Re Tahmoor Coal Pty Ltd

[2010] FWA 6468

[2010] FWA 6468

FAIR WORK AUSTRALIA

DECISION

Fair Work Act 2009
s.225—Enterprise agreement

Tahmoor Coal Pty Ltd
(AG2010/6316, AG2010/6220)

Coal industry
VICE PRESIDENT LAWLER	MELBOURNE, 23 AUGUST 2010

Termination of enterprise agreement - when is it “appropriate” to terminate an agreement.

Introduction

[1] Tahmoor Coal Pty Ltd (Tahmoor) has made application pursuant to s.225 of the Fair Work Act 2009 (FW Act) to terminate two agreements:

• The Tahmoor Colliery Enterprise Agreement 2006 (Colliery Agreement 1), a pre-reform certified agreement made under the provisions of the Workplace Relations Act 1996 (WR Act) as it existed before the WorkChoices amendments; and



• The Tahmoor Washery Workplace Agreement 2006 (Washery Agreement 2), which is a workplace agreement made under the WorkChoices version of the WR Act.

(together, the Agreements).

[2] The Construction, Forestry, Mining and Energy Union (CFMEU) appeared to oppose the applications.

[3] By virtue of item 2(5)(c)(v) of Schedule 3 to the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 the Agreements are “collective agreement-based transitional instruments” for the purposes of that Act. Pursuant to item 16 of Schedule 3 of that Act, the applications are properly brought under s.225 of the FW Act.

[4] I have come to the view that the applications should be dismissed. These are my reasons for reaching that conclusion.

Background facts and circumstances

[5] Both of the Agreements have passed their nominal expiry date. The nominal expiry date of the Colliery Agreement was 3 April 2009 and the nominal expiry date of the Washery Agreement was 1 April 2008.

[6] Tahmoor was acquired by Xstrata during the nominal life of the Agreements. Xstrata is a very large multinational mining business. As a practical matter, Xstrata is “calling the shots” in relation to what can be agreed by Tahmoor for the purposes of a replacement agreement. Of course, there is nothing intrinsically wrong or sinister about that.

[7] Tahmoor has embarked upon a very substantial programme of capital improvements to its mine and associated infrastructure.

[8] Each of the Agreements provided that the parties would commence bargaining for a replacement agreement no later than six months before the nominal expiry date. Bargaining for a replacement agreement(s) commenced as contemplated by the Agreements and has been continuing for more than 18 months (albeit that this period has been punctuated by periods when the parties did not meet or otherwise advance the bargaining, for example while the proceedings before Commissioner Roberts were being pursued and for a period when Tahmoor put a proposed agreement to the employees for their consideration and vote - see below). There been almost 60 bargaining meetings.

[9] The employees have taken protected industrial action in the form of strikes. Tahmoor has taken employer response action in the form of a lockout, albeit that, as at the time of the hearing, that action has been relatively limited.

[10] The CFMEU brought an application against Tahmoor for bargaining orders, alleging that Tahmoor had breached its duty and failed to bargain in good faith in accordance with the good faith bargaining requirements in s.228(1). That application was dismissed by Commissioner Roberts on 12 February 2010 who found that Tahmoor had not breached the good faith bargaining requirements. 3 That decision was upheld on appeal.4 Commissioner Roberts also found, as submitted by Tahmoor, that bargaining was at an impasse.5 Before me, the evidence from Tahmoor was that while bargaining was close to being at an impasse, it was no longer at an impasse. Further bargaining meetings facilitated by former Commissioner Ken Bacon were arranged by the parties for the week following the final submissions in this matter and it was accepted that I would refrain from making any decision until notified of the outcome of those meetings. I was subsequently advised that those meetings had not resulted in a resolution of the differences between the parties.

[11] The Agreements impose a number of constraints on Tahmoor to which it objects and which, at present, it is not prepared to see included in a new agreement. The constraints are summarised in Tahmoor’s final submissions (Constraints):

(a) minimum manning requirements in clause 9.4 of the Colliery Agreement and clause 9.4 of the Washery Agreement; 6

(b) provisions which place conditions and restrictions on the use of contractors in clause 22 of the Colliery Agreement and in the Washery MOU which is linked to the duration of the Washery Agreement; 7

(c) gate seniority/reverse seniority on retrenchment provisions in clause 21.5 of the Colliery Agreement and clause 21.5 of the Washery Agreement; 8

(d) provisions requiring the application of seniority on re-hiring retrenched employees in clause 21.8 of the Colliery Agreement and in clause 21.8 of the Washery Agreement; 9

(e) hours of work and shift arrangements restrictions in clauses 9.1 to 9.3 of the Colliery Agreement and clauses 9.1 to 9.3 of the Washery Agreement; 10 and

(f) the disputes procedure in clause 25.4 of the Colliery Agreement, including the requirement to maintain the status quo in the event of a disagreement. 11

[12] Tahmoor ceased bargaining with the CFMEU at one point and proceeded to put its own proposed replacement agreement to the employees for an approval vote. That proposed agreement removed the Constraints but also provided for a 23 per cent wage increase over its life. That is, on any view, a substantial wage increase albeit that it needs to be seen in the context of the employees not have received a way increase for some time. All but one of the more than 200 employees voted to reject this employer proposed agreement which I take as indicating the importance attached to some or all of the Constraints by the employees.

[13] Tahmoor has given an undertaking which will maintain the existing monetary and leave entitlements of the employees, including accrued leave entitlements, should the Agreements be terminated by FWA. I reject the CFMEU’s submission that the undertaking is unenforceable and is otherwise bad because it does not specify an end point such that Tahmoor can withdraw from it at any time. It is inconceivable that a Court with a general equitable jurisdiction lacks the power to make orders enforcing an undertaking of the sort given by Tahmoor. Equity regards as done that which ought be done. Further, as Tahmoor points out, the undertaking does specify a duration: it will terminate on approval by Fair Work Australia of a new enterprise agreement between Tahmoor and employees covered by the undertaking.

[14] Tahmoor submits that the Constraints present substantial operational obstacles or issues for the safe and optimal management of Tahmoor’s operations leading to the poor productivity performance of the mine. I accept the summary of the effect of the Constraints in paragraph [53]ff of Tahmoor’s final written submission.

[15] I am also satisfied that the Constraints adversely affect the productivity of the Tahmoor mine to a material degree. Tahmoor led evidence on the comparative performance of the Tahmoor mine compared to other coal mines in NSW. The performance of Tahmoor is almost at the very bottom of the range. However coincidence does not demonstrate causation and I have no doubt that this poor performance is not fully attributable to labour productivity issues and the Constraints. On the other hand, while I agree with many of the CFMEU’s criticisms of particular evidence relied on by Tahmoor on the issue of productivity, there remains a core of acceptable evidence that supports the finding I have made. When one considers the terms of the provisions that constitute the Constraints it is, to me, obvious that together they have an adverse affect on the productivity of the mine as contended for by Tahmoor’s witnesses. It is inherently difficult to establish and quantify the adverse productivity effects of the Constraints and the culture at the mine to which they contribute, however, on the evidence presented by Tahmoor, I am satisfied that the affect is material.

[16] I am satisfied that both Tahmoor and the CFMEU (and the employees it represents) have clear legitimate interests that inform the apparently entrenched positions they appear to have adopted in relation to the Constraints.

The legislation

[17] It is useful to set the current legislative scheme in an historical context. From 1904 until 1996 Commonwealth industrial legislation provided for the compulsory conciliation and arbitration of constitutional industrial disputes by an independent court or tribunal. The introduction of that system is generally understood to have been a response to the traumatic social dislocation caused by a series of bitter and protracted industrial disputes in the late 1800s. The introduction of compulsory conciliation and arbitration of industrial disputes was seen as ushering in what Justice Higgins famously described as a “new province of law and order” where the resolution of disputes by an independent court or tribunal through compulsory conciliation and arbitration replaced the “law of the jungle”. In 1983 enterprise bargaining was introduced into the federal industrial relations system and over the following period the scope of awards that could be made in settlement of industrial disputes became progressively limited. The WorkChoices amendments to the Workplace Relations Act 1996 all but did away with compulsory arbitration of industrial disputes. The Fair Work Act 2009 has continued that position so that our present federal system of industrial relations has enterprise bargaining as one of its centrepieces: it is the mechanism - the only mechanism - by which unions and employees acting collectively can achieve improved terms and conditions of employment over and above the safety net constituted by a set of minimum rates awards and statutorily prescribed minimum terms (presently found in the National Employment Standards). It is against this historical background that the relevant provisions of the FW Act should be considered.

[18] Broadly speaking, a certified agreement made under the pre-WorkChoices version of the WR Act commenced to operate when certified by the Australian Industrial Relations Commission (AIRC) and continued in operation until replaced by another statutory collective agreement 12 or terminated in accordance with the WR Act and now the FW Act.13 This same general approach applies in relation to workplace agreements made under the WorkChoices version of the WR Act and in relation to enterprise agreements made under the FW Act.14 It is notable that that during the currency of the WorkChoices version of the WR Act, an employer could unilaterally terminate a certified agreement or workplace agreement by the giving of written notice. That method of terminating a statutory collective agreement did not exist under the pre-WorkChoices version of the WR Act and was removed in the FW Act.

[19] Broadly speaking, under the current regime a statutory a collective agreement continues in operation beyond its nominal expiry date unless terminated by FWA on the basis of agreement between employer and employees 15 or pursuant to s.226 of the FW Act.

[20] Bargaining for an enterprise agreement under the FW Act occurs through “bargaining representatives”. The bargaining representatives have a duty to bargain in good faith as specified in s.228(1) of the FW Act. However, it is important to note that pursuant to s.228(2), the good faith bargaining requirements in s.228(1) do not require:

(a) a bargaining representative to make concessions during bargaining for the agreement; or

(b) a bargaining representative to reach agreement on the terms that are to be included in the agreement.

[21] That is, the FW Act entitles bargaining parties, through their representatives, to “hold out” and decline to make concessions on matters that are important to them.

[22] Protected industrial action and employer response action are the methods authorised by the FW Act by which the bargaining parties can place pressure on each other for the purposes of obtaining concessions and procuring an agreement.

[23] Sections 225 and 226 provide:

225 Application for termination of an enterprise agreement after its nominal expiry date

If an enterprise agreement has passed its nominal expiry date, any of the following may apply to FWA for the termination of the agreement:

(a) one or more of the employers covered by the agreement;

(b) an employee covered by the agreement;

(c) an employee organisation covered by the agreement.

226 When FWA must terminate an enterprise agreement

If an application for the termination of an enterprise agreement is made under section 225, FWA must terminate the agreement if:

(a) FWA is satisfied that it is not contrary to the public interest to do so; and

(b) FWA considers that it is appropriate to terminate the agreement taking into account all the circumstances including:

(i) the views of the employees, each employer, and each employee organisation (if any), covered by the agreement; and

(ii) the circumstances of those employees, employers and organisations including the likely effect that the termination will have on each of them.

[24] Prior to 26 March 2006 s.170MH of the WR Act conferred a power on the AIRC to terminate collective agreements that had passed their nominal expiry date. Section 170MH(1) specified who could make an application. Subsections 170MH(2) and (3) provided:

(2) On receiving the application, the Commission must take such steps as it considers appropriate to obtain the views of persons bound by the agreement about whether it should be terminated.

(3) If, after complying with subsection (2), the Commission considers that it is not contrary to the public interest to terminate the agreement, the Commission must, by order, terminate the agreement.

[25] Between 26 March 2006 and 28 March 2008, as noted above, the WorkChoices version of the WR Act made provision for the unilateral termination by an employer of an expired certified agreement or workplace agreement upon the giving of written notice. The termination occurred by operation of the statute after the giving of the notice and the AIRC had no role in that process.

[26] From 28 March 2008 until the commencement of the FW Act on 1 July 2009, s.397A of the WR Act provided that on application the AIRC “may” terminate a collective agreement that had passed its nominal expiry date if the AIRC was “satisfied that it would not be contrary to the public interest to terminate the agreement.” Pursuant to s.397A(3), in deciding whether it would be contrary to the public interest to terminate the agreement, the AIRC was required to “have regard to all circumstances of the case, including:

(a) the views of each party bound by the agreement (including the employees) about whether it should be terminated; and

(b) the circumstances of each such party, including the likely effect on each such party of the termination of the agreement.”

Section 226(a) - requirement that termination not be contrary to the public interest

[27] Guidance on how the public interest is to be assessed is provided by the decision of the Full Bench of the AIRC in Re Kellogg Brown and Root Bass Strait (Esso) Onshore/Offshore Facilities Certified Agreement 2000 16 (Kellogg), a case concerning an application to terminate a certified agreement pursuant to s.170MH of the WR Act.

[28] The Full Bench in Kellogg observed:

[22] The absence of any reference to the interests of the negotiating parties in s.170MH(3) is significant. It follows that the views of persons bound by the agreement may be relevant to the exercise of the discretion if they shed light upon the effect of termination on the public interest, but they should not be given any independent weight. To do so would be to import into the application of the section something which on its proper construction it does not include.

[23] The notion of public interest refers to matters that might affect the public as a whole such as the achievement or otherwise of the various objects of the Act, employment levels, inflation, and the maintenance of proper industrial standards. An example of something in the last category may be a case in which there was no applicable award and the termination of the agreement would lead to an absence of award coverage for the employees. While the content of the notion of public interest cannot be precisely defined, it is distinct in nature from the interests of the parties. And although the public interest and the interests of the parties may be simultaneously affected, that fact does not lessen the distinction between them.

(emphasis added)

[29] The Full Bench referred to the decision of the High Court in Queensland Electricity Commission; Ex parte Electrical Trades Union of Australia 17 (which was concerned with the statutory discretion conferred on the Conciliation and Arbitration Commission to dismiss or refrain from hearing a matter on the basis that further proceedings were “not necessary or desirable in the public interest”) and continued:

[25] The QEC case was concerned with whether or not the Commission had failed to exercise its jurisdiction in upholding an application by the Queensland Electricity Commission to refrain from further hearing or from determining an industrial dispute between it and the Electrical Trades Union of Australia. The following passage appears in the joint judgement of the majority:

“... Ascertainment in any particular case of where the public interest lies will often depend on a balancing of interests, including competing public interests, and be very much a question of fact and degree. In this case the Commission was called upon to weigh in the balance two competing public interests. One was the importance of settling in its entirety the dispute initiated by the E.T.U.'s log of claims. The other was the importance of leaving the dispute to be resolved by the State tribunal despite the limitations on its jurisdiction if that course was likely to maintain the marked improvement in industrial relations in the industry that had occurred since the dispute arose and thereby contribute to industrial peace and an efficient power supply." [at 395]

[26] It is clear from this passage that the ascertainment of the public interest may involve balancing countervailing public interests. That the Commission should take all of the circumstances into account is made clear by Dawson J in Re Australian Insurance Employees Union; Ex parte Academy Insurance Pty Ltd [(1988) 78 ALR 466 at 467]. These authorities provide useful general guidance in the application of the test in s.170MH(3). They illustrate the types of interests which can be properly described as public interests and confirm the breadth of circumstances which may be relevant to the ascertainment of those interests.

[27] It should be emphasized that the Commission's consideration of the public interest for the purpose of s.170MH(3) is directed to the consequences of terminating the agreement. In a given case, some consequences will be clearly predictable, others will be less so. For the most part the Commission should be guided by the likely foreseeable consequences of termination rather than speculation about possible consequences.

[30] Thus, the public interest involves something distinct from the interests of the parties although they may be similarly affected.

[31] Logically, the termination of a given agreement may be in the public interest, may be contrary to the public interest or may be neutral in terms of the public interest. Section 226(b)(i) directs attention to whether termination would be contrary to the public interest.

Section 226(b) - requirement that termination of the agreement is “appropriate”

[32] Although the opening words of s.226 are mandatory (“...FWA must terminate the agreement if...”), the two preconditions in s.226(a) and (b) involve a degree of subjective judgment, particularly the requirement that FWA considers that it is “appropriate” to terminate the agreement taking into account all the circumstances including the matters specified in s.226(b)(i) and (ii). “Appropriateness” is a broad discretionary standard. Reasonable minds may differ, indeed, differ sharply, on what is appropriate in any given set of circumstances. The power to terminate an agreement turns on what is effectively an exercise of a broad discretion.

[33] While there is a history of provisions empowering the AIRC to terminate statutory collective agreements, prior to the enactment of s.226 of the FW Act the focus on when that power should be exercised has been on “the public interest”. Section 226 of the FW Act is the first time that this power has been made subject to a criterion of “appropriateness”. The inclusion of that criterion is of particular significance and means that some of the earlier authorities are of limited assistance in determining whether the termination of an expired agreement is “appropriate”. 18

[34] In a different context (a termination of employment case where an employee had been dismissed for misconduct characterised in the disciplinary charges as the taking of “inappropriate physical liberties and the making of verbal and sexual approaches” in respect of a student), Spender J lamented the use of the work “inappropriate” in the disciplinary charges:

The word “inappropriate” might be in current fashion, but one thing that might be said about its use is that it covers a wide range of possible conduct, from conduct proscribed by the criminal law made, conduct unlawful by statute which may result in civil penalties, to conduct which is merely in bad taste or contrary to the prevailing sense of fashion, like wearing brown shoes with a navy suit or drinking red wine with fish. The use of the word almost necessarily involves some obfuscation of meaning and does not convey anything meaningful of the “nature of the acts or omissions” in “sufficient detail to enable the person to know” the “precise nature of the allegations and to properly respond to the allegations”, referring to the words contained in cl. 9(d)(i)(1) of the Award later set out. 19

[35] I cite this passage only because it colourfully underscores the amorphous nature of concept of “appropriateness”.

[36] In Mitchell v R 20 the High Court adverted to whether, in that case, there “had been appealable error in the construction and application to the facts of the term ‘appropriate’ ”. The High Court noted:21

The phrase “considers ... appropriate” indicates the striking of a balance between relevant considerations so as to provide the outcome which is fit and proper. Here, there were two possible outcomes. The first was to leave intact the authority of the Governor, in the circumstances identified in sub-ss (1) and (2) of s 40D, to release the appellant on parole at a date not earlier than 20 years from sentence. The second was to withdraw that power from the Governor by denying authority ever to order the release of the appellant on parole.

[37] In this passage the High Court apparently had regard to the ordinary English meaning of the word “appropriate” (which the Macquarie Dictionary relevantly defines as “suitable or fitting for a particular purpose, person, occasion, etc.”). However, this elucidation does not take the matter much further: the same problem remains. Reasonable minds may differ, indeed, differ sharply, on what is appropriate in any given set of circumstances. To use and extreme example, a committed member of the HR Nicholls Society and a hard left union activist are likely to have diametrically opposed views on what the “fit and proper” outcome of an application such as the present would be.

[38] How, then, is the tribunal to determine when a termination will be appropriate? What are the criteria by which appropriateness is to be determined?

[39] It goes without saying that what is effectively a discretion conferred by s.226 must be exercised judicially, that is, in accordance with the intent of the legislation and any principles emerging from the authorities, and not on the basis of any personal whim or ideological predisposition. The problem as things presently stand is that there is little by way of developed principle to guide the exercise of the effective discretion conferred by s.226.

[40] The explanatory memorandum in relation to s.226 is a mere summary of the provision and provides no assistance in determining how what is “appropriate” is to be assessed.

[41] In Patty v Commonwealth Bank 22 Ryan J, in a different context, suggested that a power to reinstate subject to the Court considering it “appropriate in all the circumstances” turned “on the exercise of a general discretion circumscribed only by the subject matter and scope and purpose of the legislation.”23 The scope and purpose of the FW Act in relation to bargaining are matters that must obviously guide a proper exercise of the discretion in this case.

[42] Obviously, the matters specified in s.226(b)(i) and (ii) point towards factors that properly bear upon whether termination should be considered “appropriate”.

[43] In relation to the matter specified in s.226(b)(i), if the employees and the employer agree that an expired agreement should be terminated then it would require exceptional circumstances (of which I cannot immediately conceive) before the tribunal could conclude that it was other than “appropriate” to terminate the agreement.

[44] Occasionally it will be the employees and or their union who will want to have an expired agreement terminated (for example, where a modern award provides for superior terms and conditions to those applicable under an expired agreement that passed the no disadvantage test by reference to a pre-reform award or NAPSA that had inferior conditions to those provided for in the modern award). Usually, as here, a contested application under s.226 will see the employer wanting an expired agreement terminated and the employees and union (if any) opposing such termination.

[45] In relation to the matter specified in s.226(b)(ii), the apparent legislative intent is that both beneficial and detrimental effects on the employees, employer and union of termination as against no termination should be considered and that if the comparison of those effects suggests that one of them is disproportionately worse of when the benefits and detriments are balance, this is factor in favour of a conclusion that termination will be inappropriate. Of course, there is a problem of comparison here because it will often be inherently problematic to compare different species of benefit and detriment.

[46] The objects of the FW Act are clearly relevant to a judicial exercise of the power in s.226. If termination will promote the objects then that is a material factor in favour of considering termination appropriate and if termination will work against the objects then that is a material factor against considering termination appropriate.

[47] The objects of the FW Act are set out in s.3:

3 Object of this Act

The object of this Act is to provide a balanced framework for cooperative and productive workplace relations that promotes national economic prosperity and social inclusion for all Australians by:

(a) providing workplace relations laws that are fair to working Australians, are flexible for businesses, promote productivity and economic growth for Australia’s future economic prosperity and take into account Australia’s international labour obligations; and

(b) ensuring a guaranteed safety net of fair, relevant and enforceable minimum terms and conditions through the National Employment Standards, modern awards and national minimum wage orders; and

(c) ensuring that the guaranteed safety net of fair, relevant and enforceable minimum wages and conditions can no longer be undermined by the making of statutory individual employment agreements of any kind given that such agreements can never be part of a fair workplace relations system; and

(d) assisting employees to balance their work and family responsibilities by providing for flexible working arrangements; and

(e) enabling fairness and representation at work and the prevention of discrimination by recognising the right to freedom of association and the right to be represented, protecting against unfair treatment and discrimination, providing accessible and effective procedures to resolve grievances and disputes and providing effective compliance mechanisms; and

(f) achieving productivity and fairness through an emphasis on enterprise-level collective bargaining underpinned by simple good faith bargaining obligations and clear rules governing industrial action; and

(g) acknowledging the special circumstances of small and medium-sized businesses. 24

[48] Section 226 is within Part 2 of the FW Act. Section 171 sets out the objects of Part 2:

171 Objects of this Part

The objects of this Part are:

(a) to provide a simple, flexible and fair framework that enables collective bargaining in good faith, particularly at the enterprise level, for enterprise agreements that deliver productivity benefits; and

(b) to enable FWA to facilitate good faith bargaining and the making of enterprise agreements, including through:

(i) makingbargaining orders; and

(ii) dealing with disputes where the bargaining representatives request assistance; and

(iii) ensuring that applications to FWA for approval of enterprise agreements are dealt with without delay.

[49] The objects in s.3(f) and s.171(a) are particularly relevant. They indicate that collective bargaining in good faith for an enterprise agreement is the central way in which, in the framework that has been established by the FW Act, productivity benefits are to be achieved.

[50] The object in s.171(b) is also clearly relevant. It emphasises that a key role of FWA is to facilitate good faith bargaining and the making of enterprise agreements. This suggests that that one of the effects of termination which should be considered is whether termination will enhance or reduce the prospects of the parties concluding a new agreement through bargaining.

[51] The object in s.3(a) is advanced by a termination of an agreement where this would promote productivity. However, the object in s.3(a) is expressed in general terms whereas the objects in s.3(f) and s.171(a) are more specific. Given that principle of construction that the specific overrides the general, this suggests that the emphasis on promoting productivity (part of the object in s.3(a)) is primarily to be achieved through collective bargaining in good faith (the objects in s.3(f) and s.171) rather than by other means, such as termination of an expired agreement.

[52] In Energy Resources of Australia Ltd v Liquor, Hospitality and Miscellaneous Union 25 Vice President Watson terminated an expired agreement observing:

The Legislative Scheme

[24] In my view this is an important consideration. Enterprise bargaining lies at the heart of the workplace relations system and has done so since the early 1990s. Enterprise instruments have had different titles and have been subject to different rules, but there is nevertheless consistency in many respects.

[25] Enterprise Agreements made and approved under the FW Act, Workplace Agreements made under the WR Act, and Certified Agreements made under the Industrial Relations Act 1988 have all been required to have a specified duration with an upper limit on that duration.

[26] The prevailing legislative provisions have provided for the continuation of agreements after their nominal expiry date subject to an ability to make application to terminate the Agreement. Different tests have applied, some more limited than the current provisions and some less restricted. It is clear that enterprise agreements are intended to apply for a limited period and either be renegotiated, renewed, varied, replaced, terminated or left unaltered depending on negotiations between the parties and the operation of the legislative provisions.

[27] The primary object of the FW Act is to provide a balanced framework for cooperative and productive workplace relations that promotes national economic prosperity and social inclusion. The means by which this is to be achieved include providing workplace relations laws that are fair to working Australians, are flexible for business and promote productivity and economic growth and achieving productivity and fairness through an emphasis on enterprise level collective bargaining.

Conclusion on Appropriateness

[28] I have considered all of the circumstances of this matter and have reached the conclusion that, on balance, termination of the Agreement is appropriate. The agreement has long since passed its nominal period of operation. It has marginal relevance at the workplace level. It applies to less than 1% of employees. The benefits it provides to employees are primarily intended to be retained for those employees and are subject to an undertaking to that effect.

[29] In my view it is unreasonable to lock such an agreement in place indefinitely. The legislative scheme supports the ending of agreement obligations at or after the nominal period of the agreement. Termination of the Agreement does not preclude further enterprise bargaining. Regular revisions and renewal of enterprise arrangements is desirable.

[30] I acknowledge the understandable concerns of employees at the loss of entitlements. The loss of some employee entitlements is almost inevitable when an agreement is terminated. In this case the undertakings given by ERA are not insignificant. In my view the loss in this case is not such as to outweigh the other factors which support the notion that a party to an expired agreement should be entitled to withdraw from it.

[31] The longer the time after expiry of the nominal term the stronger the case for termination. This agreement passed its nominal expiry date almost ten years ago. Where the continuation of the Agreement could have detrimental affects on the operation and the level of consistency of terms and conditions of employment the case for preventing termination is further diminished. I find that this circumstance exists in this case.

Conclusion

[32] I have reached the conclusions for the reasons outlined above that termination of the Agreement is not contrary to the public interest and that it is appropriate to terminate the Agreement having regard to all of the circumstances of the matter. I am therefore required by s 226 of the FW Act to terminate the Agreement. ...

[53] While his Honour emphasised only the object in s.3(a), for the reasons I have given, I consider that the objects in s.3(f) and s.171 are also of particular importance and should be seen as qualifying the general object in s.3(a). I respectfully agree with the outcome in ERA. However, it needs to be born in mind that the circumstances in that case were very unusual indeed. The agreement in question was some 10 years past its nominal expiry date and had a continuing application to only three employees - less than one per cent of the employer’s workforce. The remainder of the relevant workforce was employed on statutory individual contracts and the terms and conditions of their employment would not be directly affected by termination of the agreement in that case. Clearly enough, ERA was not a case where bargaining for a replacement agreement had been ongoing since the passing of the nominal expiry date of the agreement in question.

[54] I respectfully agree with his Honour that it is not intended by the legislation that agreements should remain in place indefinitely and that it is unreasonable to lock an expired agreement in place indefinitely. On the other hand, this does not mean that a party to an agreement has a prima facie right to have the agreement terminated merely because the agreement has passed its nominal expiry date.

[55] It seems to me that under the scheme of the FW Act, generally speaking, it will not be appropriate to terminate an agreement that has passed its nominal expiry date if bargaining for a replacement agreement is ongoing such that there remains a reasonable prospect that bargaining (in conjunction with protected industrial action and or employer response action) will result in a new agreement. This will be so even where the bargaining has become protracted because a party is advancing claims for changes that are particularly unpalatable to the other party. While every case will turn on its own circumstances, the precedence assigned to achieving productivity benefits through bargaining, evident in the objects of the FW Act, suggests that it will generally be inappropriate for FWA to interfere in the bargaining process so as to substantially alter the status quo in relation to the balance of bargaining between the parties so as to deliver to one of the bargaining parties effectively all that it seeks from the bargaining.

Consideration

[56] I have set out many of the relevant circumstances above. However, further identification of relevant circumstances is required including particular consideration of the matters specified in s.226(b)(i) and (ii).

Section 226(b)(i): the views of the employees, Tahmoor and the CFMEU

[57] Tahmoor strongly supports the termination of the Agreements for the reasons set out in its written and oral submissions. The CFMEU is implacably opposed to termination of the Agreements for the reasons set out in its written and oral submissions. I will deal with key arguments reflecting those views elsewhere in this decision.

[58] I am satisfied that the employees overwhelmingly oppose termination of the Agreements. The CFMEU is an organisation that prides itself on faithfully representing its employees in accordance with what it understands the views or wishes of those employees to be, ascertained in a democratic fashion, typically by a vote at a mass meeting. In my view, in the absence of anything to suggest that a union that normally represents the interests of employees is advancing a position contrary to the views of a majority of employees, it is generally open to FWA to rely upon that union on an application under s.226 to present its own views and also the views of employees. However in this case, two lodge officials (both employees) and another employee gave evidence confirming that the employees oppose the termination of the Agreements for the same reasons advanced by the CFMEU. Senior Counsel for the CFMEU submitted that I had a statutory duty to ascertain the views of employees and that submitted that this was not a sufficient discharge of that duty. Senior Counsel suggested that, for example, a survey of employees should be conducted by the Registrar (now the General Manager of FWA). The fact that employees all but unanimously voted down a replacement agreement proposed by Tahmoor that would have delivered a 23 per cent wage increase over the life of that agreement (but removed the limitations to which Tahmoor objects) is further evidence from which the views of the employees may be inferred.

Section 226(b)(ii): circumstances of the employees, Tahmoor and the CFMEU and the likely effect of termination on the parties

[59] Termination of the Agreements will alter the status quo in a fundamental way. It will effect a very substantial improvement to Tahmoor's bargaining position and an equivalent weakening in the bargaining position of the employees. Moreover, and perhaps more importantly, if the Agreements are terminated Tahmoor will effectively achieve all that it sought out of the bargaining save that the employees will continue to be entitled to take protected industrial action in support of claims for a new agreement (a right which the employees presently enjoy). This is a matter to which significant weight should be attached.

[60] Employees will not suffer a detriment in terms of monetary or leave entitlements if the Agreements are terminated. The undertaking given by Tahmoor preserves those entitlements. However, termination of the Agreements will see the employees lose other benefits in addition to the Constraints, including

• a performance management and disciplinary system that is substantially more beneficial to employees (they would say fairer) that the position that will obtain if the Agreements are terminated.



• access to a dispute resolution process that provides for arbitration by FWA as opposed to the dispute resolution process provided for in the Black Coal Mining Industry Award 2010 26 which does not provide for arbitration by an independent third party.

[61] The employees have enjoyed the benefit of the terms and conditions embodied in the Constraints for many years, not just for the life of the Agreements.

[62] The likely effect of termination of the Agreements on Tahmoor will be to increase the productivity of the mine because Tahmoor will no longer be subject to the Constraints. Tahmoor will achieve a greater degree of “managerial prerogative” than it enjoys at the moment given the Constraints. In the short term productivity may suffer because of the likelihood of increased protected industrial action by employees and any employer response action by Tahmoor.

[63] The effect of termination of the Agreements on the CFMEU will be to lessen the CFMEU’s capacity to effectively represent the industrial interests of the employees who are its members because it will lose the benefit of provisions in the Agreements that gave it a role in relation to various matters arising under the Agreements. This effect must not be overstated. The CFMEU will retain significant rights under the FW Act.

[64] Other circumstances of the employees, Tahmoor and the CMFEU are set out elsewhere in this decision.

Further consideration of circumstances

[65] In relation to the objects in s.3(f) and s.171(a), as noted, in this case the effect of termination of the Agreements will be to deliver all of the key productivity benefits sought by Tahmoor by virtue of the termination rather than by collective bargaining resulting in an enterprise agreement that delivers those benefits.

[66] In relation to the object in s.171(b), in this case I consider that termination will reduce the prospects of an agreement being concluded through bargaining. At present, the employees have an incentive to conclude an agreement because they have had no pay increase for an extended period and a new agreement is the only realistic way that they will be able to achieve a pay increase. If the Agreements are not terminated then Tahmoor will retain the incentive that it presently has to conclude a new agreement because it is clearly eager to obtain productivity benefits which it considers can be delivered by a removal of some or all of the Constraints. If the Agreements are terminated then Tahmoor will have much less incentive to compromise on its present bargaining position and, thus, Tahmoor’s incentive to conclude a new agreement will be significantly reduced.

[67] I consider it more likely than not that there will be further protracted protected industrial action by employees if the Agreements are terminated.

[68] It needs to be recognised that Tahmoor has a clear legitimate interest in seeking to unlock the productivity benefits that it believes, reasonably, are likely to flow from the removal of the Constraints.

[69] On the other hand, the employees in this case have a legitimate interest in the retention of at least most of the Constraints, particularly those that relate to security of employment. Employees will often have families to support, mortgages to service, school fees and so forth. Loss of income associated with termination of employment can have disastrous consequences for many employees. Older employees will often find it difficult to obtain alternative employment. Employees, particularly long term and older employees, have a profoundly legitimate interest in achieving security of employment. Security of employment is an issue that looms large in the coal industry. The coal industry is notoriously cyclical in unpredictable ways. Coal prices are subject to substantial and unpredictable fluctuations. A downward fluctuation in the coal price and a myriad of other circumstances can often lead to a need to reduce staff numbers. In the present economic circumstances it is difficult to see that there will be such a downturn affecting the Tahmoor mine in the immediate future. On the other hand, a round of redundancies (for reasons that are not entirely clear) is a matter of relatively recent historical fact at the Tahmoor mine. In the event that redundancies occur, the effect of termination of the Agreements will be to put longer term employees at risk of having their employment terminated being a risk that they would not face if the Agreements remained on foot. It may be that seniority provisions of the type contained in the Agreements are now only present in a “distinct minority” of agreements 27, however this does not diminish the employees’ legitimate interest in preserving security of employment through the retention of such provisions.

Conclusion

[70] As noted above, the FW Act entitles bargaining parties, through their representatives, to “hold out” and decline to make concessions on matters that are important to them. Both Tahmoor and the CFMEU/employees have exercised that “right”. Having regard to the matters I have set out above and taking into account all of the circumstances, including the matters specified in s.226(b), I do not consider that it is appropriate to terminate the Agreements at this time. Having reached that conclusion, is it is unnecessary to make a finding as to whether termination of the Agreements is contrary to the public interest in accordance with s.226(b).

[71] It follows that the applications must be dismissed and I do so. I should note that there is nothing to prevent Tahmoor from bringing a further application in the light of events as they unfold. The CFMEU and employees should not proceed on the basis that the Agreements will be left on foot indefinitely or even for a protracted further period. At some point, Tahmoor should not be obliged to remain subject to the expired Agreements. However, I do not consider that that point has been reached at this stage.

VICE PRESIDENT

Appearances:

J.E. Murdoch, Senior Counsel, with A. Morris for the applicant.

S. Crawshaw, Senior Counsel, with T. Slevin, Counsel, and A. Bukarica for the Construction,

Forestry, Mining and Energy Union.

Hearing details:

2010.

Sydney:

March 18, 25, 30, 31.

April 20.

May 14.

 1   AG848124.

 2 AC307072.

 3   [2010] FWA 942.

 4   [2010] FWAFB 3510.

 5   [2010] FWA 942 at [54].

 6   Exhibit 4, [30].

 7   Exhibit 4, [33], [35], [36], DN-6.

 8 Exhibit 4, [37]-[40].

 9 Exhibit 4, [41]-[43].

 10 Exhibit 4, [45]-[49].

 11 Exhibit 4, [52]-[53].

 12   or a s.170MX award or workplace determination.

 13 See s.170LX (and the provisions referred to therein) of the pre-WorkChoices version of the WR Act and item 3 of schedule 7 to the WorkChoices version of the WR Act (note: s.170LX was not one of the provisions the operation of which was preserved by item 2 of Schedule 7 to the WorkChoices version of the WR Act).

 14 See s.347 (and the provisions referred to therein) of the WorkChoices version of the WR Act and s.54 and ss.219-227 of the FW Act.

 15 s.223 of the FW Act.

 16 139 IR 34, PR955357.

 17 (1987) 61 ALJR 393.

 18   For example, Re Crinum Mine CFMEU Agreement 1997 (PR902468) where Bacon C held it is not contrary to the public interest to terminate a pre-reform certified agreement where the termination might improve one party's negotiating position. That may be so, however, such a consequence is undoubtedly relevant to whether termination of an expired agreement is “appropriate”.

 19   Chambers v James Cook University [1995] IRCA 442 at p 16 of 34 of the print.

 20 (1996) 184 CLR 333.

 21   Ibid at 346.

 22 [2002] FCA 111.

 23 Ibid at [16].

 24 [1997] FCA 567.

 25   [2010] FWA 2434.

 26   MA000001.

 27   Compare North Goonyella Coal Mines Pty Ltd v Construction, Forestry, Mining and Energy Union[2010] FWA 1112 at [6]-[8].

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