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T11802 and T11848

 

DECISION APPEALED - SEE T12321, T12322, T12323 & T12341

 

TASMANIAN INDUSTRIAL COMMISSION

Industrial Relations Act 1984
s.29 application for hearing of industrial dispute

Construction, Forestry, Mining and Energy Union, Tasmanian Branch
(T11802 of 2004)
(T11848 of 2004)

and

Skilled Group Limited

and

The TESA Group Pty Ltd

 

COMMISSIONER T J ABEY

HOBART, 21 September 2005

Industrial dispute - alleged breach of award - definition of enterprise - natural justice - public interest - award found to apply - Order

REASONS FOR DECISION

[1] On 11 November 2004 and 13 December 2004, the Construction, Forestry, Mining and Energy Union, Tasmanian Branch (CFMEU) applied to the President, pursuant to Section 29(1) of the Industrial Relations Act 1984, for a hearing before a Commissioner in respect of an industrial dispute with Skilled Group Limited and The TESA Group Pty Ltd, respectively.

[2] These applications are expressed in similar terms, viz:

"Alleged breach of the Pasminco/Zinifex Smelter Enterprise Award in relation to not paying correct wages and conditions to their employees at the Hobart smelter."

[3] T11848, relating to The TESA Group Pty Ltd (TESA) was originally listed before Commissioner McAlpine on 31 January 2005. Given that both applications were dealing with essentially the same subject matter, it was reassigned by consent to the Commission as presently constituted and both matters were joined.

[4] Following a number of conciliation conferences the matter was listed for hearing on 28 July 2005. Mr S Hurley-Smith appeared for the applicant, Mr W Fitzgerald for the Skilled Group Limited and Mr T Sharard, Solicitor, for The TESA Group Pty Ltd.

[5] Mr R Flanagan, for The Australian Workers' Union, Tasmania Branch (AWU), and Mr R West, Solicitor, for Zinifex sought leave to intervene. Leave was granted in both cases.

Background

[6] Zinifex operates a Zinc smelter on the Risdon site. Labour at the site is a mixture of Zinifex employees and contractors. The Commission was told that the use of contractors had increased in recent years and was no longer limited to the replacement of Zinifex employees on long term absences.

[7] Zinifex is bound by two industrial instruments:

· Zinifex Hobart Smelter Enterprise Award (the award); and

· Zinifex Hobart Smelter Enterprise Agreement (the agreement).

[8] The agreement and the award operate in conjunction, with the agreement prevailing to the extent of any inconsistency.

[9] It is common ground that the agreement only applies to employees of Zinifex. For all practical purposes, the agreement supplants the award in respect of wage rates and classification structure.

[10] Skilled Group Limited (Skilled) and TESA provide contract labour (contractors) to the smelter. These employees work alongside, and to some extent, perform the same work as Zinifex employees.

[11] For some time there has been concerns raised by the unions as to the apparent discrepancy in earnings between contractors and Zinifex employees. It is these concerns which gave rise to the s.29(1) applications in the instant matter.

[12] Numerous conferences, both within and external to the Commission, have failed to resolve the dispute.

[13] The CFMEU, supported by the AWU, assert that the Zinifex award also has application to contractors engaged by labour hire companies (in this case, Skilled and TESA) in the production process.

[14] The CFMEU seeks orders in the following terms:

"Draft Orders

1. The TESA Group Pty Ltd and Skilled Group Ltd are, and have been, bound by the Zinifex Hobart Smelter Enterprise Award in relation to work its employees perform, or have performed, falling within the Scope of the Award at Part I clause 3, where those employees work, or have worked, in the Production/Service or Trades/Technical areas of the Zinifex Hobart Smelter.

2. Within 14 days of these orders being issued, The TESA Group Pty Ltd and Skilled Group Ltd must examine their records for current and former employees who have performed work which is the subject of Order 1, and prepare a Schedule detailing the following;

· Any differences between what those employees were paid for that work and what they should have been paid under the Zinifex Hobart Smelter Enterprise Award, and

· The calculations used and award clauses relied upon to quantify any such difference.

3. Within 14 days of these orders being issued The TESA Group Pty Ltd and Skilled Group Ltd must serve upon the Construction Forestry Mining and Energy Union, Tasmanian Branch, a copy of the Schedule referred to at Order 2.

4 The TESA Group Pty Ltd and Skilled Group Ltd must allow the Construction Forestry Mining and Energy Union, Tasmanian Branch, reasonable access to their time and wages records to enable the Union to verify the accuracy of the Schedule referred to at Order 2.

5. That where there is agreement between the Construction Forestry Mining and Energy Union, Tasmanian Branch and either The TESA Group Pty Ltd or Skilled Group Ltd, as to the amount of any difference (or part thereof) referred to in Order 2, that difference (or part thereof) shall be paid to the current or former employee concerned within 14 days of such agreement.

6. That all parties have liberty to apply to the Commission in relation to any disagreement as to the calculation of any such difference or the accuracy of the Schedule.

7. Any other orders which the Commission considers necessary."

Evidence

[15] Sworn evidence was taken from the following witnesses.

· Craig Anthony Roberts, employed by Zinifex for 18 years, the last four as an operator in Casting Division.

· John Shreeve, employed by Skilled at the smelter for approximately five years.

· Brett Nicoll, employed by TESA at the smelter for approximately two years.

[16] Both TESA and Skilled reserved the right to call evidence should that be necessary.

[17] The following is a summary of the evidence:

· The widespread use of contractors in production roles commenced in the mid-nineties with the adoption of the stable income plan. At that time short-term absences were covered by Zinifex employees. Absences for longer than a "panel" were covered by contractors.

· In recent years the use of contractors had increased both in terms of numbers and the length of time employed. As an indication, a panel of 21 in Casting Division would include six to eight contractors. Zinifex had also used contractors to replace Zinifex employees who resigned.

· Contractors worked alongside Zinifex employees, in the same location and were subject to the same Zinifex supervision.

· To a limited extent contractors performed the same tasks as Zinifex employees. Whilst there was some contest as to the actual duties performed, it would seem likely that contractors were performing work at least at the level of a Production/Service Person Grade 1 and possibly beyond. (Note: this is an observation, not necessarily a firm finding, given that both respondents reserved the right to call further evidence.)

· To the extent of the tasks performed, the training provided to contractors and Zinifex employees is identical.

· Contractors are not assessed as to points for the purposes of the training matrix.

· It would seem that the earnings of contractors (on an apples with apples basis) are less than the earnings for equivalent Zinifex employees. The extent of the disparity is not entirely clear, although it would seem to be significant.

The Industrial Relations Act 1984

[18] Prior to 1992, private sector awards were established in respect of the industry of the employer, or classes of employees engaged in an occupation.

[19] By virtue of the Industrial Relations Amendment (Enterprise Agreements and Workplace Freedom) Act 19921 the capacity to make new occupation awards was repealed. At the same time s.33 was amended to provide for enterprise awards.

[20] Section 33 now reads:

"Power of Commission to make awards in respect of private sector employment

33. (1) The Commission may make an award in respect of -

(a) all or any private employees employed in an industry; or

(b) all or any private employees employed in an enterprise.

(1) ...

(2) The Commission, in making an award under this section, shall specify the industry to which the award applies."

[21] It follows that for an award to be valid, it must specify the industry to which the award relates.

[22] In s.3(1) industry is defined as follows:

"Interpretation

3. (1) In this Act, unless the contrary intention appears -

`industry' means any industry, trade, business, undertaking, profession, calling, function, process, or work performed, carried on, or engaged in by a private employer;"

[23] In the same section enterprise is defined in the following terms:

"enterprise" means -

(a) any business, undertaking or project or part of any business, undertaking or project; or

(b) any combination of businesses, undertakings or projects or parts of businesses, undertakings or projects; or

(c) any service provided by an Agency or State authority that is not an Agency or by part of an Agency or such a State authority; or

(d) any combination of services provided by Agencies or State authorities that are not Agencies or by parts of Agencies or such State authorities;"

[24] Section 38(a) reads:

"Effect of awards

38. An award has effect according to its terms and, unless and to the extent that those terms expressly provide otherwise, the award extends to and binds -

(a) in the case of an award referred to in section 33(1) -

(i) all private employees employed in positions or classifications mentioned in the award in the industry or occupation to which the award applies; and

(ii) all private employers employing those private employees; or"

[25] Mr Sharard submitted that reference to occupation in s.38 was an outmoded reference to the pre 1992 occupational awards. There is no basis upon which I can agree with this submission. The Parliament at the time enacted a comprehensive amendment package, which included the new concept of enterprise awards. Unless the words in the statute make a nonsense (which they do not) I must assume that Parliament intended that the words as written to apply.

The Zinifex Award

[26] This award has had a number of manifestations over the years.

[27] From the commencement of this Act in 1984 the award was known as the Electrolytic Zinc Award. Clause 2 Scope read as follows:

[28] "This award is established in respect of the industry of:

(a) producer of electrolytic zinc, zinc oxide, acid and other product of zinc ores and aluminium sulphate; and

(b) manufacturer of artificial fertilizers."

[29] There can be no doubt that the award at the time was a genuine industry award. As a matter of law the award in its then configuration would have applied to any other employer engaged in the industry as described in the Scope clause. That is, it could have applied to multiple employers. I do however accept, without the need for evidence, that it was for all practical purposes, a one-employer award, as there were no other employers in the industry.

[30] To add emphasis to this notion of multi employer industry awards, the Parties and Persons Bound clause read:

"Unless otherwise specified, this award shall have application to and be binding upon:

(a) all employers, (whether members of a registered organisation or not), who are engaged in the industry specified in Clause 2 - Scope;"

[31] In 1999 this clause was replaced by an Award Interest clause. As a consequence there was no longer a reference to "all employers ... engaged in the industry ..."

[32] In relation to this amendment, Mr Sharard said:2

"So we say that amendment must be taken to indicate that if the Zinifex award ever applied to multiple employers, it did not do so once it had been converted to an enterprise award."

[33] I do not accept Mr Sharard's submission. The previous Parties and Persons Bound clause was a standard clause which could be found in most, if not all, private sector awards. The clause was replaced with the Award Interest clause as a consequence of the Award Review process arising out of the 1997 State Wage Case. It is a clause that has since found its way into most private sector awards and is designed to more accurately reflect the "Interest" provisions in the Act. The clause does not alter in any way the extent of application of this or any other award.

[34] In 1996 the Scope clause was altered, ostensibly for the purpose of removing reference to the "manufacture of artificial fertilizers" However in effecting this variation by consent, the parties changed the construction of the Scope clause to read:3

"This award is established in respect of the production of:

Electrolytic zinc, zinc oxide, acid and other products of zinc ores and aluminium sulphate at Pasminco Metals EZ's operations at the Risdon Plant."

[35] In 1999 the name of the award was changed to Pasminco Hobart Smelter Enterprise Award4. The Scope clause was not changed.

[36] In 2004 the name of this and the counterpart Rosebery mine award was changed to reflect the new company name Zinifex. The following was noted in the decision effecting this change:5

"Mr Flanagan explained that the applications were essentially housekeeping applications. Both awards continue to reflect Pasminco as the name of the employer whereas that name has in fact changed to Zinifex. The effect of the applications is to simply delete the word "Pasminco" from the title of both awards and to replace it with the word "Zinifex"."

Other Enterprise Awards

[37] There are a number of other awards of this Commission styled as enterprise awards.

[38] In the case of the Australian Cement Holdings Enterprise Award, the Parties and Persons Bound clause identifies Australian Cement Holdings Pty Ltd as the only employer bound by the award.

[39] In the Temco Enterprise Award the Scope clause refers to "...the business of producing electrically smelted alloys by the Tasmanian Electro Metallurgical Company Pty Ltd at its plant at Bell Bay, Tasmania."

[40] In the Impact Fertilizers Enterprise Award Clause 3 - Scope, Purpose and Background of Award reads:

"This award is established in respect to the production and manufacture of fertiliser or other products by Impact Fertilisers Pty Ltd.

[41] These three awards clearly apply to one employer only and add some support to the contention that this reflects the true intention of enterprise awards. However the terminology used in each case can be distinguished from that used in the Zinifex Hobart Smelter Enterprise Award.

[42] The Zinifex Rosebery (Mining) Award has some similarities with the Hobart Smelter Award in terms of Scope and Parties and Persons Bound/Interest clauses. However the Rosebery award defines "employer" as:

"means Zinifex Mining-Rosebery."

[43] No similar definition is found in the Hobart smelter award.

[44] By contrast the Risdon Prison Redevelopment Project Enterprise Award is established to "... cover all on-site building and construction work, associated with Risdon Prison Redevelopment Project (the Project)."

[45] In approving the new award Leary P. noted:6

"The award is a special project award and is specific to the Risdon Prison Redevelopment Project."

[46] Clearly this enterprise award applies to any and all employers engaged on that project.

The Overall Character of the Award.

[47] Looking at the award as a whole there are certain clauses that point to a single employer award.

[48] Certainly the clause relating to Settlement of Disputes and Grievances makes reference to "the Company" and certain company specific management positions. Similarly the Stand-Down clause refers to "the Company."

[49] The Service and Experience Payment clause makes reference to "... continuous service with the recognised employer in the industry..."

[50] Mr Sharard submitted that classification structure, Employee Development Scheme, Individual Career Statement, points and training matrix are all company specific. Whilst I accept that Zinifex can rightly claim ownership of these concepts, there is nothing in the award that precludes application to contractors.

[51] Mr Hurley-Smith submitted that there were a number of clauses which used expressions like "employers"; "an employer" or "any employer." He listed the following by way of example:

· Duty to Obey Lawful Instructions

· Requirement to Work reasonable 0vertime

· Supported Wage System

· Latecomers

· Sick leave

[52] There are also numerous references to "the employer", a term which is neutral in the context of this argument.

[53] The nature of the clauses referred to point to both a single employer and multiple employers. In my view it would be unsafe to adopt either position on the basis of these conflicting indicators.

Narrow or Broad Approach

[54] Mr Hurley-Smith submitted that the Commission should follow the principles of interpretation laid down by Koerbin P in the General Conditions of Service Principal Award.7 This, Mr Hurley-Smith submitted, means that the Commission should give full effect of the plain meaning of the words used in an award.

[55] The respondents and Zinifex contended that the Commission should take a broader approach and take into account factors other than just the words used in the Scope clause. Mr West said there was "an air of unreality" about the approach urged by the CFMEU. He said:8

"This is not something from outer space, we know what it is, the unions, my client, the Commission, we have been around making this thing since its inception and the invitation that is in the submissions made by Skilled and TESA is that you look at what has happened and how these awards have come about and look at what has been said by the parties, the approach taken by the Commission and that is what you look at to try to discern what this thing is, not that you ignore all that and just simply try and apply the words because the fundamental problem with applying the words is, to be blunt, there ain't no words that deal with this issue in the award. What you have is a scope clause which doesn't make any mention of the parties at all."

[56] The application before the Commission is not an application for an interpretation pursuant to s.43 of the Act. It is in fact an application lodged pursuant to s.29(1) in respect of an industrial dispute. It is true that substance of the dispute alleges a breach of an award. It follows that in determining whether an award has application the law must be the primary consideration. However s. 20(1)(a) requires the Commission in exercising its jurisdiction to "act according to equity, good conscience and the merits of the case without regard to technicalities or legal forms."

[57] Accordingly, in addition to the law, I propose to have regard to the history of the award, relevant extrinsic material and the public interest.

[58] I propose to have regard to extrinsic material, not because the words in the Act are ambiguous or obscure, but because we are dealing with questions in uncharted waters. It is possible that extrinsic material may provide confirmation of the interpretation conveyed by the ordinary meaning of the provision. This approach is consistent with s.8B of the Acts Interpretation Act 1931.

Extrinsic Material.

[59] The Commission was referred to the Hansard report of the House of Assembly proceedings on 19 November 1992. This related to the debate on Industrial Relations Amendment (Enterprise Agreements and Workplace Freedom) Bill. In response to a question on the meaning of "enterprise," the Minister said:9

"Mr BESWICK - Clearly an enterprise means `any business, undertaking or project' or `any combination of businesses, undertakings or projects or parts of businesses, undertakings or projects'. That means that if, for example, there is a combination of businesses under one ownership they would be able to enter into an enterprise agreement. It leaves the way open for a number of enterprises under one ownership to enter into one enterprise agreement. That is my understanding of it - "

[60] The respondents sought to rely on this response as support for the contention that the intent of Parliament was to confine enterprise awards to a single enterprise. However an examination of the Hansard debate reveals that the Minister's comment was in the context of Part IVA-Enterprise Agreements. This does no more than state the obvious. Sections 61C and 61D make it clear that enterprise agreements may only be entered into by single employers, or corporations which are related to each other for the purposes of the Corporations Act.

[61] I conclude that the Minister's comment provides no guidance in relation to Enterprise Awards.

Natural Justice.

[62] Both Mr Sharard and Mr Fitzgerald submitted that the labour hire companies had never played an active role in negotiations in relation to the award. References to a number of decisions and extracts from transcript were tendered to support this position. Whilst direct evidence to support this contention was not adduced, I am prepared to accept from the Commission's own knowledge, together with absence of counter evidence, that this is an accurate reflection of the historical position.

[63] Mr West submitted that Zinifex (and its predecessors) does not now nor has it ever regarded the award as applying to any employer other than the company. He went on to submit that the unions "...ought not be able to come now, after many years of accepting one position and now assert a different position for their own tactical advantage or perceived tactical advantage."

[64] Mr West further submitted that it is a fundamental rule of natural justice that a party affected by a decision be given a proper opportunity to be heard before the decision is made. This would include notification of hearings and an opportunity to make submissions if they so chose. Failure to provide such opportunity to parties directly affected by the award would render the award invalid, Mr West said.

[65] Mr West went on to submit:10

"The Commission has always treated it solely as Zinifex, they are now saying it has always been Zinifex plus the others. That means the Commission - the implication of that is that the Commission has ignored the other parties.

Now, if that interpretation is right and it is accepted by the Commission in these proceedings, then a Court considering this might then ask the rhetorical question, "Well, if this award was intended to apply to parties other than Zinifex, why did the Commission ignore the rights of those parties to be heard in relation to proceedings - in relation to the making and variation of the award and why did it only simply allow Zinifex to appear?"

In my submission that is a legitimate to be asked. The answer to it, of course is that the Commission should not be presumed to have ignored the rights of those parties. The appropriate presumption is that the Commission fully understood what it was doing: it was hearing from the parties, the parties being Zinifex and the unions, and to presume otherwise is really to presume that the Commission deliberately acted contrary to the public interest and contrary to its statutory obligations, a presumption that should not be made."

Findings.

[66] From the definition of "enterprise" in s.3(1) it is clear that an enterprise may consist of "any combination of businesses, undertakings or projects ..". There is no requirement for the businesses to be related in a legal sense, nor is there any basis to limit the notion of multiple businesses in combination to a project such as the Risdon Prison redevelopment project.

[67] It follows that there is no legal impediment to the making of an enterprise award that is binding on more than one employer.

[68] For an enterprise award to be valid, it must specify the industry to which the award applies (s.33(3)). In this case the industry is specified in Clause 3 Scope.

[69] The terms of the Scope clause sit comfortably with the definition of industry, which includes "any...function, process or work performed, carried on, or engaged in by a private employer."

[70] I therefore conclude that the award is a valid award of the Commission.

[71] Section 38 states that an award has affect "according to its terms" and binds "all private employees employed in positions or classifications mentioned in the award in the industry or occupation to which the award applies."

[72] The award in question is an enterprise award, not an industry award. The approach adopted by the Full Bench in NGT v National Union of Workers, Tasmanian Branch11, in relation to the proper application of industry awards, is unhelpful in this case. Once there is a finding that the enterprise award has been validly made, the overriding consideration is the terms of the award, and that might take a number of manifestations.

[73] In the instant case the Scope clause is limited only by the nature of the process and the geographic location. It is particularly significant that the clause refers to the production of certain products at the Risdon Plant. It is not necessarily limited to production by Zinifex.

[74] On the available evidence there can be no doubt that the employees of Skilled and TESA are engaged in activities to which the classification structure applies. Leaving aside the argument about the points assessment, a Production/Service Person Grade 0, contemplates a person with less than 100 points, or indeed no points at all.

[75] I am also satisfied that the respondents are engaged in "a process or work" related to the "production of electrolytic zinc ... at the Risdon Plant. I do not accept Mr Sharard's contention that there must be a "common end" between Zinifex and the respondents for the award to have application. The definition of industry is very broad. Given the trend whereby contractors are not limited to specific projects, but are increasingly used as supplementary, and indeed substitute labour in a production process, it is quite appropriate to describe the employers of such contractors as being in both the labour hire industry and a relevant production process, depending on the facts.

[76] Even if I am wrong on this point, I am satisfied that the contractors are engaged in an occupation (s.38(a)(i)) to which the award applies, by virtue of the specific terms of the award.

[77] I conclude therefore that the award applies to employees of TESA and Skilled so far as such employees are engaged in the production process as described in the evidence.

[78] There are however other considerations.

[79] I am quite satisfied that up until recent times all parties, rightly or wrongly, viewed the award as having application to Zinifex employees alone. Neither of the respondents has taken any role in award negotiations in the past. In this context the natural justice submissions of Mr West have considerable force. Given all the circumstances it would in my view be quite unfair to impose the award obligations on the respondents retrospectively. I propose therefore that this finding apply from the date of this decision. It follows that I am not prepared to make orders in the manner sought by the CFMEU.

[80] I am also strongly of the view that it would be contrary to the public interest for the contractors to be placed in an award free situation once again. The employees involved are entitled to the protection of an appropriate industrial instrument. Whether that is this Award, an s.55 Agreement or some other form of industrial regulation, is a matter for the parties to determine. I therefore strongly recommend that the parties enter into immediate negotiations with the objective of finalising the terms on an appropriate industrial instrument to cover the employees affected into the future.

Order.

Pursuant to section 31 of the Act I find that employees of Skilled group Limited and The TESA Group Pty Ltd, who are engaged in the production process at the Risdon Smelter of Zinifex, are subject to the terms of the Zinifex Hobart Smelter Enterprise Award, such finding to have effect from 21 September 2005, I so order.

 

Tim Abey
COMMISSIONER

Appearances:
Mr S Hurley-Smith (21/6/05, 28/7/05), Mr M Reeves (30/11/04, 21/6/05), Mr W White (30/11/04) and Mr C Hinds (21/6/05) for the Construction, Forestry, Mining and Energy Union, Tasmanian Branch
Mr R Flanagan, (21/6/05, 28/7/05), intervening, for The Australian Workers' Union, Tasmania Branch
Mr W Fitzgerald, of the Australian Mines and Metals Association (Incorporated), with Mr P Eaves, Mr P Flight and Mr R Fitzgerald (21/6/05), for Skilled Group Limited
Mr T Sharard, Corrs Chambers Westgarth, Lawyers, for The TESA Group Pty Ltd
Mr R West (21/6/05, 28/7/05), Minter Ellison, Lawyers, intervening, with Mr M Double (21/6/05, 28/7/05), for Zinifex Hobart Smelter

Date and Place of Hearing:
2004
November 30
2005
January 31 (T11848 McAlpine C)
June 21
July 28
Hobart

1 No. 59 of 1992
2 Transcript PN 399
3 T5937 of 1995
4 T8033 of 1998
5 T11627 of 2004
6 T11787 of 2004
7 T30 of 1985
8 Transcript PN 531
9 Exhibit TESA 1 tab 7
10 Transcript PN 543 to 545
11 T No 10317 of 2002