Coal Industry (Accident Pay) Interim Award 2004 [2005] NSWIRComm 119 (6 May 2005)

Last Updated: 12 May 2005

NEW SOUTH WALES INDUSTRIAL RELATIONS COMMISSION

CITATION : Coal Industry (Accident Pay) Interim Award 2004 [2005] NSWIRComm 119

FILE NUMBER(S): 6261

HEARING DATE(S): 31/01/2005, 04/02/2005, 28/02/2005, 01/03/2003, 16/03/2005, 18/03/2005, 04/04/2005, 22/04/2005

DECISION DATE: 06/05/2005

PARTIES:

Construction, Forestry Mining and Energy Union, New South Wales Branch

Electrical Trades Union, New South Wales Branch

Australian Manufacturing Workers Union

Employers First

Australian Industry Group

Australian Business Industrial

Electrical Contractors Association of New South Wales

New South Wales Minerals Council

JUDGMENT OF: Grayson DP

LEGAL REPRESENTATIVES

Mr A Slevin of counsel instructed by Maurice Blackburn Cashman Lawyers for the Construction, Forestry, Mining and Energy Union, New South Wales Branch

Mr A Searle of counsel for the Electrical Trades Union of New South Wales

Ms S Carswell and later Mr A Neilson for the Australian Manufacturing Workers Union

Mr P Ryan for Employers First

Ms V Paul and Ms M Knight for Australian Industry Group and Australian Business Industrial

Mr R Marshall for the Electrical Contractors Association of New South Wales

Mr A Longland of Freehills solicitors for Damstra Mining Services Pty Limited, Mining and Earthmoving Services Pty Limited, Coal & Allied Operations Pty Ltd, Bengalla Mining Company Pty Limited, Coal & Allied Mining Services Pty Limited, Centennial Newstan Pty Limited, Centennial Myuna Pty Limited, Centennial Angus Place Pty Limited, Centennial Mandalong Pty Limited, Centennial Munmorah Pty Limited, Charbon Coal Pty Limited, Berrima Coal Pty Limited, Bulga Coal Management Pty Limited, Oceanic Coal Australia Limited, United Collieries Pty Limited, Beltana Highwall Mining Pty Limited, Ravensworth East Coal Management Pty Limited, Wambo Coal Pty Limited, Metropolitan Collieries Pty Limited, The Wallerawang Collieries Limited, Liddell Coal Preparation Pty Limited, Rix's Creek, Pty Limited, Bloomfield Collieries Pty Limited, Northern Waggons Pty Limited, Tahmoor Coal Pty Limited, Ulan Coal Mines Limited

CASES CITED: State Wage Case 2004 (2004) 132 IR 190

Robert Lawrence v Attorney General's Department [2004] NSWIRComm 59

Crown Employees Teachers Case (2004) 133 IR 254

Health Employees Pharmacists (State) Award (2003) 132 IR 244

CFMEU v Pasminco Broken Hill Mines [2002] NSWIRComm 300

Re Crown Employees (Teachers in Schools and TAFE and Related Employees) Salaries and Conditions Award (2002) 116 IR 361

Public Hospital Nurses (State) Award (2002) 115 IR 183

Re Operational Ambulance Officers (State) Award (2002) 113 IR 384

CFMEU v AAA Services & Equipment Hire and Others Print PR 954681

Melosco Manufacturing Pty Ltd Thompson (1996) 40 NSWLR 525

Accident Pay Case 1978 [1979] AR 101

Re Engineers &c (State) Award and Others [1973] AR 313

Master Builders Association of New South Wales, Ex parte: Re Industrial Commission of NSW [1971] NSWLR 655

R v Hamilton Knight and Others; Ex parte The Commonwealth Steamship Owners Association (1952) 86 CLR 283

The King v Central Reference Board and Others; Ex parte Theiss (Repairs) Pty Ltd (1948) 77 CLR 123

R. v. Drake-Brockman; Ex parte National Oil Pty. Ltd. (1943) 68 CLR 51

R. v. Hickman; Ex parte Clinton and Fox (1945) 70 CLR 598

LEGISLATION CITED: NSW Workers Compensation Act 1926

Workers Compensation Act (Tasmania) 1927

Workers Compensation Act (New South Wales) 1987

Work Cover Queensland Act 1987

Workers Compensation Act (Tasmania) 1988

Industrial Relations Act (New South Wales) 1996

JUDGMENT:

- 29 -

INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES

CORAM: Grayson, DP

6 May 2005

Matter No IRC 6261 of 2004

Coal Industry (Accident Pay) Interim Award 2004

Application by Construction, Forestry, Mining and Energy Union (New South Wales Branch) for a new award

JUDGMENT

[2005] NSWIRComm xxx

1 By its amended application filed on 1 December 2004, the Construction, Forestry, Mining and Energy Union, New South Wales Branch (CFMEU) seeks a new award.

2 The terms in which the new award is now sought are set out in Schedule "A" to the amended application and are as follows: -

1. TITLE

This award shall be known as the Coal Mining (Accident Pay) Interim Award 2004.

2. COVERAGE OF THE AWARD AND PARTIES BOUND

2.1 This award shall apply to all employees of an employer who has been required, pursuant to section 31 of the Coal Industry Act 2001, to effect a policy of workers compensation insurance with the workers compensation company approved under section 9 of the Coal Industry Act 2001.

2.2 This award shall not apply to employers who are respondent to the Federal Award.

2.3 This award shall apply to employees falling within the classes of work and classifications in the Federal Award.

2.3 This award binds:

The Construction, Forestry, Mining and Energy Union, New South Wales Branch;

The Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union, New South Wales Branch;

The Electrical Trades Union of Australia, New South Wales Branch;

All employers referred to in clause 2.1 herein, excepting those employers who are respondent to the Federal Award.

3. PERIOD OF OPERATION

This award shall commence on 1 December 2004 and shall continue in force for a period of 3 years.

4. DEFINITIONS

4.1 Federal Award – means the Coal Mining Industry (Production and Engineering) Consolidated Award 1997, an award of the Australian Industrial Relations Commission.

4.2 Ordinary Weekly Earnings – has the same meaning as in the Federal Award.

4.3 The Act – means the Workers’ Compensation Act 1987 (New South Wales).

5. ACCIDENT PAY

5.1 An employee in receipt of weekly payments under the provisions of the Workers’ Compensation Act 1987 (New South Wales) will be entitled to receive accident pay from the employer subject to the conditions and limitations specified in this clause.

5.2 An employer shall pay, or cause to be paid, accident pay during the incapacity of the employee, within the meaning of the said Act -

a. until such incapacity ceases; or

b. until the expiration of a period of seventy-eight weeks from the date of injury,

whichever event shall first occur, even if the employer terminates the employee’s employment within the period.

5.3 For the purposes of this clause accident pay means:

a. For the initial period of thirty-nine weeks from the date of injury –

i. a weekly payment representing the difference between the weekly amount of compensation paid to the employee by virtue of the said Act, and the employee’s ordinary weekly earnings at the date of the injury.

b. For a further period of thirty-nine weeks –

ii. a weekly payment representing the difference between the weekly amount of compensation paid to the employee by virtue of the said Act and the rate prescribed in the total payment column of sub clause 18.6 Minimum Rates, of the Federal Award, as varied from time to time, for the classification of the incapacitated employee at the date of the injury.

c. In respect of incapacity for part of a week the amount payable to the employee as accident pay shall be a direct pro rata.

d. An employee shall not be entitled to any payment under this clause in respect of any period of paid annual leave or long service leave, or for any paid public holiday.

e. In the event that an employee receives a lump sum in redemption of weekly payments under the said Act, the liability of the employer to pay accident pay as herein provided shall cease from the date of such redemption.

f. Where the employee recovers damages from the employer or from a third party in respect of the said injury independently of the said Act, such employee shall be liable to repay to the employer the amount of accident pay which the employer has paid under this clause and the employee shall not be entitled to any further accident pay thereafter.

g. The 78 week period commences from the first day of incapacity for work, which may be subsequent to the date of injury. Intermittent absences arising from the one injury are to be cumulative in the assessment of the 78 week limitation.

6. DISPUTES PROCEDURE

6.1 The employee and/or their representative will confer with the employer and/or their representative to attempt to resolve the dispute. Should this not be successful either party may refer the matter to the Industrial Relations Commission of New South Wales.

3 The grounds and reasons relied upon by the CFMEU in support of the application are as follows: -

1. There presently exists an anomaly in respect to employee entitlement to “accident pay” in the coal industry in the State of New South Wales.

2. The majority of employees engaged in the coal industry in New South Wales have an entitlement of up to 18 months “accident pay” as a result of the operation of clause 22 of the Coal Mining Industry (Production and Engineering) Consolidated Award 1997, an award of the Australian Industrial Relations Commission made under the Workplace Relations Act 1996. Additionally, some employees are entitled to such payment pursuant to the provisions of an enterprise agreement certified under the Workplace Relations Act 1996.

3. However, a significant number of employers in the coal industry in New South Wales are not bound by any industrial award or agreement.

4. Workers’ compensation payments in the coal industry in the State of New South Wales are administered by a monopoly insurer known as Coal Mines Insurance Pty Ltd (‘CMI’), a subsidiary of Coal Services Pty Ltd (ABN 98 099 078 234).

5. The Chief Executive Officer of Coal Services Pty Ltd has recently confirmed that CMI will only pay the 18 month accident pay standard to employees who have an entitlement arising from an industrial instrument.

6. CMI has also confirmed that there are at least 2,623 employees who (at present) would receive only the six month statutory minimum entitlement to accident pay in the event that they were injured at work.

7. Evidence about lost time injuries in the coal mining industry in the State of New South Wales indicates that there is a higher rate of injury of workers in the coal mining industry than in (sic) other industry, and that the injuries suffered are of a more serious nature than those suffered by workers in other industries. Coal mining is an inherently dangerous occupation which carries with it significant risk of severe injury.

8. The existing anomaly in entitlements to accident pay amongst coal miners is unjust and inequitable.

9. Unless remedied, the existing anomaly has the potential to lead to unnecessary litigation and industrial disputation.

4 The CFMEU application is supported by the Electrical Trades Union of Australia, New South Wales Branch (ETU) and the Australian Manufacturing Workers' Union (AMWU).

5 It is opposed by the numerous corporate entities for whom Freehills act and also by Employers First (EF), Australian Business Industrial (ABI), Australian Industry Group (AIG) and the Electrical Contractors Association of New South Wales (ECA).

6 From the outset, the proceedings have been attended by a degree of urgency on the part of the CFMEU and the other unions in the interests of those injured workers who may in the absence of award coverage, receive a lesser accident pay benefit than those who have such coverage.

7 That issue will be dealt with more fully in the course of these reasons but it will be sufficient for the time being to observe that the matter has been dealt with by the Commission according to its needs and in a manner which could be described at times as somewhat more procedurally taxing for the parties than would ordinarily be the case.

8 In the result and in addition to the substantial amount of documentary material placed before the Commission, the following witnesses were called: -

· Anthony John MAHER - General President of the Mining and Energy Division of the CFMEU

· Kathryn Joan HEILER - Senior Research Fellow, Australian Centre for Industrial Relations Research and Training (ACIRRT) on secondment to the CFMEU as National Policy Advisor

· Colin Edward KEEN - coal miner employed by a contractor at the Eloura Colliery located at Wongawilli near Dapto, NSW

· Robert George MITCHELL - Secretary, South West District of the Mining and Energy Division of the CFMEU

· Graham CONDIE - General Manager, Cargo Superintendents Co. Australasia (CASCO), a coal sampling company

· David PRIESTLY - Operations Manager, J.A Martin Electrical Pty Ltd, a contractor to coal mines and washeries, gravel quarries, cotton ginning facilities, chemical manufacturers and other industrial enterprises

· Phillip John BERRIMAN - Managing Director and Public Officer of P.J. Berriman and Company Pty Ltd, manufacturers and repairers of specialised vehicles used primarily in the underground mining industry (both coal and metalliferous)

· Keiren TURNER - General Manager, NSW Minerals Council

· David Ian CLIFF - Associate Professor and Director of Research with the Minerals Industry Safety and Health Centre at the University of Queensland and consultant to the Minerals Council of Australia, various mining companies and other organisations involved in the mining industry.

· Jamie Michael FRANKCOMBE - General Manager Open Cut Operations, Xstrata Coal NSW

9 Turning then to the subject matter of the application, it may be observed in broadly stated terms that the intention of the CFMEU is to afford certain production and engineering employees within the coal mining industry an entitlement which but for absence of coverage by an industrial instrument, would otherwise be theirs by reason of an industry standard which has historically provided to injured workers a weekly payment benefit significantly greater than the workers compensation laws of the various coal mining states. (Viz Queensland, New South Wales and Tasmania)

10 The primary source of that entitlement is to be found in the decisions of the now defunct Coal Industry Tribunal dating back to 1973 and presently within the various federal instruments of industrial regulation principally the Coal Mining Industry (Production and Engineering) Consolidated Award 1997 (the federal award).

11 The federal award relevantly provides as follows: -

22. ACCIDENT PAY (PREVIOUSLY CLAUSE 29)

[Pt 5:22 preamble substituted by V007 ppc 03Nov99]

An employee in receipt of weekly payments under the provisions of the Work Cover Queensland Act 1997 or the Workers Compensation Act 1987 (New South Wales) or the Workers Compensation Acts 1927 and 1988 (Tasmania) will be entitled to receive accident pay from the employer subject to the following conditions and limitations.

22.1 Payment to be made during Incapacity

[Pt 5:22.1 substituted by V002 from 01Jul98]

An employer shall pay, or cause to be paid accident pay during the incapacity of the employee, within the meaning of the said Act

until such incapacity ceases; or

until the expiration of a period of seventy-eight weeks from the date of injury,

whichever event shall first occur, even if the employer terminates the employee's employment within the period.

22.1 Meaning of Accident Pay

For the purposes of this clause accident pay means:

22.2.1 For the initial period of thirty-nine weeks from the date of injury a weekly payment representing the difference between the weekly amount of compensation paid to the employee by virtue of the said Act and the weekly amount that would have been received by virtue of the said award had the employee been on paid sick leave at the date of the injury. (emphasis added)

22.2.2 For a further period of thirty-nine weeks a weekly payment representing the difference between the weekly amount of compensation paid to the employee by virtue of the said Act and the rate prescribed from time to time for the classification of the incapacitated employee at the date of injury.

22.3 Pro-rata Payments

In respect of incapacity of part of a week the amount payable to the employee as accident pay shall be a direct pro rata

22.4 When not entitled to Payment

An employee shall not be entitled to any payment under this clause in respect of any period of paid annual leave or long service leave, or for any paid public holiday.

22.5 Redemptions

In the event that an employee receives a lump sum in redemption of weekly payments under the said Act, the liability of the employer to pay accident pay as herein provided shall cease from the date of such redemption.

22.6 Damages independent of the Acts

Where an employee recovers damages from the employer or from a third party in respect of the said injury independently of the said Acts, such employee shall be liable to repay to the employer the amount of accident pay which the employer has paid under this clause and the employee shall not be entitled to any further accident pay thereafter.

and later: -

30.1 Definition of sick leave

Sick leave is paid leave taken when the employee is unable to attend work because of personal illness or injury. This is subject to:

· the injury which causes the absence not being caused by the employee's own default or wilful act; and

· the employee having sufficient sick leave credits; and

· the employee being entitled to workers' compensation for the same period

30.2 .....

30.3 .....

30.4 .....

30.5 Payment

[Pt 7:30.5 substituted by V009 ppc 19Jun00]

If the employee has sufficient sick leave credit, sick leave taken must be paid at the rate appropriate to the employee's classification for the ordinary time hours of the shift the employee was unable to attend. (emphasis added)

12 The legal obligation on employers created by the accident pay provisions above is and has historically been transferred to the monopoly industry insurer, Coal Mines Insurance Pty Ltd (CMI) by reason of an endorsement to the standard policy of indemnity offered by CMI to participating industry employers. The endorsement provides for a policy-holding employer to be indemnified "for the employer's liability to pay accident pay to a worker covered by the policy arising from any award order or determination made by (sic) Commission on the following terms and conditions..."

13 The term "Commission" appearing on the endorsement is defined as meaning the Australian Industrial Relations Commission or such other competent Commonwealth or New South Wales industrial tribunal, commission or court as may have jurisdiction in respect of the subject matter of the endorsement and it might be usefully noted here as Mr Longland for Freehills most properly conceded in closing submissions:

Can we say finally and in summary your Honour that we acknowledge that this Commission has jurisdiction, it has power to make the award of the type sought. We acknowledge that it is a discretion which can be exercised to that effect. What we simply say is that the applicant is not armed with the evidence which is necessary for you to make the findings that the statute requires

14 Thus it can be seen that the obligation to pay in the absence of any common rule award in this State rests only upon those employers who are respondent to the federal award or a federal certified agreement and where those employers are insured, the obligation transfers to CMI. Conversely, no obligation to pay accident pay rests on an employer in the industry who is not respondent to such instruments of industrial regulation, notwithstanding that, as the evidence disclosed, such employers may have taken out and maintained in force, policies of indemnity with CMI and further, that until the matter came to attention in late 2004, CMI had in fact been making payments of accident pay to employees of such employers who suffered work-related injury.

15 In evidence before the Commission is the final report of Ernst and Young, Actuarial Business Consultants which was presented on 20 August 2004 to Mr A.J. Haraldson AM, Chairmen of Coal Services Pty Ltd the entity which is jointly owned by the NSW Minerals Council and the CFMEU and which in turn owns CMI. The report, entitled Independent Review of Monopoly Arrangement of NSW Coal Industry Scheme, not only provides a comprehensive account of the insurance operations of CMI but also and as submitted by the CFMEU, complements and verifies much of the evidence given in the proceedings.

16 The report made a number of findings and recommendations which are usefully summarised in the written submissions as follows: -

(i) It recommended that the costs of accident pay be separately identified and only applied to employers with obligations to pay accident pay (Para 1.13 (ii) @ p7)

(ii) It found that labour hire/contractors have a low workers compensation claim rate and represented 26% of workers in 2003, up from 12% in 1999 (Para 4.109 @ p 63)

(iii) It found that the proportion of total employees covered represented by large employers had reduced from 71% in 1994 to 53% at 30 June 2003. A reason for this is the growth of labour hire and contractors (Para 4.58 @ p52)

(iv) It summarised the impact of contractors on the industry in the last 10 years (Pras 4.85 - 4.92 @ pp58-59)

(v) It found that the high frequency of accidents per coal industry employee makes it more likely that the cost impact will be greater for the coal industry than other industries (Para 7.27 c @ p96)

(vi) It found that calculation of CMI of award payments, enterprise agreements and accident pay were all in accordance with agreed terms (Para 10.33 @ p138)

(vii) It found that CMI had inadequate data about which policy holders have or do not have accident pay obligations (Para 12.53 @ p174)

(viii) It found that accident pay is included in the CMI scheme for historic reasons. The CFMEU, employers, and CMI all advocated including accident pay in workers compensation payments on the basis of administrative simplicity (Para 18.19 @ p249)

17 Mr Maher gave evidence about the rapid change in the nature of employment in the coal mining industry in recent years and in particular, emphasised the significant growth of contractor/labour hire employees. In referring to the relatively low number of new entrants to the industry either as direct employers or contractors prior to 1998, Mr Maher estimated the percentage of contractor employees in 1998 to be about six per cent. He spoke about a forty per cent reduction in the permanent workforce by way of retrenchment between 1998 and 2001 as a result of falling commodity prices and the consequent industry restructuring. This phenomenon is also touched upon in the Ernst and Young report as follows: -

4.88 The number of labour hire (to be read synonymously as contractor) employees has been growing rapidly over the last 10 years with an average rate of increase of approximately 21% pa. (words in parentheses added)

4.89 The increase in "labour hire" employees may be partly explained by the number of workers retrenched during the period of industry restructuring returning to employment as contractors. With the economic forecast of a boom in coal exports over the next five years, it is unclear if the proportion of "labour hire" employees will continue to increase in the future years.

Mr Maher said that there are presently new entrants to the industry at the rate of a new mine every year and a new contractor at least every week.

18 In attempting in the sense of federal award regulation, to keep pace with the rapidly changing industrial landscape, Mr Maher observed as the following extract of his cross-examination evidence reveals, that the CFMEU has been less than successful:-

Q. Resolution No. 6 from your national conference in December said that you had dropped the ball when it came to accommodating employees of contractors?

A. Yes.

Q. That is something you are going to focus on doing better in the future, is that right?

A. Yes.

Q. Would you agree with me that the industrial regulations in the coal mining industry apparently is exclusively through Federal instruments?

A. I think that is right, in most industries there is a State Award but not this one.

Q. Your industry?

A. No.

Q. So it has been very common for your union to serve logs of claim and have new employees roped into the Federal Award?

A. It is a painfully slow process.

Q. I ask you to accept it is common for your union to do that?

A. We have been served reasonably widely in the last couple of years.

Q. I suggest to you there are 414 respondents to the Federal P and E Award, you would not disagree with that?

A. No.

Q. You would agree with me that is a large number of respondents?

A. Yes.

Q. Your union has done particularly well in increasing the list of respondents to that Award, has it not?

A. No, I think we have done very poorly and the process is painfully slow.

19 Mr Turner gave evidence, consistent with that of Mr Maher, as to the state of the coal mining industry and as to the changes that have occurred within it. In particular, he accepted under cross-examination that: -

(a) The permanent workforces at the 56 mines in NSW are covered by the federal award.

(b) The vast majority of employees in the permanent workforce are covered by federal certified agreements.

(c) There are employers in the industry who have not been served with a log of claims by the union.

(d) The vast majority of certified agreements have a provision that reflects the accident pay provision in the federal award.

(e) Once the CIT was abolished industrial regulation in the industry became more complex.

(f) There has been a burgeoning use of contractors in the industry since the CIT was abolished.

(g) The process of roping in contractors to the federal award has been going on for a long time.

(h) New contractors employing production and engineering employees enter the industry fairly regularly.

(i) The union has a valid concern that some production and engineering workers are not getting 78 weeks accident pay.

(j) There are workers performing production and engineering work in the industry who are not covered by an accident pay provision.

20 Evidence as to actual disadvantage was given by Mr Keen, an employee of a contractor engaged by and providing services to Endeavour Coal Pty Ltd, the operators of the Elouera Colliery in the Illawarra region of New South Wales. Mr Keen deposed to almost thirty years employment as a coal miner all but the last four years of which have been with a mine operator as distinct from his present employer, a contractor. He had suffered injury in the past years and I infer had been paid benefits at the industry standard.

21 In October 2004, Mr Keen suffered a back injury whilst installing roof bolts at Elouera Colliery. He was surprised to receive weekly compensation of $500, less than half his average take home pay of $1200 to $1400 per week and even more surprised to learn after contacting CMI that there was no mistake and that his employer (and therefore CMI) was under no obligation to pay the normal "make-up pay" as he described it. This was a novel experience for him in his lengthy period of employment as a coal miner and at the time his evidence was taken, he was still receiving the lower weekly payments and was uncertain of when he would be cleared for return to work.

22 In my opinion, the comprehensive empirical evidence given by Ms Heiler on behalf of the CFMEU and by Professor Cliff on behalf of the employers can be taken as evidence going to the inherent risks of injury routinely encountered by coal miners in New South Wales and although there was a substantial amount of forensic energy expended on both sides of the record in testing the various qualitative research opinions of those expert witnesses, it is beyond argument that coal mining is an inherently dangerous occupation requiring careful risk management strategies albeit with greater success in some circumstances than others.

23 It is not to the point, as I am disposed, that the New South Wales coal mining industry compares favourably or unfavourably with other industries in terms of occupational health and safety performance or whether and to what extent, there have been improvements in that regard in the past decade or so. It can be accepted I think for the purpose of the issues to be tried here that the approach taken within the coal mining industry to the compensation of injured workers has historically been and remains unique and that the premise upon which the CFMEU application is essentially based is one of fairness and reasonableness in that workers performing the same work in the same industrial environment are entitled to enjoy the same conditions of employment.

24 Turning then to the award the Commission is asked to make, a number of matters arise in the contentions of the various respondents to the proceedings about the form of the award. One matter concerns the proposed scope of the award and another the entitlement clause which it is said, does not reflect the federal award provision as is its purport.

25 As to the first matter, the CFMEU has made it abundantly clear from the outset that its intention is to cover production and engineering employees in the coal mining industry and as correctly submitted by the CFMEU, the evidence of both Mr Turner on the employers side and Mr Maher for the CFMEU indicate a clarity of understanding and an absence of controversy about the category of production and engineering employees.

26 As the following extract of Mr Turner's cross-examination evidence reveals, this category of employees is accepted within the coal mining industry as being those employees engaged in the production of coal on the one hand and in the maintenance of machinery used for that purpose on the other: -

Q: When I use the term production and engineering work force, are you clear on what I mean?

A: If you tell me I would be, but I assume you mean people involved in the production of coal for the purposes of selling the coal.

Q: And engineering workers are those who do maintenance on machinery that is used in production?

A: Okay, but the general terminology in the industry, that is consistent with what you are saying, but also they are often grouped as one group, and for the purpose of the award, that is the case.

Q: You understand the term blue collar workforce is another term for the production and engineering workers?

A: It's a common term in the industry generally.

27 The following evidence given earlier by Mr Maher is also instructive in that regard: -

SLEVIN: Q: In the questioning this morning from Mr Ryan you were asked about the definition of mine worker. In one of your responses you referred to production and engineering work. What do you mean by production and engineering work?

A: Well, "production" and "engineering" were terms that were in the award before it was changed again by the Commission in, I think, the second award simplification. Production work was the stream of skills that took the place of all the task base classifications in the early 90s and it included open cut and underground production skills, such as operating continuous miners, load hauls and open cut that would include all the open cut machinery and what-not, truck and shovels, which includes washeries. And engineering work is a combination of the electrical and mechanical skills and, you know, includes tool repairs and all manners (sic) of mechanical and electrical work, cables for various machinery that's electrically operated. So, yes, it's wide - a whole range of classifications were in production and engineering and now are replaced by the various mine worker levels and that was done by arbitration.

Q: And do you understand if the new classification structure still reflects the work that is described as production and engineering work in the earlier award?

A: Yes, it's to replace it, yes.

28 Furthermore, there was no evidence of any disputation let alone excessive disputation as to the scope of the federal award which the CFMEU here seeks to reflect and that purpose namely to reflect the federal award is to my mind materially assisted by the various amendments to the application made by the CFMEU in the interests of accommodating concerns raised by those on the respondent's side of the record.

29 For example, the amended application upon which the CFMEU proceeds, makes reference to employers who are required to take out insurance with CMI thus avoiding or at worst minimising argument about award definitions and thus also providing an entitlement to accident pay for employees the subject of such policies of insurance.

30 A further amendment limits the application of the proposed award to classes of work and classifications contained within the federal award which as earlier observed, applies to production and engineering employees in the coal mining industry.

31 Throughout the proceedings, the respondents have raised concerns about the potential for confusion if the proposed award is made and about difficulties which might arise in the construction of the award. Clearly and as Mr Slevin of counsel for the CFMEU submits, the construction of an award, absent agreement, is a matter with which courts and tribunals generally and this Commission in particular are traditionally familiar. Mr Slevin points by way of example to the High Court consideration of the term coal mining industry in The King v Central Reference Board and Others; Ex parte Theiss (Repairs) Pty Ltd (1948) 77 CLR 123, Latham CJ said at 130-131: -

"Coal mining industry" is not a technical term: see R. v. Drake-Brockman; Ex parte National Oil Pty. Ltd. (1943) 68 CLR 51; R. v. Hickman; Ex parte Clinton and Fox (1945) 70 CLR 598. It is a question of fact depending upon all the circumstances of the case whether a particular employer or employee is engaged in the coal-mining industry, with the result that an industrial question arising between the employer and the employee or an organization consisting of employees is a dispute or other matter in that industry. The line between industries is in many cases not clear. One industry may be entirely concerned with the service of another industry, and yet may not be part of that other industry. A laundry company may do work for hotels and restaurants but, to take a case at one end of the line, if the laundry business were conducted by a laundry company completely separate from any of the hotels and restaurants for which it did work (as for other customers) upon ordinary commercial terms, it would not be possible to say that the laundry was part of the hotel industry. A case at the other end of the line would be found where a hotel employed some laundresses on the hotel premises who did work exclusively for the hotel and were completely under the control of their employer. In such a case the laundresses might well be held to be working in the hotel industry.

32 Further it is contended and I agree, that the Commission should not be concerned at the point of making an award to construe the award in every conceivable application. In fact it may well be and as the CFMEU submitted, probably is the case on the evidence given by Mr Condie, Mr Priestly and Mr Berriman that those employers as presently structured would not be caught by the proposed award. That is not to say that at some future time in different circumstances, those employers may not have employees to whom the proposed award would apply.

33 Simply put, each case turns on its own facts and circumstances as is evident from the recent decision of Senior Deputy President Drake in the Australian Industrial Relations Commission to which the Commission was taken. In CFMEU v AAA Services & Equipment Hire and Others Print PR 954681, Drake SDP found that the employer of employees engaged to work as shot firers on a coal mining lease was engaged in the coal industry. In so concluding her Honour said: -

[342] It is clear that the determination of industry is a matter to be resolved on the facts and circumstances of each respondent employer and its employees and that the work performed by the employees of that employer is a relevant consideration.

I do not consider such perceived (as distinct from actual) difficulties to be a legitimate impediment to the making of the proposed award.

34 The respondents also point to differences in the terms in which the entitlement clause (cl. 5) of the proposed award and the entitlement clause (cl. 22) of the federal award are expressed and argue that those differences are at odds with the repeatedly stated intention of the CFMEU to reflect the benefit prescribed by the federal award.

35 I do not accept this as being a necessary result of the differences in the wording used in the proposed award given as the CFMEU submits and as is clear on its face, the proposed clause simply removes the surplus reference to Queensland and Tasmanian workers compensation laws and seeks to simplify the provision in the federal award which describes the actual benefit payable by reference to sick leave entitlements and classification rates which are found elsewhere in the federal award. For consistency and greater certainty of outcome, however, I can see no harm in adopting the form of words used in the federal award to the maximum practicable extent and this is particularly so if, in the result, there is an amelioration of employer misgivings. That observation includes the use of the federal award term "coal mining industry" and the use of the federal award sick leave term "ordinary time hours of the shift the employee was unable to attend" in place of the proposed term "ordinary weekly earnings".

36 Turning then to the question whether the proposed award can and if so, should be made, there are various contentions which arose in the course of debate. Reference has already been made at [13] to the concession of the numerous employers for whom Freehills act.

37 Employers First, for example, raised a jurisdictional impediment to the effect as I understand it, that the Commission cannot make an award which is contrary to the intention of Parliament, the argument being that the statutory provisions relating to workers compensation for coal miners should be construed to evince a legislative intention that those provisions would operate to the exclusion of other regulatory regimes including awards of the Commission.

38 In support of that contention, Mr Ryan for EF referred to Master Builders Association of New South Wales, Ex parte: Re Industrial Commission of NSW [1971] NSWLR 655 and the dicta of Webb J in R v Hamilton Knight and Others; Ex parte The Commonwealth Steamship Owners Association (1952) 86 CLR 283 as a source of authority for the concept of legislative exclusivity.

39 However and as Mr Slevin points out with some persuasive force, a Parliamentary intention not only recognising that there may be award prescription for accident pay but also that such prescription for accident pay may extend beyond the statutory workers compensation prescription is to be found under the Protection of Injured Employees provisions of the Industrial Relations Act 1996 which relevantly state: -

99(1A) [Definition of "relevant period"] For the purposes of subsection (1), the "relevant period" is:

(a) the period of 6 months after the employee first became unfit for employment, except as provided by paragraph (b),

or

(b) if the employee is entitled under a Commonwealth or State industrial instrument to accident pay as a result of the injury for a period exceeding that period of 6 months - the period during which the employee is entitled to accident pay.

Accident pay is an entitlement of the employee to payment by the employer, while the employee is unfit for employment, that is described as accident pay in the relevant industrial instrument.

I am far from persuaded that there is a Parliamentary intention to prevent or preclude the making of State awards which afford injured employees accident pay benefits greater than the statutory 26 weeks standard.

40 EF and Freehills also rely on the decision of the Full Bench of the NSW Industrial Commission in Court Session in the Accident Pay Case 1978 [1979] AR 101 in support of the proposition, broadly stated, that accident pay provisions were removed by arbitral process and remain absent from awards in this state. That case, however, is authority only for the proposition broadly stated that it was considered by the Commission at the time, that no useful industrial purpose was to be served by having almost 200 awards of the Commission prescribing what the NSW Workers Compensation Act 1926, then only recently amended, also provided namely, weekly payments of compensation at the full award rate for the first 26 weeks of incapacity.

41 Further, the Commission in the Accident Pay case left open the clear opportunity to revist the question of accident pay award provisions in the following passage at p 111: -

If, in the future, application is made for a review of the conditions which should apply in relation to the level of payments to be made to a workers incapacitated by a compensable injury or to the duration of such payments, the tribunal will be obliged to give consideration to the case presented notwithstanding what has happened in the past and notwithstanding the absence of any then existing award provisions.

I do not consider the Accident Pay case to have application to the issue to be determined here.

42 As to the submission of Freehills that there is not one award of the Commission which creates an entitlement of more than 26 weeks accident pay, the CFMEU points to the following four awards as examples of awards which so provide: -

(i) Energy Australia Award 2003 (342 IG 402) which at clause 27.2 provides for 52 weeks accident pay

(ii) Textile Industry (State) Award (328 IG 841 which at clause 31.4 provides for 39 weeks accident pay

(iii) Tanning Industry (State) Award (331 IG 157) which at clause 34 (iv) provides for 39 weeks accident pay

(iv) Australian Liquor, Hospitality and Miscellaneous Workers Union Chemical Industry (APS Operations) Award (319 IG 768) which at clause 23 (c) (vii) provides for 39 weeks accident pay

To the extent that such a proposition may relevantly bear upon these proceedings, it is simply not made out.

43 Turning then to the operation of the Commission's wage fixing principles (State Wage Case 2004 (2004) 132 IR 190) the CFMEU brings the proceedings in reliance upon either or both the first award principle (Principle 13) and the special case principle (Principle 10). In my opinion and with every respect to the vigorous opposition to it, the application sits comfortably within these principles and further, as the CFMEU submits, it does not offend the "counterpart" or "roping in" award principle. The award if made, would inarguably be consistent as a first award with the Commission's obligation under Part 1 Chapter 2 of the Act to set fair and reasonable conditions of employment for employees and I am far from persuaded, as EF contend, that there are many awards that presently apply to the employers sought to be covered by the proposed award.

44 EF submitted the following awards as examples thereof: -

(i) The Metal, Engineering and Associated Industries (State) Award (325 IG 209) as varied;

(ii) The Electrical, Electronic and Communications Contracting Industry (State) Award (318 IG 645) as varied;

(iii) The Engine Drivers, &c., General (State) Award (329 IG 164) as varied;

(iv) The Plumbers and Gasfitters (State) Award (313 IG 709) as varied.

Plainly, there are difficulties in making out that contention on the evidence as it stands not the least of which as Mr Slevin submitted, is that three of the four awards cited contain express provisions in the respective Area, Incidence and Duration clauses excluding coverage of workers in or about coal mines and it is by no means clear or even touched upon by the evidence how the other award namely the Electrical Contracting award might apply to the employees sought to be covered by the proposed award.

45 It is further contended by EF that the accident pay standard sought by the proposed award does not represent prima facie the existing conditions of employment to which the Commission will pay regard under the first award principle. This contention seeks to rebut the CFMEU proposition that because the employees concerned have for a considerable period of time and until relatively recently enjoyed the benefits of the industry standard of 78 weeks accident pay then the standard can be accepted as the existing conditions of employment for the purposes of Principle 13 (c). In the supplementary submissions of Freehills on behalf of numerous industry employers, it is suggested that this particular proposition is flawed because it is predicated on the fact clearly established in evidence namely, that payments of accident pay made to employees who had no entitlement to such payments were made by mistake and upon the principles of restitution and unjust enrichment could have been recovered if CMI had chosen to take recovery action. (see Melosco Manufacturing Pty Ltd Thompson (1996) 40 NSWLR 525; CFMEU v Pasminco Broken Hill Mines [2002] NSWIRComm 300 and Robert Lawrence v Attorney General's Department [2004] NSWIRComm 59). In such circumstances, the Commission would not regard a mistaken payment as constituting a condition of employment as between the employer and the employee.

46 If that were the only basis for considering the requirements of the first award principle to have been satisfied then the arguments advanced by EF and Freehills may have persuasive force but the plain and unassailable facts of this case are that existing conditions of employment referred to in the context of the first award principle can and should in my opinion, be taken to mean conditions of employment which do not include accident pay and which are thereby deficient in terms of their fairness and reasonableness. It is the Commission's task under the first award principle to have regard to the existing conditions of employment and having done so, it seems to me, to adjudge their fairness and reasonableness or lack thereof against the Commission's obligations under Part 1, Chapter 2 of the Industrial Relations Act 1996.

47 As to the special case principle, the numerous Full Bench authorities establish that the relevant tests will be met if the applicant demonstrates that the case sought to be made out has special attributes or is out of the ordinary so as to take it outside the restrictions which may otherwise apply under the wage fixing principles (see Re Operational Ambulance Officers (State) Award (2002) 113 IR 384; Crown Employees Teachers Case (2004) 133 IR 254; Health Employees Pharmacists (State) Award (2003) 132 IR 244 and others)

48 I am comfortably satisfied, as Mr Slevin submits, that the very nature of the coal mining industry in terms of industrial regulation and the regulation of occupational health and safety and workers compensation carries with it a range of special attributes as follows: -

a. The history of industrial regulation in the coal industry is special and arguably unique.

b. The coal mining industry is afforded special treatment in terms of occupational health and safety and workers compensation. This treatment includes:

i. Industry specific health and safety legislation;

ii. Industry specific legislation providing for a monopoly workers compensation insurer;

iii. Exemptions from the general workers compensation scheme including greater entitlements for injured workers.

c. The level of entitlement to accident pay is unique and was introduced in recognition of the dangerous circumstances of the industry.

d. The 78 week entitlement to accident pay has been afforded to all production and engineering workers without discrimination for over 30 years.

e. An anomaly has arisen that means that a minority of workers in the industry is not being afforded 78 weeks accident pay.

In so concluding, I bear in mind the supplementary submissions of Freehills which call into question the CFMEU contentions in this regard and would simply observe as the authorities allow, that the question of what is out of the ordinary or what attributes may bring a matter within the special case principle is ultimately a matter for judgment and the existence of circumstances where, as Mr Maher stated, there has been an emergence of what he succinctly described as a group of second class citizens within the coal mining industry namely, those who do not receive the industry standard of 78 weeks accident pay, is of itself the manifestation of an attribute which brings the matter within the special case principle.

49 That is not to say that other attributes to which the CFMEU alludes, do not have similar effect to one degree or another but to my mind the existence of an industry standard which applies to the great majority of production and engineering employees within the coal mining industry but which is denied to a small minority merely because of the absence of federal award or agreement coverage is to my mind, an attribute which most compels a special case finding and which most compels the granting of the relief sought by the CFMEU.

50 As to the proposition raised in the submissions of the respondents that by bringing proceedings in this Commission, the CFMEU is in some way engaging in forum shopping, it is difficult to understand the basis for such a proposition. This is particularly so when the term is not defined by the respondents and when the CFMEU is plainly seeking a common rule award setting the conditions of employment for employees within the coal mining industry in New South Wales whose employment is not regulated by the federal award. In the circumstances, it is self evident, as Mr Slevin submits, that the New South Wales Industrial Relations Commission is the appropriate forum to bring such a case. In that regard, the following passage from Re Engineers &c (State) Award and Others [1973] AR 313 is apposite: -

The term "counterpart award" or "roping in award" is a well recognised one. It is a term applied to a state award made for an industry in which the great majority of employers and employees are subject to a federal award, the State award being made in terms which are substantially uniform with those in the federal award and its purpose being to cover or "rope in" those employers and employees who are not bound by the federal award and who would otherwise be award free. (p 317, Cahill J)

51 In determining whether to grant the CFMEU application, the Commission is asked by the Electrical Contractors Association of New South Wales to consider the potential impact on employers holding CMI policies whose premiums are based on indemnity limited to the 26 week standard prescribed by the relevant workers compensation statute. Mr Marshall for the ECA makes this submission on the basis of the affidavit evidence given by Mr Turner who touched upon the complex subject of premium calculation in only the most superficial way and who makes the general observation that claims experience (which may otherwise be described as the cost of claims) taken into account in calculating the annual premium payable by an employer would reflect the presence or absence of an accident pay compenent. Against that, however, Mr Turner conceded in his cross - examination evidence that the level of payments made by CMI to injured workers who did not have the prerequisite award entitlement to accident pay between 1998 and 2004 was not of such significance as to prompt CMI to take action to recover those payments. Mr Turner, as the following extract of his cross - examination evidence indicates, accepted that the CFMEU was validly concerned about the issue giving rise to these proceeding but thought that the number of affected employees was minimal: -

Q: Following from that, if you accept the union's concern that there was some production and engineering workers because of the burgeoning use of contractors are not getting 78 weeks accident pay is a valid concern?

A: It is a valid concern on the part of the union, yes.

Q: And do you accept that there is a group of workers out there who are not being afforded 78 weeks accident pay but they are doing production and engineering work?

A: They are a group but it is our understanding that it is a very small group.

52 On that basis, it could be argued that any additional cost on employers which would be a consequence of the application being granted, would also be minimal. Having said that, I should not be taken to have reached a firm conclusion as to the likely cost impact because the state of the evidence simply does not permit it. I do however, conclude that the impact on injured workers such as Mr Keen of having his average weekly income reduced from $1200 to $500 by reason of work - related injury and incapacity is significant indeed.

53 As to the general standard of accident pay beyond the coal mining industry, I agree with Mr Slevin that it is no response to the case presented by the CFMEU to point, as the respondents have done, to employees in other industries who may receive less and in so doing, to assert unfairness as a consequence of granting the CFMEU application. The CFMEU application is brought on the basis that in the coal mining industry there is a higher standard and that higher standard is not being applied uniformly due to changing employment relationships. The issue of standards outside the coal mining industry does not arise unless the respondents seek a finding that the industry standard is too generous. The respondents have not put their case on that basis. The evidence of Mr Turner was that it was his view that the provision is too generous but that the members of the Minerals Council had not asked the Council to raise with the union that accident pay is too generous.

54 As was observed in Re Crown Employees (Teachers in Schools and TAFE and Related Employees) Salaries and Conditions Award (2002) 116 IR 361 at [38]: -

We would further observe, as was recently recognised by the Full Bench in Re Operational Ambulance Officers [2001] NSWIRComm 331, the "primary test" for evaluating whether an award should be altered is whether the conditions of employment in the award are "fair and reasonable". Whilst made in the context of a special case, a consideration which may not be relevant in consideration of these proceedings, it was there recognised that conditions in an existing award are to be treated as "presumptively fair and reasonable" (although it must at once be recognised that it is sufficient to rebut that presumption by evidence sufficient to satisfy the ordinary civil standard of the balance of probability: see Public Hospital Nurses (State) Award [2002] 115 IR 183 and Re Operational Ambulance Officers).

The Commission could not be satisfied on the evidence presented here, that the presumption as to the fairness and reasonableness of the federal award is rebutted.

55 Finally and as to the suggestion by the employers for whom Freehills act (all but two of whom as I understand it, are presently respondents to the federal award and therefore legally obliged to pay accident pay) that the CFMEU application if granted would have the real potential of flow - on into many other of the Commission's awards and thus have a deleterious effect on the statutory scheme of workers compensation in New South Wales or the state of the economy if New South Wales (section 146(2) of the Industrial Relations Act 1996) or both, it is sufficient to again observe that the special and limiting circumstances of this case including the fact that there is a prevailing industry standard fixed by federal award, provide no conceivable basis for flow - on into other industries. It may be observed given the longstanding nature of the coal industry standard dating back thirty years or more, and the demonstrable absence of flow - on into other industries, that any such potential has long since dissipated. (see [2])

56 I again agree with Mr Slevin who submits the CFMEU application is brought on the grounds that are unique to the coal mining industry and that the case has in no way proceeded as a test case for other industries and whilst proper regard is paid to the obligations imposed upon the Commission by section 146(2) with respect to the New South Wales economy and other matters, it seems to me that the proposition for which Mr Longland for Freehills contends, is without substance.

57 Having regard to the totality of the evidence and the arguments presented, I am of the view that the CFMEU application has significant industrial merit and I grant it accordingly for the reasons set out above.

58 The parties are directed to confer and file within 7 days an agreed document setting out the form of the new award having regard to the views expressed in [35] of this decision. To assist the parties further in that regard, the title of the new award is to be the Coal Mining Industry (Accident Pay) Interim Award 2004.

59 I note in that regard that there is a different award title at Part A of the amended application probably drawn from the application in its originally pleaded form and inadvertently carried through into the amended application upon which the CFMEU moves. I note further, if that be a correct assumption, that the document marked schedule A to the amended application - that is, the document setting out the terms of the award proposed has the word "Industry" missing from the title clause.

60 The parties, initially the CFMEU, should also amend the proposed clause 5.3(a) to read as follows: -

5.3 For the purposes of this clause accident pay means: -

(a) For the initial period of thirty-nine weeks from the date of injury a weekly payment representing the difference between the weekly amount of compensation paid to the employee by virtue of the said Act and the weekly amount that would have been received by virtue of this award had the employee been on paid sick leave at the date of the injury, the latter amount being an amount calculated at the rate appropriate to the employee's classification for ordinary time hours of the shift the employee was unable to attend.

(b) For a further period of thirty-nine weeks a weekly payment representing the difference between the weekly amount of compensation paid to the employee by virtue of the said Act and the rate prescribed from time to time for the classification of the incapacitated employee at the date of injury.

61 The parties should also give some attention to the utility of the proposed definition of "Ordinary Weekly Earnings" in the new award when the term purports to have the same meaning as in the federal award and it is unclear from the copy of the federal award attached to Mr Maher's affidavit where the term "Ordinary Weekly Earnings" is to be found.

62 Subject to those matters being properly attended to as directed, the Commission will deal with the proceedings and the processes of publishing the new award without requiring the further attendance of the parties. The proceedings are thus concluded.

LAST UPDATED: 10/05/2005