BHP IRON ORE AWARD

WESTERN AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION

PARTIES THE AUTOMOTIVE, FOOD, METALS, ENGINEERING, PRINTING AND KINDRED INDUSTRIES UNION OF WORKERS - WESTERN AUSTRALIAN BRANCH & OTHERS

APPLICANTS

 -v-

 BHP IRON ORE LIMITED & OTHERS

RESPONDENTS

CORAM COMMISSION IN COURT SESSION

  CHIEF COMMISSIONER W S COLEMAN

  COMMISSIONER A R BEECH

  COMMISSIONER S J KENNER

DELIVERED WEDNESDAY, 13 MARCH 2002

FILE NO A 2 OF 2001

CITATION NO. 2002 WAIRC 05009

______________________________________________________________________________

Result 

Representation

Applicants Mr D Schapper (of counsel) on behalf of the AFMEPKIU, the CMETSWU

 and the TWU

   Mr M Llewellyn on behalf of the AWU

   Mr J Murie on behalf of the CEPU

Respondent Mr H Dixon (of senior counsel) on behalf of BHPIO and with him

 Mr Kelly (of counsel)

   Mr R Gifford on behalf of AMMA

______________________________________________________________________________

Further Reasons for Decision

1         In accordance with the Reasons for Decision of 2 November 2001 [2001 WAIRC 04082] the Commission re-convened the proceedings on 7 December.  On that occasion it was apparent that the parties had made no progress on the matters contained in the Reasons for Decision and the Commission announced it would adjourn and issue further Reasons for Decision.  What follows are those further Reasons for Decision.  These are supplementary to, and are to be read in conjunction with the Reasons for Decision.  The unions referred to a number of issues and where appropriate we refer to the paragraph numbers of the Reasons for Decision.

Section 26A Issue

2         Section 26A of the Act relevantly provides as follows:

“In the exercise of its jurisdiction the Commission shall not

(a) receive in evidence or inform itself of any workplace agreement or any provision of a workplace agreement; or

(b) award particular conditions of employment to employees who are not parties to a workplace agreement merely because those conditions apply to any other employees who are parties to a workplace agreement. “

3         The statutory scheme provided by s 26A of the Act, reflects the general intention of the legislature that matters concerning employees employed under registered workplace agreements under the Workplace Agreements Act 1993 (“WA Act”), are not generally to be the concern of the Commission, when exercising its jurisdiction and powers under the Act.  The general scheme in this regard, is contained in Part 1A of the Act and s 4 of the WA Act. This is of course, subject to the express exceptions to this general proposition as contained in, for example, ss 7F and 7G of the Act.

4         It is also the case that s 26A is concerned with workplace agreements that have been registered under the WA Act and have force and effect accordingly under that Act.  It has been held that it has no application to offers of workplace agreements, if those offers are relevant for purposes other than their subsequent existence as registered workplace agreements: Commissioner, Public Service Commission and Others v Civil Service Association of Western Australia Inc (1998) 79 WAIG 3629; ALHMWU v Airlite Cleaning Pty Ltd and Ors (2001) 81 WAIG 1162.  The latter decision of the Commission in Court Session went on appeal to the Industrial Appeal Court.  The appeal was upheld on the basis that the scheme of regulation under the Act and the WPA Act are such that it is not open for the Commission, by the exercise of a discretion to counter the effect of different conditions of employment outcomes under each statutory scheme: Airlite Cleaning Pty Ltd & Ors v ALHMWU (unreported 2002 WASCA 24).

5         Following the publication of the decision of the court in Airlite, the parties were invited to put written submissions to the Commission in Court Session as to the effect of this decision on the present proceedings.  The unions represented by Mr Schapper, the second and third respondent unions and BHPIO did so.  Mr Schapper submitted, amongst other matters not relevant to the Airlite decision, that arguably the whole decision of the Commission fell foul of the decision of the court in that the decision of the Commission in Court Session had, as the submission went, the purpose and effect of rendering employment conditions for award employees as similar as possible to those of WPA employees.  The second and third respondent unions submitted that the proposed “choice” provision must fail in light of Airlite but otherwise made a similar submission to Mr Schapper on the “scheme” issue.  BHPIO confined itself only to the issue of the “choice” provision as being struck down as a result of Airlite.  We have taken into account the parties’ submissions.

6         The question of the application of s 26A of the Act to these proceedings arose during the course of the substantive hearing.  This was so, given the nature of the unions’ claims and the status of employment arrangements at BHPIO.   In this regard, Mr Schapper, counsel for three of the unions, said at 62-63 of the transcript:

 “Another fact to be taken into account is the fact of course that the WPAs have been granted very substantial pay increases from November of 1999.  Now, you cannot under the Act award my clients' members increased payments merely on that basis.  Under section 26 - - or is it 27?”

 BEECH C:  26A

 MR SCHAPPER:  26A says:

 “In the exercise of it jurisdiction the Commission shall not receive in evidence - -

 And that's - - paragraph (a) is not applicable here.  And 26A says you shan't award particular conditions of employment to employees who are not parties to a workplace agreement merely because those conditions apply to any other employees who are parties to workplace agreements.  The concept clearly behind that section is you can't just flow on WPA conditions to award employees - the use of the word "merely because those conditions apply" - but it's quite clear that you can certainly take into account what WPAs in the same workplace have received, or indeed even in a different workplace, when you decide what is an appropriate set of terms and conditions of employment for award EBA employees.

 If you could not take that into account then, consistent with the scheme of section 26A, one would've thought that there would've been a prohibition on the Commission receiving evidence or informing itself as to the particular conditions of employment of WPA employees.  The legislature would've said you're just not allowed to look at what they get.  It hasn't said that.  It's said you're not allowed to look at the terms of the workplace agreement but - - you can look at particular conditions of employment for WPAs but you can't award those conditions to EBA award employees merely on the basis that they are enjoyed by WPA employees.  Quite clearly it's within the contemplation of the legislature that you can certainly take them into account but not act solely on that basis and we say you should take them into account and you should not act solely on the basis of what the WPAs get in determining what kind of pay increase my clients are to receive.”

7         Furthermore, Mr Dixon SC, counsel for BHPIO, when addressing the Commission in Court Session in closing submissions, said of s 26A of the Act at 1179-1180 of the transcript:

 “BEECH C:  Mr Dixon, I wonder if I might ask you to comment on the issue of section 26A.  Mr Schapper - -

 MR DIXON:  Yes.

 BEECH C:  - - has indicated he does not think we are prevented from knowing what workplace agreement people do at BHP because those conditions are not actually within the workplace agreement, and it's an issue that I would like the company to comment on at least at some stage in the proceedings.  I'm wondering if you could take the issue on notice.

 MR DIXON:  Yes.  Commissioner Beech, it sounded to me yesterday when I think you asked a similar question or when something was said to you about Mr Schapper, is that, "Well, they're beyond the jurisdiction.  They don't count."  Of course that's wrong.  The workplace agreement employees are in no different position in the Commission's overall assessment of a claim like this than are staff or other people who might not be the subject of an award.

 The prohibition in section 26A is against the Commission having disclosed to it firstly the contents of a workplace agreement.  And I know you have, Commissioner Beech, dealt with this in a number of decisions.  I have them handy.  I had them handy.

 One of them is Hamersley Iron, CMETSU - - the CFMEU v Hamersley Iron at 78 WAIG 736, a decision which Mr Schapper was in where Commissioner Beech, you deal with this matter at 737, and you say:

 “The Commission drew the attention of the parties to section 26A.  I was assured by both the parties that any condition of employment of a staff engineman referred to in these proceedings is not a provision of the staff enginemens workplace agreement.  Indeed, as I understand it, the vast bulk of the staff enginemens employment conditions are not contained within the workplace agreement all.  In this regard I note that while section 26A(a) speaks of the Commission not receiving in any evidence any provision of a workplace agreement or any provisions of a workplace agreement, section 26A(b) refers to the Commission not awarding particular conditions of employment to employees who are not parties to the workplace agreement.  The language differentiates between any provision of a workplace agreement and conditions of employment of a person covered by the workplace agreement.  Although the Commission may not receive in evidence any provision of a workplace agreement, or any provisions of a workplace agreement, that prohibition does not extend to the Commission receiving into evidence any conditions of employment of an employee employed pursuant to a workplace agreement which are not a provision of the workplace agreement.”

 In other words, the terms and conditions of employment, the flexibilities which exist?.  Now, in my respectful submission, that is a correct analysis of the section, which means that if the Commission is assessing the present claim and there are repeated comparisons drawn by the unions to the rates of pay and benefits obtained from the workplace agreement by workplace agreement employees as conditions of their employment, they have invited the Commission to have regard for those.  We think that that is appropriate.”

8         The Commission in Court Session was somewhat comforted by the submissions of counsel for the parties to the proceedings, that the course adopted by the Commission, and one invited by the parties themselves, did not infringe the legislative proscription imposed by s 26A of the Act. That is, we were satisfied that in determining this matter, the Commission has not had regard to the actual provisions of a registered workplace agreement under the WA Act and nor has it awarded conditions of employment merely on the basis that those conditions of employment are contained in workplace agreements.  We deal with the latter issue further below.

9         As part of the cases put by the parties, the Commission in Court Session received into evidence as exhibits, various documents relating to offers of workplace agreements, for example union materials folio 4 and annexures JMS8 and JMS9 to the witness statement of Mr Stockden.  There was no evidence before the Commission that those particular offers ever became registered workplace agreements indeed, the evidence was to the contrary, as the offerees in those cases, did not accept them. Similarly, consistent with the submissions of Mr Dixon for BHPIO, the Commission also had evidence before it including flexibilities and efficiencies that on BHPIO’s evidence and submissions were generated by WPA employees.  There was also evidence from the unions regarding comparisons as to rates of pay between those employed under workplace agreements and those under award conditions. We do not consider that evidence of that kind, directed as it was to conditions of employment and productivity and efficiency outcomes as opposed to the terms of any workplace agreement instrument registered under the WA Act, infringed upon the prohibition contained in s 26A(a) of the Act.

10      As to s 26A(b), the prohibition imposed by this provision of the Act is that the Commission may not award particular conditions of employment “merely” because those conditions apply to employees covered by workplace agreements.  In the interpretation of this provision, applying accepted principles of construction, the word “merely” should be given its ordinary and natural meaning.  For the purposes of the Shorter Oxford Dictionary, “merely” is defined to mean:

“1. Without admixture or qualification. 2. Absoloutely; altogether; actually. 3. Only (what is referred to) and nothing more.”

11      Thus, the provision is directed to the circumstance of the awarding of conditions of employment to employees not covered by a workplace agreement, simply because those same conditions are enjoyed by employees covered by a workplace agreement and for no other reason.  That clearly and manifestly is not the position in these proceedings, infringed upon the prohibition contained in s 26A(a) of the Act imposed to the terms the Commission also had evidence before it of   The Commission in Court Session has carefully considered all of the evidence and the submissions of the parties as to the merits of each of the unions’ claims and the counterclaims of BHPIO. That consideration has involved the Commission in an assessment of the need for BHPIO to achieve the desired flexibilities and productivity outcomes in a modern enterprise environment, combined with the need for the award employees to be suitably rewarded for the significant changes that are to be implemented in the enterprise.  Furthermore and in any event, 26A(b) of the Act does not in terms, prevent the Commission from taking into account in its deliberations, conditions of employment of employees covered by workplace agreements, as long as that is not the sole basis for the Commission awarding such conditions to employees not covered by workplace agreements.

12      Accordingly, we do not consider that the Commission has, in its decision, infringed upon the requirements of s 26A of the Act.

13      In [102] and [103] we referred to the union’s proposed clauses 21 and 26 and our doubt that the mechanisms proposed by them can work in the form proposed.  Some detail of the claims is also referred to in [55] to [58].  Mr Schapper submitted that the unions sought a:

 “… minimalist award which extends over a handful of pages and the intention is to strip away the complex layer upon layer upon layer of industrial instruments … and to replace it with a simple, minimalist document which recognises on the one hand BHP's changed approach and aspirations in relation to its work-force but on the other hand incorporates protections for employees only in those areas which are of critical importance to them”

   (transcript p. 27-28)

14      The unions seek only to be notified in advance of the change occurring.  The submission was strongly made that it was highly desirable that consultation between an employer and its workforce before the introduction of change was desirable.  Reference was made to the Federal TCR cases (1984) 8 IR 34; 9 IR 115 as they were endorsed by a Commission in Court Session in this State:  (1986) 66 WAIG 580.  Nevertheless, the submission was made that the unions do not ask to be consulted in respective change and it is a measure of the extent of the unions’ position that it is not asked for.

15      BHPIO’s opposition to the claims is referred to in [86].  It sees the claims as unworkable.  Clause 26 would require all its policies, procedures work practices and financial arrangements to continue by force of the unions’ proposed award yet the unions, and thus the Commission, cannot identify every policy, procedure or work practice and their contents.  It submits that the Commission cannot make matters enforceable by operation of the award when it does not know what they individually are.  If BHPIO changes a policy, it will likely be in breach of the award.  Although the unions propose that change can be made by BHPIO giving 6 weeks’ notice, it is quite clear from the evidence, as distinct from the unions’ submissions, that change in the first instance will only occur if the unions agree.

16      We do not believe the union’s claims in their proposed clauses 21 and 26 are capable of working as proposed.  The difficulty in identifying each of the policies, procedures, work practices and financial arrangements is apparent.  Further, if those policies, procedures work practices and financial arrangements became award provisions and were required to be maintained by virtue of the award, we consider that also to provide that any of them may be varied or removed simply by BHPIO giving notice runs into the jurisdictional issues referred to in CWAI v WA Timber Industry Union (1991) 71 WAIG 19: it may allow contracting out of the award.

17      We also agree with the submission that the evidence suggests that the procedure of giving notice as it is proposed by the unions is for the purpose of enabling opposition to any change proposed.  We note the cross‑examination of Mr Kumeroa (transcript p. 179 and following) in relation to examples where BHPIO may give notice of change.  For example, if notice was given to change a present understanding that BHPIO would utilise Level 4 employees only provided Level 3 employees are not disadvantaged, his view is that the understanding is likely to remain.  Although Mr Kumeroa states that BHPIO may change anything provided six weeks’ notice is given, that does not apply to matters such as rosters, salaries, classifications and relocation where the unions’ consent will be necessary.  Even so, if BHPIO gave six weeks’ notice regarding training, Mr Kumeroa agreed with the suggestion that the unions would “steadfastly oppose any departure from the existing system” (transcript p. 183).  We also think it is clear from his evidence that it is likely there would be opposition to most of the changes within the process of “discussion” as seen by Mr Kumeroa.

18      Effectively, the provision as sought would have the effect of allowing opposition to be mounted, as Mr Kumeroa’s evidence illustrated.  The marked division between what was traditionally described as staff work and wages work and staff doing wages work is still a division the unions would seek to maintain, even if not strenuously (evidence of Mr Connors, transcript p 278).  We consider there is an inference to be drawn from Mr Johncock’s evidence (transcript p 321) that there are long standing issues which have been opposed by the unions and his concession that with negotiation there may well be room for change is consistent with the union opposing matters strenuously.  We also refer to the evidence of Mr Murie (transcript p. 431) that BHPIO’s proposed changes would be assessed on the basis of whether, on the assessment of the unions, the changes proposed were encompassed within the wage increase to be granted.  If it is not, then there would be resistance and further bargaining.  This appears to be in contrast to the principal submission of the unions that they have nothing left to give in the concessions they are prepared to give in this matter and only goes to underscore our reservations in relation to the unions’ proposal in this regard.

19      It is in this context that we believe BHPIO’s submission that the unions’ claims should be seen as designed as a means to extract further gain on a future occasion to have weight.  It urges the Commission not to adopt the unions’ proposition whereby change may be subject to veto or where only one or two employees can oppose, successfully, the introduction of change.  The apparent purpose of the unions’ claim for the giving of notice is for the unions to see whether or not they will consent to whatever is proposed.

20      It is in that context that we concluded in [103] that “consultation” seems pointless.  We do not exclude consultation where there is a genuine desire to “sweep away the accumulated encrustation of nearly 20 years of industrial agreement‑making” (transcript p. 58) and we endorse the submission from Mr Dixon (transcript p. 72) that, “certainly in the context of the use of contractors”, it defies sensible suggestion that an employer of this kind will make a major decision that is going to affect employees without some form of consultation.  We also note the evidence of Mr Stockden, given under cross-examination (transcript p.625) that in a matter as important as the classification structure, sitting down and having discussions with the parties affected is appropriate, with employees in the first instance and with their unions.

21      We stated further in [103] that a catalyst was required which will break the links with the past.  That catalyst is to be the award to issue.  It will not contain the clauses 21 and 26 proposed in either of the unions’ proposed awards.  By the issuing of the award, and the cancellation of the previous industrial instruments, those past practices will be able to be changed by BHPIO merely giving the appropriate notice of the change to the employees to be affected under their contracts of employment and, if the change is significant to the union, that an employer would ordinarily give to an employee when a change is to be made.

22      We recognise that the employees to be covered by this award still intend to have input into change which is to occur.  The issuance of the award will remove the foundation for many of the present work practices. Where other changes are to be introduced, the notification of those changes necessarily will allow an opportunity for discussion to then occur and matters which are not able to be agreed to be brought to the Commission.

23      We recognised in [104] that there will need to be change in culture at the workplace which will not happen overnight.  We do record however the evidence of a preparedness for flexibility and efficiency in the present EBA workforce.  The evidence includes the examples quoted to us from “The Chronicle” and, for example, in the statements of Mr Chadwick (union folio 9 paragraph 3) and Mr Blyth (folio 9 paragraphs 5 and 6).  It is for that reason that in [104] and [117] we comment that it is for BHPIO to establish the environment for that cultural change to occur.

111 - The Benchmark is the Productivity Already Achieved

24      We have had regard to the evidence before the Commission regarding the efficiencies and productivity increases achieved.  We consider Mr Miller’s evidence of the greater competition in the market place and the requirement on BHPIO to keep a tight control over labour costs, capital utilisation and capital outlays, (amongst others) is also inherently recognised in the unions’ positions.  Indeed, the unrelenting pressure to remain competitive appears to be recognised in the CEPU’s own exhibit 1.  The submissions of the unions is that the EBA employees have been productive although, as the submissions of Mr Schapper state, the unions recognise the need to make changes arising out of the necessity to remain competitive in an environment where long term real prices for iron ore are declining (transcript p. 1086 – 1087).  In that regard, Mr Miller’s evidence of his experience contrasting the position of BHPIO when merger discussions were underway with Hamersley Iron in 1998 carries significant weight.  We therefore recognise the future directions of BHPIO contained in Mr Miller’s evidence.

25      We conclude that a significant factor affecting the efficiencies of award employees is derived from the award structure and EBA and industrial agreements which have resulted from the many compromise agreements reached over time between the parties.  By removing the layers of prior industrial regulation, in conjunction with a minimalist award regime, in the context of the contribution made by EBA employees to date, we are confident that the environment will be created for BHPIO to achieve the required levels of workplace performance for award employees.

Contractors

26      In [127(a)] we stated that the award will recognise the use of contractors as an integral part of BHPIO’s operations.  The unions pointed to the long history of provisions in the various industrial agreements regarding the utilisation of contractors.  This has involved a requirement to give notice of the nature of the work to be performed, the name of the contractor, standard hours to operate during the contract and the likely duration of the contract.  There is also a linkage provision between the utilisation of contractors and overtime.  It was submitted that as BHPIO increased the use of contractors so the availability of overtime was reduced to the permanent workforce.  Therefore, provision was made for a minimum of overtime to be offered to employees within that classification which would otherwise perform the work to be contracted out.  The IR agreement contained provisions requiring BHPIO to inform work groups directly affected and the facilitation of a meeting, and notification of the state offices of the various unions.  We note that the contractor – overtime linkage was removed in the Newman Business Efficiency document. Whilst the status of this document was in issue in the proceedings, the fact remains that the parties have worked under its terms since its inception.

The Position of the Unions

27      The unions state that these provisions need to be simplified.  However, the unions submit that the WPA goes too far in terms of that simplification.  They seek an increase in the restrictions on the use of contractors and seek to address the fear of the possibility that employees at Newman will be made redundant and the whole mine contracted out.  This is submitted to be a real, substantial and justified fear for the security of employment.

28      The evidence is that there is a huge variety of different types of work required to be performed throughout the operations to be covered by this award.  There is also the recognition that the expertise to do that work may not lie within BHPIO’s workforce.  The unions seek a clause which provides that they will be given at least four weeks’ written notice of BHPIO’s decision to engage contractors.  Significantly, it would provide that BHP would not engage contractors unless each of the unions gives their prior consent in writing, provided that consent shall not be unreasonably withheld.  The unions submit that what they seek to do is to preserve work which is currently carried out by BHP direct employees to employees in the future.  Contracting out holds the potential to completely eliminate award employment.  In addition, the unions are prepared to provide for casual, part-time and fixed term employment so that the range of types of employment is increased giving an increased in flexibility.

29      We refer to the evidence of Mr Stead (transcript p. 230) that the unions will insist that if work can be done by utilising existing staff on overtime it will oppose the use of contractors irrespective of the outcome of the award proceedings.  We also note his evidence that on occasions when contractors return from time to time BHPIO merely informs the union that the contractors are on site.  Although Mr Stead attempted to draw the distinction between core and non-core work, this is not reflected in the unions’ proposed clause.  The requirement he referred to of giving four weeks’ written notice in relation to shovel maintenance was acknowledged to be nonsense (transcript p. 230).

30      Mr Stead’s further evidence is that if existing staff resources are not adequate BHPIO has the ability to utilise contractors without a problem.  A problem will occur if BHPIO decides, for example, to have all of the ordinary work of those engaged in the mobile equipment workshop contracted out on a permanent basis (transcript p. 236).  His evidence is supported by the evidence of Mr Chadwick (union folio 9, paragraph 8) where he states that the use of contractors on work ordinarily performed by BHP direct employees can and does cause problems because employees see the use of contractors as threatening their own security of employment.  The reduction in the numbers of directly employed employees does lead to the acceptance of a contractor base within the workforce, although this does lead to a concern about losing the ability to work overtime, together with the quality of the work performed and the “possession” of BHP’s employees for what they see as their work.  The individual approach of convenors as to whether contractors would come in or not does affect the smooth utilisation of contractors (transcript p. 344).  This also depends, however, on the attitude of BHP’s supervisors in approaching the convenor, and this has deteriorated, at least from the evidence of Mr Chadwick, since the advent of the BHP’s decision to go to workplace agreements.

BHPIO’s Position

31      In contrast, BHPIO sees the clause proposed by the unions as being a practical prohibition on BHPIO's use of contractors.  Further, the ability of BHPIO to engage contractors should not be determined by the employees or a group of them.  It denies sound business practice and is not an obligation which the Commission imposes upon other employers.  The unions’ proposed clause is seen as a nonsense.  BHPIO attacks the contractor overtime linkage and points to the opposition by the unions to BHPIO's claim that employees be required to work a reasonable amount of overtime.  It sees an inconsistency in the unions’ opposition to that provision and their request that there be restrictions on BHPIO in the way it which it seeks to have work performed by contractors linked to an ability to work overtime.  The requirement to give notification to the unions causes difficulties if consent has to be sought over weekends or in the middle of nightshift.

32      BHPIO submits that it has not made any person compulsorily redundant.  There was an increased use of contractors following a large number of employees who took up the offer of voluntary redundancy.  However, there is a need to utilise contractors.  BHPIO prefers to have its own workforce perform, for example, mining, provided it can be productive enough.  BHPIO invests a great deal in training and experience in getting its employees experienced in a number of areas.  Mr Stockden’s evidence was that at the end of the day business will survive if it is efficient and there is a link here with BHPIO's future intentions regarding the existing process of using contractors.

Consideration

33      The review by the Commission of the evidence before it, some of which is summarised above, leads only to the conclusion that the use of contractors has been an integral part of BHPIO's operations for many years.  The variety of its operations means that the use of contractors differs.  We also recognise, as we believe the unions have recognised, that BHPIO’s use of contractors will continue in the future.  We note and accept the evidence in reply of Mr Harris that an increased use of casual, part-time and fixed term employment as proposed by the unions is unlikely to be successful because there is generally not an excess of local people to fill these types of roles.

34      We recognise from the unions’ evidence and submissions that there is a fear of a future contracting out of “core” areas of BHPIO’s operations.  We record that in none of the evidence from BHPIO is there a present intention to replace its employees with contractors.  In relation to EBA 2 BHPIO wished to utilise contractors within mine maintenance with increased flexibility.  However, the evidence is that it is not BHPIO’s intention to replace its employees with contractors; rather its purpose is to utilise contractors for, for example, surges in workload.  In each case, BHPIO undertook to inform work groups directly affected of the matters relating to the engagement of contractors.  That appears from the evidence to be BHPIO’s consistent position.

35      Further, we do not believe the circumstances are such that the Commission is able to restrict the use of contractors within BHPIO's operations.  To do so is for the Commission to effectively put itself in the place of the management of BHPIO’s business and to usurp its management prerogative.  This the Commission is not to do and has consistently said so on past occasions.  For that reason, the Commission will not impose the limitation on the use of contractors sought by the unions.  There will however, be provision for notification within the workplace directly involved in the use of those contractors.

36      We recognise from the evidence the concern regarding the future use of contractors on a greater scale in areas which the unions have regarded as their “core” work.  Once it is recognised, however, that the Commission is not able to prohibit the use of contractors then, on the evidence, the best safeguard against a greater future use of contractors is the efficiency of the direct workforce.  We recognise the inherent practical position in Mr Stockden’s evidence that at the end of the day business will survive if it is efficient and there is a link here with BHPIO’s future intentions regarding the existing process of using contractors.  BHPIO tendered in evidence conditions of employment of contractors, in agreements to which some of the present unions are party, noting those contractors’ conditions of employment are less that those of BHPIO’s EBA workforce.  If, as the unions recognise, the business ultimately is run to make a profit, BHPIO’s preference to retain “in house” the profit margin that would otherwise be paid to a contractor becomes significant (cf. transcript p.95).

37      We also refer to s.40 of the Minimum Conditions of Employment Act 1993.  A term is implied in each employee’s contract of employment obliging BHPIO to enter into discussions in the event that there is to be a major change in the composition, operation or size of, or skills required in BHPIO’s workforce that will affect the employee.  The practicability of giving notice is, we are persuaded, reflected in the evidence before us.  In some cases, there is no current practice of notification of the return of specialist contractors who have previously been engaged.  It is not practicable to notify in some cases where an urgent position arises in the middle of a shift or a weekend.  We recognise the potential benefits to all parties if BHPIO discusses with award employees the position regarding contractors and give the employees an opportunity to respond with initiatives of their own.  We endorse this potential and believe this can arise when notification, in a form as modified and as contained in Kenner C’s recommendation in matter C 36 of 2001, is conveyed to those in the work area by the supervisor as soon as practical after the decision to retain contractors has been made.

Retention of Housing Policy on Termination

38      In Clause 15 Termination of the unions’ claim is a provision which states:

 “Upon payment of all dues an employee in the Home Ownership Scheme shall have the opportunity to purchase the property outright in lieu of termination airfares/re-location to place of engagement in Australasia.”

39      The unions submit that in the redundancy exercises in 1999 at Newman employees who were purchasing a house from BHPIO under the Home Ownership Scheme were given the option of buying the house as distinct from re-selling it back to BHPIO upon leaving.  This also occurred in relation to redundancies that resulted from the driver only agreement where “redundancy retention” meant retaining one’s house upon redundancy as distinct from being required to selling it back to BHPIO (see:  80 WAIG at 1790).  The claim of the union is that the option of purchasing the house should be available on termination for any reason rather than only where termination is by reason of redundancy.

40      BHPIO sees this issue as complicated by the joint venture ownership of the housing concerned.  That is, the rights of others are affected and there are tax implications potentially in relation to a claim of this kind.  BHPIO sees the clause claimed as vague in its operation and there is insufficient material before the Commission to justify a change.

41      We consider that the issue of home ownership raises issues additional to the issues involved in the claims otherwise before us.  In can probably be fairly stated that home ownership is embedded in the Australian psyche.  It is more than just the acquisition of a material possession. It goes to the family’s place in the community, friendships and is part of the complex of things that contribute to our identity.  The home itself can give expression to our personality; an investment that may exceed the value of the capital outlay and at times the place that affords us sanctuary against the woes of the world.

42      A person’s home is the point of reference for our memories; the place where we may celebrate our lives and those of our children.  It is the place where we hide our disappointments and where we are reinvigorated so that we can go out and meet the demands of our work, make a contribution to our community and meet the challenges of our society.  It may not go too far to suggest that in many respects home ownership is an integral part of the stability that characterises Australia as a nation.

43      In the context of this claim, it is not irrelevant to note that the development of the north of this State has been recognised in the process of “normalisation”.  Ownership extends beyond the home to the pride that is inherent in membership of a community that asserts itself and is recognised through its cultural, sporting and social activities.

44      The dislocation that comes with termination of employment often reverberates most profoundly in the loss of the family home.  Relocation can interrupt education; a partner’s employment might also be lost and family members’ participation in sports teams and cultural activities could come to an end. Goals have to be revised and dreams re-dreamt.

45      The opportunity to retain ownership affords the family the option of remaining in the community and while the reality of relocation may be inevitable it affords the prospect of undertaking a shift at a time which may assist all members of the family making the transition with least disruption.  It enables the individual and the family to continue to participate in the community in which they have been a part for some time.  The personal investment in home ownership may be realised at a time more conducive to family relocation and market circumstances if ownership is not severed along with the terminations of the owner’s employment.  The detriment that termination carries is not compounded by the necessity to vacate the family home.  The availability of continuing ownership may contribute to better industrial relations with the threat of vacating the family home no longer the immediate implication of termination of employment.

46      While we recognise the submissions of the respondent, it would seem that the tax implications and joint venture ownership of housing raised in those submissions have not been insurmountable issues when employment is terminated by reason of redundancy.  The reason for the termination of the contract of employment of itself could not change the resolution of those issues.  The same issues regarding housing are likely to arise whether or not the termination is by reason of redundancy.  The arrangement which has been recognised to have merit in a redundancy situation appears to us to be just as relevant in a dismissal for reason other than redundancy.  For those reasons, we see the granting of the unions’ claim as being equitable in the circumstances of employment in the respondent’s iron ore operations in this region of the State.

Collective Bargaining Rights

47      In [127(c)] we required BHP to respect and observe collective bargaining rights.  In doing so, we note that there was little direct evidence on the question of the rights of employees to belong to unions and to collectively bargain.  We regard it as inherent in the making of the award to issue from these proceedings to which the unions are parties that employees to be covered by it are able to organise, become and remain union members, and to bargain collectively without hindrance.  The freedom of association provisions contained in Part VIB of the Act recognise, at least in part, these principles in relation to union membership.  The employees’ rights to do so, and the rights of the unions to which they belong to represent their members and those who are potential members is to be recognised in the award.

48      An issue of significance between the parties goes to the claim for the provision of paid union meetings and paid time off as of right to continue.  Submissions were made regarding the history of such provisions in the various industrial instruments negotiated between the parties and to that extent the submission that not to grant the claim ignores that history (see applicants’ outline of submissions on secondary matters page 5).  In the decision we have reached we have not ignored the history.  However, the current industrial framework must also include the recognition by the unions of the importance for BHPIO to operate effectively.

49      Our decision is not based upon the submissions regarding section 96B and C of the Act.  We were not of the view that to provide for paid union meetings is to treat one employee more favourably than another for the purposes of the legislation.  Indeed, to provide for time off for union members to attend meetings during working time seems to us little different for the purposes of the legislation than it would be to grant an employee paid time off to attend to personal business during working time.  The ability to attend union meetings without loss of pay is not a benefit which, in its terms is restricted only to employees who are members of unions.  There may well be employees who are members of unions who do not attend the meetings.  Similarly, there may be those who are not members of unions, but who may be desirous of joining, who do attend meetings.  The extent to which this may or not occur was not the subject of evidence before us.

50      However, the imperative behind the decision of the Commission in Court Session is the imperative of improving efficiency.  As a matter of principle, employees who have regular paid time off work to attend union meetings or union business will be less productive than those who do not.  In the context of the case presented, and the environment, containing as it does a fear of the increasing use of contractors and the lack of any evidence before the Commission that paid union meetings are retained in other iron ore companies in this State, the provision of paid time off work as claimed is not merited on the evidence currently before the Commission.  To that extent, and as we have observed, it cannot be said that leave to attend union business is a provision commonly prescribed by tribunals.  The decisions to which our attention was drawn (FEDFU v RRIA (1987) 67 WAIG 763 and RRIA v AMWSU (1987) 67 WAIG 723) were noted. We have not been persuaded the claims have merit.  That is not to say that there may not be circumstances in the future where the Commission might consider that such provisions may be warranted for a particular purpose.  However, in general the claim at this time is refused.

51      In relation to the right of entry provision claimed, we have considered the submissions of BHPIO that any union official given right of entry should be a full-time official of that union.  We have considered also the submission that the clause proposed is capable of abuse, the statement of Mr Stockden from paragraph 147 onwards and the findings of Polities SDP in BHP Iron Ore Pty Ltd v William Warren Tracy (unreported AIRC 7 June 2001) that the right of entry provision has been exercised in effect for an improper purpose by Mr Tracey.  BHPIO submits that the clause proposed contains an element which permits accreditation of a union representative not subject to the unions’ rules, the rules over which the Commission has control, and it is strongly opposed.

52      Our consideration in this matter is principally directed to the issue of accountability.  We consider that in principle a person properly accredited by a union party to an award as a representative of that union should have the right to enter any premises where an employer bound by the award is carrying out work.  The issue becomes one of accountability in the event that the right is abused.  This brings into focus the registered rules of the union concerned.  It is axiomatic that a union may only act in accordance with its registered rules.  It is also to be noted that on and upon registration under the Act by s 61 of the Act, all members of a union are bound by its rules.  It is those rules which either allow, or do not allow, the accreditation of persons whether they are full-time or not.  Accordingly, the Commission decided that the issue is to be addressed in the terms of the unions’ registered rules.  If a person is accredited in accordance with the registered rules, it matters not whether that person is full time or part time.  Any future issue arising over the conduct of a union official in the workplace, or whether a visit is for an improper purpose, is able to be dealt with by the Commission under the Act on a future occasion in the event that an issue arises.

53      As to the balance of the right of entry clause, the clause sought by the union is that the union representative may enter BHPIO premises to interview and or meet any employees but not so as to significantly interfere with BHPIO’s business.  BHPIO proposes that the existing provision remain.  That provision permits the representative to interview employees during their working hours with the permission of the industrial relations officer.  BHPIO is critical of the unions’ claim because it expressly recognises a right of the union representative to interfere with BHPIO’s business, provided it is not “significantly”.  In this regard, Mr Stockden’s statement at paragraph 151 is that Mr Tracey’s actions on site caused serious and significant disruptions on site.

54      Our consideration of this issue is that the existing provision will remain.  There has not been demonstrated to have been a problem with BHPIO granting permission to a union representative to interview or meet employees in the workplace.  That position should not change.  We consider that, in principle, it is not unreasonable for a union representative to be able to interview or meet employees and if in the future a union representative is not allowed to do so then an amendment to the clause may be requested.  The evidence regarding Mr Tracey does not suggest that there is a broad problem with the operation of the clause but rather relates to the activities of one individual in the context of the history of the industrial relations environment arising from the workplace agreements dispute.

55      The unions’ claim in relation to union structure is similarly, in principle, a matter for the unions, provided it is in accordance with their registered rules.  BHPIO contends (statement of Mr Stockden at paragraph 109) that each of the unions could organise themselves differently and each require BHPIO to recognise their deemed arrangement and that it may increase potential for inter-union disputes.  The recent history of disputed coverage resulting in the s.72A application shows that there is potential for inter-union disputes however we do not consider the clause proposed by the unions necessarily increases that potential.  We consider that the award should recognise the right of an employee to be represented by a union representative, which includes a shop steward, on an individual and collective basis.  The union representative attending a meeting with BHPIO representing an employee should not lose wages for doing so any more than would any employee accompanying someone to an interview with management.  We consider that the right of an employee to have someone of his or her choice, including a union representative, is a necessary part of the fair treatment of an employee by an employer.

Hours of Duty

56      In [127(e)] the Commission in Court Session concluded that the hours of duty will be decided by the Commission in the light of information received pursuant to the identification of all arrangements and practices to be cancelled.  However, as a matter of principle, hours for which payment is made shall be worked.

57      The information received from BHPIO has not been the subject of submissions by either party and accordingly the various contentions before the Commission are resolved in the following manner.  The claim of the unions establishes set hours of work in accordance with the current rostered hours set by the department in which they work as at the date the claim for the award was made.  It further contains a provision that ordinary hours may only be altered with the agreement of the majority of employees employed under the award working in that department.

58      The claim of BHPIO is for hours of 40 per week to be the hours of day workers and for 12 hour shifts to be worked for shift workers.  The ordinary hours of shift workers are not actually defined.

59      In our assessment there is little difference of substance between BHPIO and the unions about the fixing of ordinary hours.  In our view, it is appropriate that the ordinary hours of work be specified.  This carries with it, inherently, the notion that an employee’s salary will comprise payment for ordinary hours plus additional payment for any overtime worked.  This, again inherently, is administratively less efficient than the payment of an annual salary inclusive of such entitlements as overtime, recalls to work and applicable allowances, as noted in exhibit R14 in reference to Mr Stockden’s statement at paragraph 31.  Nevertheless, the common ground between the claim of the unions and that of BHPIO, at least in this regard, is those hours of work be specified.  While we note BHPIO’s view that hours of work for day workers should be specified as 40, our assessment is that employees’ ordinary hours should remain as they currently are in practice.  It is not the intention of the Commission, by the issuance of this award, to change the ordinary hours of work to 40 of those who may presently be working different ordinary hours, as is suggested in the unions’ submissions.

60      We acknowledge the stated intention of the unions to acknowledge the requirement for flexibility and the need for BHPIO to stay competitive that the employees directly affected by any proposed change to ordinary hours be consulted.  In the event that an agreed change is not possible, then the matter is able to be brought to the Commission.  However, for the reasons previously referred to, we do not consider it possible to prescribe an award condition whilst reserving to the parties a right to work different hours by agreement.

61      The unions’ claim that an employee on a two x 12 hour shift system must work at least half the cycle on day shift, except in rail, is a newly sought provision.  We agree with BHPIO that there is no evidence to support such a change.  The issues which arise regarding ordinary hours in rail are, as Mr Schapper observed, complicated.  The ordinary hours in rail contain the “job and knock” concept whereby once the job is done the employee can knock off work and even if the employee has not worked for 10 hours, the employee is paid for 10 hours.  There is also evidence to support the conclusion that with EBA employees, more drivers now work longer than the eight hours when the operational requirements warrant it (see transcript p. 653).  In our view, the principle to be applied is that employees should be paid for the hours which they work and work for the hours for which they are paid.  In the case of rail that is against a background of employees being paid for 10 hours.  That is consistent with BHPIO’s claim in Clause 9.5 as it applies to locomotive drivers.  (We note also the provision of 10 hours’ ordinary time in Clause 9.4 for track crew employees.  However, there was no direct evidence in relation to track crew employees.)  Accordingly, it is our assessment that BHPIO’s claim in this regard is to be preferred.

Wage Increase

62      In [127(f)] we prescribed the wage increases to be paid.  The particulars of the unions’ claims are set out in [40].  The justification for the claimed increase of 25% is set out and has been considered.

63      The Commission notes BHPIO’s position proposing the existing rates under EBA 3 with a 5% increase.  BHPIO’s opposition to the claimed 25% wage increase and its submission at [88] that the magnitude of the claim fails to appreciate material differences between the way WPA employees and those covered by the EBA are working has also been considered.

64      We have noted our conclusion that the circumstances of the material before the Commission present almost unique circumstances.  The commendable approach of the unions in this matter will also see significant changes occur in the efficiencies achieved by award employees, in addition to the contribution they have already made and for which they should be rewarded.  While there may be room for debate about the extent to which future efficiencies will materialise, we conclude that the thrust of the unions’ approach will result in an improvement in productivity of a magnitude which justifies a significant increase.  We do not compare increase in efficiency with the increase in efficiency said to have occurred with WPA’s.  Furthermore, we are not awarding award employees, as a condition of employment, the remuneration of WPA employees.  Nevertheless, given the factors we have referred to in the Reasons for Decision which have issued we considered that a wage increase of 20% is justified on the material before the Commission and for the reasons we have stated.

65      In our view, however, the evidence before the Commission from some of the unions’ witnesses which indicate not only that opposition to change will be maintained, but also that further changes to be implemented by BHPIO will be regarded as an opportunity to claim further increases in remuneration, prompts us not to award the wage increase in one sum.  Rather, we conclude that the significant majority of the sum to be awarded should be paid initially with the balance payable in a further 12 month period or earlier in the event that there has been a demonstrated increase in flexibility, productivity and efficiency in accordance with the Commission’s decision.

66      The Commission has had regard for the claim of the unions that the wage increase be paid retrospectively.  The Commission concluded that the wage increase would not be applied at a date prior to the delivery of the Reasons for Decision.  In reaching that conclusion the Commission points to the substantial proportion of the wage increase due being for the improvements in productivity which are to occur.  We recognise the evidence before the Commission of the time which has elapsed since a wage increase has been paid to these employees.  We also note that a contributing factor to this time period was the decision of BHPIO not to engage in discussions on a new enterprise bargaining agreement once it had taken the decision in principle that it would offer only workplace agreements.  The Commission also takes into account, however, the evidence before the Commission of the industrial action which occurred and that the claim for the new award was not brought to the Commission until 2 April 2001.  In balancing the issues to be considered the Commission did not conclude that retrospectivity to a date prior to the date of the Reasons for Decision was made out.  Therefore, the wage increase to apply will not apply before 2 November 2001.

67      We have decided to award the same increase to allowances.  We note the submission of BHPIO that there has not been any evidence of a change to disabilities, for which some allowances are paid, warranting an increase.  Nevertheless, we regard it as important to maintain the relativities of allowances to the wage rates concerned as a matter of principle.

Superannuation

68      The unions’ claim is set out in [67].  The claim is presented as part of the remuneration to be paid for the increased flexibility and thus productivity to be realised from the award to issue.  The size of the increase is justified on similar grounds to the justification of the claimed 25% wage increase.  The unions place emphasis on the claim due to the benefit to employees being greater in money terms than the corresponding increase being granting by a way of a wage increase because of the different tax regime applicable.

69      BHPIO, in its opposition to the unions’ claim, calculates that it is equivalent to a 120% increase in what is presently awarded.  The increase sought is not seen as being merit based.  The evidence of Mr Stockden, at paragraphs 68 to 70 of his witness statement, expands upon BHPIO’s position.  The cost of granting the unions’ claim is approximately $2,236,140.00.

70      The difficulty which the unions’ claim presents lies in the basis of the wage increase it seeks overall.  As Mr Stockden’s evidence shows, the claimed increase in superannuation is part of the unions’ overall claim for increases in remuneration.  The unions have been careful not to equate the increase in remuneration they seek simply upon the equivalent remuneration increase received by employees who signed a WPA.  Rather, the unions’ claim overall is an estimate on their part arising from the increase in inflation estimated by the unions as 6.3% from September 1999 to March 2001 (transcript p. 61), the unions’ estimate of percentage increases from enterprise bargaining agreements generally which the unions conclude are between 3½ to 4%, the calculation by the unions of the remuneration increase given to employees on WPA’s and finally the substantial increases in productivity estimated by the unions from examples given in The Chronicle and following the restructuring, redundancy and reductions in the size of the workforce in 1999.  The unions point to what they see as the potentially massive increases in productivity which will result from the granting of the award in the terms claimed.

71      In reaching our conclusions, we have been conscious of the prohibition in s.26A(b) of the Act dealt with above.  As noted above, the prohibition extends to the circumstance where conditions are awarded simply because, as a matter of comparison, an employee on a WPA enjoys it and for no other reason.  That is not the position in this case.  Section 26A(b) does not prevent the Commission from ordering particular conditions which are in the same terms as conditions received by employees who are parties to a workplace agreement if, for example, the fact of those conditions being received by employees who are parties to a workplace agreement are an immaterial side issue:  Iluka Midwest Ltd and Another v. CMETSWU and Others (2001) 81 WAIG 763 at [56].

72      The claimed increase in superannuation cannot be separated from the significant changes which are to occur in the manner work is performed by EBA employees.  That reasoning has already resulted in the Commission deciding in an increase in the order of 20% for the reasons already given.  In our view also, a significant increase in superannuation is warranted for similar reasons.  The simple fact of the existence of a similar superannuation benefit for WPA employees has not, of itself, without independent consideration of the merits of the totality of the unions’ remuneration claim by the Commission, been a relevant consideration in our decision.  We accept the increasing role that superannuation plays in employees’ remuneration.  That is reflected not just in the progressive increase in the contribution rate under the relevant Federal legislation.  It is reflected in the level of contribution presently made by BHPIO and the value which it places upon superannuation as part of employees’ remuneration.

73      We are not, however, of the view that the percentage increase to the superannuation contribution should be of the order of 20% being the magnitude of the wage increase we have assessed.  The claim of the unions is for an increase of 8% which will take the superannuation contribution of BHPIO to 14%.  We are acutely aware that that is the contribution level of the superannuation contribution for employees who signed the WPA and that the equivalent costs is, on Mr Stockden’s evidence, greater than 8%.  Nevertheless, we regard it as artificial on the evidence to attempt to assess a different increase merely because of s.26A(b).  In our view, the 8% increase in superannuation for employees to be covered by this award is amply justified on the basis of the increases in productivity that has occurred in the past and is to be seen in the future.

74      Finally in relation to superannuation, in its Reasons for Decision the Commission in Court Session reached the conclusion that the superannuation clauses as proposed by both parties are caught by the provisions of section 49C of the Act.  The clause proposed by the unions provides for employees to be entitled to membership of the BHP Provident Fund and may elect to become a non-contributory or contributory member.  It requires BHPIO to make contributions in respect of each employee at the level of 14%.  It provides a contribution rate by the employee of 5%.  The clause proposed by BHPIO notes that it is agreed that the preferred in-house fund will be the BHP Iron Ore Employees Provident Fund and that the employee will contribute 8% of provident fund wages for each employee.

75      Section 49C(2) prohibits the Commission from making an award which requires contribution to a superannuation fund by an employer unless certain conditions are met.  We tend to the view that the clauses proposed by both the unions and BHPIO require contribution to a fund either by an employee or the employer.  In the case of the unions it requires a payment of 14%.  In the case of BHPIO’s proposed clause it obliges BHPIO to contribute 8%.  We are not persuaded that the issue turns upon the nomination or the identity of the fund to which the monies are paid.  The force of the provision to be included in the award will require BHPIO to contribute to a superannuation fund or scheme and that is the issue addressed by s.49C(2) (cf.  Iluka Midwest Ltd and Another v. CMETSWU and Others (2001) 81 WAIG 763 at [57]).  For that reason, the Commission has requested the parties to draft the clause to be inserted into the award having regard to the provisions of s. 49C of the Act.

Incentive Programme

76      In [127(h)] we decided that award employees may elect individually to participate in the IOIP subject to them fulfilling all of the review requirements.  In clause 7. – Wages, the unions’ claim is that BHP shall apply and give effect to the terms of the policy known as the BHP Iron Ore Incentive Program to and in respect of each employee except that part of the policy which relates to the individual employee’s performance review.

77      The unions refer to the productivity bonus scheme which was introduced as part of restructuring in 1990 (as was noted by the Commission at the time: (1990) 70 WAIG 4437).  There was a package of trade-offs and productivity off-sets at the time in relation to the bonus remaining in place.  The last payment under the productivity bonus scheme was made in May 1999 and BHP formally gave notice of withdrawal from the bonus scheme in November 2000.  The unions submit however that the trade-offs or productivity off-sets given at the time in 1990 were not rescinded by BHPIO.  That scheme had been applicable to both wages and staff employees.

78      The unions described the incentive programme as a bonus calculated by reference to BHPIO’s performance, departmental performance and then an assessment by BHPIO of each individual’s performance.  The unions argue that since payment was last made under the previous productivity bonus scheme EBA employees have contributed significantly to the overall success of BHPIO.  The unions point to the email from Mr Harris, the memorandum from Mr Hunt and The Chronicle articles.  Therefore, they submitted, increased overall productivity is to the credit of all employees, including EBA as much as it may be to the credit of staff.  The unions are critical of BHPIO committing itself to rewarding employees for performance but not those employees who have chosen to maintain an adherence to the collective approach.

79      While the unions seek the application of the incentive programme, they argue that the individual review aspect of the incentive programme ought to be excluded and the budgeted amount per employee given to each department ought to be required to be allocated to each award employee.  If participation in the individual review process was seen as necessary, then supervisors should be subject to review by those whom they supervise as a condition of this process.  The unions emphasize that payments made under the incentive programme are not a reward for participation of the individual but rather BHPIO and its department’s performances.  The review process inherent in the programme is simply the mechanism by which the award is distributed (transcript p. 1083).  The unions see the process, however, as a subjective process involving the employee’s supervisor.  The unions submit that supervisors are sensitive to BHPIO’s preference for employees to be on workplace agreements and in a highly subjective process such as the one involved it may not be possible for supervisors to appraise award employees free of those influences.

80      BHPIO opposes the claim.  It sees the incentive programme as a key element in its relationship with its dealings with its non-award employees, both traditional staff and workplace agreement employees.  BHP believes that the scheme enhances performance and personal development of employees who participate in the scheme and that it is mutually beneficial both to BHPIO and to the employee concerned.  Assessment may recognize additional responsibilities assumed by employees or additional tasks they may assume to expand their skills, experience and overall contribution.  It allows negative performance issues to be addressed but overall it is a positive incentive scheme.  It is significant that this can take place in the absence of any concern of a constraint imposed by award obligations.  It was submitted that remaining under award regulation was incompatible with participation in such a scheme.  BHPIO’s overall contributions take into account the contribution by departments and also the individual employee’s performance.  Individual employees must be prepared and must participate in the process with a view to achieving the goals.  Therefore, BHPIO does not seek to impose the obligation on unwilling participants because it will not work.  Therefore, those employees who do not participate in the programme ought not to be entitled to the reward which comes from that participation.

81      The evidence of Mr Stockden from paragraph 43 onwards in his witness statement sets out the operation of the incentive programme in some detail.  It has been operative since late 1999.  BHPIO sees this system as giving it a direct role with each participating employee’s performance and can reward individual effort and achievements.  It sets goals and employees may direct their efforts to achieving them in the knowledge that it will be recognized and rewarded.

82      The Commission has given consideration to these issues in reaching the conclusion that it did that individual award employees may elect to participate in the incentive programme subject to them fulfilling all of the review requirements.  We were persuaded to that conclusion by the nature of the incentive programme being to reward both its overall performance and also individual performance.  We are quite persuaded by the evidence contained in the Chronicle references to which we were referred, and the various separate commendations from BHPIO to its EBA employees for work that was well performed, that employees under the award have not only contributed to BHPIO’s performance but that individuals have similarly performed well notwithstanding their remuneration via the EBA.  Simple fairness requires that the incentive programme be extended to employees under the EBA (see AFMEPKIU and Others v. Western Australian Mint (1996) 76 WAIG 1700).We do not accept that employment under the award is, of itself, incompatible with participation in such schemes. The important proviso is however, that as an individual’s performance assessment is an integral part of the incentive programme we consider that an employee wishing to have the benefit of the incentive programme must commit to and accept the individual assessment process, which is an inherent part of it.

83      We appreciate from the evidence overall that the scale of individual performance may differ from employees who are employed by the award and those who are not.  However, it cannot be said that individual employees covered by the award are not committed to the productivity of BHPIO nor of their own individual performance.  To so conclude would be inconsistent with the evidence before the Commission.  If an employee has contributed to the overall performance of BHPIO and has performed well individually and has met targets set by BHPIO, there is simply no reason in merit why the benefits of the incentive programme should not be applied.  We recognize that the incentive programme should not be imposed on an employee who is simply unwilling to participate.

84      Correspondingly, the evidence referred to above suggests that there will be many employees who prefer to remain covered by the award, and with the opportunity to bargain collectively preserved to them, who nevertheless will perform well as individuals and will wish to participate on this basis in the incentive programme.  While we are conscious that it is a condition of employment received by employees on workplace agreements, this condition of employment is not being awarded by the Commission merely for that reason.  Indeed, it is inherent in our overall decision in this matter that the award structure should provide as far as possible for employees covered by the award to become as productive as employees of BHPIO generally and if they contribute to the performance of BHPIO which warrants reward, they should be included.  It is consistent with that reasoning for the Commission to provide access to the incentive programme on an individual basis to further encourage that to occur.

85      We are not persuaded that individual supervisors will discriminate against award covered employees as submitted.  Nevertheless, BHPIO should ensure not only that fairness is done but also that it is seen to be done.

Overtime

86      The unions’ claim for overtime to be paid at double time was not pursued (transcript p. 1239).  The only issue requiring any determination from the Commission is the extent to which there is a refusal by employees to work overtime.  The evidence of Mr Priestley suggests strongly that there is reluctance on the part of award employees to respond to call outs such that there is a tendency to use contractors to perform those tasks (statement paragraph 28-30).  There is further evidence from Mr Donnelly to the same effect (statement paragraphs 19-21); and see also the statement of Mr Daines at paragraph 36; Mr Knuckey at paragraph 15.  There was at least some evidence that overtime had been refused as part of industrial action (evidence of Mr Powell, transcript p. 270).  It is common ground that the award presently provides for overtime to be voluntary.  Nevertheless, BHPIO submits (transcript p. 1196) that it has tried to improve the availability of employees working overtime.  Various formulae have been developed over time and been agreed to, but the evidence is that it has not worked.  The standard provision which applies to other employees in relation to the working of overtime ought to be introduced.  BHPIO brought evidence to support its submission that it regularly has difficulty in getting the requisite labour on overtime from its workforce.  In some areas only 30% of overtime on offer is taken up.  It was submitted that it is the refusal to accept an offer of overtime which necessitates the engagement of contractors.  There is evidence of employees who accept an offer of overtime but then who do not attend to do the work (evidence of Mr Daines at paragraph 77 and Mr Priestley at paragraph 22).

87      We accept the evidence and find that BHPIO does have some difficulty in obtaining employees to work overtime, as a consequence of employees not being available to work it or not attending for work after acceptance of overtime.  We also consider that there is evidence which allows the conclusion that on occasion BHPIO is then obliged to bring in contractors and we find accordingly.  We acknowledge the evidence that BHPIO has not previously requested that reasonable overtime become compulsory, but do so in the context of Mr Stockden’s evidence that BHPIO did not do so on the basis that it is something that would not be able to be achieved by agreement and it was therefore not a sufficient priority.  Nevertheless, BHPIO acknowledges that voluntary overtime is “well embedded in the culture of the workplace” but that BHPIO would accommodate individuals who, for perhaps pressing family needs, would need to be accommodated within the concept of compulsory overtime.

88      Upon a consideration of the evidence as a whole we consider that a requirement to work a reasonable amount of overtime is not an unduly harsh or unwarranted provision.  Such a provision has been a common feature in awards of this Commission.  Whilst the word “reasonable” is not a word of precise definition and will vary from individual to individual, we believe that the circumstances as presented to us warrant at least a statement that employees will be expected work a reasonable amount of overtime.  It is for these reasons that we stated at [128] that a provision will be inserted into the award.

Status Quo

89      The claim separately pursued by the AWU and the CEPU for the maintenance of the status quo while an issue is being progressed through the Commission was decided by the Commission at [129].  We had regard to the submissions and evidence of Mr Llewellyn and Mr Murie as referred to earlier in the Reasons for Decision at [79] and [80].  We noted also the evidence of Mr Stockden (statement paragraph 93) of his experience over the previous 18 months with a number of disputes raised by the unions relating to the interpretation of the “status quo” in respect of the Ongoing Change Agreement.  We accept that evidence.  We considered the proposed clause would similarly invite arguments regarding the precise point at which “status quo” is to come into operation as well as possible disagreements over the meaning of “status quo”.

90      Further, BHPIO has submitted that the present status quo arrangements have themselves been used as an impediment to the changes which the unions now concede are necessary.  There is evidence from Mr Stockden (statement paragraph 182) where the status quo provision is seen by him as essentially providing a right of veto for the unions.  In relation to engaging contractors, Mr Stockden’s evidence (statement paragraph 100) is that unions have recently delayed and frustrated BHPIO from engaging contractors by issuing grievances and seeking to apply an interpretation to the “status quo” such that BHPIO is prevented from applying the award and IR agreements provisions permitting the utilization of contractors (as see also paragraph 221(a)).  That is not to say, however, that particular circumstances may not warrant the maintenance of the status quo pending the determination of the Commission.

91      However, our assessment is that that is something best decided on a case by case basis.  There may well be circumstances where a proposed change is brought to the Commission by the unions and the maintenance of the status quo is not seen as necessary or desirable.  The claim that is brought before the Commission by the unions in this matter is for the status quo to operate automatically upon a challenge by a union.  Putting to one side the inherent difficulties with the provision as claimed, we are not in these circumstances minded to grant the claim.

92      In similar vein, we consider that the status quo should not automatically operate when a dismissal is challenged before the Commission.  We have had regard for the evidence of Mr Chadwick (statement paragraph 11) regarding the cost of living being high and the impracticality of living reasonably in the Pilbara without work.  We have also considered the evidence of Mr Robinson.  His dismissal occurred on 5 September 2000 and he received ordinary pay from BHPIO until the decision of the Commission in May 2001.  His evidence is that had he not received that income he would almost certainly have had to leave the Pilbara and return to Victoria (and see the evidence in reply of Mr Wood).

93      BHPIO presses an alternate view.  The evidence of Mr Stockden in particular (at paragraph 225) is that the majority of terminations are challenged in order to take advantage of the status quo provision regardless of the merits of the dismissal.  Mr Stockden gave examples for holding that opinion.  Mr Stockden’s evidence referring to the dismissal of Mr Parr is challenged by Mr Wood and we accept that the circumstances of the challenge to Mr Parr’s dismissal may not be as Mr Stockden would believe.  Nevertheless, the evidence of Mr Stockden overall, including the examples of challenges where there has been a serious assault and on three occasions where applications were dismissed (paragraph 227), has been given weight.

94      The issue is whether there should be an automatic maintenance of the status quo if a dismissal is challenged.  The evidence before the Commission suggests that the answer should be “no” whilst recognizing that the Commission may make an interim order to that effect on a case by case basis.  This also recognizes the preparedness of BHPIO to continue a dismissed employee’s accommodation arrangements pending the hearing and determination of the claim in the Commission (Mr Stockden’s reply statement at paragraph 9).

95      Subsequent to the Commission’s Reasons for Decision in this matter Mr Schapper has queried the power of the Commission to issue such an interim order, citing s.23(3)(h) of the Act.  That provision states that on a claim of harsh, oppressive or unfair dismissal the Commission may not make any order except an order that is authorized by section 23A.  This was not an issue raised by any of the parties in the substantive hearing and as a result the issue has not been the subject of argument before us.  Nevertheless, we are presently of the view that if the interpretation placed upon s.23(3)(h) by Mr Schapper is correct, then it would operate to prevent the Commission making any order of an interlocutory nature, for example, an order regarding the discovery, production and inspection of documents.  That would, in our opinion, produce an absurd  result and one that, applying accepted canons of statutory construction, is not to be preferred: Cooper Brookes (Wollongong) Pty Ltd v FCT (1981) 35 ALR 151 at 169-170; see generally Statutory Interpretation in Australia Fourth Ed Pearce and Geddes at para 217) .  Rather, we find, for the reasons set out by Beech C. in ALHMWU v. Burswood Resort (Management) Ltd [2001] WAIRC 02655; 81 WAIG 1249 at paragraph [13], that s.23(3)(h) is intended to codify the powers of the Commission to issue final orders pursuant to s 23A of the Act, upon a finding that a dismissal is harsh, oppressive or unfair.  Section 23(3)(h) does not prevent the Commission exercising the interlocutory powers otherwise contained within the Act including within ss32 and 44.  We do not therefore accept the submission of Mr Schapper that the Commission is without jurisdiction or power to make such an interim order in an appropriate case.

Choice

96      The Commission in Court Session in Airlite identified one consequence of the employers offering employment only on WPA’s as being that the numbers employed on award terms and conditions in the industry are diminishing.  The Industrial Appeal Court identified this as a consequence directly contemplated by the legislature and for which it legislated when it enacted the WP Act.  To the extent that the Commission in this matter has also reached that conclusion, the decision of the court is direct authority that the conclusion cannot stand.

97      Mr Schapper, in his supplementary submission of 1 March 2002, has suggested that to the extent that the Commission in this matter reached its conclusions based upon preserving the award to issue as the safety net, the decision of the court is not direct authority against that conclusion.  We have given consideration to this submission.  The concept of the award as the safety net is underpinned by the State Wage Principles.  However, an award exists as a safety net irrespective of the numbers of persons covered by it.  Thus, in an industry where most, if not all employees are presently employed pursuant to WPA’s, the award stands as the safety net to the industry to which it applies.  We are accordingly not of the view that our conclusion can stand in light of the decision in Airlite.

98      It was submitted also that the Commission’s decision to include a clause regarding choice in order to extend the right to choose which was afforded to those in employment to those coming into employment is not caught by the Airlite decision.  In its reasons at [51], the court held that the Commission may not properly be persuaded that it should exercise jurisdiction in respect of an industrial matter by virtue of matters directly contemplated and authorised by Parliament in the WP Act.  We would need to be persuaded that the fact that persons not in employment do not have the right to choose between being employed pursuant to award or workplace agreement conditions is a matter which was not directly contemplated and authorised by Parliament in the WP Act.  The unions have not sought to persuade us of that and, with respect, we suspect that they would not be able to do so.

99      Accordingly, we are unable on the material presently before us to distinguish the court’s decision in Airlite from the decision we had reached and the claim of the unions for a clause to be inserted in the award to issue prescribing a choice to prospective employees is necessarily refused.

Transfers and Income Maintenance

100   The location at which work performed is one of the unions’ key areas.  In the submission of the unions this issue goes to the impact on the employee and the employee’s family of the location of the work.  For example, an employee employed at Port Hedland may have his or her family location there and for BHPIO to have an unlimited discretion to simply transfer that employee to Newman, or vice versa, is to place too much power in the hands of BHPIO in respect of a matter which is of fundamental importance to the employee.  The unions therefore wish to impose a restriction that there will be no transfer between locations without employee consent.

101   The Commission noted the evidence of Mr Connors (paragraph 7) that income maintenance where an employee has been reclassified or transferred from shift to days has been a long standing feature of employment at Finucane Island.  The evidence of Mr Blyth (paragraph 8) states that income maintenance for employees transferred from shift to day work reflects long standing existing practice since approximately 1986.  It was used recently at Nelson Point to maintain the income of employees who ceased to be leading hands following a restructure.

102   The Commission also noted the response of BHPIO that this may be one of the matters which in the future may be the subject of further negotiations between the unions (transcript p. 1225).  Indeed, BHPIO submits that its claim contains provisions consistent with the existing award to protect employees in relation to shift and rosters (transcript p.1209).  Mr Stockden’s statement in reply (paragraph 13) states that it has been a long standing practice that the company has been able to introduce changes to its rosters with two weeks’ notice without agreement from the relevant unions or employees.  We find accordingly.

103   We are mindful, on the balance of the evidence, of the consequence upon employees who may, for example, be requested to move from long standing employment in Port Hedland to Newman with its consequent dislocation to family arrangements.  That is not to say that all such transfers would have such a consequence.  The unions’ claim will, if accepted, give an individual a right of veto over any proposed transfer.  We consider it as consistent with the need for increased flexibility for that not to occur.  For that reason, the unions’ claim is refused.

104   However, that does not give license to BHPIO to transfer its employees where such a transfer would have harsh or unfair consequences upon the employee, including by reason of the consequence upon the employee’s family.  We consider it important to recognise that BHPIO may, for operational need, transfer an employee without requiring the employee’s prior consent.  However, BHPIO’s decision to do so in an individual case may be challenged and the Commission may, depending upon the circumstances, order that a proposed transfer not occur.  The Commission has done so in the past where unfairness has been established.  We consider that will provide a balance between the necessity for the increase in flexibility on the one hand and the need to protect employees against the harsh consequences of any particular decision on the other.  Income maintenance ought to continue to apply in principle where it will produce a harsh or unfair consequence upon the employee.  The duration of that income maintenance will necessarily depend upon the circumstances.

Redundancy

105   As we noted in the Reasons for Decision which have issued at [134] there was little evidence to justify the claim made by the unions to improve the redundancy benefits otherwise payable.  Correspondingly, the history of the present provision is outlined in the evidence of Mr Stockden (paragraph 127 to 133).  On a consideration of the evidence we were not persuaded that the present entitlement is unreasonable and that there is merit with it being improved.  We have, however, not intended this decision to prevent an application being made according to the circumstances of the case in the event that redundancies do occur.

Casual Loading

106   The claim of the unions and the Commission in Court Session’s decision are contained at [135].  We had noted the unions’ submissions found at page 6 of the written outline of submissions on “secondary” matters.  The submission notes that the loading for casual staff, as distinct from casual employees under the award, is 25%.  An argument submitted by the unions is that increasing the casual loading to 25% is justified because long service leave is more beneficial that the standard 15 years, casuals may be required to work shifts and there is a trend in recent cases to give ordinary casual employees 25%.

107   The cross-examination of Mr Stockden (transcript p. 539) shows that the difference between loadings for staff and award casuals appears to be historical.  Further, his evidence is and we find that there has been only minimal employment of casuals as either award covered employees or staff.  BHPIO urged that there was no evidence put before the Commission to justify both the increase in the loading and also the balance of the unions’ clause which in its submissions impose restrictions upon BHPIO regarding the utilisation of part-timers or casual employees.

108   We agree with the comments of Mr Stockden that the present loading of 20% is likely to be the quantum commonly prescribed in awards in this Commission.  We did not find the two cases to which Mr Schapper referred as being of assistance in the context of BHPIO’s operation where particularly there is no evidence of casual employment.  We agree with the submission of Mr Dixon (transcript p. 1283) that the traditional components of the casual loading do not include long service leave and the fact that the long service leave provisions for BHPIO may be more generous than that found in industry generally does not in these circumstances provide a reason why the casual loading should similarly be more generous.  Further, even if casual employees may be required to work shifts, that fact of itself does not seem persuasive as a reason why the loading should therefore increase.

109   Ultimately, the infrequent use of casuals by BHPIO distinguished it from industries where there has been an increase in the level of casual employment.  Indeed, the increased casualisation of the workforce in some industries may warrant such an increase but that will depend upon the circumstances.  Once those aspects of the unions’ submission have been dealt with there remained only the reason that staff employees receive 25%.  As BHPIO itself has pointed out, that has not been a reason historically in its operations for such an increase and to the extent that the staff employees are also employees on workplace agreements the submission runs into the legislative difficulty presented by s.26A(b) of the Act.

110   Mr Schapper, somewhat surprisingly, strongly contested the use by the Commission in its Reason for Decision of the word “standard” when referring to the present 20% loading.  The use of that word does not of itself indicate that there is a “standard” in the sense that that word is used for the purpose of the Wage Fixing Principles and test cases.  We would be surprised however if it could not be shown that a 20% loading for casuals is the most common loading in awards of this Commission.  Certainly, the unions have not sought to persuade us otherwise.  In that event, the use of the word “standard” does not appear to us to be exceptional.

111   The unions also claim that a provision should be inserted in the award requiring BHPIO to retain apprentices in employment for a period of six months after the completion of their apprenticeship.  This is an existing practice of long standing (Statement of Mr Chadwick paragraph 9).  Mr Stockden’s statement in reply at paragraph 6 notes that the practice has never been part of the award or an industrial agreement and the present intention is to continue the practice.  We accept that evidence.  We note the reasons why the practice has occurred (attachment JMS 51) and given the intention of continuing the practice we do not see a need for it to be incorporated in the award.  We are not persuaded that the balance of the clause sought is made out on the merits on this occasion.

Sickness and Accident Scheme

112   BHPIO seeks to include in the award to issue provisions amending the sickness and accident scheme which is described in Mr Stockden’s statement as “a current and significant entitlement for the award and EBA employees (paragraph 143).  We have considered the statement and the issues canvassed in the cross-examination commencing at transcript p.505.  We consider it reasonable that BHPIO may require an employee to undergo one or more medical examinations at its expense and that BHPIO may nominate a doctor if one cannot be mutually agreed.  We have some reservations about the proposed clause 13.7 which provides BHPIO with the authority to direct an employee to undergo a rehabilitation programme if the doctor has approved that programme.  However, provided that the rehabilitation programme proposed by the doctor nominated by BHPIO is not opposed by the employee’s doctor, we would be prepared to grant this provision on this basis.

Other Matters

Interim Order of Kenner C

113   At the proceedings on 7 December 2001 BHPIO made application to set aside the order of Kenner C in application C 60 of 2001 dated 16 March 2001 (“the Order”).  The basis of that application in essence being that the course now adopted by the Commission in Court Session in publishing these supplementary reasons, and the attendant delay, has been at the behest of the unions.  It was therefore submitted that BHPIO should not remain subject to the Order in these circumstances.

114   Mr Schapper strongly opposed BHPIO’s application.  He submitted that in the context of the entire proceedings and further proceedings that may be required to finally conclude the matter, any delay would not be significant.  Additionally, Mr Schapper submitted that as the increases in remuneration contemplated by the Commission’s decision are contingent upon the recession of all prior industrial instruments, including the Order, it would be wrong in principle to revoke the Order at a time when none of the benefits of the decision have flowed to the affected employees.

115   We have decided that in light of the course that we propose as referred to below, the Commission in Court Session will not, at this point, revoke the Order.  At paragraph 119 and 120 of our reasons for decision of 2 November 2001, the Commission in Court Session said that on the delivery of the new award, all prior industrial instruments and the Order will be cancelled.

116   We anticipate that this will now, for the reasons stated below, occur promptly.

Interim Orders

117   At paragraph 9 of the unions’ supplementary submissions certain interim orders are sought.  In light of the course to be adopted by the Commission, we do not propose to grant such orders.

Future Course

118   The Commission in Court Session has, in these further reasons for decision, set out the basis for its findings and conclusions in relation to the key issues identified in the claims by the unions and BHPIO.  We have provided to the parties clear guidance on the content of proposed award clauses in what were identified by the parties as “core issues”.  Where relevant elements of the claims have been rejected that has been made plain and the reasons for so concluding have been expressed by the Commission in Court Session.  In our opinion, for the Commission in Court Session to descend into further particularity would require us to specify the actual award clauses to be given effect.

119   By letter dated 4 December 2001, the solicitors for BHPIO provided to the Commission and the other parties, a copy of a revised proposed award said to give effect to the Commission in Court Session’s reasons for decision of 2 November 2001.  In response to that and in light of these further reasons for decision, we now direct the unions to file and serve within seven days, in accordance with Mr Schapper’s stated readiness to do so at the resumed hearing on 7 December 2001, a revised proposed award to give effect to the Commission in Court Session’s reasons for decision as a whole. We also direct the parties to confer within 21 days of service of the unions proposed award on BHPIO, in an endeavour to reach agreement on the award provisions.  We note there are a number of areas in the claims in respect of which there are few differences.  We expect those to be resolved.  We also direct the parties to confer within that time in relation to the consolidated classification structure tendered during the course of the proceedings and the subject of correspondence between Mr Schapper and Mallesons of 26 November 2001.

120   To the extent that the parties are not able to reach agreement on the terms of the proposed new award, the Commission in Court Session will deliver an award.  In that regard, the Commission requires advice from the parties at the end of the period specified in paragraph 119 as to their positions.  On the issuance of the award, as either agreed or determined in whole or part by the Commission in Court Session, the Order will be revoked.