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Federal Court of Australia |
Last Updated: 10 January 2001
AWU v BHP Iron-Ore Pty Ltd [2001] FCA 3
AUSTRALIAN WORKERS' UNION & ORS v BHP IRON-ORE PTY LTD
V 24 of 2000
KENNY J
MELBOURNE
10 JANUARY 2001
SUMMARY OF REASONS FOR JUDGMENT GIVEN ON 10 JANUARY 2001
In accordance with the practice of the Federal Court in certain cases of public interest, I have prepared a brief summary to accompany the reasons for judgment which are to be delivered today. The only authoritative pronouncement of my reasons is that contained in the full reasons for judgment. This summary is necessarily incomplete and deals only with certain aspects of the judgment.
BHP Iron-Ore, the respondent in this case, operates facilities for the extraction and processing of iron ore in the Pilbara region of Western Australia. In November 1999, BHPIO had some 1100 employees at these facilities, aside from staff. Many of these employees were members of the five unions (or their state counterparts) that, together with five individual named employees, are the applicants in this case. The terms and conditions of these workers' employment were at that time determined primarily by an Award made by the Western Australian Industrial Relations Commission and an Enterprise Bargaining Agreement arrived at through collective bargaining between BHPIO and the unions.
The present case arises out of BHPIO's offer in November 1999 of workplace agreements to its employees who fell under the award. Workplace agreements, or "WPAs", are a form of individual contract between employers and employees that, generally speaking, displaces any applicable awards or other collective industrial instruments. BHPIO's offers were made under the Western Australian Workplace Agreements Act 1993.
The WPAs offered to BHPIO's employees involved higher wages and other incentives, such as the option to receive a pay-out of accrued sick leave for those employees who signed a WPA. Nearly half of eligible employees signed a WPA in the three months following the offers. Many of these employees in turn resigned from their union. The unions opposed the WPAs and responded by taking industrial action. In these proceedings, the unions contended that the offers violated provisions of the Commonwealth's Workplace Relations Act 1996 that prohibit, amongst other things:
1) injuring an employee in his or her employment because the employee is a union member;
2) altering the position of an employee to his or her prejudice because the employee is a union member; and
3) inducing an employee to stop being a member of a union.
This involves allegations of breaches of sections 298K, 298L, & 298M of the Commonwealth Act. I reject BHPIO's submission that these provisions are constitutionally invalid as outside the legislative power of the Parliament.
In essence, the unions' complaint is that the offer of WPAs reduced the collective bargaining power of those employees who did not sign a WPA by diminishing their ability to take effective collective action. In addition, the offers were said to have led employees to resign from the unions, since union representation was allegedly of little value to a WPA employee. The unions contended that BHPIO senior management knew that union membership would diminish and intended that result as the best way to avoid collective bargaining efforts in the future.
These allegations raise BHPIO management's reasons for introducing the WPAs as a central issue in this case. Robert Kirkby, then President of the Steel Making and Energy Materials Division of BHP, was ultimately responsible for making the decision. He and several BHPIO senior managers adduced evidence and were extensively cross-examined on this matter. Despite the applicants' efforts to impugn their testimony, particularly that of Mr Kirkby, I accept that their evidence was in most respects genuine.
This evidence shows that BHPIO senior management began considering WPAs after merger discussions with Hamersley Iron, a competitor that had already introduced WPAs. These negotiations revealed that BHPIO was lagging in terms of efficiency. Many BHPIO executives held the view, rightly or wrongly, that negotiations with the unions had in the past hindered the introduction of necessary workplace changes. The introduction of WPAs was seen as the best way to improve flexibility and efficiency in BHPIO's operations. A review of the evidence does not show that BHPIO senior management ever considered union membership as such during their deliberations about WPAs. Whilst BHPIO did intend to exclude the unions from the process of implementing workplace changes, the evidence does not support an inference that they offered the WPAs because of employees' union membership or that they intended that employees stop being union members. It follows that BHPIO has not violated the Workplace Relations Act.
Finally, the applicants claimed that the individual employees' contracts of employment were breached by BHPIO. I reject this submission, as it based on an erroneous view that the award is incorporated into each employee's contract of employment.
For the foregoing reasons, I deny the applicants' claim for injunctive relief. The Court's role, of course, is limited to a review of the legality of BHPIO's actions. Accordingly, I can express no view on the desirability or otherwise of workplace agreements, either in the context of this case or as a general policy matter. The full text of this judgment and this summary is available at the Federal Court's website. (www.fedcourt.gov.au)
Australian Workers' Union v BHP Iron-Ore Pty Ltd [2001] FCA 3
CONSTITUTIONAL LAW - Commonwealth powers - corporations power - validity of ss 298K, 298L & 298M of Workplace Relations Act 1996 (Cth)
INDUSTRIAL LAW - industrial relations - freedom of association - employer offering workplace agreements - whether injury of employees or alteration of their positions to their prejudice - whether offer of workplace agreements made for prohibited reasons - whether employer by threats or promises or otherwise inducing employees to stop being members of industrial association - relevance of employer's intent to inducement considered - whether employer's obligation under award to refrain from entering into contracts inconsistent with award expressly incorporated in employees' contracts of employment
CONTRACTS - terms - whether express incorporation of terms of industrial award into contract of employment - whether obligation not to enter into contracts inconsistent with award a term or condition of employment - whether breach of contract for employer to enter into workplace agreements inconsistent with award
WORDS AND PHRASES - "induce", "member of an industrial association"
Workplace Relations Act 1996 ss 3, 298A, 298C, 298G, 298K, 298L, 298M, 298U, 298V
Workplace Relations and Other Legislation Amendment Act 1996
Industrial Relations Reform Act 1993
Workplace Agreements Act 1993 (WA)
Industrial Relations Act 1979 (WA)
Newcrest Mining (WA) Ltd v The Commonwealth [1997] HCA 38; (1997) 190 CLR 513 cited
Re Dingjan; ex parte Wagner [1995] HCA 16; (1995) 183 CLR 323 considered, applied
The Commonwealth v Tasmania [1983] HCA 21; (1983) 158 CLR 1 referred
Quickenden v O'Connor [1999] FCA 1257; (1999) 91 FCR 597 referred
Rowe v Transport Workers' Union (1998) 90 FCR 95 referred
Victoria v The Commonwealth [1995] HCA 45; (1996) 187 CLR 416 discussed, followed
Re Pacific Coal Pty Ltd; ex parte Construction, Forestry, Mining and Energy Union [2000] HCA 34 referred
R v Australian Industrial Court; ex parte CLM Holdings Pty Ltd [1977] HCA 6; (1977) 136 CLR 235 referred
National Wage Case (1987) 17 IR 65 cited
National Wage Case (1988) 25 IR 170 cited
National Wage Case (1991) 39 IR 127 cited
Safety Net Review - Wages (1997) 71 IR 1 cited
Heidt v Chrysler Australia Ltd (1976) 26 FLR 257 referred
Bowling v General Motors-Holden's Pty Ltd (1980) 50 FLR 79 referred
David's Distribution Pty Ltd v National Union of Workers [1999] FCA 1108; (1999) 165 ALR 550 considered
Construction, Forestry, Mining and Energy Union v BHP Steel (AIS) Pty Ltd [2000] FCA 1008 cited
Burnie Port Corporation Pty Ltd v Maritime Union of Australia [2000] FCA 1768 cited
Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia [1998] HCA 30; (1998) 195 CLR 1 cited, distinguished
BHP Iron Ore Pty Ltd v Australian Workers' Union [2000] FCA 430; (2000) 171 ALR 680 explained, followed
CPSU, Community and Public Sector Union v Telstra Corporation Limited [2000] FCA 844 referred
Finance Sector Union v Commonwealth Bank of Australia [2000] FCA 1372 cited
Human Rights & Equal Opportunity Commission v Mount Isa Mines Ltd (1993) 118 ALR 80 referred
IW v City of Perth [1997] HCA 30; (1997) 191 CLR 1 referred
Australian Municipal, Administrative, Clerical & Services Union v Greater Dandenong City Council [2000] FCA 1231 referred
General Motors Holden Pty Ltd v Bowling (1976) 12 ALR 605 distinguished
Moore v Doyle (1969) 15 FLR 59 referred
Byrne v Australian Airlines Ltd [1995] HCA 24; (1995) 185 CLR 410 cited
Moama Bowling Club Ltd v Armstrong (No 1) (1995) 64 IR 238 distinguished
Cliffe v Hoechst Australia Ltd (unreported, IRCt, 21 October 1996, case 514/96) cited
Australian Airline Flight Engineers Association v Ansett Australia Ltd [2000] FCA 1299 referred
AUSTRALIAN WORKERS' UNION & ORS v BHP IRON-ORE PTY LTD
V 24/00
KENNY J
MELBOURNE
10 JANUARY 2001
HEADING |
PARAGRAPH No. |
|
|
|
INTRODUCTION |
[1] |
THE PARTIES |
[2] |
INDUSTRIAL REGULATION AT BHPIO |
[7] |
CONSTITUTIONAL CHALLENGE |
[12] |
CONSTRUCTION OF SECTIONS 298K, 298L AND 298M |
[33] |
(a) Legislative history |
[34] |
(b) Construction of s 298K |
[51] |
(c) Construction of s 298M |
[70] |
|
|
|
THE DEVELOPMENT AND IMPLEMENTATION OF THE WPA PROPOSAL |
[84] |
(a) Management changes at BHPIO |
[85] |
(b) Voluntary redundancy offers and equipment reduction |
[89] |
(c) Amending the IR agreement |
[90] |
(d) The due diligence exercise with Hamersley Iron |
[95] |
(e) Project Phoenix - BHPIO reviews its operations |
[111] |
(f) The commitment to WPAs |
[118] |
(i) First Review - August 1999 |
[121] |
(ii) The Section 72A case and the ACTU |
[123] |
(iii) The second review - September 1999 |
[128] |
(iv) Third review - end September 1999 |
[138] |
(g) Moving to WPAs |
[142] |
(h) The decision to offer WPAs |
[146] |
(i) Negotiations relating to a new EBA |
[160] |
|
|
|
BHP'S REASONS FOR WORKPLACE AGREEMENTS |
[171] |
(a) The identity of the decision-maker |
[171] |
(b) Kirby's reasons |
[174] |
(c) Instances of alleged union inflexibility |
[191] |
(d) The accrued sick leave option and the backdating of pay increases |
[200] |
|
|
|
THE APPLICANTS' CASE UNDER S 298K |
[201] |
THE APPLICANTS' CASE UNDER S 298M |
[212] |
THE CONTRACT CASE |
[246] |
CONCLUSION |
[258] |
|
|
|
IN THE FEDERAL COURT OF AUSTRALIA |
|
VICTORIA DISTRICT REGISTRY |
JUDGE: |
KENNY J |
DATE: |
10 JANUARY 2001 |
PLACE: |
MELBOURNE |
INTRODUCTION
1 In this proceeding, the applicants seek relief of various kinds under the Workplace Relations Act 1996 (Cth) ("the WR Act"), the Judiciary Act 1903 (Cth) and the accrued jurisdiction of the Court. The Court is, however, presently concerned only with the claim for final injunctive relief based on alleged breaches of ss 298K and 298M of the WR Act and alleged breaches of contracts of employment. Interlocutory injunctions were granted earlier this year by a single judge ([2000] FCA 39; (2000) 96 IR 422) and substantially continued by the Full Court ([2000] FCA 430; [2000] FCA 430; (2000) 171 ALR 680). The application arises out BHPIO's decision to offer workplace agreements ("WPAs"), pursuant to the Workplace Agreements Act 1993 (WA) ("the WPA Act"), to each employee who had hitherto been covered by the Iron-ore Production and Processing (Mt Newman Mining Company Ltd) Award (No 29 of 1984) ("the Award").
THE PARTIES
2 The first five applicants ("the union applicants") are employee organisations registered under the WR Act or its predecessors. Each of the sixth to tenth applicants claims to be a member of one of the union applicants and an employee of the respondent, BHP Iron-Ore Pty Ltd ("BHPIO").
3 Each union applicant has a counterpart union in Western Australia that is registered under the Industrial Relations Act 1979 (WA) ("the WAIR Act") (collectively "the state unions"). For the first applicant ("the AWU"), this is the Australian Workers' Union, Industrial Union of Workers ("the state AWU"). For the second applicant ("the CFMEU"), this is the Construction, Mining, Energy, Timberyards, Sawmills and Woodworkers Union of Australia - Western Australia Branch ("the state CFMEU"). For the third applicant ("the AMWU"), this is the Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union of Workers - Western Australia Branch ("the state AMWU"). For the fourth applicant ("the CEPU"), this is the Communication, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Workers Union of Australia, Engineering and Electrical Division WA Branch ("the state CEPU"). For the fifth applicant ("the TWU"), this is the Transport Workers' Union, Industrial Union of Workers WA Branch ("the state TWU").
4 The rules of the state AWU, the state CEPU and the state TWU provide that the union is "incorporated with" and is "a branch of" the AWU, the CEPU and the TWU respectively, and that membership of the state union is "synonymous with membership" of the AWU, the CEPU or the TWU (as the case may be). Members of the state CFMEU and the state AMWU were enrolled as members of the CFMEU and the AMWU respectively.
5 BHPIO, a wholly-owned subsidiary of the Broken Hill Proprietary Company Limited ("BHP"), carries on operations in the Pilbara in Western Australia. These operations include the mining of iron ore at Mt Newman and the transportation of ore, principally by rail, some 450 kilometres to Port Hedland. At Port Hedland, BHPIO has processing and ship-loading facilities on Finucane Island and Nelson Point.
6 The Minister for Employment, Workplace Relations and Small Business ("the Minister"), on behalf of the Commonwealth, has intervened in the proceeding in the public interest pursuant to s 471 of the WR Act. His submissions were confined to issues of the construction and validity of the WR Act.
industrial regulation at bhpio
7 On 5 November 1999, BHPIO employed 486 employees at Mt Newman who were within the scope of the Award. The Award was made by The Western Australian Industrial Relations Commission ("WAIRC") pursuant to the WAIR Act. Besides BHPIO, the parties to the Award were unions registered under the WAIR Act or its predecessors and not under Commonwealth law. Also within the scope of the Award were 472 employees at Nelson Point and 145 employees on Finucane Island. BHPIO had other employees, described as "staff" and performing managerial and supervisory roles, who did not fall within the Award.
8 Under the WAIR Act, no party is under any obligation to negotiate or bargain (collectively or otherwise) in relation to an industrial matter. Further that Act contains no machinery for collective bargaining. If, however, an employer declines to enter into negotiations with an organisation as to an industrial matter, the organisation may refer the matter to the WAIRC under s 29.
9 Since 1993, the state unions have joined together to create a single bargaining unit ("SBU") for collective bargaining purposes. Notwithstanding that the WAIR Act provides no machinery for collective bargaining, the terms and conditions of most of BHPIO's employees have, until recently, been determined by that process. Besides the Award, there have been a number of agreements registered under s 41 of the WAIR Act, first in July 1993, then in November 1995, and then in January 1998 (the last mentioned being "EBA 3"). Further, there was an unregistered agreement between BHPIO and the state unions which was negotiated in 1988 and renegotiated in 1997 ("the IR agreement"). As will be seen, the IR agreement was varied in July 1999.
10 The offers of WPAs with which this case is concerned were made under the WPA Act. Under that Act, WPAs are agreements between employers and employees "providing for some or all of the rights and obligations that [they] have in relation to one another" (s 5(1)). Such an agreement may be made between an employer and all or some of its employees collectively, or between an employer and an individual employee: see ss 9 and 10. Where a workplace agreement is in force, no award or registered industrial agreement applies to the parties to it: see the definition of award in s 3 and s 6(1). Generally speaking, the collective provisions of the WAIR Act are rendered inapplicable to the parties to a workplace agreement by virtue of Part IA of the WAIR Act, although the Minimum Conditions of Employment Act 1993 (WA) does apply "despite any provision of a workplace agreement": see the WPA Act, s 17.
11 Although the State and Commonwealth statutory regimes differ significantly, WPAs made under the WPA Act are comparable in some respects to the "Australian Workplace Agreements" ("AWA") for which provision is made in Part VID of the WR Act, as amended by the Workplace Relations and Other Legislation Amendment Act 1996 ("the WROLA Act"). Pursuant to s 170VF of the WR Act, an employer and an employee may make an AWA that deals with matters pertaining to the relationship between them. Part VID makes extensive provision for the filing and approval of AWAs. Once an AWA comes into effect, it operates to the exclusion of any award that would otherwise apply (s 170VQ(1)) and to the exclusion of any certified agreement that exists at the time, unless the certified agreement has not yet passed its nominal expiry date (s 170VQ(6)).
CONSTITUTIONAL CHALLENGE
12 In this proceeding, BHPIO challenged the constitutional validity of ss 298K, 298L, 298M and associated provisions of Pt XA of the WR Act, on the ground of want of legislative power.
13 Part XA of the WR Act, which is headed "Freedom of Association", only applies to the extent provided for in Division 2: see s 298C. Section 298G applies Pt XA to constitutional corporations (as defined). Subsection 298G(1) reads:
This Part applies to:(a) conduct by a constitutional corporation; and
(b) conduct that adversely affects a constitutional corporation.
A "constitutional corporation", as defined in s 4(1), is a corporation of the kind specified in s 51(xx) of the Commonwealth Constitution, a body incorporated in a Territory, or a Commonwealth authority. BHPIO admits that it is a constitutional corporation, being a trading corporation of the kind referred to in s 51(xx).
14 The provisions with which this case is specifically concerned are s 298K(1)(b) and (c), s 298L(1)(a) and (h), and s 298M. All are found in Pt XA of the WR Act, the objects of which are referred to in s 298A, which provides:
As well as the objects set out in section 3, this Part has these objects:(a) to ensure that employers, employees and independent contractors are free to join industrial associations of their choice or not to join industrial associations; and
(b) to ensure that employers, employees and independent contractors are not discriminated against or victimised because they are, or are not, members or officers of industrial associations.
Subsection 298K(1) relevantly provides:
An employer must not, for a prohibited reason, or for reasons that include a prohibited reason, do or threaten to do any of the following:...
(b) injure an employee in his or her employment;
(c) alter the position of an employee to the employee's prejudice ... .
Subsection 298L(1) relevantly states:
Conduct referred to in subsection 298K(1) ... is for a prohibited reason if it is carried out because the employee ...(a) is, has been, proposes to become or has at any time proposed to become an officer, delegate or member of an industrial association; or
...
(h) is entitled to the benefit of an industrial instrument or an order of an industrial body; or
....
Section 298M provides:
An employer, or a person who has engaged an independent contractor, must not (whether by threats or promises or otherwise) induce an employee, or the independent contractor, (as the case requires) to stop being an officer or member of an industrial association.
15 I accept that, as BHPIO and the Minister contended, the central question is whether the challenged provisions, applied in conformity with s 298G(1)(a), constitute laws that come within s 51(xx) of the Constitution ("the corporations power"). It may be recalled that s 51(xx) confers power on the Commonwealth Parliament to make laws with respect to "Foreign corporations, and trading or financial corporations formed within the limits of the Commonwealth". If a law is found to be a law on a particular subject and if that subject is found to be one within the power of the Commonwealth, then the law is within power, providing it does not infringe some other constitutional tenet: cf Newcrest Mining (WA) Ltd v The Commonwealth [1997] HCA 38; (1997) 190 CLR 513 at 605 per Gummow J, quoting Berwick Ltd v Gray [1976] HCA 12; (1976) 133 CLR 603 at 611 per Jacobs J.
16 The scope of the corporations power has been delineated in a series of decisions of the High Court. Plainly enough, the subject-matter of the power is the corporations to which it refers. On the one hand, it is now generally accepted that the power is not confined in its application to the trading activities of trading corporations or to the financial activities of financial corporations: see, e.g., Re Dingjan; ex parte Wagner [1995] HCA 16; (1995) 183 CLR 323 ("Re Dingjan") at 333 per Mason CJ, 336 per Brennan J, 352 per Toohey J, 364 per Gaudron J, and 368 per McHugh J. On the other hand, as Deane J observed in The Commonwealth v Tasmania [1983] HCA 21; (1983) 158 CLR 1 at 272, a law does not necessarily come within the corporations power "simply because" it happens to apply to constitutional corporations. See also Re Dingjan at 344-5 per Dawson J.
17 In Re Dingjan, four of the seven members of the Court acknowledged that a law which regulates the business functions, activities and relationships of corporations of the kind referred to in s 51(xx) is within power: see 183 CLR at 333-4 per Mason CJ, 364 per Gaudron J (with whom Deane J agreed at 342) and 368 per McHugh J. According to the reasons for judgment of their Honours, the power may very well extend further, presumably to the regulation of all the activities and relationships of constitutional corporations. It is unnecessary in this case to decide whether or not it does.
18 I turn first to McHugh J in Re Dingjan. His Honour said at 369:
Where a law purports to be `with respect to' a s 51(xx) corporation, it is difficult to see how it can have any connection with such a corporation unless, in its legal or practical operation, it has significance for the corporation. That means that it must have some significance for the activities, functions, relationships or business of the corporation. If a law regulates the activities, functions, relationships or business of a s 51(xx) corporation, no more is needed to bring the law within s 51(xx). That is because the law, by regulating the activities, etc, is regulating the conduct of the corporation or those who deal with it. Further, if, by reference to the activities or functions of s 51(xx) corporations, a law regulates the conduct of those who control, work for, or hold shares or office in those corporations, it is unlikely that an further fact will be needed to bring the law within the reach of s 51(xx). It is not enough, however, to attract the operation of s 51(xx) that the law merely refers to or operates upon the existence of a corporate function or relationship or a category of corporate behaviour. The activities, functions, relationships and business of s 51(xx) corporations are not the constitutional switches that throw open the stream of power conferred by s 51(xx). [Citations omitted].
Compare the observations of Mason CJ at 333-334.
19 Gaudron J, with whom, as I have already noted, Deane J agreed, observed at 365:
[T]he power conferred by s 51(xx) extends, at the very least, to the business functions and activities of constitutional corporations and to their business relationships. And those functions, activities and relationships will, in the ordinary course, involve individuals, and not merely individuals through whom the corporation acts, as in Fencott v Muller [1983] HCA 12; (1983) 152 CLR 570, or the control of whose conduct is directly connected with the regulation or protection of the corporation, as in Actors and Announcers Equity Association [1982] HCA 23; (1982) 150 CLR 169.Once it is accepted that s 51(xx) extends to the business functions, activities and relationships of constitutional corporations, it follows that it also extends to the persons by and through whom they carry out those functions and activities and with whom they enter into those relationships.
Although Mason CJ, Deane, Gaudron and McHugh JJ adopted similar approaches to the corporations power, they did, as the respondent points out, differ in the result. The difference related principally to the characterisation of the law in question (which sought to regulate the conduct of persons other than s 51(xx) corporations). Whilst the Chief Justice, Deane, Gaudron and McHugh JJ all construed s 51(xx) broadly, McHugh J came to a different result for reasons that have little relevance to this case. I note, of course, that Mason CJ, Deane and Gaudron JJ were in the minority in the result on the corporations power aspect of the case.
20 Let it be accepted that the corporations power does extend, as Mason CJ, Deane, Gaudron and McHugh JJ would have it, at the least to a law which operates on the business functions, activities or relationships of constitutional corporations: cf Quickenden v O'Connor [1999] FCA 1257; (1999) 91 FCR 597 at 603 (on appeal to the Full Court) and Rowe v Transport Workers' Union (1998) 90 FCR 95 at 104-5. A law that regulates the industrial rights and obligations of a constitutional corporation and its employees may well constitute a law operating on the corporation's business functions, activities or relationships.
21 Presumably it was with this in mind that the plaintiffs in Victoria v The Commonwealth [1995] HCA 45; (1996) 187 CLR 416 conceded, at 539, that, pursuant to the corporations power, the Parliament has power to legislate on the industrial rights and obligations of constitutional corporations at issue in that case. The concession was, I note, applied and the validity of s 152 of the Industrial Relations Act 1988 (as it then stood) upheld: see 187 CLR at 540. The Court also held that s 164 (the immunity provision) of that Act operated directly on a subject within s 51(xx) and with respect to its trading activities: see 187 CLR at 557-8. Thus, the decision in Victoria v The Commonwealth provides a basis not only for s 298G(1)(a) but also for s 298G(1)(b) and s 298G(2).
22 Whether the corporations power necessarily extends to the regulation of the industrial rights and obligations of constitutional corporations and their employees does not arise in the present case, however, although McHugh and Gaudron JJ have expressed the view that it does. Besides the statement by McHugh J in Re Dingjan at 369 (set out above), Gaudron J said, obiter dictum, in Re Pacific Coal Pty Ltd; ex parte Construction, Forestry, Mining and Energy Union [2000] HCA 34 at [83] that:
I have no doubt that the power conferred by s 51(xx) of the Constitution extends to the regulation of the activities, functions, relationships and the business of a corporation described in that sub-section, the creation of rights, and privileges belonging to such a corporation, the imposition of obligations on it and, in respect of those matters, to the regulation of the conduct of those through whom it acts, its employees and shareholders and, also, the regulation of those whose conduct is or is capable of affecting its activities, functions, relationships or business. More relevantly for present purposes, I have no doubt that it extends to laws prescribing the industrial rights and obligations of corporations and their employees and the means by which they are to conduct their industrial relations.
In the present case, it is sufficient for validity that the laws in question have, by virtue of their character, a sufficient connection with the subject matter of power, whether because they operate on the subjects of power and their business functions, activities and relationships (as, for the reasons set out below, they do) or because they satisfy the approaches of Brennan and Toohey JJ. As Toohey J indicated in the passage set out below, the consensus of judicial opinion in Re Dingjan was that the approach adopted by Dawson J in that case was too narrow.
23 In Re Dingjan at 336, Brennan J explained his approach to s 51(xx) in the following way:
A law supported by s 51(xx) will ... be characterised by its effect on corporations of a kind mentioned in that paragraph, that is, trading or financial corporations formed within the limits of the Commonwealth. In the Act, those corporations are called `constitutional corporations' .... To attract the support of s 51(xx), it is not enough that the law applies to constitutional corporations and to other persons indifferently. To attract that support, the law must discriminate between constitutional corporations and other persons, either by reference to the persons on whom it confers rights or privileges or imposes duties or liabilities or by reference to the persons whom it affects by its operation. A validating connection between a law and s 51(xx) may consist in the differential operation which the law has on constitutional corporations albeit the law imposes duties or prescribes conduct to be performed or observed by others. [Citations omitted].
Plainly enough, the laws under challenge in this case do not apply indifferently to constitutional corporations and other persons. The laws discriminate between constitutional corporations and others by reference to the persons whose conduct is proscribed and by reference to the liabilities that the laws impose.
24 In Re Dingjan, Toohey J referred to the narrower construction of the power accorded by Dawson J, saying, at 352-353:
To say that a law cannot be a law with respect to trading or financial corporations unless the fact that the corporation is a trading or financial corporation is significant in the way in which the law relates to it may be to focus too narrowly on the process of characterisation. ... It is true that corporations are identified as the subject matter of the power. But in the end the question is whether there is a sufficient connection between the law and the subject matter to be able to say that the law is one with respect to that subject matter.It may be said that some circularity is involved in the proposition expressed in these terms. But there is a qualitative assessment to be made and sufficiency of connection draws attention to the need for such an assessment. It emphasises that the connection must be substantial, not merely tenuous. The law must be one which `in reality and substance' is a law upon the subject matter. And that is so whether the subject matter is identified by reference to persons or otherwise. In each case: `It is not enough that a law should refer to the subject matter or apply to the subject matter'. In the case of s 51(xx) the law must operate on the rights, duties, powers or privileges of corporations in such a way as to evidence a sufficient connection between the law and the corporations. It is not enough to identify corporations as a reference point so as to affect the activities of others. [Citations omitted]
Compare and contrast 183 CLR 344-346 per Dawson J. For the reasons given below, there is a sufficient connection between the laws in question in this case and the subject matter of the power.
25 The character of the challenged laws depends on the rights, powers, liabilities, duties and privileges they create or, more generally, on the way they affect constitutional corporations. The respondent's case was that ss 298K, 298L and 298M are "laws with respect to employers, and their character does not change merely by providing, elsewhere, that they apply only if the employer happens to be a trading corporation (sic)". In written submissions, the respondent wrote, in connection with s 298M, as follows:
Does a law which provides that a trading corporation shall not induce a person to stop being a member of an industrial association fall within s 51(xx)? It is submitted not, for the following reasons.(a) The law has not yet reached the point where any law which is addressed only to trading corporations will be valid. Individual members of the High Court have certainly gone that far, but the Court itself has not.
(b) The constitutional link is not provided by the nature of the inducement. Any manner of inducement, having nothing to do with the character of the corporation as a trading one, would be caught.
(c) Neither is the link provided by the fact that it is employees whom the trading corporation must not induce. Having employees is not an unique mark of a trading corporation. Churches, for example, have employees.
(d) Neither is the link provided by the concern of the section with membership of industrial associations. Given the definition of that term in s 298B of the WR Act, it takes the matter no further than the reference to employees.
(e) Neither is the link provided by the scope of the provision in context. Part XA is concerned with freedom of association, not with trading corporations. Section 298M seems to be in the nature of legislation which says `a corporation shall not', and then proceeds to impose a proscription which is irrelevant to the corporation's nature as such.
The respondent submitted that "the same applied, mutatis mutandis, to ss 298K and 298L".
26 I reject the respondent's challenge to the validity of ss 298K, 298L and 298M. To begin with, Part XA, within which these provisions fall, is not a law with respect to employers generally. As already noted, Division 2 limits the operation of Part XA to employers of a particular description; relevantly, ss 298C and 298G extend its operation to constitutional corporations acting in their capacity as employers. A subject of the laws with which this case is concerned is, therefore, constitutional corporations.
27 The provisions expressly affect the rights of those corporations, by forbidding them from engaging in certain conduct relating to employees who are members of industrial associations. As far as the operation of the enterprise of a corporation is concerned, the relationship of the corporation to its own employees is directly germane to its business. This is not to say that all aspects of that employment relationship are permissible subjects of regulation under s 51(xx), but, on the test favoured by Mason CJ, Deane, Gaudron and McHugh, the laws in question in this case are. In the case of s 298M, the subject of the law is a constitutional corporation inducing an employee to stop being an officer or member of an industrial association. In the case of s 298K, the subject of the law is a constitutional corporation injuring its employees in employment, or prejudicially altering its employee's position for reasons that include a "prohibited reason" (as defined in s 298L). Such a reason concerns, broadly speaking, membership of an industrial association. Each proscription directly governs a central aspect of the industrial arrangement between the constitutional corporation as employer and the employees who carry out its business. As this case illustrates, the connection between the relevant prohibitions and the corporation's business is a real and practical one. Under the scheme of industrial regulation established by the WR Act, in protecting an employee's freedom of industrial association (including the right to join or not to join a union), these laws protect a matter of foundational importance to the employment relationship. They have, therefore, the requisite significance for the business of a constitutional corporation.
28 In this sense, Part XA is readily distinguishable from the laws held beyond power in Re Dingjan: they applied to certain contracts to which a constitutional corporation was not a party and which might have been only tenuously (or not at all) related to the corporation's business. Sections 298K, 298L and 298M, as qualified by ss 298C and 298G, are capable of characterisation as laws directly operating on the subject of power and, moreover, on their business relationships.
29 Of course, many employers who are not constitutional corporations have employees. That fact is immaterial. Further, validity does not in this case depend on whether the nature or manner of the prohibited inducement (in s 298M) or the prohibited reason (in ss 298K and 298L) has any particular or independent relationship to the character of the corporation as a constitutional corporation. Having established that the laws operate directly on a subject of power as described above, no additional connection between the laws and s 51(xx) need be shown.
30 Whether the industrial association in contemplation was registered under State or Commonwealth law is also immaterial for present purposes. The crucial question is whether the laws are properly characterised as an exercise of the corporations power because they regulate the conduct of constitutional corporations as employers in relation to their employees and, in consequence, the business of those corporations.
31 I also reject the respondent's submission that the drafting technique used by the Commonwealth provides another objection to validity. The Commonwealth has used similar drafting techniques on other occasions. The technique in Part XA is not relevantly different from that which constrained the operation of s 164 of the Industrial Relations Act 1988, the validity of which was sustained in Victoria v The Commonwealth at 556-8. The observation of Barwick CJ in R v Australian Industrial Court; ex parte CLM Holdings Pty Ltd [1977] HCA 6; (1977) 136 CLR 235 at 238 may be adapted to this case. That is, the effect of Division 2 of Part XA is to produce "what is in substance a series of enactments, none of which are inconsistent with each other, and each of which is separately supported by a head or heads of legislative power".
32 It follows that there is no need to rely, as the applicants did, on s 51(xxix) of the Constitution to support the provisions under challenge. It suffices to find that they are a valid exercise of s 51(xx) of the Constitution.
CONSTRUCTION OF SECTIONS 298K, 298L AND 298M
33 This case also raises for determination the proper construction of ss 298K, 298L and 298M. In order to evaluate the parties' submissions on the issues of construction, it is necessary to examine the legislative history of these provisions. The issues arise from the enactment of the WROLA Act. The WROLA Act renamed and amended the Industrial Relations Act 1988 ("the IR Act") which became the current WR Act. The IR Act had, in turn, replaced the Conciliation and Arbitration Act 1904 ("the C & A Act").
(a) Legislative history
34 The settlement of interstate industrial disputes over wages and conditions by means of conciliation and arbitration, as well as industry awards, was central to the regime established by the C & A Act, and remained central to Australian industrial organisation for many years.
35 Beginning in 1987, the Conciliation and Arbitration Commission (later the AIRC) progressively sought to encourage greater structural efficiency in the system of industrial relations, ultimately by introducing enterprise bargaining principles: see National Wage Case (1987) 17 IR 65 at 66-67; National Wage Case (1988) 25 IR 170 at 179; and National Wage Case (1991) 39 IR 127. The shift in emphasis was accompanied by changes in Commonwealth legislation. The Industrial Relations Reform Act 1993 ("the 1993 Reform Act"), which amended the IR Act, introduced enterprise flexibility agreements together with provisions designed to facilitate the bargaining process between employers and trade unions.
36 The WROLA Act, whilst repealing enterprise flexibility agreement provisions, continued the trend of devolving responsibility for industrial arrangements to the enterprise level by introducing AWAs and providing for collective agreements between an employer and "a valid majority" (as defined) of employees. See, in this connection, Safety Net Review - Wages (1997) 71 IR 1, especially Attachment A - Statement of Principles, at 70.
37 The Explanatory Memorandum to the WROLA Act commenced by stating:
The Act is framed to give primary responsibility for industrial relations and agreement making to employers and employees at the enterprise and workplace levels. They are the best placed to develop more co-operative, productive and competitive working arrangements. The industrial relations system needs to provide them with effective choices about the arrangementswhich suit their particular circumstances. The Act provides such choice .... [Explanatory Memorandum, May 1996, p 1]
Amongst what the Memorandum called the key reforms were "providing for effective choice and flexibility in reaching both collective and individual agreements ..." and "ensuring freedom of association and the choice to join or not to join industrial associations ...".
38 In his second reading speech, the Minister for Industrial Relations also emphasised that the manner of industrial arrangements was a matter for employers and employees. The speech read, in part:
Employers and employees in the federal jurisdiction will be able to choose whether they want informal over-award arrangements, or whether they want to formalise their agreements. For those who want formalised individual agreements, we have provided Australian workplace agreements, AWAs. If they prefer formalised collective agreements, they will be able to choose certified agreements, CAs, made with unions or made directly between employers and employees. For those who want agreements under a state jurisdiction, we are providing access to such agreements, bearing in mind that it is a matter of consent for the parties if they choose to go that way. The bill does not discriminate in favour of one form of agreement over another - collective or individual, union or non-union. These are matters for decision by employers and employees, according to their own circumstances and their own perception of how their interests are best served. (Hansard, 23 May 1996, House of Representatives, p 1300).
39 The WROLA Act amended the statement of objects in s 3, presumably to signal the change of direction. Section 3 relevantly reads:
The principal object of this Act is to provide a framework for cooperative workplace relations which promotes the economic prosperity and welfare of the people of Australia by:(a) ...
(b) ensuring that the primary responsibility for determining matters affecting the relationship between employers and employees rests with the employer and employees at the workplace or enterprise level; and
(c) enabling employers and employees to choose for the most appropriate form of agreement for their particular circumstances, whether or not that form is provided for by this Act; and
(d) providing the means:
(i) for wages and conditions of employment to be determined as far as possible by the agreement of employers and employees at the workplace or enterprise level, upon a foundation of minimum standards; and
(ii) to ensure the maintenance of an effective award safety net of fair and enforceable minimum wages and conditions of employment; and
(e) providing a framework of rights and responsibilities for employers and employees, and their organisations, which supports fair and effective agreement-making and ensures that they abide by awards and agreements applying to them; and
(f) ensuring freedom of association, including the rights of employees and employers to join an organisation or association of their choice, or not to join an organisation or association; and
(g) ensuring that employee and employer organisations registered under this Act are representative of and accountable to their members, and are able to operate effectively; and
(h) enabling the Commission to prevent and settle industrial disputes as far as possible by conciliation and, where appropriate and within specified limits, by arbitration
....
40 According to par 3(c), a principal object of the WR Act is to enable the parties to determine freely the form of an industrial agreement. In conformity with this, the Act prohibits "any action with intent to coerce another person to agree or not to agree" to make or terminate a certified agreement: s 170NC. Compare ss 170WG, 170MU, 170WE and 170WF. As par 3(c) indicates, the WR Act does not reflect a preference for any particular kind of agreement (e.g., a collective certified agreement) over any other (e.g., an individual agreement made directly with an employee). Relevantly, it does not prefer an agreement provided for under Commonwealth law over an agreement made pursuant to State legislation. Indeed, the WR Act contains specific provisions that recognise the operation of State legislation and State industrial systems: see e.g., s 111AAA(1). Although the WR Act indicates a preference for bargaining to occur at the workplace level, in contrast to former provisions of the IR Act, it contains no provision requiring an employer to enter into negotiations with a union for an agreement. The WR Act provides, of course, for situations in which employers and employees fail to agree. For example, it provides a limited immunity from suit for protected industrial action taken by employers, employees and unions in pursuit of claims, including claims for a particular type of agreement: see Part VIB, Div 8 and Part VID, Div 8. It is, however, only in relatively limited circumstances that the AIRC may terminate bargaining and industrial action and proceed to arbitrate a dispute: ss 170MW and 170MX.
41 An outcome of this legislative history is that numerous provisions in Part XA have direct counterparts in the IR Act as it stood immediately prior to the enactment of the WR Act. For example, the antecedents of s 298K and s 298L are to be found in s 334 of the IR Act as it formerly was.
42 Section 298M was introduced as subs (3A) of s 334 of the IR Act by par 33(c) of the 1993 Reform Act. The Reform Act, in pars 33(a) and (b), also made other amendments to s 334 which related particularly to the introduction of enterprise flexibility agreements. In relation to the amendments made by s 33 of the 1993 Reform Act, the Explanatory Memorandum stated:
This clause amends section 334 of the Act to prohibit action against employees that is inconsistent with the notion that they should be free to choose whether or not to participate in the certified agreement or an enterprise flexibility agreement.
The introduction of s 298M may, as the applicants and the respondent submitted, have reflected a legislative concern to ensure that the capacity of registered organisations to participate in enterprise flexibility agreements and their negotiation would not be improperly subverted by employers who sought to undermine their membership in the workplace.
43 Referring to passages in Heidt v Chrysler Australia Ltd (1976) 26 FLR 257 at 266 and Bowling v General Motors-Holden's Pty Ltd (1980) 50 FLR 79 at 94 concerning the policy and purpose of s 5 of the C & A Act, the applicants submitted that Part XA encompasses the policy and purposes of its predecessor provisions, namely, to protect the existence and functioning of organisations previously protected by s 5 of the C&A Act and, subsequently, s 334 of the IR Act. The amendments introduced by the WROLA Act did not, so the applicants submitted, diminish the scope of that protection.
44 The respondent submitted that, on the contrary, the WROLA Act amendments had effected a fundamental change. In relation to s 298M, the respondent submitted:
[A]lthough one may examine the circumstances and purpose behind the enactment of s 298M as s 334(3A) by the Reform Act, the setting and purpose of the section was so changed by the WROLA Act amendments as to render such an examination useful but not conclusive. The section is no longer concerned with the integrity of the agreement-making process. It is not concerned to encourage the place or promote the role of unions. It is, rather, focussed upon the individual employee, and upon the integrity of his or her choices in the matter of union membership. Part XA of the Act appears to be based upon a philosophy that `free' means free from inducement by threats, promises or otherwise.
More generally, the respondent submitted:
The enactment of Part XA - in name and purpose encapsulating a fundamental human right (freedom of association) not previously recognised by the legislation - must be accorded the significance it clearly warrants. It brought with it substantive and procedural enhancements to the previously limited range of protections available to employees who had been dismissed on account of union membership, for instance.
45 Referring to the Explanatory Memorandum to the WROLA Act, the Minister contended that the fundamental purpose of Part XA was to protect an employee's "right to join or not to join a union". The Explanatory Memorandum relevantly stated:
This [Part] proposes amendments which will give effect to the principles of:* freedom of choice;
* freedom of association (the choice to be in a union, the choice of which union and the choice not to be in a union); and
* equal treatment before the law.
[Explanatory Memorandum, May 1996, paragraph 16.1]
Part XA was not, so the Minister submitted, intended to guarantee that "as a member of a union, an employee is entitled to have his or her terms and conditions of employment regulated by an agreement to which his or her union is a party". In particular, the Minister submitted that:
[T]he freedom of association provisions in Part XA of the WR Act do not confer rights on union members to engage in collective bargaining as to their terms and conditions of employment ....
46 The seemingly irreconcilable conflict between the applicants on the one hand and the respondent and the Minister on the other diminishes significantly when the terms of Part XA are examined. First, Part XA must be read in its statutory context: see David's Distribution Pty Ltd v National Union of Workers [1999] FCA 1108; (1999) 165 ALR 550 ("David's Distribution ") at 583 per Wilcox and Cooper JJ.
47 Secondly, the objects of the WR Act, set out in s 3, fall for consideration. They are numerous and the pursuit of one may, in some circumstances, be detrimental to the attainment of another. Compare par 3(g) (the effective operation of registered organisations) with par 3(f) (freedom of association). Bearing in mind that all objects in s 3 are "principal" objects, the legislature presumably intended that, so far as possible, the Act should be construed so as best to accommodate all of the relevant objects set out in that section. The emphasis of the WR Act is apparently different from that of the IR Act. Paragraph 2(e) of the previous legislation which referred to encouraging "the organisation of representative bodies of ... employees" no longer appears. Paragraph 3(f) has been added, although there are also par 3(g), par 3(d)(ii) (referring to an effective award safety net) and par 3(h) (referring to AIRC's conciliation and arbitration functions).
48 The additional objects of Part XA, set out in s 298A, serve to emphasise that the Part is directed to ensuring that employees enjoy the freedom to join or not to join a union as they see fit and, if they join, that they can join the union of their choice. That is made explicit by par (a) of s 298A. Par (b) expresses a consequential object, namely, that an employee is protected from discrimination or victimisation in consequence of that choice. In protecting an employee's right to choose, Part XA protects the right to belong to a union and to participate in its affairs: see, for instance, s 298K and pars 298L(1)(a), (e) and (f). Employees are also protected against action by an employer to induce them to relinquish their union membership (s 298M) as well as against a range of prohibited conduct by industrial associations: see, e.g., ss 298Q and 298R.
49 A further indicium of the purpose of Part XA is that it does not confine its attention to organisations registered under the WR Act but protects an employee's choice to belong to a State or Territory registered or recognised body as well.
50 A consequence of the protection afforded by Part XA is that in a workplace in which employees choose to join unions (and to accede to collective bargaining on their behalf), the unions (and the collective bargaining process) also receive protection. This was recognised by Wilcox and Cooper JJ in David's Distribution where their Honours said at 583:
In the context of the Act, Part XA does not stand alone. It is aimed at ensuring that employees may band together, if they wish, for collective bargaining of the type provided for in the Act to achieve the broader objectives of the Act as contained in s 3. [Emphasis added]
That is, in the context of that case, their Honours observed that employees had the right to choose whether to join together to participate in collective action. See also Construction, Forestry, Mining and Energy Union v BHP Steel (AIS) Pty Ltd [2000] FCA 1008 at [48] and Burnie Port Corporation Pty Ltd v Maritime Union of Australia [2000] FCA 1768 at [26]. Other provisions of the Act facilitate the collective bargaining process: see, e.g., Part VIB, Div 8.
(b) Construction of s 298K
51 The applicants contended, and the respondent denied, that there has been conduct by the respondent which amounts to injury and prejudice within the meaning of pars (b) and (c) of s 298K(1) of the WR Act. The applicant's case was that:
To the extent that the spread of WPAs progressively diminishes the influence and effect of collective action by the group members ..., at the very least, their position must be held to have been altered to their prejudice, and it may also be characterised as an injury in their employment.
The applicants further contended that:
[T]ogether with its offer of WPAs BHPIO gave employees who entered into WPAs the option of receiving a lump sum payment for accrued sick leave. Employees who did not sign WPAs were not given the option of having their sick leave paid out in this manner.
52 The concepts of injury and prejudice in s 298K(1)(b) and (c) are not narrow. The High Court said in Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia [1998] HCA 30; (1998) 195 CLR 1 ("Patrick") at 18 that:
[Paragraph] (b) covers injury of any compensable kind; par (c) is a broad additional category which covers not only legal injury but any adverse affection of, or deterioration in, the advantages enjoyed by the employee before the conduct in question.
The relevant injury or prejudice is that done, or threatened to be done, by an employer to an employee. In this connection, the Full Court said at an earlier stage of this proceeding (on an appeal from the grant of interlocutory relief) that:
It has to be borne in mind, in construing s 298K, that it proscribes conduct by `an employer' directed to `an employee' or `other person' (emphasis added). That use of the singular suggests that the alleged injury or alteration of position has to be examined in the light of the circumstances of each individual employee. (It is not the point that in the interpretation of statutes, the singular ordinarily includes the plural; here we are concerned with the indications of legislative intention to be discerned from the actual language used.) It is also significant that the conduct struck at by each paragraph of s 298K is expressed by an active verb: `dismiss', `injure', `alter the position', `refuse to employ', and `discriminate'. That implies that the proscription is essentially against an intentional act of the employer directed to an individual employee or prospective employee.See BHP Iron Ore Pty Ltd v Australian Workers' Union [2000] FCA 430; (2000) 171 ALR 680 at 689.
53 Section 298K(1) is, upon this view, concerned with the conduct of an employer that is directed to an individual employee. This does not mean that in dismissing one employee who is a union member for a prohibited reason, an employer commits a civil wrong, and that wrong is not committed if, for the same reason, the employer dismisses all employees who are union members. The Full Court was directing its attention to the nature of the injury contemplated by the provision. That is, the conduct in question must injure an employee individually in the sense that it would have injured him or her, regardless of whether it was actually done to an individual employee or a group of employees. The relevant inquiry is whether an employer has, by the employer's conduct, injured the position of an employee individually: cf CPSU, Community and Public Sector Union v Telstra Corporation Limited [2000] FCA 844 at [24] per Finkelstein J. The Full Court must have intended to exclude conduct that injured individuals only when directed to a class of employees.
54 Before s 298K(1) can apply, it must be possible to say of an employee that he or she is, individually speaking, in a worse situation after the employer's acts than before them; that the deterioration has been caused by those acts; and that the acts were intentional in the sense that the employer intended the deterioration to occur.
55 In the Full Court, the applicants failed to establish that their claim under s 298K raised a serious question to be tried. On that occasion, the Court said at 689:
[I]t was contended that BHPIO injured certain employees when it made a general offer of improved terms and conditions, subject to entry by each offeree into an individual workplace agreement. Deciding whether or not to accept such an offer involved, so it was argued, the making of an `invidious choice' by each employee. To impose such an invidious choice was to `injure' the employee in his or her employment as contemplated by s 298K.A second point at which BHPIO is said to have injured those employees who did not accept its offer occurred, on the unions' argument, when BHPIO commenced to extend, to those who did accept the offer, the improved remuneration and conditions for which it provided. By refusing to extend the same remuneration and conditions to employees performing similar work who have not accepted the offer, BHPIO is said to have again `injured' those employees or altered their position to their prejudice.
The Full Court held, at 690, that in offering WPAs to its employees, BHPIO:
did not change, in either absolute or relative terms, the remuneration or any of the conditions of employment of the employee to whom the offer was made. A change in absolute terms occurred only upon acceptance of the offer and the consequent coming into existence of a new contract of employment.
It said, also at 690:
It is true that, after some offers had been accepted by individual employees, a change can be discerned in the remuneration and conditions of employment of those employees, viewed in relation to the remuneration and conditions of employment of those employees who have not accepted the offer. However, the position of each of the latter employees has not been changed to his or her detriment by an intentional act of the employer. The relative charge which we have just identified is brought about by the acceptance by some employees, and the rejection by others, of an offer made indiscriminately to all employees.
The applicants sought to circumvent this reasoning in two ways.
56 First, as already noted, the applicants endeavoured to reformulate the injury and prejudice suffered by them as the diminution of "the influence and effect of collective action" by the employees who did not accept BHPIO's WPA offers. This reformulation does not, in my view, relevantly diminish the applicability of the Full Court's reasoning. The injury, as reformulated, does not flow directly from BHPIO's acts in offering WPAs; and no conspiracy to injure is alleged, as in Patrick. On the applicants' case, if injury has been done, it has been done because, BHPIO having made the offers, (1) a sufficiently large proportion of the workforce has accepted, or proposes to accept, them; or (2) a sufficiently large proportion of the workforce has accepted, or proposes to accept, the offers and has resigned, or threatens to resign, from the unions to which they formerly belonged. It is unclear whether the applicants assert (1) or (2).
57 The alleged injury occurred as the cumulative result of BHPIO's making WPA offers to each and every employee previously covered by EBA 3, many of whom accepted them. Had the company made only a few WPA offers, or had only a few employees accepted, then the remainder of the workforce could scarcely have suffered injury of the kind alleged.
58 The applicants also contended that BHPIO's entry into WPAs with some employees to the prejudice of other employees (i.e., those who did not accept the offer) "is directly analogous with the scheme entered into by the employer in Patricks with other persons". The High Court did not, so the applicants submitted, construe s 298K as either requiring an intentional act directed to an individual employee or as excluding from its ambit a prejudicial act constituted by an employer's agreement with "a stranger to the employment contract".
59 There is not, I think, any contrariety between the interlocutory judgment of the Full Court and the judgment of the High Court in Patrick. The points considered by the Full Court were not at issue in the High Court. In Patrick, the case proceeded on the facts as pleaded, it being assumed for the purposes of the appeal that Patrick's employees were necessarily affected as individuals by the company's conduct. The case made against Patrick was that it participated in a scheme leading to the appointment of administrators, thereby creating a situation which immediately threatened the employment of each and every one of its employees, considered as individuals. The critical distinction between Patrick and this case is that the position of each of Patrick's employees was necessarily directly affected by what Patrick did. Contrast this case. The allegation here is not that BHPIO injured its employees as a direct result of what it did but, rather, indirectly. That is, injury occurred because a sufficiently large proportion of the workforce accepted the WPA offers and resigned from the unions, thereby weakening the unions' bargaining position, especially with respect to EBA 4.
60 The applicants' case under s 298K is not improved by their argument that a further injury was done employees who did not accept the WPA offers because they were unable to exercise the accrued leave pay-out option. In considering a different but conceptually similar argument, the Full Court observed, at 693, that:
[A] continuing award employee who receives a promotion or some other beneficial change in his or her employment may not achieve the same increase in remuneration as a similar employee on an individual workplace agreement. However ... that will be a consequence of an election between different contractual regimes for the regulation of the employment of the two groups of employees. It will not have been brought about by the active, intentional, conduct of the employer which is struck at by s 298K.
Much the same may be said of the accrued leave option. It was open to all employees to decide whether or not to accept the company's WPA offer. In so doing, employees would doubtless have considered the merits and demerits of one or other course. The difference regarding the option entitlement is a consequence of the choice made by an employee as to whether he or she would accept or reject the WPA offer made, on terms, to him or her.
61 There are other difficulties with the applicants' s 298K(1) claim. Conduct within s 298K(1) is not impermissible unless done "for a prohibited reason, or for reasons that include a prohibited reason", as defined in s 298L(1). The applicants' case was that BHPIO injured the non-accepting employees because they were members of industrial associations (s 298L(1)(a)), or because they were entitled to the benefit of an industrial instrument (s 298L(1)(h)). (In final submissions, the applicants abandoned their earlier reliance on s 298L(1)(l)).
62 Let it be assumed (contrary to the view expressed above) that the alleged injury (or prejudice) fell within s 298K(1)(b) (or (c)). It would then be presumed in this proceeding that the conduct was, or is being, carried out by BHPIO for the reasons alleged by the applicants, unless BHPIO could prove to the contrary (s 298V). Notwithstanding that s 298V would confer a significant forensic benefit on the applicants, I do not consider that their submissions on s 298L(1)(a) and (h) withstand analysis.
63 The conduct to which s 298L(1) applies is the conduct referred to in s 298K(1), that is, relevantly, the doing of the injury or prejudice referred to in pars (b) and (c). The applicants' case under s 298L(1)(a) must be that BHPIO diminished the collective bargaining power of a non-accepting employee, and made him or her ineligible for the accrued leave option, for reasons that included that the employee was a member of an industrial association. These are difficult propositions to maintain on the undisputed facts.
64 It is undisputed that BHPIO offered WPAs to all of its Award employees. Did BHPIO disadvantage the non-accepting employees because of their union membership? The applicants contended that it did. They said that BHPIO diminished the bargaining power of the unions to which the non-accepting employees belonged for the reason that the non-accepting employees were union members. If BHPIO did diminish the unions' bargaining power, it could not have done so on the undisputed facts because an injured employee was a union member. Given that at the time of the alleged injury virtually all the employees to whom a WPA was offered were union members, if this injury was done because of union membership, then all employees should have been the victims of it. The applicants' case was not, however, that the injury under s 298K(1) was done to all the employees. If the applicants' contention was correct, conduct that affected all employees equally resulted in injury to some but not to others, notwithstanding that the reason for the injury was a characteristic that they all shared. This is an improbable result and highlights the fact that the injury complained of in fact flowed from the independent acts of the employees who accepted the WPA offers.
65 So too it was open to all the Award employees, most of whom were union members, to take up the accrued leave option, providing they accepted the terms on which the option was made available. They were to decide for themselves whether they wanted to enter WPAs on the terms being offered by BHPIO. The availability of the option was unrelated to union membership. The applicants' real case, so far as BHPIO is concerned, is that the company offered WPAs on terms to all its employees as part of a stratagem to reduce union membership (at that time held by most of its workforce) in order to diminish the unions' bargaining power. This case is properly considered under s 298M.
66 In written submissions, the applicants referred to remarks of Wilcox and Cooper JJ in Davids Distribution, at 583, and stated that their:
argument that membership of an industrial association was one of the Respondent's prohibited reasons is based on a concept and understanding of membership as being broader than simply the possession of a membership ticket.
I do not accept this submission. Paragraph 298L(1)(a) refers to membership of and holding office in a union. I do not think it is intended to cover any broader notion than that. Subsection s 298L(1) (which describes what is a prohibited reason for s 298K(1) purposes) consists of fourteen detailed paragraphs and a number of subparagraphs designed to protect an employee's freedom to join a union and to participate in union activities in a number of disparate situations. In Davids Distribution, their Honours were referring to the protection conferred by s 298L(1), considered as a whole. Their observations do not provide a basis for saying that par (a) of s 298L(1) is concerned with anything other than being, or proposing to become, a member (or an officer or delegate) of an industrial association. The concept of membership is recognised and dealt with in Part IX, Div 9 of the WR Act. There is nothing in the terms of par (a) or elsewhere in the WR Act to justify the applicants' submission that par (a) is concerned with a person's activities as a member, officer or delegate of an industrial association. At least some of those activities are protected elsewhere in s 298L(1): see, for example, pars (f), (g), (i), (m) and (n).
67 Paragraph 298L(1)(h) presents similar difficulties for the applicants. An employee to whom s 298L(1) refers is the employee against whom the conduct referred to in s 298K(1) is, or is threatened to be, taken. If the applicants' case was that a non-accepting employee has been injured because he or she was entitled to the benefit of the Award, EBA 3 or some other existing industrial instrument, then that case must fail on the undisputed facts. It is undisputed that the non-accepting employees retain the benefits of existing industrial instruments and nothing BHPIO has done, or threatens to do, impinges on those benefits. BHPIO cannot have done the injury because the non-accepting employees remain entitled to benefits under existing instruments.
68 As already noted, the injury on which the applicants rely is the diminution in union bargaining power said to flow from the WPAs. Injury of this kind is relevant to the creation of new rights under a new industrial instrument, particularly, EBA 4. In reality, the applicants' case under par 298L(1)(h) is that BHPIO has done the injury complained of in order to prevent or impede the unions' negotiation of EBA 4 on terms advantageous to the persons they represent. The Full Court has recently held in Burnie Port Corporation Pty Ltd v Maritime Union of Australia [2000] FCA 1768 at [23] that par 298L(1)(h) relates to a benefit to which an employee is entitled at the time of the impugned conduct. It does not relate to prospective entitlements.
69 In my view, the applicants' claims under s 298K(1) are misconceived. In the event that I am wrong, however, I set out below the evidence concerning BHPIO's conduct and its reasons for it. If it were necessary to do so, I would find that BHPIO has rebutted the presumption to which s 298V gives rise.
(c) Construction of s 298M
70 The applicants' case in summary was described in their written submissions as follows:
* The Respondent wanted to rid itself of the influence and role of unions in its workplace.* The Respondent offered inducements to employees which involved those employees eschewing their rights to union representation in collective bargaining by entering into workplace agreements.
* The Respondent knew that in other workplaces when individual agreements were instituted employees overwhelmingly did not retain membership of their union.
* The agreements offered by the Respondent were for a fixed period at the expiration of which employees could bargain for a new agreement.
* The Respondent's purpose would be frustrated if, at the expiration of their agreements, the employees banded together again and sought to bargain collectively.
* A purpose - or a necessary consequence of the employer's conduct - was that those employees would leave the unions in which they held membership.
* This is what happened.
71 Section 298M relevantly prohibits an employer from inducing an employee to stop being a member of an industrial association. In this case, the Full Court has already said, at 696, that:
Construed in its context ... it appears to us that s 298M will be contravened by conduct that leads or moves, by persuasion or influence, an employee to stop being a member of a union. It further appears to us that it is essentially a question of fact, to be determined by looking at all the circumstances of the case. To this extent, we do not find it helpful to analyse the issue, as the primary judge did, in terms of an absolute prohibition where intention is irrelevant. On the contrary, in resolving the question of fact which we have just identified, the existence of a particular intention may be a significant consideration.
As Finkelstein J observed in Finance Sector Union v Commonwealth Bank of Australia [2000] FCA 1372 ("Finance Sector Union") at [38], this is a difficult passage.
72 The terms of s 298M provide that the section extends to situations in which an employer makes a threat or promise, the carrying out of which is, presumably, conditional upon an employee ceasing his or her union membership. Plainly enough, the provision extends beyond threats or promises as such since it uses the words "or otherwise". BHPIO submitted that the words "or otherwise" were to be construed by reference to the words "threats or promises", with the result that the words in parenthesis in s 298M - "whether by threats or promises or otherwise" - set up a genus of relevantly inducing conduct. This conduct was the treatment or proposed treatment upon fulfilment of a condition or conditions. BHPIO contended that conduct would only fall within s 298M in -
a situation in which one person seeks to influence another to act in a certain way by treating, or promising or threatening to treat, that other person differently according to whether he or she acted in that way. There must, in other words, be a condition attached to the treatment or proposed treatment.
There is, I think, no justification for reading the provision as narrowly as this. The words in parenthesis are intended, so it seems to me, to show that s 298M is not limited to the situation where an employer induces by threats or promises or the like. It forbids any employer from inducing an employee to the forbidden end by any means. This accords with the view taken of the provision by the Full Court.
73 BHPIO submitted, in the alternative, that the concept of "persuasion" referred to by the Full Court -
can extend only to the conscious, ostensible words and acts of the putative inducer directly related to the end to be achieved, and to a situation where that end is in fact intended by that inducer.
I do not agree that the concept of persuasion can be limited only to the use of "ostensible words". This too would be inconsistent with the approach adopted by the Full Court: see 171 ALR at 700. But is it necessary to show that an employer intended an employee to stop being a member of an industrial association when a contravention, or threatened contravention, of s 298M is alleged? The Full Court touched on this in 171 ALR at 696, in the passage set out earlier. It is not clear, however, when the passage is read in the context of the whole judgment, whether an employer against whom a breach of s 298M is alleged must intend his or her employee to stop being a union member.
74 On one view, s 298M is not concerned with the employer's state of mind. It is concerned with the conduct of an employee and with the reason for it. That is, the focus of the provision, as noted by Finkelstein J in Finance Sector Union at [39], is on " the mind of the allegedly induced person (why did he act) and not on the mind of the defendant (what did he intend to achieve?" Contrast s 298M, which makes no express reference to intent, with ss 298K(1) and 170NC(1), which explicitly incorporate notions of reason or intent.
75 Finkelstein J concluded, in Finance Sector Union, that intention was an essential ingredient. His Honour said at [38]:
The difficulty arises from the final sentence [of the above passage from the Full Court's judgment] where it is said on the factual issue raised `intention may be a significant consideration'. [Finkelstein J's emphasis]. On one view of the matter, either intention is or is not a relevant consideration. If it is to provide assistance in only some cases, what is the character of that class of case?
His Honour considered that elsewhere in the Full Court's judgment the Court indicated that intention was an essential component of a contravention of s 298M: see Finance Sector Union [40] - [41].
76 As the Full Court said, whether there is conduct in contravention of s 298M is essentially a question of fact. Where an employer's express threats or promises constitute the inducement, the employer's intention may be so patent that, in a practical sense, no question concerning intention arises. But where more subtle persuasion or influence are relied upon, the issue of intention may prove to be critical. That is, I think, the qualitative difference in circumstances to which the Full Court was referring when it said, "the existence of a particular intention may be a significant consideration" (emphasis added). Cf Human Rights & Equal Opportunity Commission v Mount Isa Mines Ltd (1993) 118 ALR 80 where, at 86 and 102, Black CJ and Lockhart J adopted a like approach in considering claims under the Sex Discrimination Act 1984 (Cth).
77 As the respondent said:
[N]o sophisticated investigation into purpose or intention will be necessary in the case of promises, threats or persuasion: here the overt conduct of the employer will supply the necessary evidence of purpose. If an employer in fact promises a pay increase for any employee who leaves his or her union, it will avail the employer nothing to say that a resignation from the union was not really intended.
Conversely, where the connection between the employer's act and the employee's resignation from a union becomes more attenuated, evidence about the employer's state of mind will increase in importance. In the absence of an express promise or threat, there must be something to connect the employer's words or deeds with the outcome referred to in s 298M. The employer's state of mind (i.e. intention or purpose or motive) and the understanding of the employee may be the connection. A relevant state of mind may be inferred from all the circumstances of the case, including any communications between the parties. The employer's state of mind is an important part of the applicants' case in this proceeding.
78 The applicants submitted that, if intention were essential to establish an inducement within the meaning of s 298M, then s 298V applied, with the consequence that the requisite intention was presumed unless BHPIO proved otherwise. It was not said that s 298V applied if (as I hold) the employer's state of mind is at most an important evidentiary component of a s 298M case. If I am wrong, however, and intention is an essential substantive ingredient, I would still hold that s 298V has no application in a s 298M case.
79 Section 298K(1) makes the element of purpose a distinct constituent of the relevant delict. Conduct of the kind referred to in s 298K(1) is lawful unless carried out for a reason referred to in s 298L(1). There are a number of other provisions in Part XA which turn enlivening conduct into a delict only when a statutorily expressed purpose or intent is established: see, e.g., ss 298P, 298Q, 298R and 298S. Section 298V applies, in terms, to provisions such as these. An allegation that one or other of these provisions has been breached necessarily involves an allegation that "the conduct was ... carried out for a particular reason or with a particular intent" (par 298V(a)). Moreover, it is only when the enlivening conduct is carried out "for that reason or that intent" that there is a contravention (par 298V(b)).
80 Section 298M is different from s 298K(1) (and such provisions as ss 298P, 298Q, 298R and 298S) in the way it operates. Even if there is not a relevant inducement without intention on the employer's part, the act of inducing the outcome referred to in the section is the delict defined by the statute. Section 298V cannot apply to s 298M because the correct allegation of a s 298M breach is not that there has been lawful conduct that was rendered unlawful because it was done for a particular reason or a particular intent. Instead, the allegation must be that the act of inducing the relevant outcome is itself the contravening act. The effect of the reference in s 298V to "a particular reason" or "a particular intent" is that s 298V is attracted only where a provision in Part XA identifies a specific reason or specific intention as a separate element of the delict defined within the Part. It is the existence of that reason or intent which turns lawful conduct into a civil wrong defined by the WR Act.
81 Of course, if intention were an essential element of s 298M, then the difference that I describe between s 298M and provisions like ss 298K(1), 298P, 298Q, 298R and 298S may seem merely formal. Section 298M could be rephrased to assume a form resembling these other provisions. It seems to me, however, that the Parliament has deliberately framed s 298V to fit the specific form of 298K(1) and like provisions and the fact s 298M could be rephrased is immaterial on this particular question of construction.
82 The outcomes referred to in s 298M are "to stop being an officer or member of an industrial association". They are specific and limited outcomes. The concept of membership is dealt with elsewhere in the Act with some precision: see Part IX, Div 9, especially s 269. There is simply no basis upon which it might be said that s 298M extends to outcomes beyond the cessation of membership or the holding of an office. What s 298M forbids is an employer (or a person who has engaged independent contractors) from inducing an employee (or an independent contractor) to decide to give up his or her union membership or office. The provision does not extend beyond this reach.
83 Finally, I note the observations of the Full Court, at 697, that:
Taken literally, s 298M appears to contain only a single prohibition, that is, that an employer must not, by a threat or a promise or otherwise, induce an employee to stop being a member of an industrial association. That is, if considered grammatically only, s 298M does not speak of an attempt, or of a threat, to induce. But English industrial legislation speaking of inducement has been purposively interpreted so as to pick up a threat to induce. Section 3 of the Trade Disputes Act 1906 (UK) dealt with `[a]n act ... that ... induces some other person to break a contract of employment ... '. It was held in Morgan v Fry [1968] 2 KB 710 at 728-9 that the verb `induces' used in that context included a threat to induce. It is appropriate to place a similar interpretation upon s 298M, since, in our view, this would give effect to the evident purpose of s 298M. This approach is reinforced by the explicit reference to `threats' in the section.
It is (as the respondent conceded) unnecessary to delve into the question whether s 298M covers an attempt, or threat, to induce. This is because, if I found that there has been what in other contexts would be described as an attempt to induce, then that would be sufficient to ground the applicants' claim for injunctive relief under s 298U.
the development and implementation of the wpa proposal
84 The facts of the case must now be considered. Do they show that BHPIO is contravening, or threatening to contravene, Part XA of the WR Act in any one of the ways alleged by the applicants?
(a) Management changes at BHPIO
85 In February 1999, Robert Kirkby assumed the position of President, Steel Making and Energy Materials Division, with responsibility for coal, iron-ore and HBI (Hot Briquetted Iron) throughout Australia, including BHPIO's operations. At this time, Kirkby reported to Ronald McNeilly, President of BHP Minerals (a group within BHP that included the operations of BHPIO). Kirkby had, however, final responsibility for major decisions in the areas under his supervision, including BHPIO. In February 2000, following a corporate reorganisation, Kirkby became Chief Operating Officer of BHP Minerals. He retained his responsibility for those parts of BHPIO's operations relevant to this case.
86 When Kirkby assumed his presidency in February 1999, BHPIO was operating under a plan called "Vision 2005". The plan had been introduced in October 1998 and, according to BHPIO's Vice-President of Human Resources, Jeffrey Stockden, it "focussed on cultural change across the organisation". Vision 2005 was directed to lowering the costs of production whilst increasing the company's iron ore output. The plan included a reduction in employee numbers.
87 In February 1999, following negotiations in Japan, the global participants in the iron ore industry fixed a new global price for iron ore, which, so far as BHPIO was concerned, was to result in a 10 per cent reduction in the iron ore price and a significant drop in tonnages.
88 BHPIO's senior managers met at a conference in February 1999 to discuss Vision 2005. Those present included Kirkby, John Hannah (President of BHPIO from 22 September 1997 to 1 December 1999 who reported to Kirkby) and Stockden (who reported to Hannah until October 1999 and then to his successor, Graeme Hunt, as well as to Stephen Keogh, Vice President for Human Resources in BHP Minerals). At the conference, Kirkby stated that, owing to price and tonnage cuts for iron ore, BHPIO did not have until 2005 to cut its costs of production, and that those cuts had to be made as soon as practicable. The company was, he said, lagging behind its competitors (including its major competitor, Hamersley Iron Pty Ltd ("Hamersley Iron") which also operated in the Pilbara) in terms of profitability, cost per tonne and return on capital. Kirkby charged each of BHPIO's senior managers to examine how cost efficiencies could best be achieved. Kirkby's views about BHPIO's business practices in February 1999 were based on his involvement with the company's iron ore and coal businesses over a number of years. He had worked for BHP in iron ore as General Manager - Newman from 1989 to 1993. Thereafter, he moved into coal and was Chief Executive Officer of BHP Coal up until February 1999.
(b) Voluntary redundancy offers and equipment reduction
89 In an attempt to lower production costs by reducing employee numbers, BHPIO opened a voluntary redundancy program from March 1999. As a result, by October/November 1999, the total number of BHPIO employees had dropped from about 2200 to 1700. The evidence does not, however, support the allegation initially made by the applicants (and ultimately not pressed) that, in making its redundancy offers, BHPIO targeted union delegates in the hope that as many as possible would quit its workforce. Further, the downturn in volume meant not only that BHPIO was overmanned but also that it had an excess of machinery. Accordingly, there were also reductions in mining equipment at this time.
(c) Amending the IR agreement
90 In a briefing paper prepared for Kirkby in mid-February 1999 on employee relations and workplace change issues, Stockden focussed on negotiation objectives for a new enterprise bargaining agreement ("EBA 4") as well as on a perceived need to vary the IR agreement (although he mentioned the possibility of other employment arrangements). On 30 March 1999, the SBU, chaired by Donald Bartlem for most of 1999, met with members of BHPIO's industrial relations staff who included Stockden, Derek Miller (Vice President for Mining and Technical Services, reporting to Hannah and then Hunt), Michael Wheeler (Manager - Employee Relations, reporting to Stockden), and David James (Jim) Netterfield (Vice President - Railways and Ports, reporting to Hannah and then Hunt). Amongst the matters discussed were EBA 4 (see below) and the IR agreement. The SBU was told that the company wished to renegotiate the IR agreement to bring its workplace more in line with its competitors. Stockden gave evidence that BHPIO saw the costs associated with the IR agreement as excessive and, in consequence, sought substantially to reduce or eliminate paid union meetings and "to get union representatives back on the job instead of spending large amounts of time on union business". Accordingly, BHPIO sought to remove from the IR agreement those provisions that gave union convenors, deputy convenors and shop stewards time off to attend to union matters.
91 In April 1999, Wheeler wrote to Gary Wood, secretary of the Mining and Energy Division, West Australian District of the CFMEU, stating:
[T]he need to review cost initiatives across the existing BHP Iron Ore business has never been more critical. Just as we have undertaken reviews within our operational areas there is a need to review our industrial relations arrangements....
Attached is the new Industrial Relations Agreement. As outlined in the meeting of 9th April 1999 the new agreement contains much of the old agreement and still provides a role for unions, convenors and shop stewards within our business and a method of progressing industrial problems.
92 Between April and July 1999, there was an industrial dispute about the proposed changes to the IR agreement. The SBU formally rejected BHPIO's proposals by letter dated 3 May 1999. Amongst other things, the letter stated:
It is our view that unless agreed, any variation to [the IR agreement] should not take place prior to the negotiation of the EBA IV in November 1999.
The letter added:
We are prepared to enter into Bona fide negotiations to review the Industrial Relations Agreement ..., but not to the extent of the unilateral removal of provisions as proposed by [BHPIO].
93 On 31 May 1999, BHPIO gave notice of the termination of the IR agreement. The parties sought to resolve their differences by negotiation, eventually agreeing to variations of the IR agreement on 16 July 1999.
94 Notwithstanding the negotiation of the amendments, BHPIO continued to review its industrial relations arrangements. Stockden stated that the company did not regard the compromise reached on the IR agreement as satisfactory. A significant factor informing BHPIO's ongoing assessment was the process of negotiating a proposed merger with Hamersley Iron.
(d) The due diligence exercise with Hamersley Iron
95 From early to mid-1999, some of BHPIO's senior executives were involved in merger negotiations with Rio Tinto as the owner of Hamersley Iron. The negotiations, codenamed "Project Russia", concerned the valuation of the businesses of each of Hamersley Iron and BHPIO. As a consequence of the negotiations, which continued into late July 1999, McNeilly, who was the main negotiator on BHPIO's side, became aware that, from a cost and efficiency point of view, BHPIO was not performing as well as had been thought. This was, according to McNeilly, a significant matter because:
Iron ore has always been what may be described as one of the jewels in the crown of BHP's operations.
McNeilly's evidence was that Hamersley Iron claimed something between a 20 or 30 per cent cost advantage over BHPIO, but he denied that the Hamersley negotiators attributed this to the introduction of WPAs. He did, however, state that Hamersley Iron's representatives
would make observations that we at BHPIO would take months to change something whereas at [Hamersley Iron], if the change looked okay and satisfied business and OHS tests, then a change could take place quickly.
96 In cross-examination, Kirkby also conceded that Hamersley Iron touted its operation as much more productive and profitable than that of BHPIO and claimed that these productivity advantages arose from greater management flexibility at Hamersley Iron, which they said was a product of WPAs.
97 I accept that, as McNeilly and Kirkby said, industrial relations matters were not key issues in the merger discussions. They did, however, emerge as important issues for BHPIO's senior management when it came to compare BHPIO's productivity costs with those of its competitor. BHPIO derived much of its data on comparative productivity from a due diligence process conducted by the parties as part of the merger negotiations. Stockden, assisted by Wheeler and Christopher Winter (Manager, Human Resources - Special Projects), undertook the assessment of Hamersley Iron's human resources management. In an affidavit sworn in these proceedings, Stockden stated that:
I became aware in around March or April 1999 that Hamersley had said that they had a 25 to 30% productivity advantage over BHPIO as a result of their all staff arrangements. This view was as best I recall passed onto me by Hannah and Giorgini who had been advised of that by [Hamersley Iron] representatives in pre-due diligence discussions. Part of my task was to verify this claim. The actual figures were difficult to quantify, and BHPIO had just made major reductions in its workforce through redundancies. I doubted that BHPIO would be able to achieve 25 to 35% improvement by implementing Hamersley's practices or by having Hamersley run its operations, but I considered that BHPIO would be able to achieve a productivity improvement of between 10 and 15% by implementing those practices. In inspecting that due diligence material I do not recall any material on the level of union membership at Hamersley.
98 In cross-examination, Stockden readily conceded that BHPIO was interested in what its managers perceived to be "the outcome of the flexible working arrangements that had been achieved under a non-collective arrangement". He further accepted the proposition that:
the lesson that [he] learnt from Hamersley was that if you could exclude the third parties, i.e the unions, there was the prospect of getting better flexibilities and therefore greater productivity.
Stockden agreed that the due diligence exercise established that "the level of the Hamersley Iron workforce covered by the individual workplace agreements was all but 12 or 13 employees" and that Hamersley Iron "didn't have a lot of direct involvement with unions". He conceded that the due diligence exercise was probably "the precipitant" which led BHPIO to go down the path which ultimately led to the offer of WPAs. I accept Stockden's evidence (although Kirkby expressed a contrary view on the nexus between the due diligence exercise and workplace agreements). Stockden's evidence was not only consistent with the documentary record, it was also corroborated by the evidence of other BHPIO managers. Further it was borne out by the subsequent course of events.
99 Although involved in merger discussions on the technical and operating side, Miller was also aware that Hamersley Iron was making these claims. He deposed:
I was aware that [Hamersley Iron] was making a claim that it was getting around 20% better efficiency and productivity out of its workforce than BHPIO because of the fact that they had an all staff arrangement. I gleaned my knowledge of the 20% efficiencies claimed by [Hamersley Iron] in my discussions with my counterpart at [Hamersley Iron]. [Hamersley Iron] said that it was hard to identify and isolate the exact reasons for the better efficiencies sustained under staff arrangements, but there was just a general perception that people were far more flexible and dedicated to the business goals than under any enterprise bargaining arrangements.
100 In his affidavit, Stefano Giorgini, then Vice President - Commercial BHPIO, summarised what he learned from the due diligence process about the significance of the workplace arrangements at Hamersley Iron in the following passage:
During the due diligence process I became more acutely aware of the gap in the cost structures between BHPIO and Hamersley Iron. Some of the gap, about two thirds of it, related to structural issues such as railing distances and ore to waste ratios. However, there was a recognition by me of the potential opportunity arising from the flexibility of the work force at Hamersley Iron. It was hard to quantify the exact amount of productivity that flexibility gave. It did give them an ability to respond quickly to change. At the end of the process, senior management at BHP were saying to BHPIO `why aren't you as good as the competition'. While the structural issues explained some of this difference, one of the key differences was the flexibility in the work place.
101 Hannah and others presented the outcome of the potential merger findings and the due diligence exercise to Paul Anderson, BHP's managing director and chief executive officer, at a meeting on 13 July 1999. McNeilly, Kirkby, Keogh, Stockden and others were present. On 23 July 1999, Hannah convened a meeting of the BHPIO executive management at Newman to undertake a review of the "learnings of the due diligence exercise". Hannah deposed that he "wanted a laundry list so that we could address the problems one by one".
102 According to Stockden's affidavit:
At that meeting, the view was expressed that the `all staff' environment at Hamersley was more flexible than the environment at BHPIO and led to greater costs savings. It was decided that BHPIO needed to look at its options to improve its overall performance, and needed to develop a strategy to capture productivity equivalent to that of Hamersley. At that stage there had been no final decision by BHP as to the merger with Hamersley. Overheads were produced at the meeting. ... Netterfield said as part of his review that our costs were higher and we required greater flexibilities. He asked to quantify what the `all staff' approach was worth. The meeting concluded roughly that there was a net $51 million gap between the operations of BHPIO and Hamersley. Hannah said during that meeting that the executive management staff were to go away and review costs everywhere. I was to prepare a submission for the scenario where a merger did not take place to capture the `all staff' productivity including taking into account the Section 72A [see below] and the EBA negotiations. This was to be prepared as a `business case'.
I accept this account of the 23 July meeting, which accords with Stockden's handwritten notes of the meeting. The overheads presented at the meeting included the following comment:
We need a detailed understanding of what the work practice differences [between BHPIO and its competitors] are- Can we achieve these work practices with our current structure and union award or is more radical change required?
- Do we have board level support to embark on change?
103 I also accept that by 23 July 1999, Hannah, Miller, Netterfield and Stockden were agreed that there were significant productivity advantages in employing "production employees" under WPAs. That was what Stockden meant by the expression "all staff"environment. They believed those advantages arose from:
the ability to implement the change necessary for the business demands in the economic climate, quickly and efficiently.
104 Hannah prepared a memorandum, with annexures, which drew together some of the threads from the meeting of 23 July. Although this was sent to Kirkby in draft on 29 July, it was not completed until 3 August. By then Hannah had met with Kirkby and others on 30 July. Hence, the final form of the memorandum, which was dated 3 August 1999, recorded the outcome of the 23 July meeting, having regard to the 100 day plan (see below). In this memorandum, which was addressed to the "Iron Ore Executive Team", Hannah relevantly wrote:
Following our meeting on 23rd July, I have pulled together some of our ideas and put them into a plan. Our future is formed by these factors:* Learnings from HI [Hamersley Iron]
* Changes Business Scene as a result of merger talks:
...
The learnings from HI are summarised in the attachments and together suggest a profound shift in the way Iron Ore goes about its business. A more detailed list of findings includes 80 items that require consideration.
...
In the HR/Cultural area there are major gains to be made in moving to the HI workplace culture. Achieving this will take a revolution in the way we select, train and motivate our staff and wages workforce. ...
In an attachment entitled "Human Resources Cultural Issues", Hannah added:
The following learnings were considered:* All staff workforce which allow [sic] flexibility and initiative.
* Capability of supervisors to communicate and to supervise.
* Play to win rather than play fair.
* Cost control and NPV driven decision making.
* Very positive attitude to assuring that all problems can be solved without cost.
* Use of part time labour for part time jobs (Ship line handling and train loading).
...
The discussion was far reaching and came to several conclusions:
* That BHP Iron Ore could not reach its full potential with a unionised workforce. It could improve but the unions would always force a compromise which will prevent achieving the best.
* There is an increasing amount of positive talk about workplace agreements.
* Our supervisors and foremen fall short in communication. Real communication is done by the General Managers and Managers.
* HI have a significant edge in workforce flexibility - they do not have the productive edge in material movement, train cycle time or tons sold per employee. This suggests that our target should be to beat them at the productivity game - and to do that we need the edge of workplace agreements.
* The actions required:
* Complete a workplace agreement package and an action plan to be ready for opportunities presented by the EBA, and
* Review supervisor competence and prepare a plan to improve competence across the board in [these] key areas: ...
* Plan the EBA Strategy against the benchmark of workplace agreements
Evaluate the costs and benefits of a reactive strategy to achieve workplace agreements.
(Emphasis added)
A schedule to the 3 August memorandum set out monthly objectives. Listed amongst the objectives for August 1999 were "Kick-off HR Cultural Issue" and "Review Group to complete EBA Strategy" and, for October, "EBA Negotiations start - use benchmarking to focus the process on key needs".
105 Hannah, who was one of the prime movers for WPAs, said in cross-examination that:
I had concluded [by 23 July 1999] that that [i.e., WPAs] is what gave Hamersley their edge, but there is a big difference between concluding what gave Hamersley their edge or what might be a desirable end point and making a decision to do it.
In answer to the question,
[B]y 23 July, you came to the view that in order to catch up to HI [Hamersley Iron], you needed to have workplace agreements, as you say in this document; that is where you'd got to on 23 July, isn't it?
Hannah said:
That was a working conclusion. There is a long way to making a decision to do it.
Hannah was also asked:
On 23 July you had decided, having seen what you had seen at Hamersley, that that was the road to go and all you didn't know was the model or the style of car that you needed to get to take you down the road; that is right, isn't it?
He replied:
No, it is not because you have got to understand all of the ramifications. That is a working hypothesis. Hamersley data said this, that is a working hypothesis, and now we need to prove it. We spent a lot of time on an EBA alternative.
Hannah was further asked:
Can I suggest to you that from that time onwards the EBA was always a fall-back position to cover the possibility that the workplace agreements couldn't be implemented?
He answered:
No, we started out with the workplace agreements being a fall-back. We started the other way around.
As already said, I accept this evidence, particularly as it is borne out by the evidence of other BHPIO witnesses (and the documentary evidence) to the effect that the negotiation of EBA 4 remained at the forefront of BHPIO's discussions at least until September 1999.
106 The union applicants made much of Hannah's statement about "a unionised workforce". (The same statement appeared in an overhead slide presented, presumably by Hannah or at his direction, at a senior management meeting on or about 4 August 1999.) Hannah deposed that:
What I was referring to here, in my own words, was a workforce working under an award/EBA structure with unions doing the collective bargaining, with the need to deal with and negotiate with union officials and convenors whenever change or anything new was proposed.
In cross-examination, Hannah was asked:
You have referred to a unionised workforce and I put it to you that what a unionised workforce means is a workforce that are members of the union?
He answered:
No, it refers to all of the elements. It has nothing to do with whether people are union members or not, in my view.
In cross-examination, Stockden stated that, in the context in which it appeared, he had understood Hannah's expression "unionised workforce" to signify "union collective-type arrangements, awards, EBAs, IR agreements". He also categorically denied that there was, at the meeting of 23 July, any discussion of union membership. (As far as Kirkby could recall, the relevant passage was not communicated to him, although Hannah's evidence indicated that it was.)
107 I accept that the expression "unionised workforce" was not intended by Hannah nor understood by readers like Stockden to refer to union membership as such. Hannah's memorandum must be read as a whole. As it recorded, it was his attempt to "pull together" the ideas that had been canvassed at the 23 July meeting. I accept that, as the context indicated, the expression referred to the capacity of unions, representing a collectivity of BHPIO's employees, to negotiate employment conditions on behalf of the collectivity.
108 The same set of slides described one of BHPIO's industrial relations objectives as being "zero negative impact of unions on our business". I accept that this involved, as Hannah deposed, the acceptance of unions "as part of the business but to have no negative impact from them". He added:
By zero negative impact I meant that the unions would not slow down the change process and they would not impede getting work done efficiently. I considered then that you can broker these sort [sic] of arrangements with the unions. It would mean that the unions would have to change the way they went about their business.
109 Keogh said in cross-examination that he thought that the expression "zero negative impact" might have been his and that it meant "that the dealings with unions and the industrial relations processes ought to add to your business performance, not detract from it". Nothing turns on the question of authorship.
110 Stockden's evidence of his understanding of "zero negative impact" was to similar effect. Indeed, any other reading would be inconsistent with the rest of the contents of that and other slides. For example, another overhead read "NEAR TERM ACTIONS - A PROPOSAL" and listed the following:
1. Minimal Award2. Minimal EBA (12 months)
3. No base rate increases (staff and wages)
4. Introduction of variable pay arrangements for all staff and wages
- focus on performance
- `staff like' appearance
- allow for focused communications
- measures
5. IR Agreement - remove; replace with general recognition of unions' right to represent/some consultation
6. Remove employees who exhibit unacceptable behaviour
7. Select some high profile symbolic changes
That is, the slide confirms that BHPIO was still seriously considering negotiating with the SBU for changes to the award and an EBA 4 that would yield the lower productivity costs the company sought. I accept that the use of "zero negative impact" did not signify an intention on anyone's part that the unions were to be removed from BHPIO's workplace entirely.
(e) Project Phoenix - BHPIO reviews its operations
111 On the day the merger talks finally terminated, 30 July 1999, there was a one-hour ad-hoc meeting involving Hunt, Kirkby, Hannah and Giorgini to discuss what would happen with the respondent. Kirkby spoke to those present about the need to increase BHPIO's profitability. Kirkby told Hannah that BHPIO had to move to bridge the gap with its competitors and requested him to prepare a "100 day plan" (which later became known as "Project Phoenix") to close that gap. This led Hannah to set up teams to look at various aspects of the company's operations, including employee relations. The review was to be an all-encompassing one. Kirkby's plan was that he would receive a formal report on the review's progress every 25 days of the 100 day plan.
112 About the same time, McNeilly told BHPIO management, including Kirkby:
[W]e had been presented with a business model as to what can be achieved at iron ore. We had valued our business on net present value and [Hamersley Iron] said we were worth much less. I charged the management, including Bob Kirkby, with delivering the business outcomes in the business model that set the valuation that we had presented in the negotiations. That is, I wanted our business to be worth what we had said it was worth. Arising out of this a program was developed that was designed to significantly improve the performance of BHPIO's operations, codenamed `Project Phoenix'.
Whilst McNeilly was aware of the objectives of "Project Phoenix" in operating and cost terms, the implementation and execution of the program were left to Kirkby and BHPIO's management.
113 On 2 August 1999, BHPIO's executives met in Perth to discuss the 100-day plan. Hannah told those present that Kirkby had requested that they prepare such a plan, designed to close the gap between BHPIO's and Hamersley Iron's cost of production. Most operational issues were to be considered, including human resources. Hannah met Stockden the next day to discuss what sort of EBA 4 would meet the business case. In his notes of that meeting, Stockden wrote: "90% Deal would satisfy". He said in cross-examination that this meant "90 per cent of what we wanted in our optimum EBA would satisfy".
114 Also on 3 August 1999, Hannah produced the final version of his memorandum, discussed above. The extent to which the final version differed from the draft sent to Kirkby on 29 July is unclear.
115 On 4 August 1999, there was an executive management meeting, attended by Hannah (and his direct reports) and Keogh. An agenda, circulated before the meeting shows an item next to Keogh and Stockden as follows:
HR/Employee Relations- What are the advantages/disadvantages of workplace agreements?
- How do you write an EBA to get the same result?
- Update on Industrial Agreement Change
- Supervisory/management competency
- What are our core competencies?
- Cultural aspects that need to be addressed
116 There was a presentation at the 4 August meeting about bridging the performance gap between BHPIO and Hamersley, which included the reference to "Zero negative impact of unions on our business - By the end of the Year". This is discussed above.
117 Around this time, Stockden was coming to the view that reward systems for employees were important and that BHPIO needed to adopt performance pay systems. He discussed this and related matters with Keogh on 5 August. In mid-August, presumably at Stockden's direction, Winter prepared a briefing paper which considered how performance pay might be introduced into an enterprise bargaining agreement. Stockden discussed "EBA Strategy" at a meeting with management at Port Hedland on 10 August 1999. On 13 August 1999, as part of Project Phoenix, Keogh gave a presentation to Anderson at a meeting also attended by Kirkby, Hannah and Hunt. According to Keogh, he told Anderson that:
as the EBA was up for negotiation in the near future when it expired, BHPIO was going to put forward an ambitious agenda. If it was not able to achieve the big catch ups required in that negotiation, and the unions would not come at this approach, then it was proposed that BHP offer workplace agreements. At this stage BHPIO, as far as I was aware, were still planning on EBA negotiations. I spoke to the presentation document that was shown at this session.
In the presentation documents, reference was again made to the object of "Zero negative impact on the business from unions and `IR processes'". The first items under the heading, "Scope out `100 day' action plan", were "Minimal Award" and "Minimal EBA". Reference was made to "All staff equivalent", an expression which, according to Stockden, meant an EBA that generated the same benefits as an all staff (i.e. WPA) system. Mention was also made of "union briefings" and "union discussions", as was a briefing with the ACTU. At this stage, it is plain enough that BHPIO's managers were contemplating union involvement in the development of the workplace. Mention of "draft individual contracts" appeared under the heading "Other actions", which was consistent with the evidence given by BHPIO's managers that BHPIO at that time regarded the offer of WPAs as its secondary, or fall-back, position.
(f) The commitment to WPAs
118 Plainly enough, BHPIO's primary concern at the end of July 1999 was to catch up with Hamersley Iron's greater productivity. The evidence establishes that by 23 July 1999 BHPIO's senior managers considered that WPAs contributed to Hamersley Iron's better productivity but that BHPIO's managers considered their introduction was no more than one possible option. I accept Stockden's and Hannah's evidence on this point. I also accept, as Hannah and Stockden said and as Hannah's 3 August memorandum confirms, that, so far as the company was concerned, the primary object at that date was the negotiation of an enterprise bargaining agreement capable of delivering the productivity outcomes it wanted. So far as the unions were concerned, the company's basic object was limited to diminishing the unions' capacity to interfere "negatively" in its operations. I accept that BHPIO's senior management was not at this stage concerned with the issues of union membership.
119 Hannah stated that BHPIO senior management began exploring "the practicalities of how to make workplace agreements happen" around 23 August 1999. This was consistent with the evidence of BHPIO's other senior managers. Keogh deposed that:
In my own mind, by late August, there either had to be a revolutionary EBA or workplace agreements. I was aware that there was planning going on within BHPIO for the offer of workplace agreements. I came to the view thereafter in September and October that it was a waste of time to attempt to negotiate a revoluntary EBA.
120 Stockden's evidence was also that he "was starting to form the view that what was required by BHPIO was not going to be obtained in negotiations with the SBU for a new EBA" about 23 August 1999. Miller's evidence was that he reached a personal view sometime between late September and mid-October 1999 that WPAs were "the way to go". Miller, who was a particularly knowledgeable and credible witness, reiterated this in cross-examination. Netterfield gave evidence that, in August 1999, he "started to form the view that there were better alternatives than simply attempting to negotiate with the unions for another EBA", although he was at that time still recommending a "tight" EBA 4. This was because "at that point in time, [he] didn't believe that BHP would be so radical as to offer workplace agreements or support workplace agreements".
(i) First Review - August 1999
121 The first review of Project Phoenix occurred in Perth on 23 August 1999. Stockden made a presentation, which relevantly replicated the presentation made by Keogh and Stockden on 13 August, in which he principally proposed what he termed an "all staff equivalent". This involved the negotiation of an enterprise bargaining agreement that would yield the equivalent of Hamersley Iron's "all staff" workforce. He did, however, refer to other possibilities, including WPAs. Stockden deposed, and I accept, that as at 23 August BHPIO was directing itself to "a minimal EBA/minimal Award" and WPAs as "a fall back if BHPIO failed to achieve its wishes from EBA negotiations". Stockden's evidence was that by this date he was forming the view that, whilst EBA 4 might achieve many of BHPIO's objectives, it would not be able to secure all that the company wanted, including the elimination of the IR agreement and the introduction of performance-based pay.
122 The evidence of BHPIO's other senior managers was consistent with Stockden's position. Given that they had not yet formed a definitive view, I accept Kirkby's evidence that at this first review:
whilst generally aware that individual contracts were an option, the possibility of their introduction was not either a direction of mine or an option that I had considered in any detail. I was waiting for recommendations on a range of matters from BHPIO.
(ii) The Section 72A case and the ACTU
123 The course of BHPIO's decision-making must be viewed against the backdrop of a demarcation dispute between the state AWU and the state CFMEU arising out of Bartlem's termination, reinstatement and resignation from the state AWU in mid-1998. Bartlem, who had been an organiser for the state AWU, subsequently began working for the state CFMEU. A substantial number of state AWU members resigned from that union around the same time, and many subsequently joined or purported to join the state CFMEU. The dispute was brought before the WAIRC under s 72A of the WAIR Act in December 1998.
124 In April 1999, Kirkby and other BHPIO managers met with ACTU officials, Gregory Combet and Robert Kelty, as well as representatives of the AWU and CFMEU to discuss union representation issues, including the demarcation dispute. The ACTU proposed that the unions be allowed to represent anyone they could sign up, which proved unacceptable to BHPIO. Kirkby deposed that he said something at this meeting along the lines of "union representation at BHPIO was in a shambles and this was making it more difficult for BHPIO". Keogh gave evidence corroborating the fact that Kirkby made such comments.
125 Kirkby deposed that from April 1999 he saw as an emerging issue, whether union representatives really represented the employees they claimed to represent. He said that he gained this perception from his conversations with BHPIO's managers including Hannah and Stockden. The applicants challenged this evidence in cross-examination. Whilst it is plain enough that, as Kirkby conceded, he had little recollection of any specific conversations and that he was seeking to reconstruct what had happened from the limited amount he could recall, I accept his evidence about his perception in April 1999, since it was in that month that he met with the ACTU's representatives to discuss matters of this kind.
126 In mid-June 1999, the s 72A case was heard before a Full Bench of the WAIRC. The state AWU sought to protect its representational rights. The state CFMEU sought to cover work that had previously been covered by the state AWU. Having applied to be heard on the unions' applications, BHPIO supported the status quo in respect of union coverage. Bartlem, the main witness for the state CFMEU, gave evidence that the ACTU had been unable to resolve the coverage question between the unions. Michael Llewellyn, the Assistant Branch Secretary of the state AWU, who also gave evidence in the s 72A case, described the situation that arose at BHPIO as a result of disputes over union coverage as making industrial relations impossible. In its reasons for decision, which were handed down on 22 September 1999, the Commission found (at p 41) that the "dispute has caused considerable disruption at BHP".
127 In late August 1999, there was a further meeting between Kirkby and Keogh for BHPIO and Kelty and Combet for the ACTU, this time to discuss issues arising from the proposed BHPIO/Hamersley merger. Keogh deposed that:
We gave them a general briefing on the merger and the discussions and the fact that the merger was not proceeding. I recall Kirkby saying that BHPIO was too far behind and that we had to do something about it. He said there had to be catch up arrangements. Either Kirkby or Kelty, I cannot recall which, said something about the necessity for a revolutionary agreement. Kelty and I had had dealings in the past, particularly about the closures of the steel works at Newcastle. I said something about that being a revolutionary deal and we wanted something in line with that to achieve the change necessary.
I accept this account of the meeting, which largely accords with Kirkby's recollection of it and, in general terms, is consistent with Combet's evidence about it.
(iii) The second review - September 1999
128 Stockden's evidence was that on 1 September 1999 BHPIO was still considering having a briefing for union officials on 17 September 1999, with a view to commencing negotiations for EBA 4 in early October 1999. This is borne out by his notes of an industrial relations meeting at Newman on 1 September. These notes also show that the company's managers were comparing the respective merits and demerits of enterprise bargaining and WPAs. Whilst Stockden continued to refer in his notes to WPAs under the heading "Contingency Plan", their introduction was perceived as less unlikely than in July 1999. Stockden recorded:
Union official briefing 17/9?If serious about WPAs low key approach to Award/EBAs.
129 On 10 September 1999 Hannah, Wheeler, Miller and Stockden met in Newman. For the first time, they discussed the possible content of WPAs, such as sick leave, income maintenance, and issues resolution procedures. They agreed that, if BHPIO were to introduce WPAs, then it should do so before EBA 3 expired. Stockden's staff, especially Winter, began to determine how much the introduction of workplace agreements would cost. BHPIO delayed responding to the SBU's request for dates for the commencement of negotiations for EBA 4 because it had not decided whether it would pursue enterprise bargaining or WPAs.
130 The second review of Project Phoenix, being the 50-day review, took place on 16 September 1999, with Kirkby, Hannah, Keogh and others attending. According to Stockden, the primary proposal was still the negotiation of EBA 4, although the offer of WPAs had become "a more serious option". This is confirmed by the overheads presented at the meeting. Under the heading "100-day action plan", the following appeared:
EBA Strategy- Minimal Award incl unlimited use of contractors
- Minimal EBA:
- staff/wages work |
- work changes as required |
- minimal wage increase |
- performance based pay/salary annual review |
- Elimination IR Agreement:
- new document |
- consultation role |
- representation in disciplinary matters |
|
- Commence negotiations early October 1999
Under "100 Day Action Plan - Risks" was:
`No strike' provision removed. Unions reject in total.
Company provides platform for `unions'.
Under the heading "Alternative Strategy" appeared the question:
Offer WPA pre EBA. Why?
Further on, under this heading, was:
Changed circumstances- union reps seeking redundancy packages
- workforce perceptions?
Workforce feedback:
- Expectation Company is going to do something in November
- Loco drivers reluctance for strike action
- Merger - expectation of WPAs
- Supervision confirm some interest
- TWU withdrawn from SBU?
- Employment prospects outside Iron Ore enhanced if WPAs
S72 A Demarcation
- Hopkinson going
- Bartlem low credibility
- Workplace confused/disillusioned?
- Creates vacuum/opportunity?
Clearly enough, whilst EBA 4 and the associated industrial instruments remained the primary focus, BHPIO managers appreciated the risks involved in that strategy, with the result that the offer of WPAs was also being given serious consideration as an "alternative strategy"(also involving risks).
131 In connection with the second review, Kirkby deposed that:
At around this stage I was getting more interested in the option of workplace agreements. I was forming the view at this stage that such agreements may be able to deliver a significant contribution to improved flexibility and performance in the business. The other option I was aware of at that time was reaching a new enterprise agreement which had to be negotiated with the union officials. The negotiation of such a new agreement which would have a life of two or three years would be a significant commitment to the future. I was asking myself at this stage whether this was the right thing to do. I was not sure that the union officials really represented the workforce or were representative of them. I was looking for significant change in the business. At this stage I was forming the view that, historically, people can and do say they will produce certain outcomes and sign agreements to that effect but ultimately do not deliver or are not be capable of delivering. This was a concern of mine with entering into a new enterprise agreement. I also had the view around this stage that the union representatives did not have the confidence of the ACTU officials.
132 Anderson recalled a discussion with Kirkby in the following terms:
At some stage, in August or September 1999, I became aware that Bob Kirkby was considering the implementation of individual contracts at BHPIO. Sometime in mid September, he told me informally that, in order to achieve savings, BHPIO would have to offer individual contracts. I recall saying that it was his call and that I would rely on him to figure out how to do it. I recall saying words along the lines of `quite frankly, I do not think I can add to the debate'. Kirkby said something to the effect that we were going to offer the contracts but he wanted some assurance that any decision to do so would not be reversed by Melbourne - meaning, the BHP senior management in Melbourne. In effect, he needed to know that everyone was going to be comfortable with any such decision. I said that we should take it to the management committee before-hand.
Kirkby said, in cross examination, that he could not recall that statement and that he "certainly hadn't made up [his] own mind until October".
133 I accept that, at some time after 23 August 1999, Kirkby told Anderson that he thought WPAs would best meet BHPIO's productivity objectives. Equally, I accept that he did not actually make the decision to offer them to BHPIO employees until October 1999. The evidence establishes that, although BHPIO's managers were moving towards WPAs from 23 August onwards, they continued to discuss and examine a number of other proposals, including EBA 4, well into October. Bearing in mind the deliberative process engaged in by BHPIO (and what was at stake for the company), it seems to me inherently unlikely that Kirkby would have reached any definitive decision before he received appropriate advice from those reporting to him. This is consistent with McNeilly's evidence that:
Around August or September I recall Paul Anderson and I being advised by Bob Kirkby and iron ore management that, there was increasing interest in the workforce in individual arrangements and an increasingly conducive environment that would suggest an opportunity existed for the offering of individual contracts.
134 On 20 or 21 September 1999 there was a meeting at Port Hedland to discuss EBA 4 and various workplace scenarios. I accept that this was the meeting at which Miller produced a whiteboard list of scenarios. He gave evidence that there were about fifteen people - senior managers, site industrial managers and industrial officers - at the Port Hedland meeting. Those present included Miller and Stockden, Netterfield, Wheeler, Winter and James Shaw (Vice President - Contract Mining). A Xerox copy of the notes made by him on a whiteboard that day confirms his evidence.
135 According to Miller, there were three principal scenarios under consideration in late September, though two more were added in the course of the discussion on 20 September. The first was a "tough EBA No IRA". This meant no IR agreement as amended, only a minor wage increase, staff doing wages work, 12-hour shifts for locomotive drivers and for rolling stock maintenance. There was to be no compromise. The unions had the choice of either picking up the offer or rejecting it. In the latter event, should the discussions "spin out", the company could proceed to offer WPAs. Industrial action was anticipated. Miller was asked:
Can I suggest to you that when you put this up, your anticipation, as is shown on the first page, was that the unions would not accept a proposal such as this; you had no realistic expectation that they'd accept it?
He answered:
We wrote, `They could pickup there, okay'. There was some expectation but just what percentage is open to question.
He was then asked:
Let me ask you your personal view. You have been there for 25 years. You didn't expect, in any sort of realistic way, that the unions would come at this sort of a proposition, did you?
He said:
I would say there was about a 30 per cent chance that they would have picked that up.
136 The second scenario was "low level roll over EBA", designed to meet the case which might arise if the unions could not agree on their representatives in the EBA negotiations. In this connection, the position of Bartlem as SBU chairperson was noted,
because of the confusion surrounding the leadership of the single bargaining unit. I think not much after this Don Bartlem was taken out of the leadership role of the bargaining unit. It was our view at the time that his position there was pretty tenuous.
The second scenario, so Miller said, did not meet the company's business case. According to Miller's notes, WPAs were to be "dribbled out" in response to a "groundswell". When asked what that meant, Miller said:
At that stage quite a few people were saying to us what about workplace agreements, people who had left the AWU, for instance, over the AWU/CFMEU debacle that weren't in any union. So there was a groundswell of people interested in workplace agreements.
The perceived disadvantage was lack of opportunity for performance pay.
137 The third possibility was to offer staff contracts (including superannuation) as a collective workplace agreement, and the fourth, to negotiate no new EBA and simply roll over the existing one. Finally, the meeting considered delaying EBA negotiations and "just offering WPA in response to groundswell". The fourth and fifth scenarios were added during the course of the meeting and, ultimately, the company chose those paths.
(iv) Third review - end September 1999
138 There was a third review on 28 September 1999 involving McNeilly, his direct reports and Kirkby. Stockden again presented the negotiation of EBA 4 as the primary means for securing change, WPAs being still described as an "alternative strategy". In the overheads presented by Stockden, there was no mention of union membership, although there was mention of "No ideology" and "Freedom of choice" as salient principles. It is also clear that the presentation propounded the idea that the time was ripe for change, notwithstanding that the unions might be expected to oppose it. The description of the "IR Environment" included the following:
* Major downsizing March - Dec 1999* Merger talks created WPA expectation among workforce
* Workforce expectation something is going to happen in November?
* Workforce perception employment prospects outside BHPIO enhanced if on WPAs
* Major changes to IR Agreement June 99 - reducing union benefits
* Union reps requesting personal redundancy packages
* Single bargaining unit breaking down
* S72A Decision - defeat for CFMEU
* Workforce confused/disillusioned - creates opportunity?
139 In the meantime, about 20 September 1999, Hannah sent Kirkby an e-mail (which was not produced at trial) suggesting that BHPIO go ahead with WPAs as a "once in a lifetime opportunity". In explaining what he meant by this, Hannah said:
I considered there was such an opportunity as a number of union delegates had already left the business and a number more were either leaving or had asked for voluntary redundancies. As a result I thought that, in order to have a successful EBA, BHPIO would have to rebuild the delegate structure which to me seemed counter productive. As the unions then stood I didn't know who we would deal with. We were facing tough negotiations and without experienced union convenors those negotiations would have been harder.
140 In cross-examination, Hannah said:
That would be the point where I, shall we say, truly mentally committed myself to the fact that we should do it [introduce workplace agreements] and it was achievable. And after that time, I spent a lot of time on it.
He added:
There was another [subsequent] stage of work in getting a lot of detailed work done and to see if, in spite of all of the ideas and concepts, it truly made sense, and we didn't actually complete that work until some time well into October, when I had made up my mind fully that I could recommend it in all ways.
At that stage, as I recall, BHPIO was still looking at options. I was being kept generally up to date with developments through Stockden, Hannah and Keogh. I was aware at that stage that workplace agreements were a real option and some work had been done on them. I wanted to understand the rules of their introduction and how they could be introduced. I was concerned that if workplace agreements were to be introduced that they would actually improve business performance.
This evidence was challenged in cross-examination. It is, however, consistent with Hannah's and Stockden's evidence that, whilst they were seriously contemplating the introduction of WPAs, the negotiation of EBA 4 was still envisioned.
(g) Moving to WPAs
142 At meetings on 4 and 13 October 1999 at Port Hedland, and 11 October at Mt Newman, BHPIO's managers conferred with supervisors to discuss WPAs and how many employees would be likely to accept them if they were offered. In mid-October, Kirkby asked his managers for some assurance "as to how successful the rollout of offers would be to employees". Miller and Netterfield gave their views. Netterfield's evidence was that, based on his own inquiries plus input from his managers and supervisors, he thought 60-70% would accept over the first three to six months. Stockden recalled an assessment of between 40% and 50% in the first month, with about 25% more acceptances over the next three months. Stockden said, in cross-examination, that BHPIO would not have gone ahead with the offer of WPAs if the level had not been assessed as sufficiently high.
143 As already noted, Miller was an impressive witness. His oral evidence was corroborated by notes and memoranda made at the time. A memorandum of his dated 15 October 1999 and sent to Hannah, Hunt and Stockden confirms the nature of the deliberations that were then taking place within BHPIO at a senior level. The memorandum, headed "Confidential" and "Business Case - Workplace Agreements" relevantly read:
1) An increasingly changing world economic environment needs us to be able to make change more quickly than in the past - we sell in a highly competitive international market and our customers' markets can change quickly.2) In the past we have been too slow to make change - union policy is always to slow change and extract a price for it ....
3) To be competitive we need our workforce aligned with our business, rather than with the union they belong to - hence all workers in the business need to be on the same arrangements (as Staff).
4) We are getting the message that individual employees want a) to ensure their job security, and b) more control over their earnings/increase earnings.
5) There are indications that employees are looking to be more accountable for their work performance.
6) ...
7) More money for performance will, over time, focus people on doing the job they do best better ....
8) ...
9) ...
10) Union officials have agendas often determined by their own career aspirations in union politics and State politics rather than the direct interest of their members' employment.
11) Convenors over recent years have been more concerned with their own privileges i.e. time off work, meetings, trips away etcetera, than the real issues of their members. Because of this they have never been held in a lower level of regard by their members as they do at present.
12) Since March '99 the BHPIO unions ... have been on the back foot.
...
An early and timely introduction of workplace agreements within BHPIO would considerably reduce the ability of any resurgent union to garner serious support for an industrial campaign. Even a 50% take-up of workplace agreements over the next 6 months should be enough to `swing the odds' Management's way.
This is an important point. We would undoubtedly have some management complexities with a 50/50 split arrangement, but the unions would have far more significant difficulties - we would therefore be further `back-footing' them.
`There is a tide in the affairs of men which taken as a flood, leads to fame and fortune.' (Shakespeare) - `if passed up, leads to stuff-ups' (colloquial)
144 On another sheet of paper, headed "Confidential" "Business Case - Enterprise Bargaining Agreement", Miller made an assessment of the case for negotiating EBA 4. He noted:
There is less immediate business risk in the EBA Strategy.
145 There was a Project Phoenix 75-day presentation on 19 October 1999. Stockden presented a one-page report headed "Workplace Agreements - Status Report" which indicated that the outcome of the company's inquiries about employee opinion was that some 50% favoured WPAs. The report recorded that the "Next Steps" were "Final assessment 26 October whether WPA or EBA". Hunt, who had by then been appointed President of BHPIO, made it known to the other managers of BHP and BHPIO that he believed "there would be benefits in the structures and systems available under WPAs". He deposed:
At that point it was decided that we should further investigate workplace agreements and that BHP Iron Ore should get a better idea of how they would work and whether they were feasible. Kirkby was present and said words to the effect that individual workplace agreements were worthy of further consideration but more work needed to be done before any final decision could be made. I then went overseas for three weeks meeting BHP Iron Ore's customers.
Stockden's notes of the meeting on 19 October 1999 recorded that "RWK agree put to Minerals Committee tomorrow".
(h) The decision to offer WPAs
146 On 22 October 1999, Kirkby told Stockden that no final decision could be made on whether to offer WPAs until after the BHP Minerals management meeting on 15 November 1999. On the same day, however, Kirkby attended a BHP management committee meeting where he was able to raise his proposal to introduce WPAs. There were about twenty-five of BHP's senior managers in attendance, including Anderson. Kirkby deposed:
I told the committee that there was broad ranging review on improvement of the activities of BHPIO, one of which changes was to working arrangements. I said at that stage there was turmoil amongst the union representatives and that any new enterprise agreement had to be negotiated with a disorganised group. I said any change had to be done now. At that stage, my view was that the only managers who understood the proposed changes and what was involved were myself, Keogh and Stockden. I told the committee that the opportune time was present for the making of such offers and that preparatory work had been done. I said that our competitors had already implemented these arrangements and that I believed they would bring us improved productivity and financial performance. I said I believed the risks were manageable and that we should proceed to make the offers. As I recall, Paul Anderson said words to the effect `that's what we need to hear'. I took the attitude of the management committee to be that I could proceed to do this if I considered it appropriate.
147 Anderson said "something along the lines of `if any of those present have a problem with this, they should raise it now'". He also asked whether anyone:
had a problem with turning the matter of individual contracts over to Bob Kirkby and leaving the issue to him to deal with.
148 Anderson said that, so far as he was concerned, the matter was up to Kirkby. He said that he "understood it to be the consensus of the meeting that Kirkby needed to do what he had to do to make the business competitive and, if that meant individual contracts, then so be it." Anderson said, and I accept, that he heard no more of the matter until the Friday prior to the proposed Monday mail-out of offers when Kirkby told him that the mail-out was about to begin.
149 McNeilly said that he trusted Kirkby's judgment. In relation to the 22 October meeting, he deposed:
I already knew what was going to be proposed as Bob Kirkby had spoken to Paul Anderson and me before that meeting. Bob Kirkby had advised us that, the management and senior staff were of the view that the environment was conducive to moving towards individual contracts and that there was enthusiasm and interest on the part of management and senior staff for this to occur.
He added:
We had confidence in Bob Kirkby and his management team. They were very experienced and held a strong belief that it was time to offer the opportunity for individual contracts to our iron ore workforce in Western Australia.
Later in the day on 22 October Kirkby telephoned Stockden and told him that the situation had changed from the morning and that BHPIO could proceed to offer WPAs if it decided to do so without the need for further approval.
150 On 26 October, Stockden attended a meeting in Mt Newman with Hannah, Miller and Miller's direct reports to assess again the likely level of acceptance and to finalise the workplace agreements package. There was a like meeting at Port Hedland on 27 October, this time with Netterfield and his direct reports. There was a meeting in Perth on 28 October attended by, amongst others, Hannah, Netterfield, Miller, Stockden and Keogh. The agenda for that meeting relevantly read:
* Decision to go or not.* If go then what is the best date. Issues:
-Bob's schedule. Jch to check - Bob wants to be in country
-Before or after EBA discussions
-First date is Nov 10 given the 100 day meeting is on the Nov 8
151 Hannah deposed that at the team meeting on 28 October "we recommended that we were ready to go". He gave evidence that:
The schedule for making the offers was laid out. We were working to a timeline, but with an option to shut down the process if we wanted to. [I] knew that if we delayed making the offers too much after 1 November 1999 it would be difficult to turn back because the offers would have become very close to being public. [I was] prepared to turn back if the business case changed in some way, that is if the long term benefits were not going to be achieved.
In cross-examination, he said:
On the 28th I was convinced, committed, that were we ready and went back on that [to Kirkby]; `I'm ready. Is that approval still good'.
152 Hannah's evidence was that he viewed each of Kirkby's earlier approvals as "as conditional, if we could do it". He added:
On the 28th we decided that it was achievable, that we could do it, and I went back to Bob and I said, `Bob, we have decided we can go, are you still in agreement'. Essentially that was the process.
When asked
Isn't the case that on the 28th the only thing that your committee was doing was putting together the package that would go into the workplace agreements and between the 28th and when you introduced them, your concern was to put the package together?
Hannah answered:
We'd been working on the package for a long time. Certainly the package was important, our most up-to-date view on whether it was achievable. For me, the 28th was a watershed time.
I accept Hannah's evidence. It is consistent with the e-mailed agenda notice set out above and with the evidence of other BHPIO managers. Stockden said:
At that meeting, we decided to finalise the offer package and to cost the package. At that point, we had not decided upon an offer date. ... Whilst I had the view at that time that the offer of Workplace Agreements was to proceed, this was still subject to Bob Kirkby approving the form of the package.
153 On 30 October 1999, Stockden went to Newman to finalise salaries and put the finishing touches on the proposed packages. On 3 November, there was a telephone conference call involving Hannah, Netterfield, Stockden, Giorgini and others, during the course of which it was agreed that the offers should be rolled out on 11 November if they were indeed to go ahead.
154 Kirkby did not know, and could not have know, the details of the workplace agreements package before 30 October. For one thing, they were not worked out before that date. He recognised that WPAs were going to be more expensive than an EBA settlement in salary terms, and there was a question of how much to pay. He said, and I accept, that he wanted to see the exact nature of the package before he gave the go ahead.
155 The offer package was sent to the printers on 5 November 1999. The 100-day presentation for Project Phoenix was on 8 November 1999. Those present included Kirkby, Hannah, Stockden, Miller, Netterfield, Keogh, Giorgini and Hunt. Stockden made a presentation on the offer and the roll-out schedule and set out the details of the whole package. Someone from Giorgini's group presented a document entitled "Phoenix Value Add Analysis" which showed the estimated costs and benefits of the WPAs. It identified at least a 26c - 38c per tonne costs saving. This represented about 3 per cent of BHPIO's total costs. Stockden deposed that everyone present agreed that the roll-out should go ahead on 10 November. Hannah confirmed the package and its readiness. Kirby gave the go-ahead on making the offers. Kirkby said that it was not until then that he was brought up to date on the details of the workplace agreements package and was in a position to approve formally the offers of WPAs. I accept his evidence in that regard. It is consistent with the course of events and the evidence of BHPIO's other managers, especially Stockden.
156 Kirby's evidence concerning the decision-making process was challenged in cross-examination. For example, counsel said:
I come back to the point I put to you originally. You made up your mind in mid-September that, in order to achieve the outcomes, you needed to go with the workplace agreements, you weren't sure exactly how to implement them, and from there on you had your Project Phoenix people find out: how do we do it, will it be accepted, and if you got the positive answers to those, then you would go ahead and it was only if you got negative answers to that that you would return to the collective bargaining. Is that a fair summary?
Kirkby responded:
That's getting close to a fair summary.
The witness is not to be understood as assenting to the proposition that he had decided to proceed to introduce WPAs in September 1999. The substance of his evidence remained the same: although he favoured their introduction as early as September, he did not decide that they should in fact be introduced until after the package had been worked out and costed.
157 By letters dated 9 November 1999, BHPIO wrote to all its employees bound by the Award offering them WPAs pursuant to the WPA Act. The offer was made to all employees bound by the Award other than those who had confirmed their acceptance of an offer of voluntary redundancy as part of BHPIO's restructuring program or implementation of driver only rail operations. The package that was sent to each employee included a letter offering the employee a "staff position" with a new title upon the condition that the employee sign an enclosed WPA to be registered under the WPA Act. The letter set out a new total salary and other benefits, and stated:
Should you accept this offer your conditions of employment will be in accordance with this letter of offer, the attached Workplace Agreement and Staff Contract of Employment.
In addition the letter advised that:
[Y]our entitlement to annual leave (including airfare travel assistance), sick leave and long service leave accrued to date will be preserved and recognised in your staff position.In addition, under the Staff Sick Leave benefits, you will be entitled to salary continuance during absences due to illness or injury to a maximum period of 12 months. As a result, if you accept this offer, you may elect, if you wish, to have your accrued sick leave paid out.
158 Also included in the package were an Explanation of Offer; "Changes at a Glance - A Comparison between Award and Staff Employment"; and "What the Change Means for You: Key Questions and Answers on the Staff Employment Offer". The "Key Questions" document relevantly stated:
It is your choice as to whether you are a union member - this is not affected by your accepting the staff offer....
Your acceptance of the offer is completely up to you.
If you do not choose to sign the Agreement, your employment will continue on the current terms and conditions of employment under the Award and the EBA.
159 The "Staff Contract of Employment" advised:
You are required to comply with all the Company's Staff Handbook, workplace policies and procedures as amended from time to time.
Employees were advised in the material sent to them that the Staff Handbook provided:
An employee is entitled at any stage of [an issue resolution process] procedure to have in attendance a work colleague to assist them in the progression of the issue.
(i) Negotiations relating to a new EBA
160 EBA 3 was to expire on 25 November 1999. The SBU began taking steps to bargain collectively for EBA 4 in March 1999. As noted earlier, there was a meeting on 30 March 1999 between the SBU and members of BHPIO's industrial relations staff, including Wheeler and Miller. One of the items on the agenda was EBA 4. Although witnesses gave differing accounts of what was said at the meeting, I am satisfied that Wheeler stated, at the least, that there would be no wage increase in EBA 4. I do not accept, as one witness said, that Miller said at that meeting or at any other in mid-1999 that unions were then seen by BHPIO as third parties in the regulation of employment matters. The statement, which Miller denied making, was not mentioned by any other witness. There is nothing else to support the assertion that it was made at that time.
161 By mid-1999, the unions were making repeated requests to set down a timetable for meetings to negotiate EBA 4. The company did not respond. Wheeler stated that he was unable to obtain a coordinated set of dates from Stockden, Netterfield and Miller and, so far as he knew, BHPIO had not undertaken any detailed work on the conduct of the EBA negotiations. Wheeler was correct: prior to the end of July 1999 none of BHPIO's senior management had turned his mind to the development of EBA 4. The relevant personnel were occupied with tasks associated with a contemplated merger with Hamersley Iron, particularly the due diligence exercise discussed above. Stockden summed up the position, saying that the mid year was too early to fix a timetable because:
In June, given the agreement expired on 25 November, it was too early to commence negotiations. We hadn't formulated our - I think we were in the midst of the merger, or starting to go into the merger discussions at that time, we'd just come out of a disastrous market result in terms of our ore markets, there was a huge focus on what workplace changes we need to make as a result of that market turn and we were not even contemplating EBA issues at that time.
162 There were no further discussions about EBA 4 until mid to late August when Bartlem and Wheeler spoke again, particularly about the matters BHPIO wanted addressed. Bartlem wrote to Wheeler on 31 August 1999 about a possible timetable for the commencement of EBA negotiations and allied matters. He received no written response, although he subsequently spoke to Wheeler. On 20 September 1999, Bartlem again wrote to Wheeler about the negotiations for EBA 4. He later spoke to Wheeler about the status of the EBA negotiations and about the possible introduction of WPAs. Although Bartlem and Wheeler differed about the precise content of this conversation, Wheeler admitted that he mentioned his difficulties in coordinating BHPIO's negotiating team and that he had in fact expressed a "personal view" to Bartlem that BHPIO would not introduce WPAs. Wheeler said much the same to Llewellyn of the state AWU at about the same time. He turned out to be wrong. He deposed that "up until late October, I was operating under the assumption we were on the road to a new EBA". His evidence was that he was working on the details of the WPA proposal during October. For the purposes of these proceedings, Wheeler's actual state of mind does not matter much. Save for the meetings on 10 and 20 or 21 September, he was not a party to discussions about WPAs, and certainly not a party to those at senior management level involving Kirkby, Hannah, Hunt and Keogh and their reports leading to the WPA proposal and Kirkby's endorsement of it.
163 There were no negotiations with the unions about EBA 4 during 1999. As it happened, BHPIO made no attempt prior to offering the WPAs to sound out the unions on whether they would be receptive to the negotiation of an enterprise bargaining agreement that would deliver the efficiencies the company sought. Stockden deposed:
It is my opinion, and was at the time, that if we had told the unions that BHPIO was considering offering workplace agreements to its employees, a dispute would have been guaranteed to result. ... Informing the unions that BHPIO was considering workplace agreements had a potential to create industrial disputation, and would have made whichever course BHPIO decided upon much more difficult to achieve. For this reason, BHPIO did not inform the unions until the final decision to go ahead with either the EBA negotiations or the offers of workplace agreements had been made.
I accept his evidence on that point. Further, as Stockden said in cross-examination, BHPIO chose not to proceed with negotiations for a new EBA while at the same time preparing for a different outcome.
164 There can be no doubt that there was a real risk of industrial disputation had the unions had been informed during BHPIO's deliberative process that it was considering WPAs. As Wood deposed:
Through the SBU, senior management of BHPIO were told, on a number of occasions in the period from March to November 1999, that the unions and their members would oppose the introduction of individual contracts and seek to support the continuation of collective bargaining and the regulation of industrial conditions by means of registered collective agreements.
165 By early November 1999, the SBU was worried about the company's failure to begin negotiations and by rumours that it was preparing to introduce WPAs. Wood gave evidence that, although BHPIO never expressly told the SBU that it was planning to introduce WPAs, from mid-1999, it became increasingly clear to him that BHPIO was at least considering their introduction. He stated that he attended a number of union meetings and other union forums between July to November 1999 at which the issue was discussed.
166 On 18 and 19 November 1999, shortly after BHPIO begun to offer WPAs, the union applicants served a Notice of Initiation of Bargaining Period on the company and notified BHPIO of their intent to try and reach a agreement with BHPIO under Part VIB of the WR Act and to have it certified. The bargaining approach was the subject of mass meetings at Mt Newman and Port Hedland on 17 and 18 November 1999. On 25 November, Stockden wrote to Wood, saying
[e]ntering into negotiations for a new collective agreement would be inconsistent with [BHPIO's] position and it is not prepared to do so.
In an affidavit sworn in the proceedings, Stockden explained this stance in these terms:
Offering workplace agreements and negotiating for an EBA at the same time did not cross my mind. The idea is so impractical, that it is just unthinkable. The offer of workplace agreements and negotiating an EBA at the same time is impracticable because a firm offer of a workplace agreement to all employees was required and there needed to be some settlement of the terms of that offer. If an offer of a workplace agreement was advanced at the same time that EBA negotiations were occurring, then there would be a period of total uncertainty as to the terms of the offer and the possibilities of anything that would be negotiated with the unions. In my view the offer of a workplace agreement would have to come first and without parallel EBA negotiations and this was a view I had at that time. A suggestion of EBA negotiations in the near future would have a similar effect to actually negotiating it. Therefore it was my view that we should advise the unions that there was not to be negotiations for a new collective agreement.
167 BHPIO told its employees that it would be about a year before it would enter into negotiations for EBA 4. On site, BHPIO's managers reiterated that the company was intending to roll over EBA 3 for the ensuing year. BHPIO advised employees bound by the Award that BHPIO would review the terms and conditions of EBA 3 to ensure that they would remain competitive with rates for employees within the mining industry.
168 After the initiation of the bargaining period, the union applicants unsuccessfully sought to open negotiations with BHPIO. On 3 December 1999, they revised their claims in an attempt to achieve some comparability between what was offered under the WPAs and what was being claimed on behalf of employees by the unions. Mass meetings of members held on or about 6 December 1999 endorsed the revision.
169 On 7 December 1999, the AWU gave BHPIO notice under s 170MO of the WR Act, of industrial action in the form of a 24-hour stoppage across both BHPIO's sites on 13 December 1999 and "a peaceful protest" to be held at the respective gates. The AMWU, the TWU and the CEPU gave notices to the same effect. The CFMEU not only gave notice of the 24-hour stoppage but also notice of an overtime ban by locomotive drivers to commence on 12 December 1999. A 24-hour strike took place at BHPIO's Mt Newman and Port Hedland operations on 13 December 1999.
170 On 21 December 1999, the Chairman of the SBU gave notice of further mass meetings of state union members for 12 and 13 January 2000 at Mt Newman and Port Hedland respectively. On 13 January 2000, BHPIO again received s 170MO notices from the applicant unions advising of protected action. On 17 January 2000, the 4-day stoppage commenced at Mt Newman and picket lines were set up. On 19 January 2000 there was strike action at Port Hedland and picket lines were set up. On that day, BHPIO filed an application in the Supreme Court of Western Australia. The picket action subsequently ceased.
bhpio's reasons for offering workplace agreements
(a) The identity of the decision-maker
171 The applicants submitted that the decision to offer WPAs was made by BHP's management committee at the 22 October 1999 meeting and that, since BHPIO had led evidence from only three of the approximately twenty-five committee members, it had not adduced the requisite evidence to rebut the s 298V presumption. The applicants referred to certain observations in IW v City of Perth [1997] HCA 30; (1997) 191 CLR 1, discussed by Madgwick J in Australian Municipal, Administrative, Clerical & Services Union v Greater Dandenong City Council [2000] FCA 1231 at [42] - [46].
172 The evidence established that the decision to offer WPAs was not made by the board of BHPIO, nor by BHP's management committee, as the applicants submitted. On 22 October 1999 Kirkby informed this committee - in what McNeilly called a "process of communication" or "briefing" - of the WPA proposal and of his reasons for supporting it. According to the evidence of Anderson, McNeilly and Kirkby (which I accept), the committee left the ultimate decision whether to act on the proposal to Kirkby, who had final responsibility for major operational decisions affecting BHPIO. Anderson, as BHP's CEO, and McNeilly, as his direct report, were, at least for present purposes, the most senior members of the committee. This also conformed to the understanding of BHPIO's managers who accepted that the final decision would be Kirkby's. At most, as McNeilly's evidence indicates, the management committee declined to object to, or to veto, the proposal. Read in its proper context, this is all that Kirkby can have intended by his use, in cross-examination, of the word "approve". In declining to veto the proposal, however, the committee did not make the operative decision. Kirkby made this decision on 8 November 1999. If the evidence failed to rebut that he acted for "prohibited reasons" as defined in s 298L(1) or established that he had an intent relevant to s 298M, then those reasons or that intent would be attributable to BHPIO: see WR Act, s 349.
173 This case is distinguishable from General Motors Holden Pty Ltd v Bowling (1976) 12 ALR 605. In that case, a decision was taken to dismiss Mr Bowling by the company's directors in Melbourne, acting on the recommendation of a manager in South Australia. Since the directors were not called, the company failed to discharge the onus placed on it by s 5(4) of the C & A Act. In this case, however, one individual, Kirkby, rather than a number of individuals, made the relevant decision.
(b) Kirkby's reasons
174 The evidence established that Kirkby based his assessment of the desirability of introducing WPAs on the advice given him by his managers. Kirkby's evidence was (and I accept) that by 22 October 1999 he regarded Keogh, Stockden and himself as best understanding what was involved in the proposal, although it is plain that he also received advice from Hannah and Giorgini and some information from Miller and Netterfield. Accordingly, I turn first to the evidence of Kirkby's managers, because their views were amongst the matters Kirkby considered in making his decision.
175 Stockden deposed that:
I could see many benefits for BHPIO in improved flexibility, pay for performance, better attitudes and a greater commitment to the business.
I accept that this was a belief that he genuinely held. It was a view shared by all BHPIO's managers who gave evidence.
176 Stockden also believed that, as a result of introducing WPAs, Hamersley and Robe River Iron Associates (which also ran mining operations in the Pilbara) had been able to introduce more flexible working arrangements than previously. He deposed that during the 1990s he had found it difficult readily to obtain union agreement to changes in work conditions or practices. According to him, the process of reaching agreement "through the existing industrial structures often involv[ed] lengthy negotiations against a background of possible industrial action". As will be seen, other managers said much the same thing.
177 Stockden said that, at the time the WPA offers were made, he believed that many of BHPIO's employees were dissatisfied with their union representation, partly on account of the conduct of the state CFMEU and the state AWU in competing for members. From at least 16 September 1999, he considered that, following the merger discussions, there was an expectation in BHPIO's workforce that BHPIO would offer WPAs eventually. Other managers agreed with him. Stockden denied that, in making the WPA proposal, he intended to encourage employees to leave the unions since, in his view, union membership was "not incompatible at all with the benefits in employee attitude" that he wanted to achieve. According to him, the proposal had nothing to do with union membership at all.
178 Keogh also denied that, so far as he was concerned, union membership was a relevant consideration in his support for WPAs. He deposed that:
I never heard anyone else in the process of decision making refer to wanting to encourage people to resign or leave a union as being part of or the reasons for the offering of workplace agreements or the non negotiation of a new EBA. As far as I was aware, the purpose of offering workplace agreements was to achieve world class work arrangements and relationships with individual employees which would result in improved productivity and performance and help achieve the business objectives of BHPIO. I believed that BHPIO's prospects of achieving those objectives were significantly improved if workplace agreements were introduced, whether or not employees were members of unions.
Keogh said that, so far as he was concerned, it was "no business" of BHPIO whether its employees were or were not union members. He stated that he believed that, even with the introduction of WPAs:
the unions would have representative roles not only in respect of those employees [who did not accept the WPA offers], but could also have a role in representing employees that did accept workplace agreements, both under the legislation in Western Australia and also in the grievance procedure if employees so wished. For example, employees could utilise a union member in the grievance procedure in the workplace agreement as the colleague could be a shop steward or union representative. That is a matter for the individual employee and not for BHPIO to prescribe.
179 Keogh deposed that he had come to the view that attempting to attain the company's productivity and efficiency objectives through "a revolutionary EBA" was a waste of time, since there was continued "union infighting" and "poor attitudes and behaviours of the part of union officials" and some employees. He said:
Workplace agreements at BHPIO in my view would produce greater individual ownership of jobs and more constructive relationships between supervisors and employees. Such improved attitudes and behaviours have a significant impact on the job as employees then become committed to performing the task rather than negotiating change or being obstructive in relation to change. Collective agreements at BHPIO through the mechanism of EBA's [sic] and IR agreements just put in place a whole lot of processes through which change is delayed and frustrated. ... The value in workplace agreements was that not only could they override enterprise agreements, IR agreements and awards, in my view they would create an environment where the involvement of individuals and the removal of the structures would improve the innovation that could be obtained from individual employees, would assist in the speed of decision making, and would encourage and assist employees in adapting to changed circumstances and making their own decisions. Further, a workplace agreement could allow the offering of a full salary which would eliminate the overtime culture.
180 In cross-examination, the applicants' counsel said:
The reason why you felt that was because you expected that by introducing the workplace agreements, you would create a situation where the employees would regard themselves as staff and would align themselves more with the needs and directions of the business than they had done under the previous system?
Keogh answered:
I would not say it that way at all. We needed a quantum leap. We'd worked in the traditional enterprise agreement manner for some time and at Iron-Ore we had to take a quantum leap in business performance - this is all about business performance - and we had a choice. We had the majority of the WA mining industry already on these workplace agreements, reporting great progress to us, and we had our experience in the past, which was not good, and we had to make an assessment about whether we could improve it. We had the unions fighting amongst themselves, we had senior union representatives leaving, we had change. I left Iron-Ore back in 1993-1994 and I got back last year and they were still negotiating driver-only operation and on the basis of all of that, we made a decision to utilise the workplace agreements that were available in Western Australia. That is why we did it. The sort of alignment, etcetera, you talk about there, I believe can be achieved in collective arrangements or individual arrangements....
He went on to say:
The processes were bureaucratic and slow and people took advantage of them....
It is no issue for us whether people belong to a union or not. Our interest is in the work they perform.
181 It is not for me to decide whether these views were sound. It is enough that I accept (as I do) that Keogh genuinely held them and conveyed them to Kirkby in the course of the deliberative process.
182 Hannah's evidence was not materially different from that of Stockden and Keogh. He too said that WPAs were introduced for "business" reasons, for BHPIO "to become efficient and competitive". He deposed that:
As far as I was concerned, the decisions to offer workplace agreements and to move away from collective negotiations were not made with a view to getting people to leave the union. I did not care whether employees were union members or not.
He too gave evidence that he saw a continuing role for the unions in BHPIO's workforce after the introduction of WPAs, although he conceded that they would have a smaller base of workplace support. Hannah's assessment of the merits of WPAs and what they might mean for BHPIO was shared by his successor, Hunt.
183 As part of Project Phoenix, Giorgini and his staff undertook a financial analysis of the potential benefits of workplace agreements. Giorgini deposed:
The concept of workplace agreements was about them being an enabler for productivity improvements to occur. The decision to offer workplace agreements flowed out of a process in which BHPIO looked at a number of options and alternatives.
He added:
I supported the changes. I have no opinion as to whether our employees were members of unions or not. My focus was on the business achieving the best result possible.
He said that his financial analysis was presented to and endorsed by Kirkby. His evidence was not subject to cross-examination.
184 Miller's and Netterfield's evidence on this matter is consistent with that of Keogh, Stockden, Hannah, Hunt and Giorgini. Miller and Netterfield were not, it seems, amongst Kirkby's direct or regular advisers although they did provide information to those that were. Miller's evidence was that he too regarded BHPIO's negotiation of "a workable EBA that could be effectively implemented as very unlikely". This was because the "unions were in disarray", as shown by the s 72A case before the WAIRC (referred to above). He deposed:
My aim in all this process of offering workplace agreements and not negotiating collectively was to improve the performance of BHPIO, particularly at Newman. I considered these steps would improve the attitude and commitment of employees, allow for the speedy introduction of change, provide incentives to employees to perform and remove the need to negotiate every change with union convenors. I do not care whether people are in unions or not. Being a member or not of a union is not inconsistent or incompatible with any of the above benefits.
185 Miller was asked in cross-examination:
Would you agree that if one compared the role that unions played prior to the introduction of workplace agreements at the mine and at the port to the role that is available for them under the workplace agreements regime, that to all intents and purposes they have no role in your workplace?
He answered:
They may have a role. It is not for me to say what their role is, but they maybe need to rethink their position. There have been some articles written on unions needing to, in this circumstance, rethink how they handle their members; they may want to give them financial advice, for instance. There is a number of possibilities that you can think of....
The grievance procedure, they may well want to use a union person as the person that comes with them on the individual basis. They can have a colleague with them.
186 As to Netterfield, it suffices to say that, broadly speaking, his evidence was to the effect that he shared the views of his managerial colleagues. In cross-examination, he said that "[t]he aim of the [WPA] plan was to have a closer working relationship with each individual employee". He too said that he believed that WPAs would lead to an attitudinal change in the workforce - "a shift from the lowest common denominator approach and the ability to make change part of the culture". He deposed that he "wanted to move away from having to negotiate change with union officials and convenors, particularly the changes available in a work group or at a site level".
187 Since he was the decision-maker, Kirkby's evidence was critical. He deposed that:
I have had a long held view that union membership is a matter for an individual employee and is not a matter for the employer. The rollout of offers of individual contracts and movement onto individual contracts was a step that I saw would improve the relationship between BHPIO and its employees and allow the employees to work more flexibly and to be more attuned to the aims and objectives of BHPIO. I considered that the removal of the need to negotiate change with union representatives was desirable and in the best interests of BHPIO. I did not intend by approving the rollout of the agreements and not entering into negotiations for a new EBA to encourage or require anyone to leave union membership. At the time that I approved the arrangements, I held the view, which I continue to hold, that an enterprise based agreement is not a preferred employment arrangement for BHPIO as it still involves and requires negotiation with union representatives who can still hold up and demand a price for any change. I held the view in late 1999, which I still hold, that the introduction of workplace agreements and the movement away from collective bargaining is in the best commercial interests of BHPIO and will deliver benefits over time. I did not consider then nor do I consider now that the benefits that will come to BHPIO will be affected by whether employees are members of unions or not.
188 Kirkby stated in evidence that one of the matters he considered was the advice he received from his managers on the s 72A case which led him to the view that there was "an issue as to whether the union representatives really represented the employees they said they represented". He said that, on the basis of the information being given to him by his managers, he had become more conscious by mid-1999 that the implementation of change in BHPIO's workplace was being frustrated and delayed by union representatives and the need to have their agreement to any proposed workplace change. Instances of alleged union inflexibilities referred to by Kirkby and BHPIO managers are discussed below.
189 Kirkby admitted that in introducing WPAs the company's objective was to release it from having to deal with the unions "over operational issues every time [it] wanted to make a change". Kirkby said, in cross-examination:
As far as change ... we want more flexibility.
That meant, so he said, not having to deal with "union structures". His evidence in cross-examination was:
I was interested in getting rid of bureaucratic and frustrating union structures. I wasn't interested at all in union membership. That is something for an individual. I mean, that is where I stand.
190 Kirkby categorically denied that the issue of union membership of BHPIO's employees was discussed at any meeting concerning the WPA proposal at which he was present or that the issue had played any part in his deliberations. When asked, "Isn't it an issue for you if the individual's continued membership of the union maintains the prospect of you having to deal with union structures?", he replied:
Not necessarily. I want an efficient structure for doing business, and in some places we have efficient union structures.
In the same exchange the applicants' counsel said:
What I am suggesting to you is that you know and your industrial relations people know that if you want to enhance your chances or maximise your chances of keeping away from having to deal with unions, the best way to do that is to create a situation where people leave the union?
Kirkby responded:
Never our objective....
All I can say is I don't know what individuals are going to do with their union membership, and I was interested in efficient structures for doing business. I can't take it any further than that.
Kirkby conceded that the WPAs removed roles from the unions which they had previously fulfilled. This led to the following exchange:
You know that they can't offer any assistance in relation to any industrial issue, once these people have signed. That is correct, isn't it?- - They have their rights as workers.
Yes, but they can't call the union in, you can't get an organiser to come down and speak to the manager and say, `You've mistreated so and so,' or, `You've mistreated that group of people,' or, `We don't agree to that change over there', you can't do any of that?
- - That's right, we were looking for a different process.
I understand that. But they are all services which, up until the agreement, the unions were doing on a daily basis for these people. You know that.
- - Some of them, yes.
And after the agreement, those services are no longer available?
- - Mm'hm.
You understand, as a matter of commonsense, that large numbers of your workforce would say, `If I can't have the organiser in and if the union can't help me, why should I pay my money'?
- - That's their decision.
I know it is their decision, but you are experienced enough in business to know and to expect that that would be the response of a large number of your employees?
- - That, I am not sure of. Maybe you call it commonsense, but I am not sure of that.
(c) Instances of alleged union inflexibility
191 As already noted, the views of Kirkby and other BHPIO managers (as well as Anderson and McNeilly) were said by them to be based on experience with the unions on a number of occasions. In this connection, BHPIO's witnesses principally referred to the s 72A case (mentioned earlier) and three other matters: the contracting out of gardening at Port Hedland, the contracting out of blasting work, and the introduction of driver-only operated trains. Some referred to other matters, such as the coverage of workers at the benefaction plant and the contracting out of drilling operations, but it is unnecessary to deal with all these examples.
192 The section 72A case is, of course, only relevant in this proceeding to the extent that it bears on the evaluation made by Kirkby and his managers of the industrial relations situation in the company's workplace. The case arose out of events in mid-1998 when several hundred BHPIO employees who had been members of the state AWU resigned from it following the termination of Bartlem's employment as AWU national metalliferous mining co-ordinator on 10 July 1998. Subsequently, a substantial number of the ex-state AWU members joined, or purported to join, the state CFMEU. Others joined the state TWU or remained non-union employees. At the relevant time, the state AWU had the classification under the award covering all of these employees. As already mentioned, in their applications under s 72A of the WAIR Act, both the state AWU and the state CFMEU sought exclusive representation rights over employees falling within the state AWU's classification in the award. The fact that BHPIO regarded the dispute as serious is reflected in its discussions with the ACTU in April 1999 at which Kirkby apparently said that union representation at BHPIO was "in a shambles".
193 Kirkby, Keogh and Stockden and Miller referred to disruption and increased industrial action that interfered with the company's operations during the dispute. Whether the stop-work meetings referred to by Stockden actually affected productivity as he believed does not really matter. The fact is that he viewed them seriously and passed his views on to Kirkby. The same may be said of a number of other related matters which Stockden instanced as indicative of industrial dislocation. Stockden's evidence was that the competition between the unions for members created "general discontent" and "increased employee tensions and reduction in cooperation between members of the competing unions". Other BHPIO managers gave evidence to similar effect. Although Bartlem denied the managers were correct in their assessments, I accept that they genuinely held these views and that it was this information that was conveyed to Kirkby.
194 A subsidiary dispute over coverage arose out the company's decision in late 1998 to contract out gardening at Port Hedland as a non-core activity. The decision affected the employment of six gardeners. Llewellyn, for the state AWU, gave evidence that the state AWU had coverage of the gardeners under the award, although only two remained members of the union. According to Bartlem, the others had sought to become members of the state CFMEU or were unaffiliated with any union. BHPIO and the state AWU ultimately came to some agreement and withdrew a notification previously given to the WAIRC. At this point, however, the negotiations faltered, whether because one of the gardeners was to be reduced in classification, as Llewellyn said, or because the state CFMEU gardeners were unhappy with the state AWU negotiating an agreement without their participation, as Bartlem said. It is clear enough that the employees rejected the agreement and BHPIO issued a new notification of the dispute to the WAIRC. At the Commission, the state CFMEU members refused to participate unless their union was able to represent them. Ultimately, a conference was held before the WAIRC at which BHPIO and both state unions appeared and the matter was resolved.
195 Llewellyn agreed that a situation where two unions were purporting to represent the same group of workers "makes industrial relations impossible" and, in this instance, placed BHPIO in a difficult position. Bartlem denied the confusion. Be that as it may, I accept that the dispute led members of BHPIO's management, including Stockden and through him, Kirkby, to form a negative view about the effect of union involvement on BHPIO's efforts to contract out the gardening work. Whether that view was justified is not a matter which arises in this proceeding.
196 On 28 May 1998, Greg Spoonheim, Manager-Mining, notified the state TWU, state CFMEU and state AWU of the company's plans to have contractors perform "the full scope of blasting duties currently carried out by employees". About nine employees were affected by the decision. According to Ross Kumeroa, state TWU convenor, the employees were concerned that they would be transferred to jobs that were not commensurate with their jobs on the blasting crew. The unions took the matter to the WAIRC. The matter was resolved in October or November 1998, with an agreement that the employees concerned would be offered jobs at the mine and, if they were dissatisfied after three months, they could either seek another job with the company or take a redundancy.
197 Stockden and Kirkby both took a negative view of the unions' approach to the dispute. Neither were directly involved in the matter, and both formed their views based on the information communicated to them from other managers. Although Stockden conceded that his recollection of the dispute was in some respects inaccurate, and he accepted the account given by Kumeroa and Llewellyn, he stated that he believed that the unions had unnecessarily delayed the implementation of a sensible business decision. Kirkby too referred to the delay in implementing the contracting out of blasting as an example of the "endless structured negotiations" that hindered the introduction of necessary changes. Regardless of whether their assessments were warranted, I accept that they genuinely held these views about the delay and the inefficiency of the negotiating process so far as it concerned BHPIO's contracting out plans.
198 Stockden and others referred to the negotiation of "driver-only operations" as another example of the delays inherent in negotiating workplace changes with the unions. In the early 1990s, BHPIO sought to modernise its rail technology and negotiate work practice changes to allow a single driver to operate its trains. Similar changes had, it seems, been made by BHPIO's competitors in the Pilbara, Hamersley Iron and Robe. Negotiations with the unions began in 1992. According to Ian Burtenshaw, President Convenor for the Port Hedland lodge of the state CFMEU, by 1994, the union and the company had agreed on a driver-only operation upon the basis that the employees who took redundancies would be paid out at the same rate that the remaining drivers were to be paid. His evidence was that the company retracted the offer shortly before the agreement was to be voted on by the union's members. Burtenshaw, whilst maintaining that there were various outstanding safety issues to be resolved, agreed that the negotiations at this point failed solely because of disagreement about the payment to be made on redundancy. He said, however, that the company was put to no disadvantage because the outstanding safety and technical matters were such that driver-only operations could not have been put into practice immediately.
199 Discussions about driver-only operations recommenced in June 1998. There were a series of meetings in 1998 and 1999, which culminated in agreement being reached in April 1999. Prominent among issues arising in the negotiations were safety concerns and rostering arrangements. Kirkby's complaint was that the practice had been adopted by BHPIO's competitors but "was denied to us for a number of years because of the slow negotiating process". Stockden and Netterfield expressed similar views. Without expressing any view on the reasonableness or otherwise of the company's or the union's position, I accept that Kirkby, Stockden and Netterfield believed that the negotiating process seriously delayed the implementation of driver-only operations.
(d) The accrued sick leave option and the backdating of pay increases
200 The applicants sought to make something of the fact that employees who signed a WPA had the option of receiving a pay-out of their accrued sick leave and that the wage increase for WPA employees was backdated to 28 August 1999, at least for those employees who signed before 3 December 1999. For some employees, the amount received under the accrued sick leave option was considerable. BHPIO managers, particularly Stockden, claimed business or administrative reasons for these aspects of the WPA offers. The applicants invited the Court to infer, however, that the benefits were merely incentives designed to get employees to sign WPAs. This debate was, so it seems to me, of little consequence. This is because such incentives, if that is how they are to be characterised, are no different in kind to any other benefit provided by a WPA, such as higher wages. That is, if the offering of WPAs does not itself offend any provision of the WR Act, then there is no reason why a monetary incentive to accept a WPA would do so. The WR Act does not prohibit employers from encouraging employees to sign WPAs, so long as they do not do so by engaging in conduct which would otherwise violate the Act.
the applicants' case under s 298K
201 The respondent submitted that there was no evidence that the spread of WPAs would, as a matter of fact, diminish the capacity of employees who remained under the award to take collective action. The applicants responded by referring to the fact that, during the second strike in January 2000, BHPIO was able to continue operating with WPA employees, whereas in December 1999, shortly after the WPA offers were made, a strike virtually closed down BHPIO's operations. In light of what I am about to say, it is unnecessary to determine precisely what the evidence established about the effect of WPAs on employees' ability to take collective action. Let it be assumed, for present purposes, that a result of BHPIO's offering WPAs to its workforce was that the unions' bargaining power was reduced and (contrary to my view) that this constituted cognisable injury or prejudice for s 298K(1) purposes. Even if those assumptions are made in the applicants' favour, it seems to me that their case under s 298L(1)(a) and (h) must fail.
202 In written submissions, the respondent also contended that it was incumbent on the applicants to establish that an employee who has been relevantly injured in fact has the union membership that is said to be a reason for the employer's misconduct. As the respondent pointed out, the evidence was that, until the union applicants served bargaining period notices in November 1999, BHPIO had mostly dealt with the state unions with respect to workplace arrangements. The evidence established that BHPIO's concerns centred upon the actions of the state unions and their officers. Accordingly, so the respondent submitted, the pleading, in par 93 of the amended statement of claim, that BHPIO acted by reason of its employees' membership of the union applicants was misconceived. Bearing in mind the decision of the Full Court in Moore v Doyle (1969) 15 FLR 59, that submission has a deal to recommend it.
203 As the applicants said, however, the evidence established that some of BHPIO's employees were enrolled in both the state and federal unions. Members of other state unions were said to be automatically members of the counterpart federal union by virtue of the constitutional arrangements existing between state and federal unions. Accordingly, so the applicants' argument ran, one should not draw too fine a distinction between the state and federal unions. Indeed, they said that BHPIO's managers did not draw any such distinction.
204 In light of the conclusions I have reached on the s 298K aspect of the applicants' case, it is unnecessary to express a definitive view on these particular submissions, save to say, I should not be taken as necessarily accepting the applicants' response as adequate.
205 The applicants' case under par (a) depended upon the proposition that -
A primary, if not the sole aim of BHP [sic] in this matter was to inhibit the exercise of those activities which are central features of union membership.
These central features are, according to the applicants, collective bargaining and union representation of employees where a grievance with an employer arises. As already stated, par (a) relevantly protects only membership as such. Kirkby's evidence established that BHPIO did not do any act "because" an employee was a member of an industrial association. I accept his evidence on this issue. It is consistent with that given by other BHPIO managers and with the considerable documentary evidence adduced at trial. Furthermore, Kirkby's evidence on the point is consistent with that given by McNeilly, to whom he reported directly, and by Anderson, with whom Kirkby discussed these matters. As I indicated earlier, if it were necessary to do so, I would find that BHPIO has rebutted the presumption to which s 298V gives rise.
206 The applicants' case under s 298L(1)(h) depended upon the proposition that
a significant, if not the prime motivation behind Kirkby's decision was the need to escape from procedures under which the union was required to be consulted and negotiated in respect of change in the workplace.
As already seen, Kirkby's evidence was that he decided to offer WPAs because he believed that they were better suited to BHPIO's productivity objectives than the existing industrial instruments or any successor to them. These instruments were not conducive to the changes needed at BHPIO's workplace, so he believed, because they made union agreement a prerequisite for any workplace change, and the unions had in the past unreasonably withheld their agreement. As already indicated, I accept that he genuinely held these views (without deciding whether they were soundly based) and that he truthfully stated his reasons for introducing WPAs.
207 Kirkby's views and reasons were consistent with those of other BHPIO managers. It was they who provided Kirkby with much, if not most, of the information on which he relied in forming his views and in reaching his ultimate decision. Indeed, in this regard, Kirkby's evidence was on all fours with that of Stockden and Keogh, whom Kirkby regarded as being most knowledgeable about the WPA proposal. His evidence was generally consistent with the documentary record of the deliberative process, especially that part of it that he saw, such as the presentations of 16 and 28 September and 19 October 1999. Kirkby's evidence as to why BHPIO proceeded to make WPA offers was also consistent with that of Anderson and McNeilly with whom he discussed the WPA proposal.
208 As already stated, I accept that Kirkby and other BHPIO managers genuinely believed that the unions had unreasonably prevented or impeded workplace change and that this belief was based on their perceptions of the unions' conduct in the past (discussed above). In accepting Kirkby's evidence as to why BHPIO made the WPA offers, I accept that the company's object was to improve its productivity and efficiency by the promotion of a more flexible workforce. I also accept that, as the applicants put it, the means by which the company sought to accomplish this was to eliminate the need to negotiate workplace change with the unions.
209 I reject the applicants' further proposition, however, that "[t]he entitlement of employees to have access to a representative of the union in negotiations with the company involving individual disputes was also an important factor" (emphasis added). This is to put the matter too highly. Stockden and other witnesses for the respondent gave evidence that WPA employees had an entitlement to be represented by a colleague in the event of a workplace dispute and that that colleague could be a shop steward, convenor or other on-site union office-holder. Since the terms of the WPAs made no provision for union representation as such, however, I accept that union representation may have been a consideration, although not as important as the applicants would have it. This does not assist the applicants' case, however.
210 Let it be accepted (as I do) that the company wanted to eliminate the need arising from the existing industrial instruments to negotiate workplace change with the unions and that the lessening of their role in grievance procedure may have been a consideration. Yet, in this circumstance and as stated above, BHPIO cannot have acted for the reason identified in s 298L(1)(h) because the "injured employees" continued to have entitlement to such benefits as these instruments conferred. As already said, BHPIO has done nothing to imperil those benefits. The most that could be said is that BHPIO made WPAs with its WPA employees because they were, at that time, entitled to the benefit of the Award etc. The applicants' case is not, however, that the WPA employees have been injured by BHPIO's acts. If it were necessary to do so, I would find that, on this aspect of the case too, BHPIO has rebutted the presumption to which s 298V gives rise.
211 Before turning to the applicants' s 298M case, I note, as the respondent did, that the applicants have not pressed the allegations of discriminatory and harassing behaviour on the respondent's part referred to by the Full Court in this case on the earlier appeal. There was no reference to these allegations in the applicants' principal written submissions (consisting of 124 pages) nor in any subsequent submission. Some of the affidavits filed by the applicants were worded in such a way as to suggest that, after the WPA offers were made, certain middle managers had, as part of a concerted and coordinated campaign, harassed, intimidated, threatened or discriminated against employees who had not accepted WPAs. In response, the respondent called a number of middle managers (Eugenio Alvarez, John Anger, Les Barbie, Michael Campbell, Mick Carroll, Russell Denton, Chris Donoghue, Jim Harris, Maurice Hassan, Les Heywood, Steve Maley, Graeme Offereins, Patrick Ross, Greg Spoonheim and Alan Zanders). Many of these allegations were the subject of cross-examination. Whilst the WPA offers and their subsequent acceptance by some employees has generated a degree of dissension and, in some instances, ill-will, I am not satisfied that any of the allegations made against BHPIO's managers were made out. The allegations were, in many cases, shown to be exaggerated or misleading. To the extent that the presumption created by s 298V applied, the evidence led by the respondent, especially the evidence of the middle managers, rebutted it.
the applicants'case under s 298m
212 The applicants did not claim that the respondent made any express threat or promise that was conditional on an employee giving up his or her union membership. Nor did they say that there was any explicit persuasion or attempt to persuade to that end. This was not a case in which the respondent was alleged to have done something directly which amounted to an inducement. The applicants' case was that, in attempting to remove the unions from its workplace, BHPIO offered WPAs, knowing that in other workplaces the introduction of WPAs had led employees "overwhelmingly" to give up their union membership. Further, in having offered WPAs for a five-year term, BHPIO knew its purpose would be frustrated if, at the end of the term, WPA employees sought to bargain collectively again. Since the surest way of averting this possibility was to erode union membership, a purpose of BHPIO's introduction of WPAs had to have been, so the applicants' argument ran, that WPA employees would give up union membership.
213 Where a significant number of employees at a workplace enters into WPAs under the WPA Act, the scope of union activities may well be reduced, and the unions' role may well differ from that in a workplace where awards and agreements to which it is party apply without qualification. But this fact does not by itself justify attributing any illegitimate intent to the employer.
214 In any event, I reject the applicants' basic premise that BHPIO's object was to deprive the unions of any role at its workplace. Kirkby's evidence, which I accept, was that the unions were to have no role in relation to operational matters within the company, including the introduction of workplace change. He gave no evidence on the question whether the unions might, from time to time, have a representational role for their members. Virtually all of BHPIO's managers denied that the introduction of WPAs necessarily deprived the unions of a role in BHPIO's workforce. Both Keogh and Stockden referred to on-site union representational roles in individual grievance disputes with the company. Other BHPIO managers gave evidence to like effect. Although Netterfield's evidence is capable of a contrary interpretation, I doubt that, as the applicants submitted, the effect of his evidence overall was to concede that there was no role at all for the unions at BHPIO's workplace. When Netterfield's evidence is read as a whole, what he was saying, I think, was that the WPAs made no provision for unions in the formal arrangement (i.e., what he called "the structure arrangement") between BHPIO and its employees. This is not the same as saying the unions could have no practical role in its workplace. In any event, the evidence of other managers was to the contrary.
215 In making the WPA offers, the respondent, so the applicants said, "offered benefits to employees ... which involved those employees eschewing their rights to union representation and collective bargaining by entering into Workplace Agreements". In this connection, the applicants referred, first, to the offer of back pay if employees entered a WPA by 3 December 1999 and, secondly, to the accrued leave pay-out option.
216 Plainly enough, the back pay offer was designed by BHPIO to encourage employees to make up their minds by 3 December 1999 to accept a WPA. The accrued leave option was also designed by BHPIO to make the WPA offers attractive to its employees. Obviously, BHPIO wanted its employees to accept its WPA offers. As noted earlier, this is not an unlawful object in itself; ordinarily, anyone who seeks to conclude an agreement with another offers terms thought likely to secure the agreement. Further, as Miller said:
Questions and answers were sent out to the supervisors and all employees. [O]ne of the points was to tell employees that if they signed a WPA, they could stay a member of the unions.
The documentation that accompanied the WPA offers stated clearly that the question of continued union membership was entirely a matter for an individual employee. There is no evidence that the employees to whom the WPA offers were sent believed that the company wanted them to leave the unions.
217 The applicants invited a finding that it was "an inevitable end of the respondent's plan that employees should resign their union membership"; and that "[t]his was also necessary for the fulfilment of that plan". The evidence does not establish either that BHPIO made a plan that was designed to lead its employees to resign their union membership or that mass resignation from the unions was a necessary corollary of any plan made by the company. As already stated, the evidence establishes that Kirkby supported the introduction of WPAs because he believed they would further BHPIO's business objectives by facilitating workplace change better than previous industrial instruments. This was because WPAs did not afford the unions any role in the negotiation of change, as the older instruments had done. The evidence also shows that the decision to introduce WPAs was not taken by Kirkby in order that BHPIO's employees would give up their union membership. Whether or not the information on which they acted was correct, BHPIO's managers and Kirkby regarded the unions' and some of their officers' past conduct as having unreasonably stymied change.
218 There is nothing in the numerous presentations, memoranda and other documents generated in the course of BHPIO's deliberative process that discloses a purpose of the WPA proposal was that employees should resign from their union. As the history of Project Phoenix (set out earlier) shows, the matter of union membership was not raised in terms at any meeting of BHPIO's management or in any of the memoranda or other documents created by BHPIO's managers during the life of the Project. The absence of any reference in these documents, including Miller's schematic whiteboard drawings, is telling. This is especially so in this case where the WPA proposal emerged after months of discussion, much of which was recorded in documentary form.
219 The nearest reference to union membership was in Hannah's use of the term "unionised" in his memorandum of 3 August (recording the outcome of the 23 July meeting) and in an overhead slide presented at the meeting of 4 August 1999. At best, so far as the applicants are concerned, the term is ambiguous. As already noted, when account is taken of the entirety of the memorandum and the slide, there is little support for the proposition that the term was intended and understood as referring to union membership as such. In any event, as the respondent pointed out, these documents were prepared at an early stage in the deliberative process. There is nothing to indicate that they operated on Kirkby's ultimate decision to accept the WPA proposal.
220 What the memoranda and presentations prepared in the course of Project Phoenix show is that the respondent's primary purpose was to achieve a form of industrial regulation that would best suit its business objectives by facilitating change within the workforce. The purpose was originally to be achieved by means of a new enterprise bargaining agreement designed to give an "all-staff equivalent" (not an all-staff system as such). It was only towards the end of a relatively drawn-out deliberative process that the decision was taken to pursue the WPA proposal instead. This decision was made because BHPIO's managers did not think that an enterprise bargaining agreement of the kind they sought was practicably achievable. The evidence does not warrant the conclusion that a reason for preferring the WPA proposal over the enterprise bargaining agreement was that WPAs would lead employees to leave their unions.
221 A further part of the applicants' case was an allegation that BHPIO knew that, when WPAs were introduced at Hamersley Iron and Robe, the employees had overwhelmingly not retained their membership. This was not made out on the evidence. There was evidence, adduced by the applicants from John Mossenton, AMWU organiser, that union membership at Hamersley Iron "slumped rapidly" after its introduction of WPAs. The evidence did not, however, establish the requisite knowledge on the part of BHPIO's officers.
222 McNeilly's evidence was that he knew that there had been a reduction in the level of union membership after the introduction of WPAs at Hamersley Iron. This did not establish that, as the applicants would have it, the respondent knew that the effect of WPAs had been to "dramatically diminish" union membership there. Winter deposed that he became aware during the due diligence process that there were only some twelve or thirteen employees left at Hamersley Iron working under the award. This shows only that he knew that most employees had signed WPAs, not that most employees resigned their union membership.
223 The applicants submitted that Stockden had, in effect, conceded that he knew that "the levels of membership were extraordinary low" when he gave evidence that Bartlem had told him that there were between 40 and 50 CFMEU members at Hamersley Iron's operations at Mt Tom Price and Parabadoo. Stockden's evidence was that CFMEU members included locomotive drivers, crane drivers and, possibly, shovel drivers but that Bartlem's reference to Mt Tom Price and Parabadoo would have excluded locomotive drivers who were based at Dampier. He testified that he believed that the quoted numbers were significant, since Hamersley Iron had never had a large number of CFMEU members. In the absence of other evidence, I am unable to conclude that if, indeed, Stockden believed that there were 40 to 50 CFMEU members at Hamersley Iron, then he knew that that figure was "extraordinary low", as the applicants would have it.
224 There is nothing in any of the many documents in evidence that would indicate that any BHPIO manager gave consideration to the level of union membership at Hamersley Iron. Keogh, Stockden, Netterfield and Winter, each of whom gave evidence about the due diligence process, deposed that they had made no inquiries about union membership in that process. Stockden's evidence was that he could not recall any material on the level of union membership being given to him. Keogh said that he was told there was continuing union activity and some active union representation at Hamersley Iron. Netterfield and Winter both said they had acquired no information about the level of union membership at Hamersley Iron in the course of the due diligence process. I am, therefore, unable to find, as the applicants submitted, that officers of BHPIO knew that there had been a "dramatic" decrease in union membership following the introduction of WPAs at Hamersley Iron and that union membership remained low there.
225 Let it be accepted, for present purposes, that, at the time the WPA offers were made in November 1999, BHPIO wanted its employees to accept a WPA and did not want to negotiate with anyone about their terms. The applicants submitted that, bearing in mind the WPAs' five-year term, BHPIO knew that its purpose would be frustrated if, at the end of the term, the WPA employees sought to return to a collective bargaining regime. But what was BHPIO's purpose? If the applicants meant BHPIO's attempt to attain its business objectives by ending the need to consult the unions about operational matters, then this submission is not supported by evidence. There is no evidence whatsoever that BHPIO gave any consideration to what would happen at the end of the WPA term. This is unsurprising, given that the circumstances in November 2004 were likely to differ from those affecting BHPIO at the end of 1999. If by "purpose", the applicants meant the company's attempt to have its relationship with its employees regulated by WPAs, then again the submission fails. This is not only because there is no evidence that the company turned its mind to the matter, but also because BHPIO must be taken to have understood that under the WPA regime adopted by it, the WPA employees could always attempt to bargain collectively for a new WPA, through a bargaining agent (such as a union): see WPA Act, s 15. If the applicants meant that the company's attempt to establish a WPA regime would be frustrated by a return to awards and EBAs, then the submission is self-evidently correct. That fact does not by itself warrant a finding that to prevent a return to regulation by instruments to which the unions were party, BHPIO sought to erode union membership by introducing WPAs.
226 In final submissions, the applicants made little of the respondent's refusal to negotiate any industrial agreement. As we have seen, the unions made no attempt to negotiate as bargaining agents on behalf of any employee or employees. They did seek, however, to commence negotiations for EBA 4. As the respondent noted more than once, it was under no statutory or other legal obligation to do so. BHPIO's managers, particularly Stockden, gave evidence that they did not think it practicable to proceed with negotiations for a new EBA whilst the WPA offers were outstanding. The applicants did not seriously challenge that explanation. Of course, even if an employee entered a WPA because of the respondent's refusal to negotiate EBA 4 (there being no evidence of this), it does not follow that that employee would thereafter resign from his or her union.
227 As will have been seen, I have very largely accepted the evidence given by Kirkby and Stockden on material points. I have not, however, overlooked the applicants' attack on the credit of Kirkby and, to a lesser extent, Stockden and Hannah. It is convenient to discuss that attack, before turning to other aspects of the applicants' s 298M case.
228 Kirkby's evidence was, so they said, "generally vague and marked by a fluidity of recollection" which was "inconsistent with that of a senior executive charged with undertaking fundamental changes in the operations of BHPIO". According to the applicants, Kirkby's evidence showed a lack of candour. It was "given with apparent reluctance and in a seemingly disengaged and uninvolved manner". Whilst I accept that this is not an inapt description of Kirkby's manner in giving evidence, for the reasons I am about to give, I reject the proposition that his manner was necessarily indicative of a lack of candour on his part on any material point. Nor do I accept that his poor recollection of some of the events which have occurred at BHPIO since February 1999 are indicative of a lack of frankness.
229 The applicants cited as indicative of a measure of dishonesty on his part (1) his failure to recall the briefing given to him by Stockden in February 1999; (2) his failure to recall his conservation with Anderson in mid-September concerning WPAs; (3) an alleged error in his evidence as to the date of the dispute between the state AWU and the state CFMEU; (4) his asserted lack of knowledge of the unions' position at Hamersley Iron; and (5) his failure to recall the draft memorandum sent to him by Hannah in July 1999.
230 In assessing whether Kirkby's poor recollection is indicative of a lack of candour on his part, it is to be borne in mind that he had broad responsibilities for matters extending beyond BHPIO. On his own admission, his recollection of a number of events, especially of pertinent details, was poor. He said that, in July 2000, his recollection of events after February 1999 was not at all clear. Memory losses of this kind are consistent with ordinary human experience. Stockden himself could not recall the format of his presentation to Kirkby in February 1999 and even Hannah, who was apparently present, seemed to have little recollection of it. Indeed, Kirkby's lack of recall is consistent with his evidence that, between February and April 1999, he was not concerned with the form and nature of industrial arrangements in the workforce. Kirkby did not deny (although he did not recall) a conversation with Anderson in mid-September 1999 when, according to Anderson, he had said that it was "a strong possibility" that BHPIO would introduce WPAs. What Kirkby said was that he had not made up his mind about WPAs until October. There is no inconsistency between this evidence and the statement attributed to him by Anderson, and his inability to recall it is not necessarily indicative of mendacity. Much the same may be said of his evidence on the state AWU - state CFMEU dispute. Nor were Kirkby's answers to questions concerning his knowledge of the position of the unions at Hamersley Iron inconsistent with one another when the precise terms of the questions are examined. I reject the proposition that Kirkby's inability to recollect Hannah's draft memorandum justifies a finding that Kirkby deliberately concealed from the Court the nature of the communications to which he was privy. Kirkby was not shown the draft in Court and it was that document which, according to Hannah, was actually sent to him. Instead, Kirkby was shown the final version of the memorandum, as it appeared a few days later. There is no evidence that that document was ever sent to him. Whilst Kirkby was not forthcoming in cross-examination and generally gave short answers in response to the specific terms of the questions asked of him, he did not impress me as untruthful.
231 In any event, whatever reservations one may have about the reliability of Kirkby's evidence on pertinent matters, they are overborne by a number of other factors that independently support him. As already noted, save for the instances noted by the applicants, Kirkby's evidence was generally consistent with that of other BHPIO managers, as well as Anderson and McNeilly. The reasons he gave for endorsing the WPA proposal were entirely consistent with the assessments that other BHPIO managers testified they were making during Project Phoenix. His decision to endorse the WPA proposal was based in part on their assessments. His reasons were also consistent with the appreciations being made by Anderson and McNeilly with whom he had discussions.
232 The applicants claimed that Stockden was "prepared to tailor his evidence" to suit the company's case. They referred to two instances which, so they said, could be explained only upon this basis. Those instances related to relatively peripheral matters, however, and Stockden's evidence, which was given over three days, must be considered as a whole. When so considered, the applicants' attack on it fails. Stockden too gave his evidence carefully, even cautiously, with a view to what he perceived to be the issues in the case, but again he did not impress me as untruthful.
233 Hannah's evidence was adversely criticised by the applicants on the basis that he gave inconsistent evidence as to when he concluded that WPAs should be introduced into BHPIO's workforce. It is not suggested that precisely when Hannah came to this conclusion is critical. When Hannah's evidence is read in its entirety, the alleged inconsistencies either disappear or become so slight that they cease to matter. Hannah's evidence tallies generally with other managers' accounts of how they came to prefer the WPA route and with the numerous presentations, memoranda and other documents generated in the course of BHPIO's deliberative process.
234 A part of the applicants' case as initially put was that the employees who signed WPAs "almost invariably" resigned from the unions. Whilst this aspect was later reformulated, the applicants' case remained that the correlation in this case between the making of WPAs and the resignations gave rise to an inference that the resignations were a reasonably foreseeable consequence of the making of WPAs and that, if intent mattered, the company must have intended the resignations to occur. It is to this aspect of the s 298M case that I now turn.
235 The evidence is largely contained in an affidavit sworn on 4 August 2000 by Vanessa Lee Murphy, a Human Resources Services Officer for BHPIO. She deposed that there were 1103 award employees at the three BHPIO sites in the Pilbara on 5 November 1999, and 1037 award and WPA employees on 28 January 2000. The workforce had, therefore, declined by 6 per cent over the relevant period. Of the 1037 employees whose employment had previously fallen under the award, 474 (45.7 per cent) had signed WPAs by 28 January 2000. That is, a little less than half of the employees eligible for WPAs in November 1999 had accepted them during the period before BHPIO was enjoined from making further WPAs.
236 BHPIO has agreements with the state unions to deduct union dues and social welfare fund payments automatically from the payroll at an employee's request. Such deductions are made fortnightly and are remitted directly to union funds. In the absence of any comprehensive direct evidence of union membership, both parties relied upon BHPIO's payroll deduction records as a means of assessing union membership levels, although that means was not entirely accurate.
237 The evidence was that as at 5 November 1999 some form of union dues was being deducted for 804 award employees. This represented about 72.9 per cent of the relevant workforce. As at 28 January 2000, however, union dues were being deducted for only 598 employees, or 57.7 per cent of that workforce. This represented a drop of 15.2 percentage points, or about a 20.9 per cent decline in the number of employees for whom BHPIO made union fund deductions over the three months following the offer of WPAs, after accounting for the reduction in the workforce overall. Of the 474 employees who had entered into WPAs by 28 January 2000, union dues were being deducted for 320 on 5 November 1999 and for 164 on 28 January 2000. Thus, the decline in union membership, after allowing for the decrease in the number of employees overall, is almost entirely due to WPA employees leaving the unions.
238 In summary, the evidence establishes that:
(1) about 45.7 per cent of eligible award employees entered into a WPA between November 1999 and the end of January 2000;
(2) about 48.8 per cent of the employees who had been union members and who entered into a WPA resigned from their union in the same period; and
(3) WPA employees resigning from the unions (for whatever reason) resulted in about a 20 per cent decline in union membership (relative to overall workforce size) by 28 January 2000.
239 The parties apparently accepted that the payroll deduction records for April 2000 also showed that by 22 April 2000 only 121 (perhaps, 117) of the WPA employees remained union members, bringing the percentage of WPA employees who had been in unions in November 1999 but had subsequently resigned up to 62.2 per cent. The respondent contended, however, that the applicants' reliance on this statistic was "unacceptable", because the longer the period elapsing after the signing of a WPA, the more likely it was that a resignation was due to some factor other than the WPA. Further, from February onwards, an injunction restrained other employees from signing WPAs and this, so the respondent said, "means that the denominator employed by the applicants to derive their [percentage figure] was held constant since 31 January 2000, whereas the numerator was under no such constraints". Putting this debate to one side, the evidence establishes that a significant proportion of WPA employees who had been union members, but by no means most, resigned their union membership after signing WPAs.
240 The applicants accepted, I think, that a mere correlation between the acceptance of a WPA and resignation from a union was not necessarily indicative of a causal relationship between the two. At the core of the applicants' case was the proposition that an employee who accepted a WPA had little reason to remain in his or her union and "[o]n any fair view, this would almost inevitably lead those employees to withdraw from the union". The respondent rejected this proposition. It adduced evidence from twenty-four employees who had signed WPAs and subsequently resigned from either the state CFMEU or the state TWU concerning their reasons for resigning. The applicants challenged this evidence and called a further witness to give his reasons for resigning. They also tendered (without objection) a number of resignation forms received by the state and/or federal CFMEU and the state and/or federal AMWU.
241 The relevant witnesses fell into three overlapping categories. These were:
(1) witnesses who said that a union was of little or no value after signing a WPA. They included Gordon Clement, Malcolm Wilson, Geoff Jolly, Ian Pike and Les Standen, although Pike's statement that it was "no use being a member of a Union any longer" must be understood as arising out of his negative experience in the workplace. Perhaps Jeffrey Head fell into this category too. Head's evidence was that he wanted to represent himself in industrial matters; that he did not believe that his union was providing good enough representation; and that he did not see any more use for the union's representation of him. Wilson said the "fair bit of stuff coming from individual unions and the unions as a whole" had a big bearing on his decision.
(2) witnesses who resigned for reasons unrelated to the role the unions could play. These included Robert Bouveng, Anthony Holland, Bruce Martin, Murray Hirini, Lance Doherty, Jeffrey Head, Bernard Winiata, Dennis Robinson, Geoff Shore and Steven Brown. Bouveng's evidence was that he resigned, amongst other reasons, because he did not want to participate in a picket and because "they [the union] turned around and said that they would not support me". Holland's evidence was that he "resigned from the union because [he] was becoming very disgruntled with the direction they were taking and the things that were going on site." Martin remained in the union for nearly six months after signing a WPA and left when a nasty verse (which mentioned him and which he attributed to people in the union) circulated around the workplace. Hirini's evidence was that he resigned for various reasons, including derogatory conduct directed by union members to WPA employees. Whilst Doherty assigned an incident of alleged harassment occurring six months before his resignation as his reason, in the social climate of the BHPIO workforce (as shown by the evidence), that reason is not entirely implausible. Winiata resigned because he was called a scab, and particularly by "my own race". Robinson resigned when a 4-day strike was fixed and it seemed obvious to him that he would be required to cross the picket line. Shore's evidence was that he resigned because of the attitudes and conduct of union officers. Brown formed the view that he could not reasonably expect any support from his union.
(3) witnesses whose stated reasons allegedly related to matters that postdated their resignations. Barry Howell signed a WPA in November 1999 and resigned from his union about the same time. He referred to an incident relating to the January 2000 picket line, although he did not actually say that the incident led to his resignation. Jack McDonald resigned from his union around 7-10 December 1999, having signed a WPA on 3 December. He sent a letter to the union at the time of his resignation, stating, amongst other things, that he was resigning because he would be labelled a scab if he attended work and be subjected to verbal abuse. In his affidavit, he apparently referred to the January 2000 picket, although it is unclear whether he was referring to it as a reason for resignation. In evidence, he also said that he resigned because the unions did not support WPAs and "there was a fair bit of flak going around up on the hill". Graham Palmer resigned from his union on 7 December 1999, having signed a WPA on 26 November 1999. He referred to a meeting which he thought was before but which he conceded may have been after his resignation, concerning people who were going to come to work and cross the picket line on the 13 December stoppage. On the basis of what was said at the meeting, Palmer believed that his ticket was "worthless, may as well be torn up". Colleen Stewart and Leanne Wilson may have fallen into this category too. Stewart resigned from her union in December, stating that she did so because of harassment and conduct at the first picket line on 13 December 1999. As the applicants noted, her last payroll deduction was for the fortnight ending 3 December 1999. This is perhaps consistent with her resigning any time up until 17 December, when the next deduction would have been made. Wilson resigned from her union on 8 December 1999 after a meeting at which she believed that a union official had said the union would not represent WPA employees and wanted nothing more to do with them and because of the conduct of other union members at the meeting. Her evidence about the date of the meeting was unclear: it may have been after the first strike on 13 December.
242 The applicants submitted that the testimony of many of these witnesses was untruthful, unreliable, or vague and uncertain. Without dealing with each witness in turn, it is enough to say that I accept that the evidence about employees' reasons for resigning is to be treated with caution. Further, of the 68 resignations from the state CFMEU identified by Matt Willie, state CFMEU office-holder, 27 were dated before 10 November 1999, when the WPA offers were made. Of the 41 letters remaining (including some from employees already mentioned), 21 gave no reason for the resignation, 7 referred to retirement or a change of employment, 11 referred to accepting a WPA, and 2 gave other reasons. Those letters which contain a reference to a WPA simply state words to the effect that the member is resigning, having signed a WPA, without offering any more specific insight into the employee's views. Mossenton identified resignation letters dated between 10 November 1999 and January 2000 from 18 state AMWU members. Of these, 14 referred to a WPA as the reason for their resignation; and another 4 gave no reason or referred to a change of employment. Again those who gave WPAs as their reason for resigning did not explain the perceived link between signing a WPA and resigning from the union.
243 Plainly enough, the employees who gave evidence are not necessarily a representative sample of the approximately 156 WPA employees who resigned their membership between November 1999 and end January 2000 (or the 200 odd who resigned between November 1999 and May 2000). The witnesses were mostly members of the state and/or federal CFMEU or state and/or federal TWU. Aside from the resignation forms from the state and/or federal AMWU, there is no evidence as to why members of other unions have resigned. Generalisations drawn from the direct evidence of a limited number of employees could well be misleading.
244 As it turns out, this evidence is not critical, and I place little weight upon it. At most, it demonstrates that, as the respondent contended, the WPA employees who gave evidence made up their own minds about union membership on the basis of what it meant to them, their own experiences, and perception about themselves as WPA employees. I have found that the respondent did not have as its purpose that the WPA employees should leave their unions. In this event, it is beside the point that the respondent might reasonably have foreseen that a reasonable number would do so. Further, the evidence shows that whilst many WPA employees had resigned union membership, not all had done so. Presumably, those employees have decided that there is value in retaining their membership, notwithstanding that they have signed WPAs.
245 In summary, the applicants have not made out the case under s 298M summarised at [70] above. Further, it has not been shown that "almost invariably" employees who signed WPAs resigned from their union. Some did and some did not. The evidence establishes that some WPA employees made their own judgments about the value of union membership, taking into account all the circumstances, including those peculiar to themselves. As stated before, I accept that the respondent did not offer WPAs to its award employees in order to have them give up their union membership.
the contract case
246 In addition to their claims under the WR Act, the sixth to tenth applicants ("the individual applicants") allege that their employment contracts were breached by BHPIO's conduct in making WPAs with some of its award employees. This claim depends on the proposition that the Award was expressly incorporated into their individual contracts with BHPIO. According to the particulars under par 22 of the amended statement of claim:
That express incorporation is evidenced by inter alia, letters of offer and accompanying information in standard form provided to the Employees by BHPIO at or about the time that their contracts of employment were made.
The provision of the Award upon which the applicants rely is clause 5(14)(a), which provides:
No contract of employment shall be made between the employer and any employee which contains any term or condition which is inconsistent with or contrary to the provisions of this award; ... .
By entering into WPAs, some of the terms of which are inconsistent with the Award, the individual applicants claim that BHPIO has violated their employment contracts.
247 In the earlier appeal, the Full Court held that, on the evidence adduced in the interlocutory proceedings, there was no serious issue to be tried on the contractual claim. The Full Court's decision was based on a document headed "Information for New Employees at Newman". The Full Court stated (171 ALR at 701):
[W]e have difficulty accepting that the document relied on by his Honour was intended to have the contractual force suggested. The document is entitled `Information for New Employees at Newman'. In our view, that is an appropriate description of its character. In its form and in its substance it is not, and does not purport to be, an independent contract of employment, or a document recording or evidencing such a contract. On the contrary, the document makes it plain that the employment relationship is governed, not by any free-standing contract, but by the award.The document commences with the statement which we have set out above, under the heading `Conditions of Employment'. As has been seen, it is there stated that the conditions of employment are `[i]n general ... as prescribed in the ... Award ... and the [EBA] ...' and that `[w]here any inconsistencies exist, the conditions as set out in the EBA shall prevail'. This makes it plain, in our view, that the relationship is governed by the award and the EBA to the exclusion of any independent contractual arrangements.
So much is confirmed by the balance of the document. The next heading is `Award Conditions'. Under this title, a number of matters are dealt with under separate subheadings: `Contract of Employment', `Hours', `Overtime', etc. Later in the document, under further headings (`Property Protection', `Relocation of Employees', etc) other managerial subjects are dealt with.
In our opinion, when the document is read as a whole, it is clear that it was not intended that the terms of the award were to be picked up as a free-standing contract of employment: see Secretary of State for Employment v Associated Society of Locomotive Engineers and Firemen (No 2) [1972] 2 QB 455 at 490.
248 The evidence relied on in the interlocutory proceedings was augmented at trial. In his affidavit, Ross Beggs, the tenth applicant, deposed that he had been employed by BHPIO since 1995. There was in evidence a letter, dated 17 October 1995, by which he was offered employment, together with the "Joining Instructions to New Employees at Newman" which accompanied it. These documents referred to the Award in the following terms.
(a) The letter stated that "[i]n general, the terms and conditions of employment are as prescribed" in the award and in certain other agreements, including the 1993 EBA.
(b) The Joining Instructions contained an acknowledgment by Beggs that "in general, the terms and conditions of employment as are prescribed" in the award and those other agreements and that "[w]here any inconsistencies exist, the conditions as set out in the EBA shall prevail".
Besides referring to the Award, the letter of offer specified a starting date, an annual wage and the personnel to whom Beggs might direct any inquiries. It also requested him to indicate his acceptance by signing and returning a copy of the letter (which he apparently did).
249 None of the letters of offer sent to the other individual applicants was in evidence, although the "Joining Instructions" given to Ross Kumeroa and Doug Stead were. These Instructions were in relevantly the same terms as those given to Beggs. (I put to one side as irrelevant, for present purposes, the other contractual documents relied on by the applicants since none related to the individual applicants.)
250 The applicants' case was not that the terms of the Award were implied terms of their contracts of employment. That possibility was foreclosed by the decision in Byrne v Australian Airlines Ltd [1995] HCA 24; (1995) 185 CLR 410. As the Full Court observed at 701:
In Byrne it was held that the obligation to observe an award arose by force of statute, not because the award was imported into a contract of employment independently of the parties' intention; and that the provisions of the award were not an implied term of the contracts of employment, because their implication was not necessary for their reasonable and effective operation in all the circumstances.
251 Whether an award is incorporated into an individual contract of employment depends upon the circumstances of the case and, in particular, the terms of the relevant employment contract. In Moama Bowling Club Ltd v Armstrong (No 1) (1995) 64 IR 238, the Industrial Court of New South Wales held that an award was incorporated into an employment contract by virtue of a clause in the contract providing that:
This Agreement shall be deemed to incorporate the whole of the provisions of the Award as the Award stands at the date of this Agreement together with all future variations of the Award and the provisions of any Award made in substitution thereof and the provisions of this Agreement shall be read and interpreted so as to be subject to the provisions of the Award or any Award made in substitution therefor.
This provision can be contrasted with Cliffe v Hoechst Australia Ltd (unreported, IRCt, 21 October 1996, case 514/96) in which Marshall J held that a sentence in a handbook reading, "Termination conditions are provided in Awards and Determinations" did not incorporate an award into the employment contract.
252 The language of the Beggs letter of offer is plainly distinguishable from the unambiguous terms considered in Moama, and is closer to the language considered in Cliffe. It is to be borne in mind that the Award is given statutory effect by s 37 and is enforceable pursuant to s 83 of the WAIR Act by, amongst others, an employer, or an employee to whom the award applies "on his own behalf". As in Byrne, there is little reason to suppose that the parties intended to convert their statutory rights and obligations into contractual ones, since that was not necessary to give the Award operative force. In this case, in the context in which they appear, the words "are as prescribed" do not indicate an intention to incorporate the terms of the Award into an employment contract. Instead, there are explanatory or descriptive of the instruments that are applicable to Beggs' employment. What the letter of offer did was inform him that the Award applied to him, and that his employment relationship with the company was to be governed by it and the agreements to which the letter referred. The letter did not purport to incorporate the terms of the Award and those agreements into an employment contract between BHPIO and Beggs.
253 The Joining Instructions given to Beggs are in substantially the same terms as the "Information" document that was considered by the Full Court. The Full Court's reasons for declining to find that that document was intended to incorporate the Award in an employment contract are equally applicable to the Joining Instructions.
254 The state of the evidence does not permit the position of the other individual applicants to be better than that of Beggs. Accordingly, I reject the applicants' submission that clause 5(14)(a) of the Award was incorporated into any contract of employment between BHPIO and the individual applicants.
255 In any event, even if the letter of offer incorporated some of the terms of the Award, it does not follow that it incorporated clause 5(14)(a) into the employment contract. The relevant part of the letter of offer referred to "terms and conditions of employment". Clause 5(14)(a) does not prescribe any term or condition of employment. What it does is purport to impose a general obligation on both employer and employees not to enter into any contract containing terms inconsistent with the Award. It does not make it a term or condition of an individual employee's employment that the employer (and, for that matter, other employees) will not enter into such contracts with others.
256 The applicants referred in final submissions to certain observations of Merkel J in Australian Airline Flight Engineers Association v Ansett Australia Ltd [2000] FCA 1299 at [17] - [21]. Nothing that his Honour there said assists in the resolution of an issue in this case.
257 The respondent also submitted that if clause 5(14)(a) was an incorporated term of a contract of employment, then the clause as incorporated applied only to the particular employment contract in which it was incorporated. In the alternative, the respondent submitted that the clause was invalid since it was repugnant to the WAIR Act: see s 114(3) and s 7E. In light of the conclusion reached, however, it is unnecessary to express a view on these submissions.
CONCLUSION
258 Accordingly, for the reasons stated, the applicants have not established entitlement to the final injunctive relief that they seek in this proceeding. The injunction granted by Gray J on 31 January 2000 as varied by the Full Court on 7 April 2000 should be discharged.
259 I propose to adjourn the matter to enable counsel to prepare short submissions on costs and on any consequential orders that they consider should be made.
I certify that the preceding two hundred and fifty-nine (259) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Kenny. |
Associate:
Dated: 10 January 2001
Counsel for the Applicants: |
Mr H Borenstein with Mr W Friend and Mr S Moore |
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Solicitor for the Applicants: |
Maurice Blackburn Cashman |
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Counsel for the Respondent: |
Dr C Jessup QC with Mr F Parry |
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Solicitor for the Respondent: |
Malleson Stephen Jaques |
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Counsel for the Minister for Employment, Workplace Relations and Small Business, intervening |
Mr G Pagone QC with Mr B Lawrence |
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Solicitor for the Minister for Employment, Workplace Relations and Small Business, intervening |
Australian Government Solicitor |
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Dates of Hearing: |
10 July to 31 July 2000, 2 August 2000, 4 August 2000 and 9 November 2000 |
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Date of Judgment: |
10 January 2001 |
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URL: http://www.austlii.edu.au/au/cases/cth/FCA/2001/3.html