Construction, Forestry, Mining & Energy Union v Coal & Allied Operations Pty Ltd [1998] FCA 1079 (4 September 1998)

Last Updated: 8 September 1998

FEDERAL COURT OF AUSTRALIA

INDUSTRIAL LAW - Application for penalties - Alleged breaches of awards - Unilateral decision by coal mine operator to work rotating shifts - Whether this constituted breach of award provision requiring consultation in respect of variation of "ordinary working hours of any shift" - Alleged breach of deemed award, being decision of Local Coal Authority - Decision to vary bonus agreement between employer and unions - Decision limited to substitution of different dollar figure in formula for computation of bonus - Whether subsequent unilateral variation of figure by employer constituted a breach of the deemed award.

Workplace Relations Act 1996 , s 178

Coal Industry Act 1946, ss 36 and 39

The Coal Mining Industry (Production and Engineering) Interim Consent Award 1990, cll 6 and 13

NG 337 of 1998

CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION v COAL & ALLIED OPERATIONS PTY LIMITED

JUDGE: WILCOX J

PLACE: SYDNEY

DATE: 4 SEPTEMBER 1998

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NG 337 of 1998

BETWEEN:	CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION Applicant
AND:	COAL & ALLIED OPERATIONS PTY LIMITED Respondent
JUDGE:	WILCOX J
DATE OF ORDER:	4 SEPTEMBER 1998
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1. The Application be dismissed.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NG 337 of 1998

BETWEEN:	CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION Applicant
AND:	COAL & ALLIED OPERATIONS PTY LIMITED Respondent

JUDGE:	WILCOX J
DATE:	4 SEPTEMBER 1998
PLACE:	SYDNEY

REASONS FOR JUDGMENT

WILCOX J: By an Application filed on 17 April 1998, Construction, Forestry, Mining and Energy Union ("CFMEU") sought the imposition of penalties on an employer, Coal & Allied Operations Pty Limited ("Coal & Allied"). The application was made pursuant to s 178 of the Workplace Relations Act 1996 which relevantly provides:

"(1) Subject to section 182, where an organisation or person bound by an award, an order of the Commission or a certified agreement breaches a term of the award, order or agreement, a penalty may be imposed by the Court or, except in the case of a breach of a bans clause, by a court of competent jurisdiction.

(2) ...

(3) ...

(4) The maximum penalty that may be imposed under subsection (1) for a breach of a term of an award, order or agreement is:

(a) where the penalty is imposed by the Court:

(i) if the breach is taken to have been committed under a provision included in an award or order under paragraph 111(1)(e ) - $5,000 for a body corporate of $1,000 in other cases; and

(iia) if the breach is of a term of a certified agreement and continues for more than one day - the total of:

(A) $10,000 for a body corporate or $2,000 in other cases; and

(B) $5,000 for a body corporate, or $1,000 in other cases, for each day for which the breach continues; and

(iib) if the breach is of a term of a certified agreement but subparagraph (iia) does not apply - $10,000 for a body corporate or $2,000 in other cases; and

(ii) in any other case - $10,000 for a body corporate or $2,000 in other cases; and

(b) where the penalty is not imposed by the Court - $10,000 for a body corporate or $2,000 in other cases.

(4A) ...

(5) A penalty for a breach of a term of an award or order may be sued for and recovered by:

(a) an inspector;

(b) a party to the award or order;

(c) an employer who is a member of an organisation and who is affected by the breach:

(ca) a person:

(i) whose employment is, or at the time of the breach was, subject to the award; and

(ii) who is affected by the breach;

(d) an organisation that is affected, or any of whose members are affected, by the breach; or

(e) an officer or employee of an organisation that is affected, or any of whose members are affected, by the breach where the officer or employee is authorised, under the rules of the organisation, to sue on behalf of the organisation.

(5A) ...

(6) Where, in a proceeding against an employer under this section, it appears to the court concerned that an employee of the employer has not been paid an amount that the employer was required to pay under an award, order or agreement, the court may order the employer to pay to the employee the amount of the underpayment.

(6A) ...

(6B) ...

(7) ...

(8) ...

(9) ..."

CFMEU alleges two award breaches: first, a contravention of cl 6 of The Coal Mining Industry (Production and Engineering) Interim Consent Award, September 1990 ("the 1990 award") or alternatively cl 24 of The Coal Mining Industry (Production and Engineering) Consolidated Award 1997 ("the 1997 award"); second, breach of a 1995 decision of the Local Coal Authority, that decision being said to be a deemed award. The two alleged breaches pertain to different subjects and must be considered separately.

The hours of work claim

Coal & Allied operates an open-cut coal mine in New South Wales known as "Hunter Valley No 1 Mine". It seems mining activity has always been limited to weekdays and that, prior to 24 November 1997, the miners worked fixed shifts; that is, one third of them were on a fixed night shift, one third on a fixed day shift and one third on a fixed afternoon shift. On 12 November 1997 Allan Davies, General Manager - Operations of Coal & Allied, announced the introduction from 24 November 1997 of "3 x 8 hr x rotating shifts Monday to Friday in production in the Mine" and two eight hour rotating shifts, Monday to Friday, in preventative maintenance. This change was made without consultation with CFMEU or the consent of the affected employees. CFMEU charges that Coal & Allied's unilateral action in varying the shift arrangements constituted a breach of either cl 6 of the 1990 award or cl 24 of the 1997 award. Apparently, there is a question which award applied in November 1997. However, it is not necessary to determine that matter. CFMEU and Coal & Allied are parties to both awards and the two clauses are framed in relevantly identical terms. Counsel for both parties were content to argue the present case by reference to the 1990 award, it being accepted it would make no difference to the result, one way or the other, if the 1997 award applied.

Clause 6 of the 1990 award is in these terms:

"6 - HOURS

(a) Ordinary Hours

(1) The ordinary hours of work shall be an average of 35 hours per week.

(2) The ordinary working hours of any shift shall be worked between such hours as may be agreed between the employer and the employees.

(3) Where the employer and employees fail to agree, the starting and finishing times shall continue until the matter is referred to the appropriate industrial authority and determined.

(b) Shift Length

(1) The employer can determine the shift length to be worked up to a maximum of eight ordinary hours.

(2) Shift lengths greater than eight ordinary hours can only be implemented by agreement between the employer and the majority of affected employees.

(c) Number and Spread of Shifts

The number and spread of ordinary shifts may be varied by the employer, or by order of the appropriate industrial authority.

(d) Starting and Finishing Places

(1) There shall be a designated starting and finishing place as may be agreed between the employer and employees.

(2) At underground mines the designated starting and finishing place shall be on the surface.

(e) Roster Employees - 6 or 7 day roster

There shall be a roster of shifts which may provide for rotation. An employee's place on a roster shall not be changed, except on one week's notice of such change or payment at overtime rates.

(f) Rostered Days Off

(1) If an employee is entitled to a rostered day off, such employee shall be advised by the employer at least four weeks in advance of the day the employee is to take off, provided that a lesser period of notice may be agreed by the employer and the majority of employees in the mine, section or sections concerned.

(2) Employees will only be required to work overtime on a rostered day off after attempts by the employer to cover the casual vacancy by other means have failed.

(3) An employer, with the agreement of the majority of employees concerned, may substitute the rostered day off an employee is to take off for another day in the case of a breakdown of machinery or a failure or shortage of electric power or to meet the requirements of the mine or some other emergency situation.

(4) An individual employee, with the agreement of the employer, may substitute the day the employee is to take off for another day.

(5) Except for employees covered by (2) hereof, an employee shall be paid ordinary time for time worked on a rostered day off and shall observe a day off in lieu before the end of the employee's next roster cycle. Such a day in lieu shall be selected by the employee provided that a minimum of one week's notice is given to the employer. The employee shall be allowed such day off unless the operations of the mine will be affected by the absence.

(6) Except for statutory officials whose non-attendance would affect the operations of the mine, employees shall not be required to work pre-shift overtime when resuming work immediately following a rostered day off."

Counsel for CFMEU, Mr W R Haylen QC and Mr R Reitano, argue it is implicit in cl 6 that any five day roster is to be non-rotating; any variation of that situation is a variation in the "ordinary working hours of any shift" that requires agreement between the employer and relevant employees or the approval of an appropriate industrial authority. They say Coal & Allied's action in unilaterally moving to rotating shifts constituted a contravention of cl 6(a)(2); the "ordinary working hours" were no longer being worked between agreed hours.

In order to show the background against which the 1990 award was made, counsel for CFMEU tendered two earlier awards: The Coal Mining Industry (Miners) Award, 1982, New South Wales and The Coal Mining Industry (Engine Drivers and Firemen's Award), 1982, New South Wales and a decision of the Coal Industry Tribunal in a matter called Queensland Coal Association v The Australasian Coal and Shale Employees Federation (8 September 1988, not reported). This material demonstrates it was the practice in the industry, prior to 1990, for miners to work a five day roster, Mondays to Fridays, though engineering employees customarily were rostered for weekend work. Counsel contend the term "ordinary hours" must be understood against this background.

Mr Haylen and Mr Reitano say cl 13 of the award supports their interpretation of cl 6. That clause is headed "Afternoon and Night Shifts". It provides, in sub-cl (a), that "all time worked on afternoon or night shift shall be paid at 115% of the ordinary rate". Sub-clause (b) is headed "Permanent Night Shift". It reads:

"An employee who works night shift only or remains on night shift for a longer period than four consecutive weeks; or works on a roster which does not give at least one-third of the employee's working time off night shift in each roster cycle; shall, during such period be paid at 125% of the ordinary rate for all time worked during ordinary working hours on such night shift."

Sub-clause (c) deals with the case of a day shift employee who is required to work an afternoon or night shift:

"If an employee who ordinarily works on day shift only is required to work shift work on at least three consecutive working days the employee shall be paid at overtime rates for the first afternoon or night shift so worked and thereafter shall be paid in accordance with the foregoing provisions of this clause for such other shifts. If such employee is required to work shift work for a period less than three consecutive working days, overtime rates shall be paid for such afternoon or night shift work unless such requirement is caused by the failure of any other employee to come on duty at the proper time."

Mr Haylen and Mr Reitano referred me to two authorities: Kezich v Leighton Contractors Proprietary Limited [1974] HCA 50; (1974) 131 CLR 362 and Re Hospital Salaried Officers' Award (1983) 5 IR 244. The issue in Kezich was the correct method of computing a worker's compensation award. The relevant statute provided for an award, in cases of total incapacity, "equal to the weekly earnings of the worker" computed in accordance with a schedule to the Act. The schedule defined "weekly earnings" as "the amount of the ordinary wage or salary... the worker would have received for the ordinary hours he would have worked if he were not incapacitated for work as a result of the injury". The High Court held the "ordinary hours" included regular overtime hours. At 365 Gibbs J said:

"A man's 'ordinary hours' of work are the hours during which it is usual for him to work. There is nothing in the expression 'ordinary hours' that connotes payment at any particular rate, and to understand the words as meaning 'hours during which work is done for which overtime is not paid' would be to place upon them a meaning which they simply do not bear. The expression 'the ordinary hours he would have worked' in my opinion means the same as 'the hours he would ordinarily have worked' ..."

Re Hospital Salaried Officers' Award arose out of a Western Australian award. Heather Knight, a hospital physiotherapist, initially worked from 8 am to 4 pm Monday to Friday. At the request of the hospital assistant administrator, she varied her working days to Tuesday to Saturday. Her union claimed she should have been paid at overtime rates for her Saturday work because this was outside her "ordinary working hours". The Industrial Appeal Court of Western Australia (comprising three Supreme Court judges) held her "ordinary hours" were those she had agreed to work, so the Saturday work was not outside her ordinary hours.

I do not obtain much assistance from these decisions. This case is to be determined solely by reference to the terms of the subject award. In relation to the term "ordinary hours", the award provides its own dictionary. The "ordinary hours of work" are to average 35 hours per week and are to be worked in shifts, the "working hours" of which are to be as agreed between the employer and its employees or determined by an appropriate industrial authority (sub-cl (a)). Shifts are to be a maximum of eight hours, unless agreed otherwise (sub-cl (b)). Nothing in these provisions proscribes the rotation of shifts; the most that can be said is that the clause makes no express provision for rotation, except in the case of 6 or 7 day roster employees (sub-cl (e)). However, as counsel for the respondent, Dr C N Jessup QC and Mr S J Wood, submit it would not be enough to show an employer has taken a course not expressly contemplated by an award; it must be shown the course contravened the award. The intent of an award may be conveyed by implication, but it will not ordinarily be enough that the award is silent about a particular subject.

Far from supporting the applicant's argument, it seems to me cl 13 tells against it. That clause contemplates shift rotation. It gives a special benefit to an employee who "works on a roster which does not give at least one-third of the employee's working time off night shift in each roster cycle"; in other words an employee who is not rotated off night shift for at least one-third of the time. This provision is not restricted to six and seven day roster employees.

It is clear that, before November 1997, Hunter Valley No.1 miners did not work rotating rosters. The decision by Coal & Allied to change to a rotating roster system disturbed that situation. That being so, I can understand a feeling that the change ought not to have been made without consultation and agreement. However, in considering whether the unilateral change constituted a contravention of cl 6(a) of the award, it is necessary to pay careful attention to the meaning in that context of the term "ordinary hours of work". When that is done, it becomes apparent the term says nothing about rotation of shifts. Whatever view may be held as to whether it would have been desirable for Coal & Allied to have negotiated the change with CFMEU, and referred any disagreement to an independent industrial authority, it was not a contravention of cl 6 for the company to have failed to have done this; its action in requiring miners to work rotating shifts did not infringe the award.

The bonus claim

The applicant's second allegation arises out of a production bonus scheme agreed in 1989 between Coal & Allied and the predecessors of CFMEU. The scheme was the subject of a written agreement which provided for the calculation of a bonus in accordance with a formula that multiplied an adjusted computation of production tonnage by $1.15 and divided the result by the total number of employees employed at the mine. Provision was made for indexation of the figure of $1.15 in accordance with National Wage increases. By this means, the figure of $1.15 had increased to $1.22 in 1994 when Coal & Allied announced its intention of varying or discontinuing the scheme. The announcement occasioned a dispute that was referred to the Local Coal Authority.

On 8 September 1994 the Authority made an interim order pending review of the bonus scheme. On 10 February 1995 the Authority made an order and direction:

"that the 1989 Hunter Valley No 1 Mine and Hunter Valley CPP production bonus scheme signed by the parties on 18 August 1989 be varied in the following manner.

1. The multiplier appearing in Clauses 3 and 11 be varied from $1.22 to $1.13.

2. The date the scheme will commence appearing in Clause 1 shall be varied to comply with the orders contained in the Authority's decision No 22 of 1994, the Tribunal's decision contained in Print No UR 1994-071 and this decision.

3. Clause 11 shall be varied to reflect the equipment currently being used at the mine.

The foregoing variations shall remain in force for a period of one month or until further order."

Coal & Allied sought review of this decision by the Coal Industry Tribunal, something that was only available if the Tribunal concluded there were public interest reasons for allowing review. On 27 March 1995 the Tribunal indicated it was not satisfied Coal & Allied had established grounds why the decision should be reviewed in the public interest. It dismissed the application for leave to review.

On 21 March 1997 Coal & Allied notified relevant union representatives of its intention "to vary or discontinue the existing bonus arrangements". The company acknowledged this should not take place without consultation. There were discussions but no agreement was reached. On 11 September 1997 Coal & Allied issued a notice to all employees stating it intended to revise the existing bonus arrangements from 15 September 1997. The letter offered the following explanation:

"As you are aware, a number of employees have accepted voluntary retrenchment or transferred to the Rio Tinto Coal office which is offsite. With the current calculation of bonus applying a divisor of the number of employees, this automatically leads to bonus earnings being well in excess of intended levels.

Accordingly, the Company proposes a variation to the calculation to neutralise the impact of the downsizing. This variation will be a reduction in the index by the same proportion as the reduction in the workforce.

This is a fair revision of the bonus as it preserves bonus earnings prior to the downsizing."

Apparently, the variation did not take effect in September but it did proceed in November. The variation adopted a multiplier of $0.968 instead of the figure of $1.13 selected by the local Authority. The effect of the variation was to reduce the bonus received by employees by about 14%. The CFMEU contends the action of Coal & Allied in unilaterally reducing the dollar multiplier is a contravention of the decision of the Local Coal Authority and, accordingly, a breach of a deemed award.

In order to understand why a breach of a decision of the Authority can be claimed to constitute a breach of an award, it is necessary to refer to the Coal Industry Act 1946 . Part V of that Act related to industrial matters. As originally enacted, it contained ss 28 to 48. Section 30 provided for the constitution of a Coal Industry Tribunal. The Tribunal's powers and functions were to be as agreed between the Commonwealth and the State of New South Wales (s 32). Section 33 dealt with the manner in which the Tribunal's powers were able to be enlivened and s 34(1) set out the Tribunal's jurisdiction in relation to industrial disputes. Section 36(1) provided that an award or order made by the Tribunal pursuant to s 32(2) of the Act:

"...

(a) has effect in all respects as if it were an award of the Commission; and

(b) is binding on -

(i) the parties; or

(ii) the persons on whom it is expressed to be binding, including an organization if it is expressed to be binding on an organization,

and the provisions of the Conciliation and Arbitration Act 1904-1956 under which awards of the Commission may be enforced apply in relation to such an award or order made by the Tribunal as if it were an award of the Commission."

When this provision was originally enacted, "the Commission" was the Commonwealth Conciliation and Arbitration Commission, later known as the Australian Conciliation and Arbitration Commission. That Commission was abolished in 1988 and replaced by the Australian Industrial Relations Commission. Thereafter, by virtue of s 88 of the Industrial Relations (Consequential Provisions) Act 1988 , the reference in s 36 to "the Commission" was to be taken as including a reference to the Australian Industrial Relations Commission.

Section 37(1) empowered the Tribunal to appoint persons to be Local Coal Authorities in New South Wales, exercising power within such limits, as to locality or otherwise, as are specified by the Tribunal. By s 38(1) of the Act, the jurisdiction of Local Coal Authorities extended to the settlement of disputes as to any local industrial matter likely to affect the amicable relations of employers and their employees in the coal mining industry of New South Wales and the investigation and reporting of industrial disputes and matters referred by the Tribunal. Section 34(3) and (4) empowered the Tribunal to make references.

Section 39 provided that, subject to the Act, the provisions of ss 33, 34 and 36 of the Act, so far as applicable, "apply with such alterations as are necessary in relation to matters before a Local Coal Authority" pursuant to s 38(1).

Part V of the Coal Industry Act 1994 was repealed by Schedule 1 of the Industrial Relations Legislation Amendment Act (No.2) . That Schedule took effect after the date of the subject decision of the Local Coal Authority. Item (1) of cl 15 of the Schedule defined the word "instrument" as including a decision given by a Local Coal Authority that had effect under s 36(1) or (2) of the Coal Industry Act 1988 immediately before the commencement of the item. Item (2) provided for instruments to have effect as awards made by the Australian Industrial Relations Commission under the Industrial Relations Act (now the Workplace Relations Act 1996 .)

Against this background, counsel for the applicant argue the subject decision of the Local Coal Authority is enforceable in the same way as if it was an award of the Australian Industrial Relations Commission. Accordingly, say counsel, any breach of the Local Coal Authority's order of 10 February 1995 attracts the penalty provisions contained in s 178 of the Workplace Relations Act.

Counsel for Coal & Allied do not dispute their opponents' analysis of the legislation. But they say their client has not contravened the order of the Local Coal Authority; the order must be read in context. The parties had negotiated an agreement that provided for payment of a bonus to be calculated according to a particular formula. The formula included a figure of $1.15 adjustable by reference to National Wage increases. Yet the scheme was not set in concrete; it specifically envisaged the possibility of variation or discontinuance. Clauses 12 and 13 provided:

"12. In the event of the need to vary the scheme as a result of any change in the basic operation of the mine (this would include the introduction of additional or larger overburden removal equipment) consultation will take place between both parties prior to varying the scheme.

13. The scheme shall not be varied or discontinued by either party except by the giving of 28 days notice in writing, of their intention to do so."

Counsel for Coal & Allied say that, in 1994-95, their client decided to vary or discontinue the scheme and gave notice of its intention pursuant to cl 13 of the agreement. This notice led to an industrial dispute which was referred to the Local Coal Tribunal. The Tribunal resolved that dispute by ordering the agreement be varied in relation to two matters: the multiplier stated in cll 3 and 11 and the equipment mentioned in cl 11. Importantly, say counsel, the Local Coal Authority did not import the terms of the agreement into its order; it was content to allow the document to continue to operate merely as a contractual arrangement with all other provisions intact, including cll 12 and 13. Counsel submit the effect of the Authority's order was the same as if the parties themselves had agreed to the two variations. If that had happened, they would have substituted a different multiplier for that included in the original agreement, as adjusted in accordance with National Wage increases; but they would have left themselves free to effect a further variation, or to discontinue the agreement, pursuant to cl 13.

I think this argument must be accepted. In order to succeed in its application under s 178 of the Workplace Relations Act, CFMEU needs to persuade the Court that the Authority's order should be read as not only varying the multiplier used in cll 3 and 11, but also abrogating the right of variation and discontinuance reserved by cl 13. The problem about that proposition is that the Authority said nothing about cl 13, either in its formal order or reasons. It seems unlikely it intended the figure of $1.13 to apply for all time. As the Authority observed in its reasons for decision, there had been many recent changes in the manner of operation of the mine; there was no reason to believe they had run their course.

If the Authority intended merely to resolve the instant dispute regarding the appropriate multiplier, leaving the parties the right to pursue further variations to the agreement, or even its discontinuance, it would have accepted its chosen multiplier might not long endure. Counsel for CFMEU argue this is a reason for construing the order as precluding a further variation, or discontinuance, pursuant to cl 13. I see the force of the argument but I am not persuaded. The Authority would have realised that, in the realm of working conditions, nothing is permanent; nonetheless the Authority might have thought it to be useful to resolve the immediate dispute. True, one or other of the parties might later attempt to depart from its stipulated figure and this might give rise to a further dispute. However, this might not happen for some time; in the meantime, there would be no issue about the multiplier.

I am not called upon to decide whether the action of CFMEU in unilaterally altering the multiplier used in the bonus agreement constitutes a breach of contract. I am only concerned with the question whether it contravened the order of the Local Coal Authority. I conclude it did not. Accordingly, there was no breach of s 178 of the Workplace Relations Act.

Orders

Both breach allegations made by CFMEU must be rejected. I propose to dismiss the Application.

I certify that this and the preceding twelve (12) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Wilcox

Associate:

Dated: 4 September 1998

Counsel for the Applicant:	W R Haylen QC and R Reitano
Solicitor for the Applicant:	R L Whyburn & Associates
Counsel for the Respondent:	Dr C N Jessup QC and S J Wood
Solicitor for the Respondent:	Freehill Hollingdale & Page
Date of Hearing:	6 August 1998