Australian Workers' Union v Pasminco Australia Ltd and ors

Australian Workers' Union v Pasminco Australia Ltd and ors - [2003] NSWIRComm 365 - NSWIRComm 2003 case summary — Zoe

[5]

FOURTH RESPONDENT Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union, New South Wales Branch FILE NUMBER: IRC 4663 of 2003 CORAM: Wright J President; Boland J; Bishop C Appeal - Leave to appeal - Mine closure - Whether redundancies due to economic factors or reorganisation - Principles to be applied when interpreting industrial instruments - Whether subsequent conduct relevant in interpreting an industrial instrument - Whether prior conduct may be taken into account in interpreting an industrial instrument - Redundancies held to be necessary due to economic factors - Appeal dismissed CATCHWORDS : Award Interpretation - Appeal - Leave to appeal - Mine closure - Whether redundancies due to economic factors or reorganisation - Principles to be applied when interpreting industrial instruments - Whether subsequent conduct relevant in interpreting an industrial instrument - Whether prior conduct may be taken into account in interpreting an industrial instrument - Redundancies held to be necessary due to economic factors - Appeal dismissed LEGISLATION CITED : Industrial Relations Act 1996 s 130 s 136 s 175 Application for Redundancy Awards, Re (1994) 53 IR 419 Australian Communication Exchange Ltd v Deputy Commissioner of Taxation [2003] HCA 55 Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 Construction, Forestry, Mining and Energy Union (New South Wales) v Delta Electricity [2003] NSWIRComm 135 Elura Mines Enterprise (Consent) Award, Re 2001 Health and Research Employees' Association of New South Wales v Baptist Community Services NSW and ACT [2002] NSWIRComm 32 King v State Bank of New South Wales (No 2) [2002] NSWIRComm 353 Kingmill Australia Pty Ltd t/a Thrifty Car Rental v Federated Clerks Union of Australia, New South Wales Branch (2001) 106 IR 217 CASES CITED : Knowles v Anglican Property Church Trust (No 2) (2000) 95 IR 380 Merchant Service Guild of Australia v Sydney Steam Collier Owners and Coal Stevedores Association (1958) 1 FLR 248 New South Wales Teachers Federation v Managing Director NSW TAFE Commission (2003) 123 IR 384 Professional Radio and Electronics Institute of Australasia v Qantas Airways Ltd (1984) 10 IR 1 Seamen's Union of Australia v Adelaide Steamship Co Ltd (1976) 46 FLR 444, 445 Security Officers (Waterfront) Award, Re (1988) 26 IR 1 Shop, Distributive & Allied Employees Association (NSW) & Ors v Countdown Stores & Ors (Crockers Case) (1983) 7 IR 273, 292 Short v F W Hercus Pty Ltd (1993) 46 IR 128 State Rail Authority Firefighters Award, Re 2001 [2002] NSWIRComm 159 Australian Paper Manufacturers Ltd v Pulp and Paper Workers' Federation of Australia (1981) 55 FLR 303 HEARING DATES: 10/09/2003 DATE OF JUDGMENT: 12/05/2003

[19]

Plus an additional one week's payment for each additional year of service, up to a maximum of 15 weeks payment. (c) Severance payments shall be paid on pro-rata years of service. (d) All severance payments shall be paid at the higher rate of: (i) the individuals average rostered shift earnings; or (ii) the Surface Mechanical Tradesmen's rate as per Clause 11. (e) "Weeks pay" means 42 hours at the rates calculated in accordance with (d) above. (ii) Long Service Leave (a) For employees with more than five years service, 54.6 hours payment for each year of service paid at average rostered earnings. (b) For employees with less than five years service, 54.6 hours payment for each year of service paid at average rostered earnings. (iii) All accrued entitlements to sick leave and annual leave will be paid out on termination. (iv) Employees who are living in Company accommodation may remain in their house or flat, rent free for up to four months from the date of retrenchment. (v) The Company will provide, on termination, an amount of $2,500 for married personnel and $1,200 for single personnel, to assist with relocation. (vi) (a) Should retrenchments become necessary due to economic factors, the Company guarantees to give individuals a minimum of four weeks notice of termination. (b) Should redundancies occur due to technological change or re-organisations, the Company guarantees to give individuals a minimum of three months notice of termination (our emphasis). (vii) An employee who is retrenched and is a member of the Company Superannuation Scheme shall receive his/her full account balance i.e. the employee's own contributions and all the Company's contributions, including interest. (viii) Retrenched employees shall be entitled to an exit health examination by an agreed local doctor, where possible. Such examination to include hearing tests, chest x-ray (if requested), lung capacity tests and such other tests as are deemed appropriate for the type of work in which the persons are engaged

[22]

10 The unions tendered evidence of Pasminco documents relating to the sale that used the expression 'restructure' and submitted that the terms "reorganisation" (as used in clause 29 (iv)(a)) and "restructure" were very similar. The Deputy President considered that: 83 The majority of the Company documents related to the sale, use the expression " restructure " - a point strongly advanced by the Unions in support of their case. However it seems to me that the concept of "restructure," in the context of Pasminco's grave financial state, does not sit comfortably with the generally understood notion of "restructure" or "reorganisation" in which an employer seeks to maximise profits or long term business viability. Here, it seems to me, the sale of the mine must be seen in the context of a company desperately attempting to extricate itself from almost overwhelming economic difficulties. Nothing will be left for it at Elura when the mine is sold. I concur with Mr Neil's submission that a "restructure" or "reorganisation" in the usual sense would ordinarily result in something being left over after the "restructure" or "reorganisation". That is plainly not the case here. … 93 Further, I do not agree with the Unions' contention that there is a distinction to be drawn with the word "retrenchments" used in subcl (vi)(a) and "redundancies" used in subcl (vi)(b). In my opinion, such a distinction is not reasonably open in the context of the clause as a whole which makes consistent reference to retrenchment and the conditions and benefits which flow from retrenchment. I agree with Mr Neil that the use of the two words "is a distinction without a difference" and is more likely to be a slip in the drafting. 94 In view of the Commission's conclusions, I have not found it necessary to make specific findings on whether the word "reorganisation" in cl 26(vi)(b) is only applicable to a reorganisation within the Elura Mine itself; although I doubt the word has the limited affect, contended for by Mr Neil. For example, one could well imagine a decision taken by the Pasminco Group to contract out a particular task or function across all its mining operations. It might well be open to conclude that the reorganisation in those circumstances warrants notice of termination of three months to the affected employees at each mine site.

[23]

11 The Deputy President also made certain observations as to periods of notice required in redundancy situations: 79 There is no doubt that the authorities of this Commission have adopted a distinction between notice to employees of redundancies caused by different factors. Shorter periods of notice will usually be found in situations brought about by economic circumstances beyond the employer's control and for which little planning or reorganisation of the employer's operations is possible. However, there is nothing in the authorities which, expressly or impliedly require that such circumstances be necessarily sudden or unexpected. It will vary from case to case. It is not too difficult to contemplate a situation where adverse economic factors are cumulative over a period of time. To my mind the key to the test of what constitutes economically based redundancies is whether the circumstances are beyond the control of the employer and/or which results in the employer suffering some adverse effect. 80 This situation is to be contrasted with a deliberate and planned decision by an employer to introduce new technology or restructure or reorganise its operations through company merger, takeover or asset sale. Obviously, longer periods of notice to affected employees will not only be practically available but, as a matter of good industrial citizenship, should be provided. 81 There can be no doubt that the Pasminco Group has experienced serious economic problems in recent times. It is difficult to comprehend how this could not be so when Pasminco was placed in voluntary administration in September 2001 with consolidated losses of $715.7 million and debts in the order of $2.9 billion. I note the evidence of Mr Howe in this regard was not called into question. 82 However it is equally true, I think, to say that Pasminco could, and did make choices about its future that might not have necessarily involved the sale of the Elura Mine. Indeed, if the present sale proposal is not consummated, it is envisaged that the mine will continue to operate under its present ownership. That is not, in any way, a criticism of the decision to sell the mine in the current circumstances. However in my opinion, it was not a decision, in stricto sensu , which could be said to be beyond the employer's control.

[25]

13 His Honour considered the disputed clause in the following way: 84 On one view of it, the express wording of subcl 29(vi) might be said not to cover the circumstances of company closure, even though in the preamble to the clause it refers to retrenchments caused by four factors, one of which is company closure. 85 Subclause (vi) expressly covers notice in circumstances of economic factors, technological change and re-organisations. It is curious that the different notice provisions in subcl (vi)(a) and (vi)(b) do not expressly use the words "company closure" or "restructure." Herein, of course, lies the conundrum. If the disputed expressions are not included, where do they fit? Was this a deliberate intention of the parties to exclude such circumstances from the notice previsions? I think not. Rather, it would appear most likely to have been an oversight or a slip in the drafting that has now created an ambiguity. 86 In order to reconcile this ambiguity, I have considered particularly apposite the manner in which the award clause was actually used and applied in the past. This approach is consistent with the conclusion in Kingmill and the other authorities to which I earlier referred. In this regard I have found the Metalliferous Miners (Elura Mine) Award (Matters 435 and 784 of 1991) judgment of Cullen, J in 1992 to be analogous to the circumstances that confront the parties in this case. 87 The first observation to be made is that the wording of the existing cl 29(vi) was in identical terms in the 1991 agreement (the provision having been first inserted in 1987). Moreover that agreement was made by consent. 88 Secondly, his Honour identified the major factors resulting in the 225 redundancies as "the massive downturn in metal prices in association with adverse exchange rates." The Unions in the present case did not take issue with these two factors as being directly relevant to the present situation. It was not put, nor could it be, I think, that such factors are within the control of Pasminco as the employer. 89 Thirdly, the 1991 redundancies saw a massive reduction in employment from 287 to 65. On one view of it, the 1991 redundancies would likely have had a more severe impact on the employees and the Cobar community than what is envisaged in CBH's purchase of an ongoing operation at Elura in 2003. I accept, of course that all Pasminco employees will be made redundant at the point of sale. It is unclear at this stage how many of these employees will obtain employment with the new owner. No doubt some will. 90 Fourthly, and importantly, I accept the documentary evidence provided by Mr Martin that redundant employees in 1991 were paid one months' notice. There is no evidence that such a payment was a cause of any complaint, grievance or claim that the three months' notice provision in subcl (b) should have applied. 91 In these circumstances, I am compelled to the view that the parties had intended and applied the one month notice provision to a redundancy situation resulting from falling metal prices and adverse exchange rates. It would seem inescapable that this situation was based on economic factors beyond the control of the employer. While the result in 2003 will be different, i.e. a new owner, the circumstances are not dissimilar to those in 1991.

At a glance

Court

Decision date

Before

Source

Judgment (79 paragraphs)

Parties

Cases Cited (19)