Notification under section 130 by Pasminco Australia Ltd (subject to Deed of Company Arrangement) and Pasminco Cockle Creek Smelter Pty Ltd (subject to Deed of Company Arrangement) of a dispute with Australian Workers' Union, New South Wales and others re industrial action; Notification under section 130 by Australian Workers' Union, New South Wales of a dispute with Pasminco Elura Mine (subject to Deed of Company Arrangement) re industrial action; Notification under section 130 by Electrical Trades Union of Australia, New South Wales Branch of a dispute with Pasminco Elura Mine (subject to Deed of Company Arrangement) re industrial action [2003] NSWIRComm 235 - NSWIRComm 2003 case summary

Judgment (119 paragraphs)

[1]

CITATION : Notification under section 130 by Pasminco Australia Ltd (subject to Deed of Company Arrangement) and Pasminco Cockle Creek Smelter Pty Ltd (subject to Deed of Company Arrangement) of a dispute with Australian Workers' Union, New South Wales and others re industrial action; Notification under section 130 by Australian Workers' Union, New South Wales of a dispute with Pasminco Elura Mine (subject to Deed of Company Arrangement) re industrial action; Notification under section 130 by Electrical Trades Union of Australia, New South Wales Branch of a dispute with Pasminco Elura Mine (subject to Deed of Company Arrangement) re industrial action [2003] NSWIRComm 235 MATTER IRC 1836 of 2003 APPLICANT: Pasminco Australia Ltd (subject to Deed of Company Arrangement) Pasminco Cockle Creek Smelter Pty Ltd (subject to Deed of Company Arrangement) RESPONDENT: Australian Workers' Union, New South Wales

[2]

MATTER IRC1838 of 2003 PARTIES : APPLICANT: Australian Workers' Union, New South Wales RESPONDENT: Pasminco Elura Mine (subject to Deed of Company Arrangement)

[3]

MATTER IRC1851 of 2003 APPLICANT: Electrical Trades Union of Australia, New South Wales Branch RESPONDENT: Pasminco Elura Mine (subject to Deed of Company Arrangement) FILE NUMBER: 1836, 1838, 1851 of 2003 CORAM: Sams DP Metalliferous mining industry - industrial dispute - industrial action - recommendation and direction - return to normal work effected - request to interpret award clause concerning notice of redundancy - sale of Elura Mine - conditional sales agreement - all employees to be made redundant - all employees to receive outstanding entitlements and redundancy benefits - whether closure of mine for economic reasons or company reorganisation - different notice periods for different reasons of redundancy - meaning of "restructure" - redundancy test case decisions considered - principles of award interpretation - previous application of the disputed clause - whether disputed clause ambiguous. CATCHWORDS : Held, closure of mine forced on employer by serious economic difficulties - disputed clause ambiguous - consideration of how disputed clause had applied in the past - notice to employees of redundancy not unreasonable - no distinction between redundancy and retrenchment - no uncertainty or confusion - actual notice of redundancy not significant - employer's interpretation of disputed clause accepted- dispute proceedings concluded. LEGISLATION CITED : Industrial Relations Act 1996 Amcor Limited v Construction, Forestry, Mining and Energy Union [2003] FCA FC 57 Australian Paper Manufacturers Ltd v Pulp and Paper Workers' Federation of Australia (1981) 55 FLR 303 Australian Workers Union NSW and WJ & A Seery [2000] NSWIRComm 62 Australian Workers' Union, New South Wales Branch and Zoological Parks Board of New South Wales [2003] NSWIRComm 49 Bryce and Another v Apperley (1998) 82 IR 448 City of Wanneroo v Holmes (1989) 30 IR 362 Cooper Brookes (Wollongong) Pty Ltd v The Commissioner of Taxation of the Commonwealth of Australia (1981) 147 CLR 297 Kingmill Australia Pty Ltd T/A Thrifty Car Rental v Federated Clerks' Union of Australia, New South Wales Branch (2001) 106 IR 217 Hotville Pty Ltd v NSW Nurses' Association [2002] NSWIRComm 338 Merchant Service Guild of Australia v Sydney Steam Collier Owners and Coal Stevedores Association and Others (1958) 1 FLR 248 Metalifferous Miners (Elura Mine) Award, Cullen J. (Matters 435 and 784 of 1991) National Union of Workers v Graincorp Operations Ltd (2002) 117 IR 136 CASES CITED : New South Wales Fire Brigade Employees' Union and New South Wales Fire Brigades [2003] NSWIRComm 55 Perisher Blue Pty Ltd and Others v Australian Workers Union (1999) 91 IR 274 Re Clerks (State) Award 1987 (1987) 21 IR 29 Re Application for Redundancy Awards (1994) 53 IR 419 Re State Rail Authority Firefighters Award 2001, [2002] NSWIRComm 159 Re Security Officers (Waterfront) Award (1988) 26 IR 1 Shop, Distributive & Allied Employees' Association (NSW) & Ors. v Countdown Stores & Ors (1983) 7 IR 273 Shop, Distributive and Allied Employees' Association (NSW) v Myer (NSW) Ltd (1983) 7 IR 300 Termination, Change and Redundancy Case (1984) 8 IR 34

[4]

Elura Mine Enterprise (Consent) Award 2001 339 IG 718 Metalliferous Mining Industry (State) (Consolidated) Award 291 IG 1 HEARING DATES: 05/26/2003 DATE OF JUDGMENT: 08/01/2003

[5]

MATTER IRC1836 of 2003 APPLICANT: Mr I Neil of counsel SOLICITOR Mr A Cunningham, Minter Ellison

[6]

RESPONDENT: Mr R Tripodi, Australian Workers' Union, New South Wales Mr S Robinson, Electrical Trades Union of Australia, New South Wales Branch Mr A Neilson, Australian Manufacturing Workers' Union

[7]

LEGAL REPRESENTATIVES: MATTERS IRC1838 and 1851 of 2003 APPLICANTS: Mr R Tripodi, Australian Workers' Union, New South Wales Mr S Robinson, Electrical Trades Union of Australia, New South Wales Branch Mr A Neilson, Australian Manufacturing Workers' Union

[8]

RESPONDENT: Mr I Neil of counsel SOLICITOR Mr A Cunningham, Minter Ellison

[9]

JUDGMENT: - 33 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES CORAM: SAMS DP 1 August 2003 Matter No IRC03/1836 Notification under section 130 by Australia Pasminco Ltd (subject to Deed of Company Arrangement) and Pasminco Cockle Creek Smelter Pty Ltd (subject to Deed of Company Arrangement) of a dispute with Australian Workers' Union, New South Wales and others re industrial action Matter No IRC03/1838 Notification under section 130 by Australian Workers' Union, New South Wales Pasminco Elura Mine (subject to Deed of Company Arrangement) re industrial action Matter No IRC03/1851 Notification under section 130 by Electrical Trades Union of Australia, New South Wales Branch (subject to Deed of Company Arrangement) re industrial action DECISION [2003] NSWIRComm 235

[10]

1 These three dispute notifications, pursuant to s130 of the Industrial Relations Act 1996 ('the Act') had their genesis in a decision by Pasminco Australia Ltd (subject to Deed of Company Arrangement) to enter into a conditional agreement to sell its silver, lead and zinc underground mine at Elura, near Cobar New South Wales. The agreement was entered into with Consolidated Broken Hill Ltd ('CBH') and its related entities on 8 April 2003.

[11]

2 Pasminco's notification of dispute was lodged on 2 April 2003. It arose as a consequence of a strike by production and trades employee members of the Australian Workers' Union ('AWU'), Australian Manufacturing Workers' Union ('AMWU') and the Electrical Trades Union ('ETU') ('the Unions') on 25 March 2003. The employees had resolved to remain on strike until certain questions relating to the mine's sale, were answered by Pasminco's Administrator to the Unions' satisfaction. Also on 2 April, 2003 the AWU and the ETU lodged identical dispute notifications alleging a failure by Pasminco to properly consult with their employees over the proposed redundancy of all the Elura Mine employees at the completion of the sale process.

[12]

3 The dispute notifications were urgently listed by the Commission on the same day they were lodged. After compulsory conference proceedings, the Commission recommended a resumption of normal work as soon as practicable and recommended urgent meetings be arranged between the parties. The Commission's recommendation for a return to work was not complied with. The employees remained on strike.

[13]

4 At Pasminco's request the matters were urgently relisted on 3 April. At the conclusion of the proceedings, the Commission issued a direction, pursuant to s136(1)(a) of the Act, that there be an immediate return to normal work.

[14]

5 In proceedings later that day, the Commission was informed that normal work had resumed. Mr M Thistlwaite for the AWU and AMWU and Mr S Robinson for the ETU sought the Commission's assistance in resolving the disputes by way of an interpretation of the notice of retrenchment provisions under cl 29(vi) of the Elura Mine Enterprise (Consent) Award 2001 339 IG 718 ("the Award").

[15]

6 Mr A Cunningham (Solicitor) for Pasminco requested the Unions provide an outline of the basis for their interpretation of the disputed Award clause. The Commission adjourned the matters until 8 April for conciliation conferences pursuant to s134 of the Act.

[16]

7 On that occasion, the Commission formed the view that the disputes could not be resolved by conciliation and accordingly made a finding pursuant to s135 of the Act. The proceedings were adjourned for an expedited hearing on 26 May 2003 with directions issued in preparation for the arbitration.

[17]

8 This decision now deals with the interpretation of the disputed Award clause pursuant to the Commission's powers of interpretation of an industrial instrument under s175 of the Act.

[18]

9 The Elura mine is an underground zinc/lead/silver mining operation in central New South Wales. It is forty-seven kilometres north west of the town of Cobar. It commenced production of lead and zinc concentrates in 1983. It was built at a cost of more than $200 million and comprises an underground mine accessed by both a decline and a haulage shaft, concentrator, drying, storage and rail facilities. In 2002, the mine treated 1.18 million tonnes of ore and produced 170,666 tonnes of zinc concentrate and 80,490 tonnes of lead concentrate. Zinc ore is processed primarily at the Cockle Creek Smelter (set for closure in September 2003) and lead concentrate is processed at the Port Pirie smelter.

[19]

10 The operation currently has a workforce of some 240 employees, including contractors. There are 114 employees covered by the consent Award who are members of the three Unions.

[20]

11 There is a long history of agreements and consent awards applying at the Elura mine. The current Award took effect on 24 September 2001 and remains in force for a period of two years, ie until 24 September 2003. It is a consent award binding on the Australian Workers Union, New South Wales; the Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union, New South Wales Branch; the Electrical Trades Union of Australia, New South Wales Branch and Pasminco and is expressed to apply only at the Elura mine.

[21]

12 Clause 29 is expressed as follows: 29. Retrenchment The Company will make every effort to avoid the need of having to retrench employees. However, in the event of retrenchments becoming necessary, it is agreed between the parties that the retrenchments are not voluntary and arise solely as a result of: - The Company's closure - Economic factors - Introduction of new technology - Restructuring At the time of retrenchment, the following would apply: (i) (a) Method of selection of employees to be retrenched. When the Company is not affecting a complete shutdown of its activities, the following method of selecting employees to be retrenched shall apply: - In deciding which employees are to be retrenched, the Company shall have the discretion to choose those employees to be retained, if any, where due consideration has to be made for the continuity of operations. - Accordingly, some occupation classes may either be fully exempted from the retrenchment, whist other classes may need to be included in total or part thereof. (b) Employees would be paid the following severance payments in accordance with the State Test Case Provisions 1994: Years of Service Entitlements Under 45 Years of Age Less than 1 year Nil 1 year and less than 2 years 4 weeks 2 years and less and 3 years 7 weeks 3 years and less than 4 years 10 weeks 4 years and less than 5 years 12 weeks 5 years and less than 6 years 14 weeks 6 years and over 16 weeks

[22]

Where an employee is 45 years old or over, the entitlement shall be in accordance with the following scale: Years of Service Entitlement 45 Years of Age and Over Less than 1 year Nil 1 year and less than 2 years 5 weeks 2 years and less and 3 years 8.75 weeks 3 years and less than 4 years 12.5 weeks 4 years and less than 5 years 15 weeks 5 years and less than 6 years 17.5 weeks 6 years and over 20 weeks

[23]

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. (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.

[24]

13 Shortly stated, the question here to be determined is whether the present circumstances of the sale of the mine are for economic reasons as contemplated by cl 29(vi)(a) or as part of a Company reorganisation(s) contemplated by subclause (vi)(b).

[25]

14 The Unions relied on the evidence of Mr Lloyd Mitchell, a senior mill operator at the Elura mine. Mr Mitchell has worked at the mine since January 1987 and is the AWU surface shift delegate. He was also a member of the Award Negotiating Committee for the making of the 1996, 1999 and 2001 enterprise awards.

[26]

15 Mr Mitchell deposed that for some years Pasminco had spoken of possible redundancies arising from a restructuring of the Company. He said this was the only reason given for the redundancies when the employees took industrial action on 25 March 2003. He now believed the Company was arguing that the redundancies were for economic reasons.

[27]

16 Attached to Mr Mitchell's affidavit were a number of documents. For convenience, I shall identify each document and the relevant details contained therein. a) News releases of 22 October 1999 and 20 July 2001 headed respectively " Pasminco Announces Reorganisation " and " Pasminco Restructures ." (LM1, LM2) b) Presentation to analysts dated 20 July 2001 entitled " Restructure of Pasminco ." (LM3) c) Letter to shareholders of 23 July 2001 (LM4) which states, inter alia: Strategic review As you know Pasminco has been adversely affected for some time by a range of factors including low zinc prices, high US$ debt repayments and a restrictive foreign exchange option position, all of which have combined to see our share price at disappointingly low levels. Accordingly the Board has been undertaking a comprehensive review of all assets and considering a range of options to restructure the business and improve performance. We have been advised during this process by UBS Warburg. Restructuring initiatives for Pasminco The Board has decided that the most compelling option is a significant restructuring of the company, designed to solve Pasminco's financial difficulties by refocusing the company on its core lead and zinc smelting business. The restructured company will have more stable earnings than in the past and the potential to grow when opportunities arise. d) Letter from Ferrier Hodgson, the Administrator appointed on 19 September 2001, to creditors (LM5). The letter reads in part: During the course of the Voluntary Administration, we will be: a) Keeping the business operating as usual during this review period. b) Looking to restructure the business where appropriate. c) Considering the possibility of selling the whole or part of the business as going concerns e) Letter from the Administrator to creditors dated 3 October 2001 advising of the outcome of the first meeting of creditors (LM6). f) Letter to shareholders from the Administrator dated 15 November 2001 advising that " Pasminco remains in a precarious financial position ." (LM7) g) Email from Mr Mark Hine, General Manager NSW Mines to all employees guaranteeing all entitlements. (LM8) h) News release from Pasminco dated 30 April 2002 entitled " Restructure of Pasminco Group " (LM9). i) News release from Administrator dated 21 May 2002 entitled " Pasminco Restructure endorsed by Creditors Committee " (LM10) which included the following: A significant amount of restructuring has taken place in Pasminco in terms of cost reviews, staff reconstruction, slimming head office operations and identification of efficiencies which can be gained in the larger assets of the group. This process is ongoing and includes a thorough review of all of the business activities of Pasminco. There will be redundancies arising out of a restructure and downsizing of the company's head office and the ongoing drive for efficiency gains and cost reductions at the various operating sites. j) Letter to staff from Administrator dated 20 June 2002 (LM11). k) Questions and answers concerning Pasminco's future (LM12). Q. What are the chances of Pasminco's survival? A. We will conduct a review of all of Pasminco's operations. It is expected that it will be business as usual in the short term with a view to exploring restructuring options and possibly the sale of some/all of Pasminco's assets. l) Document prepared by Administrator entitled " Pasminco Restructure " (LM13). m) Deed Administrator's Report 2002 (LM14) n) News release dated 18 July 2002 entitled " Restucture Proposal to be put to Creditors of the Pasminco Group - Takeovers Panel Disclosure Requirements ." (LM15) o) News release dated 24 October 2002 announcing closure of Cockle Creek Smelter, (LM16) which included the following: Given the interdependency between Cockle Creek and Pasminco's Elura mine near Cobar in NSW, Mr Galley also confirmed that the sale process for the Elura mine was continuing as part of the restructuring strategy for Pasminco. He said that interdependencies between Elura and other Pasminco assets would be protected under any sale agreement. If a sale was not concluded, Mr Galley said that Pasminco would retain the mine (P.2). p) Statement by Administrator to 2001 and 2002 Joint Annual General Meetings 12 December 2002. (LM17) q) Announcement by Managing Director of Consolidated Broken Hill of negotiations for the purchase of the Elura mine. (LM18) r) Media Release and half yearly results (LM19) stating in part: Importantly, we remain committed to our plans to restructure Pasminco's asset base in preparation for a re-float of the company when market conditions are appropriate. Restructure Initiatives With regard to the restructure being implemented for Pasminco, the sale process for the Elura mine, near Cobar in New South Wales, is continuing. Consolidated Broken Hill Ltd (CBH) has completed its due diligence. Negotiations between Pasminco and CBH are now substantially complete and transaction documents are now being drafted. s) Correspondence between the AWU and the Administrator concerning issues relevant to the sale (LM 20, 21, 22, 23 and 24) t) Media releases concerning closure of Cockle Creek smelter (LM25), strike at Elura Mine (LM26), sale of Elura Mine and Newcastle ship loading operation (LM27) and Pasminco Quarterly Review (LM28). u) Deed of Cross Assumption of Claims (LM29)

[28]

17 Mr Tripodi on behalf of the Unions provided an outline of submissions which dealt with three matters.

[29]

18 The Unions argued that cl29(vi)(b) of the Award should apply to redundancies arising from a reorganisation of the Company. Such an interpretation would require the Company to provide three months notice of termination.

[30]

19 Mr Tripodi examined the meaning of a number of words used in the clause: "retrench", "unnecessary", "economic", "redundancy", "reorganisation", "occur" and "restructure".

[31]

20 He put that the words should be given their "plain ordinary English meaning." See Kingmill Australia Pty Ltd T/A Thrifty Car Rental v Federated Clerks' Union of Australia, New South Wales Branch (2001) 106 IR 217, Bryce and Another v Apperley (1998) 82 IR 448, Perisher Blue Pty Ltd and Others v Australian Workers Union (1999) 91 IR 274.

[32]

21 Applying the principles of award interpretation, the situation was that employees are no longer needed for work at the mine as part of the Company's reorganisation. It is not for a reason outside the Company's control for which subcl (vi)(a) would apply.

[33]

22 While submitting there is no ambiguity in the words used, Mr Tripodi said it was proper to have regard to the surrounding circumstances and the purposes for which the provision was intended. He said that the same provision was to be found in the 1999 award and the 1992 industrial agreement.

[34]

23 It was put that the use of the term "retrenchments" in subcl (vi)(a) is to be distinguished to "redundancies" used in subcl (vi)(b). Mr Tripodi submitted that the employees at the mine are to be retrenched for reasons of redundancy arising from the Company's closure. This situation is different to retrenchments in circumstances where the employer is able to select employees to be retrenched. See Amcor Limited v Construction, Forestry, Mining and Energy Union [2003] FCA FC 57. This latter situation is covered by subcl (vi)(a) while the redundancy of employees due to the mine's closure would be covered by subcl (vi)(b).

[35]

24 Mr Tripodi submitted that it was relevant to have regard to the industry award which would otherwise cover the work performed at the Elura mine; namely, the Metalliferous Mining Industry (State) (Consolidated) Award 291 IG 1. This award provides for a scale of one to five weeks' notice for changes in production program, organisation or restructure and three months notice for technological change. However, this award exempts mines that have their own enterprise arrangements, such as Elura.

[36]

25 It is therefore appropriate to look beyond the industry award to the various redundancy test case decisions of the Australian Industrial Relations Commission and this Commission. See Termination, Change and Redundancy Case (1984) 8 IR 34, Shop, Distributive & Allied Employees' Association (NSW) & Ors. v Countdown Stores & Ors (1983) 7 IR 273 ("the Croker case"), Re Clerks (State) Award 1987 (1987) 21 IR 29 and Re Application for Redundancy Awards (1994) 53 IR 419. The Unions put that the test case decisions recognised a distinction in situations where longer periods of notice are more appropriate, such as for reasons of technological change or company restructure.

[37]

26 Mr Tripodi noted that the 1987 Elura Mine Industry Agreement provided redundancy provisions for the first time at the mine. This was around the same time as the 1987 Clerks case and three years later than the Croker case. It was inserted at a time when the parties were well aware of how the Commission dealt with periods of notice based on different reasons for redundancy.

[38]

27 Mr Tripodi highlighted the evidence of Mr Martin which revealed the detailed planning and negotiations involved in the present sale process. This situation was to be distinguished from circumstances suddenly forced on an employer by economic factors.

[39]

28 Mr Tripodi put that the words, "reorganisation" and "restructure" are very similar and if there was any ambiguity the Court would prefer an interpretation which would avoid inconvenience or injustice. See Cooper Brookes (Wollongong) Pty Ltd v The Commissioner of Taxation of the Commonwealth of Australia (1981) 147 CLR 297.

[40]

29 The Unions relied on the numerous Company documents that demonstrated that redundancies due to company restructuring have long been anticipated by Pasminco.

[41]

30 Mr Tripodi referred to the various documents attached to Mr Mitchell's affidavit, which he said demonstrated that restructuring had been a planned process, over a long period, within the control of the employer.

[42]

31 For example, in July 2001, Pasminco announced a significant restructuring through a process of selling assets and reducing debt. Decisions were made to sell the Broken Hill and Elura mines. The objective was to address the then financial position of the Company arising from a fall in metal prices and an earnings down grade. This was to be achieved through a wide ranging strategic review and business improvement program. It was obvious, Mr Tripodi said, that none of the documents suggested that the decision to sell the Elura mine was one suddenly forced on the employer because of economic factors. Moreover, the Elura mine was seen as a competitive operation that was likely to attract a range of interested investors.

[43]

32 Mr Tripodi emphasised that the Company's voluntary administration was not a short term economic imperative. The Administrator had stressed that it was "business as usual". The Elura mine's performance had been good and its sale was a strategic decision involving forward planning and notice.

[44]

33 Throughout 2002, numerous documents showed that redundancies due to restructuring or reorganisation continued to be anticipated in circumstances completely within the control of the employer. As a result, notice periods in excess of three months should be made to employees.

[45]

34 Mr Tripodi put that the concept of Pasminco's re-organisation involved a wider context of redundancies throughout the Pasminco Group. Authorities on the question of mergers and takeovers envisaged longer periods of notice in such circumstances.

[46]

35 The Unions rejected the proposition that the Elura mine was sold because it "is marginally performing due to the mine's own economic factors and more general factors." The Elura mine was identified (LM22) as a competitive non-core asset whose sale would help restore the Group's balance sheet. The mine's own performance was not the reason for the sale (See LM3, LM25 and LM28).

[47]

36 Finally, the Unions submitted that it was clear, on the evidence, that the sale of the mine to CBH was a situation in which longer periods of notice to employees under cl29(vi)(b) was appropriate. The redundancies are within the control of the employer and arise from a decision to reorganise within the Pasminco Group.

[48]

37 Mr Stewart Fraser Howe, General Manager, Strategic Planning and Development, Pasminco Ltd and Mr Peter Martin, Manager, Human Resources, New South Wales Mines provided both affidavit and oral evidence.

[49]

38 Mr Howe is responsible for conducting the sale process for the Elura Mine. In his affidavit he detailed the background to the Pasminco Group's worsening financial position. This had resulted in the appointment of administrators in September 2001. Mr Howe gave as the reasons for the Group's collapse as including: a) The decline in world zinc prices b) Pasminco's debt burden c) The acquisition of Savage Resources d) Pasminco's hedge book, and e) The information systems deployed under the former management of the Pasminco Group

[50]

39 Mr Howe said the ultimate cause of the Group's collapse was external economic factors beyond its control relating to the fall in zinc prices to historic lows and the decline in the value of the Australian dollar. These factors meant that the Pasminco Group could not overcome its financial stresses and remain financially viable.

[51]

40 Mr Howe provided details of Pasminco's financial position. This evidence was not disputed by the Unions.

[52]

41 At the time of voluntary administration, Pasminco's financial creditors were owed $1,891 million, with a further $850 million in the hedging exposure. Total creditor claims were $2,812.4 million. The annual loss for the year ended 30 June 2001 was $2,418.3 million. Liabilities exceeded the value of assets by $856 million. The 2002 annual result disclosed a consolidated loss of $411 million and liabilities exceeding the value of the assets by $1,261 million.

[53]

42 To address the worsening financial position, Mr Howe described the "Equity and Float" option. This was a proposal in which the financier creditors had agreed to swap their combined debt of $2.8 billion for equity in a new company, Pasminco Resources Ltd. An important element with the proposal was the sale of the Elura mine and the sale or closure of all other mining assets (except Century and Roseberry (Tasmania) mines). If this option failed, a number of "fall back "options had been identified - including the complete liquidation of the Pasminco Group.

[54]

43 Mr Howe gave details of the proposed sale of the Elura Mine. He said the mine had been incurring substantial financial losses - the after tax loss for the year ended 30 June 2002 was $17.1 million. Without major investment the life of the mine was about two to three years. Mr Howe said Pasminco could not afford substantial investment in the mine.

[55]

44 Mr Howe deposed that on 8 April 2003 Pasminco signed a conditional sale and purchase agreement with CBH for the sale of the Elura Mine and the shiploader at Newcastle. Mr Howe emphasised that this was a conditional sale which might not eventuate.

[56]

45 On completion of the sale Pasminco will no longer have any involvement at the mine. The company will receive: i) $2.2 million cash;

[57]

ii) a further $3.2 million cash nine months after completion;

[58]

iii) up to $5 million in price linked payments if the zinc price exceeds AUD$2,000 per tonne;

[59]

iv) a refund of $2.8 million on account of an environmental bond previously paid to the NSW Department of Minerals and Resources by the Pasminco Group;

[60]

v) release from a $1.8 million bank guarantee securing the balance of the environmental bond; and

[61]

vi) release from its obligations under the lease for the Newcastle shiploader, as CBH will take over the lease in respect of the ship loader.

[62]

46 All employees of Pasminco will be terminated on completion of the sale and Pasminco will not have any involvement or interest in Elura mine once the sale is completed. Mr Howe gave evidence that the sale agreement provided for employees to be given eight weeks' actual notice of the termination of their employment. In cross examination, Mr Howe agreed that the eight weeks had been the subject of offers and counter offers during the negotiations for the sale.

[63]

47 Mr Howe added that the cash proceeds of the sale would be insufficient to cover the liability for severance payments to employees at the mine. The liabilities are estimated to be at least $10.7 million. This figure is likely to be higher as it had been calculated three to four months ago. An additional months notice would add $660,000 to this figure.

[64]

48 Mr Peter Martin commenced employment with Pasminco in February 1975. He has held his current position for approximately six years.

[65]

49 Attached to Mr Martin's affidavit were copies of the announcement of 20 July 2001 of the possible sale of the Elura mine (PM1) and staff updates about the impact of the sale on the employees' employment. (PM2 and PM3)

[66]

50 Mr Martin said the first occasion the AWU had raised the issue of notice to employees was at a meeting with management on 13 March 2003. Mr Martin had replied that the sale of the mine was due to economic factors and not as a result of technological change or reorganisation within the mine. Mr Martin gave an example of when three months' notice might apply. Nevertheless, the AWU representatives believed the employees were entitled to three months notice. Mr Martin confirmed that the terms of the sale agreement provide eight weeks' actual notice of termination to the employees.

[67]

51 On 25 March 2003 (following industrial action at the mine) the AWU in correspondence had asked "when is the mine closing, and why will it not be recognised by the administrators as a reorganisation of Pasminco Aust Ltd?" Pasminco had replied that "the proposed sale of the mine is not a reorganisation of Pasminco Aust Ltd, it is simply the sale of an asset which is marginally performing due to the mine's own economic factors and more general economic factors" (PM4).

[68]

52 Mr Martin referred to a folder of documents tracing the history of industrial coverage at the Elura Mine since 1982 (PM1). It was apparent Mr Martin said, that the industrial instrument governing the Elura mine and its employees was specific to Elura and does not, and never has applied to any other Pasminco location.

[69]

53 Mr Martin said the wording of the present cl 29(vi) was first inserted by consent in the Elura Mine Industrial Agreement in 1987. He said the terms of the current award had been negotiated at an enterprise level. It was his understanding that "reorganisation" in cl 29(vi)(b) was intended only to refer to a reorganisation at the Elura Mine itself.

[70]

54 Mr Martin referred to previous redundancies at the Elura Mine in 1991 and the decision of Cullen J; Metalliferous Miners (Elura Mine) Award (Matters 435 and 784 of 1991). His Honour had said: The base metal mining industry has been subjected to a massive downturn in metal prices in association with adverse exchange rates. These two circumstances resulted in the operations at Elura being reduced from a production rate of 1,200,000 tonnes per annum to approximately 400,000 tonnes per annum and resulted in the retrenchment of approximately 225 employees. The workforce therefore was reduced from 287 to 65 employees.

[71]

55 Mr Martin had made inquires of the Company's 1991 financial records. These revealed that employees made redundant at the time received one month's notice. Mr Martin had made further inquiries and was informed (by Paul Laurent - an employee at the time) that the mine had sustained considerable losses and that management had determined that staffing had to be reduced. Management had described the process as part of a "restructure" necessitated by economic factors.

[72]

56 So far as Mr Martin was aware, no employee or union had complained about the one month's notice payments in 1991. No union or employee had asserted an entitlement to three months' notice. In cross examination, Mr Martin agreed that the word "restructure" was not to be found in the 1991 employees' certificates of service. However, Mr Paul Laurent, a project metallurgist who had been very much involved in the redundancies at the time, had told him of the circumstances being described as a "restructure".

[73]

57 Mr Neil, counsel for Pasminco, submitted that this case arose out of the economic collapse of Pasminco. The collapse had forced the sale of the Elura Mine. Nevertheless the sale was conditional and may still not proceed. The contract of sale agreement stipulates an eight week period for completion of the sale process. Pasminco will be in a position to give employees eight weeks' actual notice of termination. At the expiration of eight weeks, the business will be sold and Pasminco will vacate the field. The purchaser will then conduct the business on its own account using the assets it has purchased - although there may be some arrangement whereby Pasminco purchases the mine product on a commercial basis.

[74]

58 Mr Neil drew a distinction with the circumstances described in the Myer case (see Shop, Distributive and Allied Employees' Association (NSW) v Myer (NSW) Ltd (1983) 7 IR 300). In this instance there is no continuing involvement in the operation of the business.

[75]

59 Mr Neil made four observations as to the construction of subcl 29(vi). Firstly, the subclause deals only with notice and not severance pay or other matters which are relevantly covered by other provisions in the clause.

[76]

60 Secondly, subcl 29(vi) prescribes different periods of notice according to the cause of retrenchment. As such, it accords with the approach adopted by the Industrial Relations Commission of New South Wales to the question of redundancies and severance pay. This approach requires an inquiry and a finding of fact as to the real cause of the prospective redundancies as opposed to something that might accidentally contribute to the redundancies.

[77]

61 Thirdly, the subclause does not contain, either expressly or impliedly, any "temporal element". It is directed only to the cause of the present redundancies. Questions of the suddenness of the decision or whether planning was involved are irrelevant considerations.

[78]

62 Fourthly, there is no distinction between the use of the words "retrenchments" in subcl (vi)(a) and "redundancies" in subcl (vi)(b). It is not a meaningful distinction. At best it was simply a slip in the drafting. So much is clear by the preamble to the clause. The decision in Amcor was not about the distinction of the two terms. Amcor is therefore, not authority for the proposition that the sale of a business is a necessary indicia of redundancy. Such a distinction can be put to one side.

[79]

63 Mr Neil referred to the uncontested evidence of Mr Howe that detailed the serious economic factors resulting in Pasminco being placed in voluntary administration in September 2001. Pasminco's financial collapse followed two essential causes outside the Company's control - the historic decline in the world zinc price and the decline in the value of the Australian dollar against the US dollar. Mr Neil highlighted the losses of the Pasminco Group referred to in Mr Howe's evidence.

[80]

64 Against this background an "equity and float" option was proposed which included the sale of the Elura Mine. The mine itself had been incurring substantial financial losses - for the year ended 20 June 2002 the loss totalled $17.1 million. Mr Neil submitted that these economic factors made it necessary to sell the Elura mine. The real cause of the sale was the Company's desperate financial position. It was difficult to demonstrate a clearer connection between economic factors and the decision to sell the mine.

[81]

65 Mr Neil said that confirmation of this view could be found in the events of 1991. Mr Mitchell had been employed at the mine at the time and he had not contradicted Mr Martin's evidence of what had occurred in 1991. The judgment of Cullen J identified that retrenchments at the time were caused by a fall in metal prices and currency difficulties; precisely the same economic reasons for the mine's closure in 2003. The same notice provision had existed in 1991 and subcl (vi)(a) had been applied without complaint. Past practice was particularly significant in this case because the same provisions were accepted and understood to have been applied. This was an ordinary canon of (award) construction. See Re Security Officers (Waterfront) Award (1988) 26 IR 1, The Merchant Service Guild of Australia v Sydney Steam Collier Owners and Coal Stevedores Association and Others (1958) 1 FLR 248, Australian Paper Manufacturers Ltd v Pulp and Paper Workers' Federation of Australia (1981) 55 FLR 303.

[82]

66 Further, Mr Neil submitted that the disputed clause should be construed in light of the award as a whole. The award only relates to the Elura Mine and no other of Pasminco's operations. This is borne out by the various enterprise industrial instruments that have operated exclusively at the Elura Mine since 1982. As an example, Mr Neil pointed to the Elura Picnic Day in cl 15 - Public Holidays. It followed that every other award obligation is specific to employment at the Elura Mine. This must mean that the word "reorganisation" in cl 29(vi)(b) can have no wider construction beyond the mining and metallurgical activities at the Elura Mine. He submitted that one word cannot be lifted out of the Award and given a wider context to everything else in the Award.

[83]

67 Mr Neil developed this submission by putting that "reorganisation" must result in something being left after the reorganisation. That is obviously not the case here, as Pasminco will simply vacate the field entirely. Consequently, "reorganisation" can not apply to these circumstances.

[84]

68 Mr Neil dealt with the proper construction of the disputed clause in the context of the industrial standards that applied when the provision was introduced. It was clear the provision had remained unaltered since 1987. In 1987 the industrial jurisprudence in New South Wales recognised that redundancies should be treated differently due to their causes. Three classes of inclusion were recognised - economic recession, technological change and company reconstruction or merger.

[85]

69 In earlier cases Fisher J, President had considered that economically based redundancies were likely to involve circumstances of an employer labouring under significant economic disadvantage; see Croker's case. This was to be contrasted with the Myer case where redundancies arose as a result of the employer's decision to maximise it's financial or market position. The Re Redundancy Award case in 1994 continued the distinction. It is what had informed the approach adopted consistently in subcl 29(vi) of the Award. When this context is understood it becomes entirely clear that, upon its proper construction, subcl 29(vi)(a) operates in the present case to the exclusion of subcl (b).

[86]

70 In reply, Mr Tripodi put that the authorities Mr Neil referred to did not deal with the question of notice and are therefore not relevant. He put that all company reconstructions or reorganisations arise from economic factors driving efficiency. However, the distinction in this case deals with notice. The only credible authority is that relied upon by the Unions.

[87]

71 Mr Tripodi rejected the use of the word "reorganisation" applying only at the Elura Mine. Pasminco, he said, had relied on evidence of economic factors across the Pasminco Group. Therefore, the "reorganisation" across the Group must be relevant in this case.

[88]

Commission's power to interpret industrial instruments

[89]

72 The Commission's power to interpret the provisions of an industrial instrument - in this case an award clause - is found at s175 of the Act: The Commission may, for the purpose of exercising its functions in connection with a matter before it, determine any question concerning the interpretation, application or operation of any relevant law or instrument (including the industrial relations legislation and any industrial instrument).

[90]

73 It is well settled within this jurisdiction as to the principles to be applied by the Commission when interpreting the words in an award clause. In a recent Full Bench decision, the Commission reaffirmed these principles. In Re State Rail Authority Firefighters Award 2001, [2002] NSWIRComm 159 the Full Bench said at para 20: The principles applying to the interpretation of awards were authoritatively stated in this jurisdiction in Kingmill Australia Pty Ltd t/a Thrifty Car Rental v Federated Clerks Union of Australia, New South Wales Branch (2001) 106 IR 217 where the Commission emphasised the need to approach the construction of an instrument by reference to the actual words used and their plain, ordinary English meaning. The relevant sections of the agreements referred to, state in terms that the position of Senior Fire Equipment Officer is covered by the instrument in question. It can also be seen that the Senior Fire Equipment Officer classification has been consistently referred to over time and this would appear to be indicative of a consistent intention to subject the employees of the FPU to coverage by the federal instruments.

[91]

74 The Full Bench in Kingmill, examined in some detail the principles of award construction and it is appropriate to quote extensively from that judgement: The interpretation of awards are, in our view, to be approached in accordance with the principles authoritatively stated by the Full Bench of the Commission in Court Session in Bryce . Hungerford and Schmidt JJ stated there (at 452): In our view, in construing the true meaning of an industrial award, like any other instrument with legal force, the task requires an approach according to the actual words used and their plain, ordinary English meaning. As was said by Kelleher J in Re Dispute between Broken Hill Pty Co Ltd and the Federated Ship Painters and Dockers' Union of Australia, New South Wales Branch, Re Tank Tops [1961] AR (NSW) 312 at 314: "The meaning is to be ascertained primarily from a consideration of the words actually used and, while it is proper to pay regard to the surrounding circumstances and the purposes for which the provision was intended, this cannot justify a meaning being given to the words which they are not fairly capable of bearing. Particular words or expressions, having a special trade significance, however, may need to be construed in that light." Their Honours approved the approach adopted by Olney J in Norwest Beef Industries Ltd v Australasian Meat Industries Employees Union of Workers (WA Branch) (1984) 12 IR 314 at 331 as follows: If it be the case that the correct approach to the interpretation of an industrial award is to read the document itself and give to the words used their ordinary commonsense English meaning (see Jackson J in United Furniture Trades Industrial Union v Dale Manufacturing Co Pty Ltd , 30 WAIG 539, at 540) then the first task in every case will be to determine whether the words used are capable in their ordinary sense of having an unambiguous meaning. If that question is answered in the affirmative then the further consideration of the expressed or supposed intention of the award making tribunal does not fall to be considered. The majority of the Full Bench in this case took that view when they said: "It is now trite law that when the meaning of language read in its ordinary and natural sense is obtained it is not necessary or indeed permissible to look to the intention of the parties." In my opinion the majority of the Full Bench has correctly stated the basic principle to be applied in the interpretation of industrial awards. Any other conclusion would lead to industrial anarchy. If the contrary were the case every employer, union official and indeed each employee would need to have available to him the expressed views of the award making tribunal whether they be expressed before or after the making of the award in order to determine the intention of the tribunal whilst the award itself would be rendered meaningless. The principles stated in Bryce have been applied on a number of occasions by this Commission: see, for example, Kellogg (Aust.) Pty Limited v National Union of Workers, New South Wales Branch (1998) 89 IR 391 at 392 - 395; Re Hospital Employees Conditions of Employment (State) Award (1999) 96 IR 245 at 255 - 256 per Wright J, President and Schmidt J; ALHMWU v Manilla RSL & Ex-Servicemens' Club Limited [2000] NSWIRComm 122 at [40]-[42] per Boland J; Australian Workers' Union, New South Wales v New South Wales Technical and Further Education [2001] NSWIRComm 25 at [15] and [17 - 19] per Schmidt J. We consider that Hungerford J was correct in observing, in Kellogg (at 395), that the passages cited by the majority in Bryce represented a "long-standing and settled approach" to the task of award interpretation. The application of those principles, we think, should occur in conformity with general approaches to the construction of enactments and other instruments. In this respect, we note, with approval, the observations of Walton J, Vice-President, in Perisher Blue v Australian Workers' Union (1999) 91 IR 274 at 283 - 284: Speaking generally, awards should be interpreted in a similar fashion to other enactments: Geo A Bond & Co Ltd (in liq) v McKenzie [1929] 28 AR (NSW) 498 at 503 ; Short v F W Hercus Pty Limited (1993) 40 FCR 511 at 520. In the construction of the general order, and in conformity with general principles of award interpretation, the Commission should consider the wider context of the making of those provisions. Burchett J in Short v F W Hercus describes this approach to the interpretation of an award as follows: "The context of an expression may thus be much more than the words that are its immediate neighbours. Context may extend to the entire document of which it is part, or to other documents with which there is an association. Context may also include, in other cases, ideas that gave rise to an expression in a document from which it has been taken. When the expression was transplanted, it may have brought with it some of the soil in which it once grew, retaining a special strength and colour in its new environment. There is no inherent necessity to read it as uprooted and stripped of every trace of its former significance, standing bare in alien ground. True, sometimes it does stand as if alone. But that should not be just assumed, in the case of an expression with a known source, without looking at its creation, understanding its original meaning, and then seeing how it is now used. Very frequently, perhaps most often, the immediate context is the clearest guide, but the court should not deny itself all other guidance in those cases where it can be seen that more is needed. In literature, Milton and Joyce could not be read in ignorance of the source of their language, nor should a legal document, including an award, be so read." (at 518) (See also Western Newspapers Pty Limited & Another v Warren (1994) 56 IR 340 at 351). I note that a similar approach was adopted by the former Industrial Commission in re Butter, Cheese and Bacon Factories and Milk and Cream Condensories &c. (State) and Butter Cheese and Bacon Factories and Milk and Cream Condensories, &c. (Newcastle and Northern) Awards (1950) 49 AR (NSW) 62 at 64 where it was held that the meaning of words within an award (which are not expressed or precise) may be ascertained by "placing upon the words their ordinary meaning as applied to the subject matter with respect to which they are used". The authorities set out in Bryce considered the circumstances in which it may be appropriate to apply the award-maker's intentions to the circumstances in which the award was made and to the practical effects of a particular construction. The decision in Perisher Blue indicated the desirability of considering the terms of an award in the context in which they appeared and emerged. Those principles apply with equal force to the circumstances in which it may be appropriate to have regard to other aids of construction such as the "major and substantial" or "principal purpose" tests. Those principles apply to a clause which establishes the coverage of an award in the same way as they do to other clauses in the award. It is thus appropriate to consider the scope clause of the award in the context in which it appears and, in particular, by reference to the other provisions of the award. It should be noted that the application of aids to construction, such as the "major and substantial" or "principal purpose" tests, should be approached with caution. The automatic adoption of such an approach may, depending on the terms of the award, have the potential for awards to be interpreted inconsistently with their plain words and, therefore, unnecessarily restrictively. This potential may be greatest when the scope of the award's coverage clause is expressed in broad and inclusive terms. See also City of Wanneroo v Holmes (1989) 30 IR 362; Hotville Pty Ltd v NSW Nurses' Association [2002] NSWIRComm 338; National Union of Workers v Graincorp Operations Ltd (2002) 117 IR 136; New South Wales Fire Brigade Employees' Union and New South Wales Fire Brigades [2003] NSWIRComm 55 and my consideration in Australian Workers Union NSW and WJ & A Seery [2000] NSWIRComm 62 and Australian Workers' Union, New South Wales Branch and Zoological Parks Board of New South Wales [2003] NSWIRComm 49.

[92]

75 In my opinion, the additional authorities referred to by Mr Neil have particular relevance to my determination of this matter. I do not agree with Mr Tripodi that these authorities are irrelevant because they do not deal with the subject of this case i.e. notice to employees. That is not the point at all. Rather, the authorities reaffirm a general principle that is relevant to award construction. I shall refer to them.

[93]

76 In the Merchant Service Guild of Australia v Sydney Steam Collier Owners and Coal Stevedores Association and Others (1958) 1 FLR 248, the Full Bench of the Commonwealth Industrial Court found that ambiguous provisions of an industrial agreement, construed and acted upon by the parties in a particular manner for many years, should be construed in the same manner by the Court. Dunphy J said at p 254: It seems to me that as the parties have, over all these years, mutually agreed upon an interpretation of this clause, which interpretation was and still is fairly available on the terms of the agreement, that interpretation should not be disturbed because of a new found ambiguity. I think the interpretation given should be as announced by his Honour the Chief Judge.

[94]

77 In Re Security Officers (Waterfront) Award (1988) 26 IR 1 a Full Bench of the former Commission said at p7: In a case such as this where misunderstandings arise concerning the effect of what is a compromise reached between parties to an industrial dispute, there is considerable attraction towards adopting the approach made in some earlier cases in this jurisdiction. In those cases regard has been paid to the subsequent long-standing practice of parties to establish the meaning of an award which has been otherwise uncertain (see Re Wire Netting Makers &c (Lysaghts) Award [1942] AR (NSW) 531; Re Rockchoppers and Sewer Miners (State) Award [1927] AR (NSW) 283; Re Maritime Services Board Masters and Mates and Engineers - Pilot Steamers Award [1958] AR (NSW) 330 and Crown Employees (Toll Collectors - Department of Main Roads) Award [1969] AR (NSW) 12.

[95]

78 Before deciding this matter, the Commission proposes to make some further observations.

[96]

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.

[97]

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.

[98]

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.

[99]

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.

[100]

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.

[101]

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.

[102]

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.

[103]

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.

[104]

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.

[105]

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.

[106]

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.

[107]

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.

[108]

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.

[109]

92 I would add that the Unions of course - and not without some rational basis - argue that the word "reorganisation" is synonymous with "restructure". In ordinary circumstances, I would agree. However, here the circumstances are far from ordinary. On any view of it, this restructure (if it can be so defined) has been forced on the employer by dire economic difficulties.

[110]

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.

[111]

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.

[112]

95 Notwithstanding my finding in favour of Pasminco's interpretation of the disputed clause, I make these additional general comments.

[113]

96 The main objectives of giving notice of impending redundancy to employees is to provide to them some certainty of when their employment will be terminated and to offer a period of time to reorganise their personal circumstances, including looking for alternative employment. I readily acknowledge that this will be particularly difficult in a town like Cobar.

[114]

97 More often than not, notice is paid in lieu of it being worked. To the extent that this becomes an expectation of a lump sum cash payment is really not the issue. Although I hasten to add, there is no evidence that this is an expectation of any of the employees at Elura.

[115]

98 The terms of the sale agreement will provide an effective notice of eight weeks to employees of their last day of work with Pasminco. I judge this to be reasonable, particularly in circumstances where all employees at the mine have had, in reality, notice in excess of four months. This is not a case where doubt exists as to who will be selected for redundancy. All employees have known for some considerable time that they will be made redundant on the completion of the sale process. While I have no evidence of it, I have no doubt that the majority of employees have been closely looking at their personal circumstances and reorganising their lives, including offering themselves for employment with the new owner.

[116]

99 It follows that I do not believe that the requirement to give actual notice of an employee's date of redundancy was significant in the context of the peculiar circumstances known to exist in this case.

[117]

100 For the aforementioned reasons, pursuant to s175 of the Act, the Commission would interpret subcl 29(vi)(a) and not subcl (b) of the Elura Mine Enterprise (Consent) Award as applying to the circumstances of the sale of the Elura Mine by Pasminco Ltd (under Deed of Company Arrangement) to Consolidated Broken Hill Ltd.

[118]

101 Dispute notifications 1836, 1838 and 1851 of 2003 are determined accordingly and the proceedings are concluded.

[119]

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.

At a glance

Court

Decision date

Before

Source

Judgment (119 paragraphs)

Cases Cited (26)