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T12027 (8 November 2005)

 

TASMANIAN INDUSTRIAL COMMISSION

Industrial Relations Act 1984
s70(1) appeal against decision

Zinifex Australia Limited
(T12027 of 2005)

and

The Australian Workers' Union, Tasmania Branch

 

FULL BENCH:
PRESIDENT P L LEARY
COMMISSIONER T J ABEY
COMMISSIONER J P McALPINE

HOBART, 8 November 2005

Appeal against a decision handed down by Deputy President Shelley arising out of T11982 of 2005 - Application by Zinifex Australia Limited pursuant to s.24(4A) of the Act.

REASONS FOR DECISION (2)

[1] This is a further decision in this matter and follows our decision issued 17 June, 2005.

[2] In that decision it was indicated that the application by Zinifex Australia Limited (Zinifex), made pursuant to s.24(4A) of the Industrial Relations Act, 1984 (the Act), that the matter "......is so important that it is in the public interest to have the matter dealt with by a Full Bench" had been granted and the matter was referred to this Full Bench.

[3] In this decision the Full Bench considers the grounds of appeal and the submissions of Zinifex pursuant to s.24(4A) of the Act.

[4] Zinifex advised the Full Bench that it ".....does not seek to add to the evidence and submissions already put before the Commission at first instance before DP Shelley and on the hearing of the appeal, and relies on all of this material in relation to the determination of both matters."1

[5] Both the Australian Mines and Metals Association (AMMA) and the Tasmanian Chamber of Commerce and Industry Ltd (TCCI) advised the Full Bench that they relied on the submissions they presented before Deputy President Shelley in the matter below and before the Full Bench.

[6] In respect to the application by the Australian Workers Union (AWU) to vary the Zinifex Rosebery (Mining) Award (the award) to incorporate the terms and conditions found in the Pasminco Rosebery Mine 2002 Agreement (the agreement), Zinifex relied on the submissions it presented at first instance when it argued that, pursuant to s.21(2)(c)(ii) and (iv) of the Act, the Deputy President should dismiss the application or refrain from further hearing as the proceedings are not necessary or desirable in the public interest.

[7] S.24(4) of the Act provides that an application can be referred to the President by a Commissioner sitting alone or on application by a party to the matter. The President is required to determine whether the application "is so important that it is in the public interest to have the matter dealt with by a Full Bench." In this matter the President so decided.

[8] Zinifex has relied on the submissions it presented before the Deputy President pursuant to s21((2)(c)(ii) and (iv) in support of its argument pursuant to s.24(4). Both sections of the Act address "public interest."

[9] Zinifex submitted in the proceedings below that:

"It would be contrary to the objective of encouraging and facilitating workplace bargaining stated in the Wage Fixing Principles and the Preamble to the IR Act for the Commission to proceed to arbitrate on matters at issue between the parties in enterprise bargaining negotiations.

Bargaining Periods under the WR Act now exist between Zinifex and each of the AWU, CEPU and AMWU. Arbitration by the AIRC of the matters in dispute between the parties in a bargaining period is prohibited by s.170N of the WR Act. Further proceedings in this matter would be inconsistent with the WR Act and invalid.

The Zinifex Rosebery (Mining) Award already provides an appropriate set of minimum terms and conditions. The application before the Commission is to extend the award to include matters not properly the subject of a safety net award contrary to the Wage Fixing Principles and the object of the IR Act.

The parties continue to be bound by the Pasminco Rosebery Mine 2002 Agreement, an industrial agreement made under s.55 of the IR Act. The proposed award variation deals with the same subject matter as the agreement which will prevail over the provisions of the varied award. It is contrary to the public interest that the Commission determine a matter by arbitration in circumstances where either party can unilaterally affect the outcome by electing to retire from or affirm the agreement."

[10] The AWU provided additional submissions which discussed the history of enterprise bargaining at the Zinifex site.

[11] The AWU noted that the employees covered by the agreement had not received a wage increase since 1 July, 2003. The agreement prescribed a 3.5% increase made up of a flat salary increase coupled with a performance component. Further it provided submissions which considered wage movements over the period between the last wage increase to Zinifex employees and current time. It said:

"Depending on which measure is used the real value of employee earnings has fallen as a consequence of employees not receiving a wage increase over the last 2 years. During that period Safety Net Adjustments have increased Award Rates by 6.25% (3.25% in 2004 and 3% in 2005). During that period March 2003 to March 2004 the CPI for Hobart increased by 2.1%, and during the period March 2004 to March 2005 the CPI for Hobart increased by 3.5%, a total of 5.6%. During approximately the same period average weekly ordinary time earnings increased by 9.9%. During the 12 months February 2003 to February 2004 Private Sector Full-time adult ordinary time earnings increased by 5.0%. During the period February 2004 to February 2005 Private Sector Full-time adult ordinary time earnings increased by 4.9%. This application does not seek to increase rates of pay and cannot therefore be said to circumvent enterprise bargaining."

[12] In addressing the intent of the application the AWU referred to the role of the Commission in workplace bargaining and the Commission's Wage Fixing Principles. It submitted the following:

"The Role of the Commission in enterprise bargaining has varied from time to time depending upon the particular legislation regulating the Commission's conduct. In 1995 the then Federal Commission in the "Enterprise Flexibility Agreements Test Case May 1995" (59 IR 430) stated "The role of the Commission in the bargaining process is facilitative rather than interventionist". That decision was in the context of the Industrial Relations Act 1988 (Commonwealth). Since that point in time and the subsequent enactment of the Workplace Relations Act 1996 the Commonwealth Act now provides for Section 170 MX Awards where the Commission does have an interventionist role. Likewise the role of the Commission in Tasmania was considered by a Full Bench of the Tasmanian Commission in T8413 of 1999 in a review of the Wage Fixing Principles in July 2000.

In that decision the Commission states at page 47:

....as a matter of general principle we believe it would be inappropriate to vary the Commissions Awards to incorporate agreements, whether expired or not. However, we cannot say that there could never by any circumstances that might constitute an exception to that general statement - such a determination could only be made after hearing the parties. In any event, for reasons already discussed, it is not open to the Commission by means of Wage Fixing Principles, to purport to prevent parties making such applications pursuant to the provisions of Section 23, 24 and 25 of the Industrial Relations Act 1984. The Commission will deal with the provisions of the Act, including the public interest requirements of Section 36".

[13] The AWU submitted that the circumstances of this application are such as to constitute an exception to the general statement. The circumstances which contribute to that exception, the AWU submitted, include:

"(a) The Award which this application seeks to vary is an enterprise Award with only one employer bound by it.

(b) A number of provisions of the Award are so obsolete that it is no longer capable of practical application without causing significant disruption to both the mining operations and the circumstances of employees and their families.

(c) Having regard to (b) above the Award is no longer a relevant safety net underpinning workplace bargaining.

(d) The enterprise bargaining process is being abused by the employer who is punishing employees for acting collectively contrary to the spirit and intent of the enterprise bargaining process.

(e) In the absence of a relevant safety net award, there is no incentive for the employer to genuinely bargain with its workforce.

Given the above exceptional circumstances the AWU submits that the Commission should vary the Award as sought by the AWU and in so doing the Commission will:

(a) establish a relevant safety net Award

(b) encourage the employer to genuinely bargain"

[14] In responding to the additional submissions of the AWU, Zinifex noted that the AWU had conceded that the making of the Pasminco Rosebery Mine 2000 Agreement (2000 Agreement) in 1999 was "......a significant departure from award arrangements" and noted that the award to which the AWU and Zinifex are party includes all State Wage case increases up to and including the 2004 increases. Zinifex also submitted that the average full time wage rate in the agreement was far in excess of the average full time rate in the award.

[15] Zinifex rejects the submission of the AWU which asserts that the award "....in its current form is incapable of application without serious detrimental consequences for both employees and the efficiency of operation" and reiterated its position that the agreement continues to apply and that neither the AWU or Zinifex has sought to retire from the agreement.

[16] The assertion by the AWU that Zinifex "has abused the intent of the enterprise bargaining process" is refuted by Zinifex. Zinifex submitted that the "offers accepted by individuals have been available to be accepted by the Union collectively" and further that it has made it clear that it is intent on reaching a collective agreement with the AWU and the other relevant unions. [Zinifex written response 21 July 2005]

[17] The Commission's Principles provide at Principle 4:

"THE AWARD SAFETY NET

Existing wages and conditions in the relevant award or awards of the Commission shall be the safety net underpinning workplace bargaining.

The award safety net may, on application be reviewed and adjusted from time to time to ensure its relevance. Generally the detailed nature and timing of any adjustments will be determined in the context of specific applications and in the light of prevailing economic, social and industrial circumstances."

[18] And at Principle 3:

"ROLE OF THE COMMISSION IN WORKPLACE BARGAINING

The Commission will continue to play an active role in encouraging and facilitating workplace bargaining. In that regard, the exercise of its statutory responsibilities pursuant to s.36 of the Industrial Relations Act 1984, the Commission will act to ensure that the proposed award or agreement does not result in a reduction in ordinary time earnings, or departure from parental leave standards or hours of work or annual leave with pay, and the agreement or award, taken as a whole, will not disadvantage the employees concerned unless the Commission is satisfied that circumstances justify otherwise."

[19] The AWU relies on the Commission's comments in the 2000 Review of the Principles which discusses the incorporation of the terms of an enterprise bargaining agreement into an award. Such consideration would require, as submitted by the AWU, "exceptional circumstances." The Commission said in its statement that as a general principle it would not be appropriate to vary awards by incorporating the terms of an enterprise agreement. We agree with that statement.

[20] The Full Bench in that review also noted that "In any event, for reasons already discussed, it is not open to the Commission, by means of wage fixing principles, to purport to prevent parties making such applications pursuant to the provisions of Sections 23, 24 and 25 of the Act." The AWU application is made pursuant to s.23 of the Act.

[21] Some reliance was placed on the only two applications which have been made to the Commission seeking that agreement provisions be inserted into an award. Both of those applications were by consent and the nominal expiry date of the agreement had passed and in both cases new agreements between the parties had been approved by the Commission.

[22] In its review of the Wage Fixing Principles the Full Bench determined that it was appropriate that the then Principle 13, which allowed applications in respect to `special cases,' be deleted. There is now no principle available to consider a `special case.'

[23] It is in the context of the review of the principles by the Full Bench that the claim by the Tasmanian Trades and Labour Council (TTLC) to incorporate expired agreements in awards was considered.

[24] We note that the claim at that time by the TTLC was in respect to expired agreements only.

[25] There is no definition of `expired' in the Act however s.55 provides that an industrial agreement continues in force past the nominal expiry date if that is the wish of the parties. [s.55(7)]

[26] The Act provides at s.61, enterprise agreements, a variety of options in respect to the duration of an enterprise agreement, however there is no reference in any of the relevant provisions to `expiry date.'

[27] Accordingly we are of the view that the reference to `expiry date' is the date referred to in the agreement as being the nominal expiry date. The application in this matter is in respect to an agreement which has passed its nominal expiry date.

Findings

[28] Zinifex requested that we make no decision in respect to the matter of notices issued pursuant to s.170MI of the Workplace Relations Act, 1966. We make no finding in respect to that issue and in any case we do not consider it necessary or relevant to the issues raised in the matters before us.

[29] We consider the grounds of appeal and the s.24(4) application by Zinifex. In respect to the s.24(4) application Zinifex relies on the submissions it presented below pursuant to s.21(2)(c)(ii) and (iv). We deal with the appeal and the s.24(4) application together as they address common issues.

[30] We think it is arguable whether the Decision of the Deputy President can be appealed as the only matter she in fact decided was to refer the application by Zinifex to the President pursuant to s.24(4A) of the Act which she was required to do by statute. However she did make some findings and we consider the grounds of appeal, where relevant, and the submissions by Zinifex pursuant to s.24(4) in respect to those findings.

[31] Appeal ground 1:

"The learned Deputy President:

(a) made an error of law by:

(i) failing to recognize that there could be a public interest in refraining to further deal with a matter under s.21(2) of the Act.

(b) acted on a wrong principle by:

(i) misconstruing Principle 4 of the Wage Fixing Principles as enabling the Commission to convert an expired agreement into a safety net award without the consent of the parties; and

(ii) failing to have regard to the statement of principles in the 2000 Wage Case that it is inappropriate to incorporate expired agreements into awards.

(c) failed to give sufficient weight to:

(i) the continued operation of a registered agreement in respect of the work to be the subject of the proposed award variation and the effect of s.60 of the Act; and

(ii) the potential for the proposed arbitration to adversely affect the process of enterprise bargaining in the state as envisaged in the statement of principles of the Commission."

[32] We note that the claim for incorporation of agreement conditions into awards is not, and never has been, a wage fixing principle. The commentary relied upon by the AWU was the Full Bench's response to the claim by the TTLC where they said that any such claim would be considered in accordance with the provisions of the Act.

[33] Accordingly we are of the view that the Deputy President fell into error by finding that the AWU application was in accord with the Commission's wage fixing principles. The safety net adjustment referred to in the principles is the safety net increase applied to award rates as a result of applications made in respect to the State Wage Case, not the type of application the subject of this decision.

[34] Furthermore it is in the public interest that the Commission complies with its own principles.

[35] We do not consider it relevant that the award is an enterprise award with only one employer respondent as was submitted by the AWU as a circumstance to support the application. It is on what terms and under what circumstances should or can agreement conditions be incorporated into an award, and in this instant without the consent of one of the parties.

[36] Even if it were possible to consider such an application in the manner the Deputy President suggests the fact that it is without the consent of one party is a matter of some significance.

[37] We agree with the submission of Zinifex that to concede this application to incorporate agreement conditions into an award would "destroy the safety net character of the award and would be inconsistent with the safety net principle."

[38] In support of its claim the AWU submitted that some conditions of the award are obsolete and no longer capable of practical application. We note the submission but wonder why the provisions have not been addressed in the award review process and we are of the view that the award review is the appropriate process to remedy any difficulties. A safety net award should reflect rates and conditions which underpin agreements and are used for satisfying the no disadvantage requirements of the Act.

[39] Further the Full Bench in the 2000 review indicated that any consideration of a claim to incorporate agreement terms into an award would require exceptional circumstances. It is our view that the inability of the parties to reach agreement, for whatever reason, does not constitute exceptional circumstances. Such a circumstance, regrettably, is not unusual.

[40] Both parties submitted that they have not and did not intend to seek to retire from the agreement. We accept those submissions and expect the parties to honour the terms of the agreement. S.60 of the Act is self explanatory and in our view has little or no relevance to this matter.

[41] A fundamental element of any agreement is that the parties to it have negotiated and agreed on its terms. The terms have been negotiated without any involvement of the Commission and the terms have been agreed without any reliance on the Commission's wage fixing principles.

[42] Accordingly to insert by arbitration, that is without the consent of all parties to the agreement, the terms of an agreement would seriously compromise a basic element of workplace bargaining and remove the incentive to bargain.

[43] Appeal ground 2:

"The decision was plainly unreasonable and unjust."

[44] The grounds of appeal for appeal ground 2 reiterate those for appeal ground 1 which we have already addressed.

[45] We set aside the finding of the Deputy President that the application by the AWU "is within the Wage Fixing Principles."2

[46] We have previously determined that, in the public interest, the matter should be referred to the President. We therefore reject the comment by the Deputy President that it was not in the public interest that the matter be dealt with by a Full Bench. That is a determination to be made by the President.

[47] We also decide, pursuant to s.21(2)(c)(ii) and (iv) of the Act, that further proceedings are not necessary or desirable in the public interest and that the matter should be dismissed.

[48] Accordingly the application by the AWU is dismissed.

[49] The decision of the Deputy President states that "the sticking point was the differential treatment by the company of employees who had elected to avail themselves of individual offers made by the company, and those who had chosen to bargain collectively" however Zinifex has submitted that "offers accepted by individuals have been available to be accepted by the Union collectively" and further that Zinifex is intent on reaching a collective agreement with the AWU and the other relevant unions. We are uncertain whether there has been a change in the relationship since the time the matter was before the Deputy President nevertheless we would expect that Zinifex would treat all of its employees equally and in the same manner whether they seek individual or collective representation.

 

P L Leary
PRESIDENT

Appearances:
Mr K Farouque, Solicitor, Maurice Blackburn and Cashman with Mr R Flanagan for The Australian Workers' Union, Tasmania Branch
Mr R West, Solicitor, Minter Ellison with Mr R Murphy for Zinifex Australia Limited
Ms S Butterworth for the Australian Mines and Metals Association (Incorporated)
Mr M Watson for the Tasmanian Chamber of Commerce and Industry Limited

Date and place of hearing:
2005
May 16
Hobart

1 Zinifex correspondence dated 27 June 2005
2 Decision T11982 of 2005 para 93