128] Step 4, Clause 7, says:
[129] I confirm my earlier findings, and add the following observations: [130] When the parties entered into the Registered Agreement in October 2000 they agreed to become bound by the terms of the Agreement. In the Agreement, the parties agreed that unresolved matters could be referred to the Commission for conciliation and/or arbitration as appropriate. It does not say that there shall only be arbitration when both parties agree. In fact, the parties have already consented to arbitration, they did that when they entered into the Agreement. [131] It is illogical, in my view, to argue that a clause which plainly says that the matter can be referred to the Commission for conciliation and/or arbitration, in fact restricts the rights to conciliation only, as was argued by the respondent. It is clear that the procedures for resolving disputes contained within the Agreement envisage a role for the Commission that includes arbitration. [132] The parties have agreed to submit their disputes to the Commission and, by inference, if the dispute is arbitrated, to accept the decision of the Commission as binding upon them. It is not "de facto compulsory arbitration" as submitted by the respondent, it is, more appropriately, "de facto consent arbitration". This is not the same as consent arbitration as provided for in section 61 of the Act, but has the same effect, that is, the parties have agreed to submit their differences for a decision by a third party. [133] In any event, in the present case, the union has the right to bring a dispute in relation to an alleged breach of a registered agreement, pursuant to section 29(1) of the Act, as they have done. Even if step 4 of clause 7 of the Agreement did not exist, the right to make an application for a hearing in respect of the industrial dispute would still exist. [134] The respondent submitted that the role of the Commission is confined to determining whether the review was conducted and whether the Commission's order was complied with. There is no doubt that a review did take place on Tuesday 14 January 2003, as a result of the Consent Order issued by myself on 24 December 2002 and that some of the terms of the order were complied with. For reasons which will become apparent, I am not satisfied that Barminco bargained in good faith, as required under the terms of the order. [135] However, the question I have to determine is not whether the order was complied with, but whether the Agreement was breached. What happened as a result of the order is relevant to a consideration of whether the wage review was conducted in accordance with the terms of the Agreement. [136] The essential issue in this dispute is whether or not there has been a breach of the registered agreement, in particular whether or not clause 12.3 of the Barminco (Copper Mines of Tasmania) Mining Production Enterprise Agreement 2000 has been breached, as alleged, by the failure of Barminco to have appropriate regard for, and to place appropriate weight on general industry and community wage movements when conducting a review pursuant to clause 12.3 of the Agreement. [137] The Agreement, at clause 12.1, allows for movements to the Base Wage Rate during the life of the Agreement to be dealt with under clause 12.3 - Review Period. Clause 12.2 says that the piecework rate consists of two parts - the Base Rate and the Incentive Rates. Clause 12.3 says that all rates will be reviewed, both the Base Wage Rate and the Incentive Rates, and that, when reviewing those rates, the factors identified at dot points one and two below have to be had regard for. It says:
[138] The Agreement states that there will be a role for the union in the wage review, a role that involves consultation. The applicant cited the observations made by Smith C in Vodaphone concerning the meaning of consultation. Commissioner Smith said that consultation is not perfunctory advice on what is about to happen. It is providing the relevant party with a bona fide opportunity to influence the decision maker. I agree with his comments. The parties agreed, at the time of making the Agreement, that the union would have such a role in the wages review. [139] Once the parties agreed, as expressed in the terms of the registered agreement, that there was to be a review of this nature, that created an obligation upon the parties to conduct the review in the manner set out in the Agreement. At a properly conducted wage review, under the terms of the Agreement, the parties would consider and have regard for both sets of factors and give them appropriate weight. What, then, is appropriate weight? [140] It is obvious that the first dot point in clause 12.3 sets out the factors of most importance to Barminco, and the second dot point the factors of most importance to the union. When formulating the terms of the Agreement the parties have not given either of the dot points more weight than the other. The parties have not said in the Agreement that either of the dot points are the primary consideration. The Agreement says that the review will "have regard for...Productivity, efficiency and financial performance of Barminco at Mt Lyell and general and community wage movements." (my emphasis) [141] I find, therefore, that the appropriate weight to be given to the factors that the parties are required to have regard for is equal weight to each set of factors. That is, the considerations set out at dot point one of Clause 12.3 of the Agreement are to be given the same weight as the considerations set out at dot point two. In effect, the review is required to balance the interests of one party against the interests of the other party. The question then becomes: during the review on 14 January 2003 did the parties have proper regard for and give appropriate weight to each set of considerations? [142] At the review, the company presented information in relation to their financial position, including profit and loss statements. The parties agreed that this information would remain confidential. Information was also provided in relation to all pay rates movements for Barminco employees at Mt Lyell since early February 2002, and documents showing measures of productivity and efficiency in relation to the operations at the Mt Lyell mine. There was evidence to show that there were some upward wage movements for individual mining production employees. (The evidence of both parties, during the hearing, was that those increases were as a result of progression through the gaining of skills, not as a result of increases to the base rate or to the incentive rates). [143] At the wage review meeting, as required by the Consent Order, the union provided: wage cost index statistics; consumer price index figures; figures showing average weekly earnings for a period of two years up to November 2002; the (National) Safety Net Review Wages Decision for 2001 and the National Wage Case Decision of 2002; and examples of wage movements in Tasmanian in respect of the Pasminco Rosebery Mine, Beaconsfield Mine and Australian Bulk Minerals. Mr Mayes' evidence was that this information was not relevant. He said that the Agreement was between the union, themselves and their employees, and, by inference, information relating to outside factors and influences was of no relevance. It is not open to the company, having agreed to this process and to the Consent Order, to simply say that they do not consider the information provided by the union to be relevant. [144] I am satisfied that the relevant information was provided at the review and that the people representing Barminco had authority to make decisions in respect of the outcomes. There was a discrepancy between the evidence of Mr Wakefield which was that Mr Mayes had said he had spoken to Mr Bartlett (the owner of Barminco) during a telephone call to Western Australia, and the evidence of Mr Mayes, which was that he had not spoken to Mr Bartlett, because he was not available, but to Mr Bailey, a colleague of equal standing with himself. This is most likely the result of a simple misunderstanding. The important thing is that I accept that Mr Mayes had the authority to make the decision in relation to the wage review and that he did so. [145] During the hearing, Mr Mayes' evidence was clear that the financial viability of Barminco at Mt Lyell had been his primary consideration at the wage review. His evidence was that there would be no pay increases for employees "until Barminco can sustain a commercial viability at Mt Lyell". Somewhat inconsistently, the evidence showed that supervisory staff at Barminco, eg shift bosses, received a wage increase at about the time of the wage review and that, in that instance, other considerations were taken into account, ie, the length of time since the last increase for supervisory staff. [146] Mr Mayes' evidence before the Commission was that he had a significant involvement in negotiating both the commercial contract and the industrial agreement. His evidence was equivocal in some respects, eg whether pay increases are able to be passed on through the rise and fall clause of the contract, but his evidence was unequivocal when he testified that no pay rises had been factored into the contract and that the base pay rate was fixed. [147] On the basis of Mr Mayes' evidence, I have concluded that, despite the Consent Order and the terms of wage review clause in the Agreement, it was never the intention of the company that the review would result in a wage increase. In the words of Mr Mayes, the rates are "...for the term of the contract. We don't get a price rise in the term of the contract, neither do our wages increase in the term of the contract." His evidence was that the company had unsuccessfully attempted to negotiate a price rise with their client.
[148] Taking into account Mr Mayes' evidence that there would be no wage increases during the term of the contract unless there was a price rise in the terms of the contract; that they had been unable to negotiate a price rise; that there would be no wage increases until Barminco could sustain commercial viability at the site; and that the company was making a loss of 6½ per cent at the site, then it becomes clear that at the time of the wage review the outcome was predetermined. There would be no wage increase. From this I can only conclude that, on 14 January 2003, Barminco was simply going through the motions of complying with the terms of the Consent Order, but it was not, in fact, conducting a genuine wage review in which the company would take into account all of the factors they were required to consider, in particular, general industry and community wage movements. [149] The respondent submitted that it could be said that the union [in seeking a 9.8% increase] did not consider the position put by Barminco in terms of their financial circumstances. It is true that there was no evidence presented to show that the union had regard for the factors set out at the first dot point when formulating their claim and it is true that the union is seeking a substantial increase. However, the evidence was that the company's response was that there would be no wage increase whatsoever. It is difficult to see how, during the wages review, the union could have balanced the considerations set out in the first dot point against general industry and community wage movements when there was no wage offer for them to consider. Had there been, it is likely that it would have been at that stage that the competing considerations would have formed the basis of negotiations. That did not happen. [150] I find that Barminco failed to have appropriate regard for, and to place appropriate weight on general and community wage movements when conducting the wages review pursuant to clause 12.3 of the Agreement, and, in failing to do so, have breached an agreement registered under section 55 of the Act. [151] On 3 October 2000, at the hearing for the making of the Agreement, Mr FitzGerald, for Barminco, said that the agreement was negotiated in good faith, and that good faith had been shown "from all sides". Unfortunately, on the part of Barminco, there has been little shown by way of good faith in respect of the wage reviews. [152] The first wages review did not take place when due, ie in October 2001. The second review did not take place when due, ie in October 2002. Various reasons were given for this, including a poor relationship with the union. Mr Mayes' evidence was that there had been an aborted wage review, whereas Mr Wakefield's evidence was that the union was told that they could have a wage review but that no wage increase would result. [153] It is clear that there was a lack of will on the part of the company to participate in a wages review. Indeed, a formal review only occurred after the intervention of the Commission, and, as I have found, that was not a genuine wages review in that the outcome was predetermined and Barminco failed to have appropriate regard for, and to place appropriate weight on general industry and community wage movements. REMEDY [154] The information presented to the Commission by the applicant, Exhibits A4(a) and (b), A5(a) and (b), A6(a) and (b), A7, A8, A9 and A10 was not challenged by the respondent. Excepting for Exhibit A10, which is a decision in respect of private arbitration conducted by the Australian Industrial Relations Commission, the information is that which was provided to the respondent by the applicant at the wage review meeting on 14 January 2003. On the basis of those documents, I accept the applicant's submission that the evidence shows community and industry wage movements of 9.8% during the life of the Agreement, as at the time of the hearing. [155] I also accept the evidence of the respondent in respect of the productivity, efficiency and financial performance of Barminco at Mt Lyell. I accept that the operation has sustained a loss during a substantial part the period during which the Agreement has been in place [156] In settlement of the dispute, I am of the view that I should, by way of remedy, order an increase based on apportioning equal weight to the factors to be considered as set out in clause 12.3 of the Agreement. Barminco's position was that there should be no pay increase, for reasons which included the fact that the commercial contract with CMT was set for the life of the contract and so too should the wage rates be fixed, and because of the losses sustained by the company in recent times. The union's position was that the community and industry wage movements during the life of the agreement amounted to 9.8% and that, therefore, was their claim. [157] Giving equal weight to each of set of factors set out in clause 12.3 of the Agreement, I have concluded that there should be an increase of 4.9%, to be applied to both the base rate and the incentive rates. [158] The respondent argued that the Commission was able to award 9.8% or nothing, as there is no other claim before it. I reject this on the basis that section 20(3) of the Act says:
[159] The question of operative date of the increase now arises. During the hearing, Mr Flanagan said that an increase was unable to have retrospective application, but advanced no reasons as to why that was the case, apart from saying that the Agreement made no provision for retrospectivity in the application of the wages review. [160] That may be the case, but I have some doubts as to whether, in the particular circumstances of this dispute, an increase awarded from the first full pay period on or after the date of the wages review could be characterised as a retrospective increase or a retrospective application of the review clause. The review took place on 14 January 2003. Had the review been properly conducted, had Barminco complied with the terms of the Agreement, had there been no breach, then it is likely that an increase would have had application from the time of the review or shortly thereafter. [161] Section 31 of the Act, which deals with orders arising from hearings brought under section 29, is silent on the question of retrospectivity. [162] Section 31(1) says:
[163] There is nothing in section 31 that prohibits the retrospective application of a remedy. There are many obvious examples where a remedy in relation to a dispute brought under section 29 of the Act would have retrospective application, eg, where there has been a breach of an award or agreement resulting in an underpayment of wages for a period of time predating the issuing of the order, which, in effect, is the present situation. Another example is the ordering of reinstatement in an unfair dismissal case, where the effect of the order necessarily has a retrospective application. [164] I have decided that the increase will apply from the first full pay period on or after 14 January 2003, which was the date of the wages review. [165] I now deal with the respondent's argument that the Commission is unable to award an increase because it would, they contend, effectively make a new award which would be an award of the Commission and which is precluded by virtue of section 31((2)(b). [166] Section 31(2) says, that in settlement of a dispute brought under section 29:
[167] I reject that argument, on the basis that the order that follows is not making or creating a provision of an award. [168] The Act clearly defines two different means for regulating wages and conditions, one through the making of awards and the other through the making of agreements. [169] Section 3 - Interpretation defines awards and agreements separately:
[170] An award and an agreement are not the same thing. An award does not mean an agreement and an agreement does not mean an award. Nothing in this decision is either making or varying a provision of an award, as defined. [171] The Act sets out, very specifically, the requirements for making or varying an award, including the identification of the name of the award sought to be made or varied. In the order which follows there is no award identified that is to be made or varied. This dispute concerns the breach of an agreement, and the order I shall be making does not have the effect of changing one single word or amount in an award of the Commission. [172] Nor do I agree with the contention that an order for a wage increase would create a new obligation upon the employer. The obligation on the company is to conduct annual wage reviews, in consultation with the union, and to have regard for the factors specified in clause 12.3. The agreement provides for wage movements. No obligation, beyond those they already agreed to when making the Agreement, is being imposed on the company. [173] In settlement of this dispute, I make the following Order: ORDER I hereby Order, pursuant to s.31 of the Industrial Relations Act 1984, in settlement of the dispute in matter T10668 of 2003, that Barminco Pty Ltd, Locked Bag 3, Queenstown, Tasmania 7467, increase the Base Wage Rate and the Incentive Rates referred to in Clause 12 - Remuneration - of the Barminco (Copper Mines of Tasmanian) Mining Production Enterprise Agreement 2000 ("the Agreement") by the amount of 4.9% and pay the increase to "Mining Industry Employees" as referred to in the Agreement, such increase to apply from the first full pay period on or after 14 January 2003.
P C Shelley Appearances: Date and place of hearing: 1 T9215 Transcript PN 35 |