RUS Mining Services Pty Ltd

[2014] FWC 496

[2014] FWC 496

FAIR WORK COMMISSION

DECISION

Fair Work (Transitional Provisions and Consequential Amendments) Act 2009
Sch. 3, Item 16 - Application to terminate collective agreement-based transitional instrument

RUS Mining Services Pty Ltd
(AG2013/2805)

Mining industry
SENIOR DEPUTY PRESIDENT HAMBERGER	SYDNEY, 11 FEBRUARY 2014

Application for termination of the ResCo Underground Services Pty Limited CFMEU Queensland District Union Collective Agreement 2009.

[1] RUS Mining Services Pty Ltd (the applicant, successor to ResCo Underground Services Pty Ltd) applied on 11 September 2013 for the termination of the ResCo Underground Services Pty Limited CFMEU Queensland District Union Collective Agreement 2009 (the ResCo Agreement). The ResCo Agreement nominally expired on 3 June 2012. The application was made pursuant to subdivision D of Part 2-4 of the Fair Work Act 2009 (the Act) as it applies under item 16 of Schedule 3 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009.

[2] A hearing was held in Sydney on 20 January 2014. The applicant was represented by Mr Chen, and the Construction, Forestry, Mining and Energy Union, Mining and Energy Division (CFMEU) by Mr Walkaden. Statutory declarations were filed on behalf of the applicant by Mr Smith, the applicant’s General Manager of Mining and Contracting 1, and Mr Chen, the applicant’s Human Resources Manager2. Both witnesses were cross-examined by Mr Walkaden. The CFMEU did not call any witnesses; however Mr Walkaden filed a number of exhibits.

[3] The applicant provides services to the underground coal mining industry, including the provision of skilled labour. The ResCo Agreement covers all underground associated coal mining work carried out in the coal mining industry in Queensland at the applicant’s sites or those of the applicant’s customers (with the exception of the BMA Gregory Crinum Joint Venture site). Mr Smith said in his declaration that the applicant had had no business in Queensland for some time, and no longer had any employees in that State. There were therefore no employees covered by the ResCo Agreement. He attributed the inability of the applicant to obtain work in Queensland primarily to the terms of the ResCo Agreement, which he claimed made the applicant uncompetitive. He contrasted the terms of the ResCo Agreement with that of two of its competitors, MasterMyne Services Pty Ltd (the MasterMyne Agreement) and WorkPac Pty Ltd (the WorkPac Agreement).

[4] Mr Walkaden tendered evidence concerning the state of the coal mining industry in Queensland. This material referred to a fall in the export price of Queensland hard coking coal to Japan from $231 in January 2012 to $148 in October 2013, and a similar fall in the export price for thermal coal to East Asia over the same period.

[5] Mr Walkaden’s evidence also included an address by Mr Michael Roche, Chief Executive of the Queensland Resources Council, given on 12 August 2013, which referred to the industry’s ‘unsustainable’ cost structure and the need to focus on cost-cutting. According to Mr Roche ‘industry suppliers are having to adapt to the new market conditions and look to engage producers with a focus on efficiency and productivity.’ 3

[6] Mr Walkaden also tendered evidence that a large number of contractor positions had been abolished in the Queensland coal industry as part of a general down turn in the sector.

[7] During his cross-examination, Mr Smith said one effect of the down turn in the industry was that the coal companies were looking for ‘cheaper alternatives’ when it came to contractors. 4

[8] Mr Walkaden tendered an analysis comparing the rates of pay in the ResCo Agreement and the MasterMyne Agreement for a range of different shift arrangements. 5 This appears to show that the ordinary time rates for Monday to Friday work (though not weekend work) are higher under the MasterMyne Agreement than the ResCo Agreement. However Mr Smith drew attention to the provision in the ResCo Agreement that provided for an attendance bonus of a minimum $70 per shift. (The attendance bonus in the MasterMyne Agreement is $100 a week.) The ResCo provision also allowed for an alternative bonus scheme to be negotiated presumably on a site by site basis. His evidence was that in practice the applicant was required to pay the prevailing (higher) ‘site rate’. This would not, in his view, happen if the bonus was set in the agreement in ‘black and white’ terms.6

Consideration

[9] The relevant legislation governing the application is as follows:

‘Subdivision D—Termination of enterprise agreements after nominal expiry date

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 the FWC 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 the FWC must terminate an enterprise agreement

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

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

(b) the FWC 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.

227 When termination comes into operation

If an enterprise agreement is terminated under section 226, the termination operates from the day specified in the decision to terminate the agreement.’

[10] Mr Walkaden submitted that it was necessary to have regard to the objects of the Act and that part of the Act dealing with enterprise agreements (Part 2-4) in determining whether it was contrary to the public interest to terminate the ResCo Agreement. He referred in particular to Sections 3(c) and (f) of the Act:

‘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...

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’...

[11] Mr Walkaden also referred to s.171(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’.

[12] Mr Walkaden submitted that while there were no employees currently covered by the ResCo Agreement it was a necessary precondition of there being a replacement enterprise agreement that there be employees employed. It was not possible, under the terms of the Act, according to Mr Walkaden, for the applicant to make a new enterprise agreement. On the other hand, if the ResCo Agreement was terminated, there would be little to stop the applicant from employing new employees who would not be covered by an enterprise agreement - something that Mr Walkaden argued would be contrary to the objects of the Act. Even if the applicant was to seek to negotiate a new enterprise agreement, the platform for future enterprise bargaining should be the current enterprise agreement, rather than a lower base.

[13] Mr Chan submitted that the applicant was more than happy to negotiate a ‘brand new’ enterprise agreement, but because of the existing enterprise agreement, its bargaining power was limited. It was willing to make an agreement with the CFMEU similar to those at MasterMyne or WorkPac.

[14] The first issue I need to determine is whether it would be contrary to the public interest to terminate the agreement. The public interest is distinct from the interests of the parties to the agreement. As the Full Bench of the AIRC said in Re Kellogg Brown and Root Bass Strait (Esso) Onshore/Offshore Facilities Certified Agreement 2000 7(Kellogg)when dealing with an application to terminate a certified agreement pursuant to s.170MH of the Workplace Relations Act 1996:

‘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.’

[15] The object of the current Act - set out in s.3 of the Act - is rather different. The object of the Act now is to:

‘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.

[16] I note that the current object no longer refers explicitly to employment levels or inflation (though it does refer to ‘national economic prosperity’ and the promotion of productivity and economic growth’. Along with the objects of Part 2-4, there is an emphasis on collective bargaining to achieve productivity and fairness.

[17] The Full Bench in Kellogg stated 8

‘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.’

[18] What are the ‘likely foreseeable consequences’ of terminating the ResCo Agreement? In an immediate sense, the consequences are likely to be minimal. No employees are covered by the agreement, and therefore no employees will be directly affected. I find that it is likely, given what was indicated by the applicant, that it would seek to negotiate a new enterprise agreement with the CFMEU, with terms and conditions that would make it ‘more competitive’ and therefore more likely to win contracts in Queensland. Whether such an agreement could be negotiated on a ‘greenfields’ basis is unclear, and would depend on the circumstances. In the alternative, the applicant might first seek to employ new employees in Queensland and then negotiate an agreement with those employees and/or their representative(s). To ask what the terms of such an agreement would be, would be to engage in the kind of ‘speculation about possible consequences’ the Full Bench in Kellogg warned against.

[19] Mr Walkaden invited me to find that there was a ‘pronounced’ prospect that the company would re-employ people within the coverage of the ResCo Agreement, and that those people would not be covered by an enterprise agreement. This in his submission would be contrary to the public interest. However it cannot be a correct construction of the Act that it would always be against the public interest for an employer who had an enterprise agreement no longer to have one. If that were the case, ss. 225 and 226 would be otiose. Moreover, while the object of the Act and the objects of Part 2-4 do place an emphasis on enterprise agreements - it is on enterprise agreements that achieve ‘productivity and fairness’ (s.3 (f)) and ‘that deliver productivity benefits’ (s.171 (a)). The goal is not to have enterprise agreements for their own sake - but to have ones that promote productivity (as well as fairness.) No evidence was given that the ResCo Agreement is particularly distinguished in this regard.

[20] In any case, drawing on my knowledge of the industry, and the stated intention of the applicant, I find that it is unlikely that the applicant would seek to operate for any significant period of time in Queensland without an enterprise agreement. Moreover, I can find no basis for inferring that any enterprise agreement that the applicant would seek to negotiate would be less likely to assist in achieving productivity or fairness.

[21] I can find no basis for determining that the termination of the ResCo Agreement would have any deleterious consequences for ‘the public as a whole’. The termination of the agreement would not therefore be contrary to the public interest.

[22] It is now necessary to consider whether it is appropriate to terminate the agreement taking into account all the circumstances including the views of the applicant and the CFMEU; and the likely effect that the termination will have on each of them.

[23] The applicant wishes to terminate the agreement. This is opposed by the CFMEU. I have already found that the applicant would probably seek to negotiate a new agreement with the CFMEU. It might alternatively, first engage new employees in Queensland and then seek to negotiate an agreement with those employees. In that case it would be up to those employees whether to have the CFMEU as their bargaining representative.

[24] It is probably true, as Mr Chan implied, that the bargaining power of the applicant in negotiating a new agreement would be stronger if the ResCo agreement was terminated. The ResCo Agreement was negotiated over four years ago. In recent years the export price of coal has dropped significantly and there is a renewed emphasis on cutting costs in the industry to maintain its competitiveness. Presumably the applicant would seek to negotiate an agreement more in keeping with the current state of the industry. This would be made easier if the current agreement were terminated. I consider that it would be appropriate for the applicant to be given the opportunity to try and negotiate a new agreement reflecting the current circumstances, unimpeded by the continued application of the ResCo Agreement, now that its nominal term has well and truly expired. I consider it would be appropriate in these circumstances therefore to terminate the ResCo Agreement.

SENIOR DEPUTY PRESIDENT

Appearances:

E Chan for the applicant

A Walkaden for the CFMEU

Hearing details:

Sydney

2014

20 January

 1   Exhibit R1

 2   Exhibit R2

 3   Exhibit CFMEU1

 4   PN129

 5   Exhibit CFMEU2

 6   PN190

 7 139 IR 34, PR955357 at [23]

 8   At [27]

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