1
Fair Work Act 2009
s.156 - 4 yearly review of modern awards
4 yearly review of modern awards
(AM2014/67)
BLACK COAL MINING INDUSTRY AWARD 2010
[MA000001]
Coal industry
VICE PRESIDENT HATCHER
SENIOR DEPUTY PRESIDENT HAMBERGER
DEPUTY PRESIDENT GOSTENCNIK
COMMISSIONER JOHNS SYDNEY, 10 APRIL 2015
Variation of clause 14.4(c) of the Black Coal Mining Industry Award 2010 - redundancy.
Introduction and background
[1] Clause 14 of the Black Coal Mining Industry Award 20101 (Award) makes provision
for severance and retrenchment payments to be made to redundant employees. Relevantly, it
provides (underlining added):
“14. Redundancy
14.1 The redundancy arrangements in this award are an industry-specific redundancy
scheme and, as such, Subdivision B of Division 11 the NES does not apply.
14.2 Definition of redundancy
(a) An employee is made redundant where an employee’s employment is
terminated at the employer’s initiative:
(i) because the employer no longer requires the job done by the
employee to be done by anyone except where this is due to the ordinary
and customary turnover of labour; or
(ii) because of insolvency or bankruptcy of the employer.
1 MA000001
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DECISION
E AUSTRALIA FairWork Commission
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(b) This clause does not apply to employees engaged for a fixed term or a
specified task.
14.3 Severance payment
Except where clause 14.5 applies, when terminations occur due to redundancy
the employees terminated are entitled to severance pay equal to one ordinary
week’s pay for each completed year of employment.
14.4 Retrenchment payment
(a) Except where clause 14.5 applies, where redundancies occur due to:
(i) technological change;
(ii) market forces; or
(iii) diminution of reserves,
the employees terminated are entitled to retrenchment pay equal to two
ordinary weeks’ pay for each completed year of employment. This
payment is additional to the payment prescribed in clause 14.3. This
makes a total of three ordinary weeks’ pay for each completed year of
employment.
(b) Regardless of length of employment, the minimum payment due to
employees under clause 14.4(a) is two ordinary weeks’ pay.
(c) The amount of payment due under clause 14.4 is not to be more than what
an employee would have received had the employee remained in employment
with the employer until the age of 60 years.
14.5 Exemption
. . .
14.6 Variation of retrenchment pay
. . .”
[2] Under s.156(1) of the Fair Work Act 2009 (FW Act), the Commission is obliged to
conduct a 4 yearly review of modern awards as soon as practicable after each 4th anniversary
of the commencement of Part 2-3 of the FW Act, being 1 January 2010. In a letter dated 9
May 2014, the Construction, Forestry, Mining and Energy Union (CFMEU), as part of the 4
yearly review which commenced in 2014, identified clause 14.4(c) of the Award as a potential
item of review on the basis that it is discriminatory against employees who had attained the
age of 60 or more. On 26 September 2014 the Commission published an exposure draft of the
reviewed Award which replicated the existing clause 14.4(c) in proposed clause 24.3(c). On
20 October 2014 the CFMEU and the Association of Professional Engineers, Scientists and
Managers, Australia (APESMA) filed a joint submission which sought the deletion of the
provision.
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[3] On 25 July 2014 the APESMA made a complaint to the Australian Human Rights
Commission (AHRC) pursuant to s.46PW(1)(d) of the Australian Human Rights Commission
Act 1986 (AHRC Act). Section 46PW of the AHRC Act provides:
46PW Referral of discriminatory industrial instruments to the Fair Work
Commission
(1) A complaint in writing alleging that a person has done a discriminatory act
under an industrial instrument may be lodged with the Commission by:
. . .
(d) a trade union, on behalf of one or more of its members aggrieved by the act
or on behalf of a class of its members aggrieved by the act.
(2) If the Commission receives a complaint under this section, the Commission
must notify the President accordingly.
(3) If it appears to the President that the act is a discriminatory act, the President
must refer the industrial instrument to the Fair Work Commission. However, the
President need not refer the industrial instrument if the President is of the opinion that
the complaint is frivolous, vexatious, misconceived or lacking in substance.
(4) If the President decides not to refer the industrial instrument, the President
must give notice in writing of that decision to the complainant or each of the
complainants, together with notice of the reasons for the decision.
(5) If the President refers the industrial instrument to the Fair Work Commission,
the President must give notice in writing of the outcome of the referral to the
complainant or each of the complainants.
(6) The President may obtain documents or information under section 46PI for the
purposes of this section.
(7) In this section:
"discriminatory act under an industrial instrument" means an act that would be
unlawful under:
(a) Part 4 of the Age Discrimination Act 2004; or
(b) Part 2 of the Disability Discrimination Act 1992; or
(c) Part II of the Sex Discrimination Act 1984;
but for the fact that the act was done in direct compliance with an industrial
instrument.
"industrial instrument" means:
(a) a fair work instrument (within the meaning of the Fair Work Act 2009); or
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(b) a transitional instrument, or a Division 2B State instrument, (within the
meaning of the Fair Work (Transitional Provisions and Consequential
Amendments) Act 2009).
(8) For the purposes of the definition of discriminatory act under an industrial
instrument in subsection (7), the fact that an act is done in direct compliance with the
industrial instrument does not of itself mean that the act is reasonable.
[4] The APESMA’s complaint was that two identified coal mining companies had in
October 2013 terminated the employment of four of its members who were over the age of 60
on the ground of redundancy, but relying on clause 14.4(c) of the Award did not pay them the
retrenchment benefits provided for in clause 14.4(a). The APESMA contended that this
constituted age discrimination.
[5] In a letter dated 20 October 2014, the President of the AHRC referred the matter to the
President of this Commission pursuant to s.46PW(3) on the basis that the acts complained
about by the APESMA appeared to be discriminatory. The consideration and conclusion of
the President of the AHRC as stated in this letter were as follows:
“On its face, clause 14.4(c) appears to provide for less favourable treatment of
employees based on their age, in that an employee over 60 years of age who is made
redundant is not entitled to retrenchment pay while an employee under 60 years of age
made redundant at the same time is entitled to retrenchment pay.
I note there is jurisprudence of the AIRC to the effect that a similarly worded
redundancy cap clause was not discriminatory (Re BHP Coal (unreported, AIRC,
Wilks C, S8070, 13 July 2000 and Re Metropolitan Daily Newspapers Redundancy
Award 1996 (unreported, AIRC, Giudice J, S8526, 25 July 2000). However, as
observed by Lawler VP in Re Australian Catholic University Ltd [2011] FWA 3693
these decisions were made almost 15 years ago in a context where compulsory
retirement at 60 years was the practical reality in the coal mining industry. With the
passage of the Age Discrimination Act 2004 and the abolition of the compulsory
retirement age in the coal mining industry that position has now changed.
Conclusion
On the basis of the information before me at this time, it appears that the agreed act
which is the subject of this complaint is a discriminatory act, in that it would be
unlawful under Part 4 of the Age Discrimination Act 2004 but for the fact that it was
[an] act was done in direct compliance with an industrial instrument.
I am therefore referring the Award to you.
I have notified the Association of my referral.”
[6] The action required to be taken by this Commission upon receiving a referral under
s.46PW of the AHRC Act is set out in s.161 of the FW Act, which provides:
161 Variation of modern award on referral by Australian Human Rights
Commission
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(1) The FWC must review a modern award if the award is referred to it under
section 46PW of the Australian Human Rights Commission Act 1986 (which deals
with discriminatory industrial instruments).
(2) The following are entitled to make submissions to the FWC for consideration in
the review:
(a) if the referral relates to action that would be unlawful under Part 4 of the
Age Discrimination Act 2004—the Age Discrimination Commissioner;
(b) if the referral relates to action that would be unlawful under Part 2 of the
Disability Discrimination Act 1992—the Disability Discrimination
Commissioner;
(c) if the referral relates to action that would be unlawful under Part II of the
Sex Discrimination Act 1984—the Sex Discrimination Commissioner.
(3) If the FWC considers that the modern award reviewed requires a person to do an
act that would be unlawful under any of the Acts referred to in subsection (2) (but for
the fact that the act would be done in direct compliance with the modern award), the
FWC must make a determination varying the modern award so that it no longer
requires the person to do an act that would be so unlawful.
Note: Special criteria apply to changing coverage of modern awards (see section 163).
[7] On 5 November 2014 the President of this Commission made directions that the award
modernisation submission of the CFMEU and the APESMA concerning clause 14.4(c) of the
Award and the referral from the President of the AHRC should be heard concurrently. The
matters were referred to this Full Bench, and were the subject of a hearing on 16 February
2015.
[8] Separately from these matters, Centennial Northern Mining Services Pty Ltd applied
to the Federal Court of Australia for a declaration that clause 30.8 of the Centennial Northern
Mining Services Enterprise Agreement 2011 (Agreement) was lawful. Clause 30.8 of the
Agreement is in terms identical to clause 14.4(c) of the Award. In the alternative, if the
declaration was not granted, the company sought that the provisions in the Agreement
conferring retrenchments pay benefits (clauses 30.6 and 30.7) be declared unlawful along
with clause 30.8 on the basis that they together formed a single entitlement. This application
was heard by the Federal Court (Buchanan J) on 9 February 2015, and the judgment was
issued on 27 February 2015 (Centennial Mining Decision).2 The Court rejected the
company’s primary application for a declaration that clause 30.8 was lawful, and also rejected
the alternative application that clauses 30.6, 30.7 and 30.8 together be declared unlawful.
Evidence and submissions
2 Centennial Northern Mining Services Pty Ltd v Construction, Forestry, Mining and Energy Union (No 2) [2015] FCA 136
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[9] The CFMEU and the APESMA submitted that clause 14.4(c) of the Award
discriminated on the basis of age, and on that basis should be removed from the Award. The
history of the award provision demonstrated, they contended, that the provision was originally
made in circumstances where there was a standard coal mining industry retirement age of 60.
That retirement age had been abandoned, and persons over 60 now worked in the coal mining
industry. The clause was discriminatory on the basis of age because if a person over the age of
60 was made redundant, he or she would receive no retrenchment payment under clause 14.4
whereas a person under 60 with exactly the same length of service would receive a payment.
The only distinguishing feature between them was age. Clause 14.4(c) was inconsistent with
the modern awards objective in s.134 of the FW Act. The CFMEU and the APESMA also
pointed to s.578, which requires the Commission, in performing its functions and exercising
its powers, to take into account the need to respect and value the diversity of the work force
by helping to prevent and eliminate discrimination on the basis of, among other things, age.
[10] The CFMEU and the APESMA adduced evidence by way of a statement made by
Catherine Bolger, the Director of the Collieries’ Staff Association of the APESMA. Ms
Bolger was not required for cross-examination by any party. Ms Bolger gave evidence as to
the following propositions:
Upon a review of enterprise agreements in the coal mining industry, only a minority
had aged-based caps on redundancy payments.
In relation to members of the APESMA employed on common law contracts, most
of those which contained any redundancy provisions at all did not have any aged-
based caps on payments. A minority of them referred to the Award entitlement.
An Australian Bureau of Statistics analysis published in 2011 showed that 5% of
employees in coal mining in New South Wales were over the age of 60.
An analysis of the membership of the Collieries’ Staff Division of the APESMA
showed that 11.5% of members were over the age of 60 and still working.
[11] In its submissions the Coal Mining Industry Employer Group (CMIEG) pointed to
s.153(1) of the FW Act, which requires that modern awards not include terms that
discriminate against an employee because of or for reasons including, relevantly, age, and
contended that clause 14.4(c) of the Award was not contrary to s.153. This provision, the
CMIEG submitted, was concerned only with direct and not indirect discrimination, and
referred to Shop, Distributive and Allied Employees Association v National Retailers
Association.3 The CMIEG pointed to the fact that clause 14.4(c) was introduced into the
Award when it was made in the course of the award modernisation process with the consent
of the CFMEU and the APESMA as part of an industry-specific redundancy scheme under
s.141 of the FW Act. Clause 14.4(c), it was submitted, was an integral part of an industry-
specific redundancy scheme that had been in place since 1983, and no proper merit case had
been advanced for its removal. The provision was not directly discriminatory because it did
not have a substantial and operative purpose of seeking to disadvantage employees by reason
of their age; rather it had the different purpose of setting a reasonable limit on economic
compensation paid upon retrenchment. The age of 60 was a reasonable reference point for that
limit because at that age employees could immediately access their retirement benefits; as an
example of this, under the AUSCOAL superannuation scheme:
3 (2012) 205 FCR 227 at [56]
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(a) members aged 60 could make tax free withdrawals from the Auscoal Fund;
(b) members aged 55 to 59 could make tax free withdrawals up to an amount of
$185,000;
(c) members aged 55-60, depending upon year of birth, were if no longer
employed able to access their superannuation funds;
(d) members aged 55 and over, if permanently retired, could invest in an account-
based pension and receive a regular income; and
(e) members aged 55-65 and still working could withdraw from the Auscoal Fund
by electing to receive their superannuation as a pre-retirement pension to
supplement their income.
[12] The CMIEG also referred to the fact that under superannuation legislation,
superannuation may be accessed by an individual once that person reached their preservation
age, which was from 55 to 60 depending on the year of birth, and retired. The retention of the
cap in clause 14.4(c) was also supported by the Termination, Change and Redundancy Case4
and the Redundancy Case5 which required that standard redundancy provisions ensure that
severance payments not exceed the amount the employee would have received if employment
had proceed to the employee’s normal retirement date.
[13] In the alternative, the CMIEG submitted that if it was found that s.153 did not permit
clause 14.4(c), then the whole of clause 14 should be removed because clause 14.4(c) was an
integral element in the redundancy scheme which was only permitted to be in the Award
because of its industry-specific nature, that the redundancy scheme including clause 14.4(c)
had been implemented with the consent and support of all the parties, the scheme did not
constitute a proper safety net, and there should not be cherry-picking of the scheme in a way
which resulted in it departing from its original form. The CMIEG also contended that there
was no power under s.141(3)(a) of the FW Act to remove clause 14.4(c), because this did not
involve varying the amount of any redundancy payment in the scheme. The CMIEG also
made a further alternative submission that, if clause 14 was not removed in its entirety, a new
limitation on payments should be introduced capping payments under clause 14.4 to 18
weeks’ pay.
[14] The CMIEG tendered a witness statement of Ms Hannah Martin, a lawyer employed
by Ashurst Australia. Ms Martin was not required for cross-examination. She was provided
with data from the Department of Natural Resources and Mines which was drawn from the
Coal Mine Workers’ Health Scheme for the years 2009-2014 which she analysed. Her
analysis showed, relevantly, that in 2009 5.5% of coal mine workers were aged 60 and over,
and that for the subsequent years in the 2009-2014 period the corresponding figures were
3.1%, 3.3%, 3.2%, 3.4% and 4.3%.
[15] The CMIEG also tendered a witness statement made by Mr David Gunzburg, the
principal of DGHR Services, a human resources consultancy, and a director on the board of
4 (1984) 9 IR 115 at 131
5 (2004) 129 IR 155 at [159]-[168]
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Coal Services Pty Ltd. He was likewise not required for cross-examination. Mr Gunzburg
provided data concerning the age profile of 953 employees who had been retrenched in the
black coal mining industry over the last two years. That data showed that 10% of such
employees were aged 60 years or over when retrenched, and a further 15% were in the 55-60
age range. He also provided further data concerning the age distribution of employee in the
black coal mining industry in New South Wales, which showed that the proportion of
employee 60 years of age or more had increased from 2.8% in 2007 to 4.7% in 2013.
The Centennial Mining Decision
[16] Subsequent to the hearing of this matter, the Centennial Mining Decision was
delivered as earlier indicated. In that decision, Buchanan J dealt with the issue of alleged age
discrimination as follows:
“[40] Until 30 June 2006 coal mine workers in New South Wales were obliged to
retire from coal mining at the age of 60 years. Section 5(1) of the Coal and Oil Shale
Mine Workers (Superannuation) Act 1941 (NSW) prohibited the employment of mine
workers of or above the age of 60 years. The prohibition was removed by the Coal and
Oil Shale Mine Workers (Superannuation) Amendment Act 2006 (NSW) (s 3, Sch 1
cl [4]).
[41] For so long as a coal mine worker could not work beyond the age of 60 years it
was at least arguable that no discrimination would have been involved in a provision
such as cl 30.8 of the Agreement. I do not need to consider further how any such
argument might have been resolved.
[42] However, it is unarguable that cl 30.8 will have a dramatically different effect
upon a long-serving employee retrenched at age 60 or over (for example) than one
retrenched at less than that age. Leaving aside any debate at the margins about a
progressive reduction in entitlement as age 60 is approached, the effect of cl 30.8 is
stark from age 60 on: no retrenchment payment is available no matter what the length
of service.
[43] The reason for that difference in outcome is the employee’s age. In my view,
the conclusion is inescapable that the term of the Agreement having that effect
(cl 30.8) is a discriminatory term (s 195 of the FW Act) and therefore an unlawful
term (s 194(a) of the FW Act).”
[17] In rejecting the applicant’s alternative claim in that matter to which we have earlier
referred, namely that the entirety of the retrenchment pay provisions in the Agreement be
declared unlawful if the age cap was found to be discriminatory, Buchanan J said:
“[54] On the other hand, I can see no reason why cll 30.6 or 30.7 are thereby
affected. I do not accept the applicant’s submissions that:
68. ... clause 30.8 cannot be read in isolation from cll.30.6 and 30.7. These
three clauses read together give rise to the single entitlement to “retrenchment
pay” ...
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[55] The effect of accepting the applicant’s submissions would be to strip all other
employees (in addition to those at present disadvantaged) of any entitlement to
retrenchment pay in any circumstances. The appropriate course to take is to remove
the unlawful discriminatory term, not take the axe to an entitlement which should not
have been subject to a discriminatory limitation in the first place.”
[18] The CMIEG has filed an appeal against the Centennial Mining Decision on 19 March
2015, but the appeal does not seek to challenge Buchanan J’s conclusion concerning the
lawfulness of the aged based cap on retrenchment pay in the Agreement.
Further submissions
[19] After the Centennial Mining Decision was delivered, we invited the parties to make
further submissions concerning it. The CFMEU and the APESMA submitted that there was
no relevant distinction between clause 14.4(c) of the Award and the enterprise agreement
provisions considered in the Centennial Mining Decision such as to justify any different
conclusion as to whether clause 14.4(c) was discriminatory. The result was that clause 14.4(c)
was a provision that was not, under s.153(1), permitted to be contained in a modern award,
and that consequently s.137 rendered it of no effect. In those circumstances, they submitted,
clause 14.4(c) should be removed on the basis that it was ambiguous and/or uncertain.
[20] The CMIEG filed a submission in which it maintained its earlier position. In the
alternative, it submitted that if the Commission were to reach the conclusion that it was not
appropriate for clause 14.4(c) to remain in the Award, it sought to be heard further as to the
appropriate variation to the Award.
[21] The Australian Industry Group (AIG) submitted that if, given the Centennial Mining
Decision, the Commission determined that clause 14.4(c) could or should not remain in the
Award, the appropriate course would be to allow the parties to enter into discussion in an
attempt to agree upon an alternative form of cap of redundancy entitlements, and that if
agreement could not be reached, a timetable for the filing of submissions and a hearing of that
matter should be established.
Consideration
Relevant statutory provision
[22] Section 139 of the FW Act identifies generally the matters about which terms may be
included in modern awards. Redundancy pay is not one of those matters. However s.141
permits the inclusion of an “industry-specific redundancy scheme” in a modern award.
Section 141 provides:
141 Industry-specific redundancy schemes
When can a modern award include an industry-specific redundancy scheme?
(1) A modern award may include an industry-specific redundancy scheme if the
scheme was included in the award:
(a) in the award modernisation process; or
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(b) in accordance with subsection (2).
Note: An employee to whom an industry-specific redundancy scheme in a
modern award applies is not entitled to the redundancy entitlements in
Subdivision B of Division 11 of Part 2-2.
Coverage of industry-specific redundancy schemes must not be extended
(2) If:
(a) a modern award includes an industry-specific redundancy scheme; and
(b) the FWC is making or varying another modern award under Division 4 or 5
so that it (rather than the modern award referred to in paragraph (a)) will cover
some or all of the classes of employees who are covered by the scheme;
the FWC may include the scheme in that other modern award. However, the
FWC must not extend the coverage of the scheme to classes of employees that
it did not previously cover.
Varying industry-specific redundancy schemes
(3) The FWC may only vary an industry-specific redundancy scheme in a modern
award under Division 4 or 5:
(a) by varying the amount of any redundancy payment in the scheme; or
(b) in accordance with a provision of Subdivision B of Division 5 (which deals
with varying modern awards in some limited situations).
(4) In varying an industry-specific redundancy scheme as referred to in subsection (3),
the FWC:
(a) must not extend the coverage of the scheme to classes of employees that it
did not previously cover; and
(b) must retain the industry-specific character of the scheme.
Omitting industry-specific redundancy schemes
(5) The FWC may vary a modern award under Division 4 or 5 by omitting an industry-
specific redundancy scheme from the award.
[23] Apart from a limited ability under s.55(4) for a modern award to include terms
ancillary or incidental to the operation of (relevantly) the National Employment Standards
(NES) redundancy pay entitlements, and under s.121(2) to include terms specifying situations
other than those in s.121(1) where the NES redundancy entitlements are not payable, there is
no other power to include terms in modern awards concerning redundancy pay.
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[24] The FW Act contains requirements concerning terms which must not be included in
modern awards. Section 153 prohibits discriminatory terms in modern awards as follows:
153 Terms that are discriminatory
Discriminatory terms must not be included
(1) A modern award must not include terms that discriminate against an employee
because of, or for reasons including, the employee’s race, colour, sex, sexual
orientation, age, physical or mental disability, marital status, family or carer’s
responsibilities, pregnancy, religion, political opinion, national extraction or social
origin.
Certain terms are not discriminatory
(2) A term of a modern award does not discriminate against an employee:
(a) if the reason for the discrimination is the inherent requirements of the
particular position held by the employee; or
(b) merely because it discriminates, in relation to employment of the employee
as a member of the staff of an institution that is conducted in accordance with
the doctrines, tenets, beliefs or teachings of a particular religion or creed:
(i) in good faith; and
(ii) to avoid injury to the religious susceptibilities of adherents of that
religion or creed.
(3) A term of a modern award does not discriminate against an employee merely
because it provides for minimum wages for:
(a) all junior employees, or a class of junior employees; or
(b) all employees with a disability, or a class of employees with a disability; or
(c) all employees to whom training arrangements apply, or a class of
employees to whom training arrangements apply.
[25] Section 136(2)(a) provides that a modern award must not include terms that
contravene Subdiv. D of Div.3 of Part 2-3 of the Act (in which s.153) is located. Section 137
then provides: “A term of a modern award has no effect to the extent that it contravenes
section 136”. Thus, for relevant purposes, any modern award provision which discriminates
against an employee because of, or for reasons including, the employee’s age has no effect.
[26] Section 134 establishes a general objective, the “modern awards objective”, which the
Commission must ensure is achieved when it exercises its modern award function and
powers. Section 134 provides:
134 The modern awards objective
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What is the modern awards objective?
(1) The FWC must ensure that modern awards, together with the National
Employment Standards, provide a fair and relevant minimum safety net of terms and
conditions, taking into account:
(a) relative living standards and the needs of the low paid; and
(b) the need to encourage collective bargaining; and
(c) the need to promote social inclusion through increased workforce
participation; and
(d) the need to promote flexible modern work practices and the efficient and
productive performance of work; and
(da) the need to provide additional remuneration for:
(i) employees working overtime; or
(ii) employees working unsocial, irregular or unpredictable hours; or
(iii) employees working on weekends or public holidays; or
(iv) employees working shifts; and
(e) the principle of equal remuneration for work of equal or comparable value;
and
(f) the likely impact of any exercise of modern award powers on business,
including on productivity, employment costs and the regulatory burden; and
(g) the need to ensure a simple, easy to understand, stable and sustainable
modern award system for Australia that avoids unnecessary overlap of modern
awards; and
(h) the likely impact of any exercise of modern award powers on employment
growth, inflation and the sustainability, performance and competitiveness of
the national economy.
This is the modern awards objective.
When does the modern awards objective apply?
(2) The modern awards objective applies to the performance or exercise of the FWC’s
modern award powers, which are:
(a) the FWC’s functions or powers under this Part; and
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(b) the FWC’s functions or powers under Part 2-6, so far as they relate to
modern award minimum wages.
Note: The FWC must also take into account the objects of this Act and any other
applicable provisions. For example, if the FWC is setting, varying or revoking modern
award minimum wages, the minimum wages objective also applies (see section 284).
[27] In addition, in performing any of its functions or exercising any of its powers
(including in relation to modern awards), s.578(c) requires the Commission to take into
account “the need to respect and value the diversity of the work force by helping to prevent
and eliminate discrimination on the basis of race, colour, sex, sexual orientation, age,
physical or mental disability, marital status, family or carer’s responsibilities, pregnancy,
religion, political opinion, national extraction or social origin.”
[28] In conducting a 4 yearly review of modern awards in accordance with s.156(1), the
Commission is empowered by s.156(2)(b)(i) to make determinations varying modern awards.
Outside of 4 yearly reviews, the Commission has the power to vary modern awards (except in
relation to minimum wages and default fund terms) if it is satisfied that it is necessary to do so
to achieve the modern awards objective. The Commission may also, under s.160(1), make a
determination varying a modern award to “remove an ambiguity or uncertainty or to correct
an error”.
History of the black coal mining industry redundancy scheme
[29] The scheme of redundancy payments in clause 14 of the Award has two elements: the
severance payments provided for in clause 14.3, and the retrenchment payments provided for
in clause 14.4. The severance payment entitlement has its origins in decisions of the Coal
Industry Tribunal in 1973. The payment of that entitlement has never been limited by reason
of the age of the redundancy employee.
[30] For employees in New South Wales and Queensland, the retrenchment payment
entitlement was added by a decision of the Coal Industry Tribunal of 19 January 19836, and
included the capping provision currently to be found in clause 14.4(c) of the Award. It
appears, having regard to the evidence and submission in the matter that the rationale for the
capping provision was to be found in the then-existing State legislative provisions which
established a mandatory retirement age of 60 for coal miners and provided for the payment of
pensions after that age.7 This statutory mandatory retirement age did not extend to colliery
staff, who were permitted to work until the age of 65, but nonetheless an industry practice of
retirement at 60 was recognised as applicable to them as well.8 In that context, the capping
provision was determined to be necessary to ensure that no employee received more than he
would have received had he remained at work until the statutory retirement age. In that
decision the question of retrenchment benefits for employees over 60 did not arise because the
statutory provisions referred to prohibited employment of persons over that age.
6 Decision - Coal Mining Industry (Severance and Retrenchment Pay, New South Wales and Queensland), CR3132
7 Coal and Oil Shale Mine Workers (Superannuation) Act 1941 (NSW), Pt.2 Div.1; Coal and Oil Shale Mine Workers
(Pensions) Act 1941 (Qld); Coal Mine Workers Pensions Act 1942 (Vic)
8 Decision - Coal Mining Industry (Staff, New South Wales, Queensland and Tasmania), 3 February 1983, CR3147 at pp.5, 6.
[2015] FWCFB 2192
14
[31] The Coal Industry Tribunal’s decision to cap retrenchment payments by reference to
the earnings an employee would have received had the employee not been retrenched and had
worked to retirement was consistent with the standard redundancy provisions established by
the Full Bench of the Australian Conciliation and Arbitration Commission in the 1984
Termination, Change and Redundancy Case.9 In that case, the Full Bench said, in relation to
the standard provisions it proposed to establish: “... we are of the opinion that where
termination is within the context of an employee’s retirement, an employee should not be
entitled to more than he/she would have earned if he/she had proceeded to normal
retirement.”10 The standard provision which was ultimately determined in the supplementary
Termination, Change and Redundancy Case11 was:
“Provided that the severance payments shall not exceed the amount which the employee
would have received if employment with the employer had proceeded to the
employee’s normal retirement date.”
[32] The aged-based cap on retrenchment pay in the redundancy scheme for the coal
mining industry (as contained in the then Coal Mining Industry (Production and Engineering)
Consolidated Award 1997) was reviewed by the Australian Industrial Relations Commission
(AIRC) in 2000 in the context of the requirement in item 51(7)(f) of Schedule 5 of the
Workplace Relations and Other Legislation Amendment Act 1996 to determine whether it
meant the criterion that (relevantly) “it does not contain provisions that discriminate against
an employee because of, or for reasons including ... age...”. In a decision issued on 16 July
199912, the Commission (Harrison C) recorded that (ironically) the employers sought the
deletion of the cap on the basis that it was discriminatory and its replacement by an overall
cap on retrenchment pay equal to the amount payable after 20 years service, and that this was
opposed by the CFMEU, which contended that the provision was not discriminatory.13
Commissioner Harrison found that the age cap was discriminatory and determined that it
should be deleted, and directed the parties to confer on a replacement cap.14
[33] It appears that the parties did not agree upon a replacement cap, and the Commissioner
did not ultimately order the deletion of the age cap. This led to an appeal by the employer on
this issue (as well as other issues). In a decision issued on 18 May 2000, a Full Bench of the
AIRC (Giudice J, President, Boulton J and Lawson C)15 upheld the appeal, and in doing so
observed that the Commissioner had not explained why he implicitly rejected a submission of
the CFMEU that “the cap renders the operation of the retrenchment pay provision more
equitable” in that “employees who are close to the end of their working lives should not
receive a benefit on retrenchment which is larger in relative terms than that received by
employees with a greater proportion of their working lives still ahead of them.” The Full
Bench then referred the issue to Commissioner Wilks for re-determination. In a decision
issued on 13 July 200016, Commissioner Wilks noted that the employers no longer pressed the
9 (1984) 8 IR 34
10 Ibid at 75
11 (1984) 9 IR 115 at 131
12 Print R4611
13 Ibid at [61]-[66]
14 Ibid at [67]-[69]
15 S6142
16 S8070
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submission that the age cap was discriminatory (except indirectly), and that they were
supported in this approach by all the unions which appeared in the matter, including the
CFMEU and the Australian Collieries Staff Association.17 The factual premise upon which
the matter proceeded was stated by the union representatives to be as follows:
“[10] Mr Wilson and Mr O’Sullivan supported the submissions of both Mr Longland
and Mr Slevin and in Mr Wilson’s case, supplemented them by reference to the fact
that the normal retiring age in the coal mining industry is 60 years. While the situation
in New South Wales and Queensland differs in regard to statutory requirements, the
practical situation remains the same in both states. That is, that the normal retiring age
is 60 years.”
[34] Commissioner Wilks found that the provision was not directly discriminatory, and
because there was a reasonable justification for it there was no need to consider whether it
was indirectly discriminatory. His reasons were as follows:
“[20] Clearly, the clause is applicable to all employees. There is no different formula
applied to any employee on any of the bases which would be prohibited by the
definition of direct discrimination. For example, if an employee retires at the “normal
retiring age” of 60 years, he or she could not earn more than that. It follows therefore,
that the clause is intended to avoid the potential for employees to obtain an unintended
or “windfall” gain from being made redundant at a point where he or she is
coincidentally nearer to the normal retirement age than another employee who, for no
different reason is also made redundant, but may be much further from the normal
retiring age of 60 years.
[21] Any differential in monetary entitlement is a function of the point in time at
which the retrenchment occurs and is not based on some formula which relies upon the
age of the individual concerned to differentiate directly. Accordingly, I find that the
clause does not involve direct discrimination as described by the definition of it which
I have set out above.
[22] Having now found that the clause does not involve direct discrimination, I turn
to consider the clause in the context of the definition of indirect discrimination, also
set out above.
. . .
[25] In relation to the second of those parts it is clear to me that, dependent upon
the point in time at which an individual employee is retrenched, the quantum of
retrenchment pay is affected. For example, an employee who is 58 years and 6 months
of age and who has 30 years continuous service with a company would be entitled to
60 weeks retrenchment pay, while another employee who is 59 years of age and has
the same amount of service with the company would only be entitled to 52 weeks
retrenchment pay. This apparent discrimination is, as I have already said, not primarily
caused by the clause but rather by the timing of the decision to retrench employees.
Both of the employees in the example given above would not be entitled to any
retrenchment pay at all if they had taken early retirement at age 55 or, alternatively,
had worked on until the normal retirement age of 60 years. It is the fact of the
17 Ibid at [6]-[10]
[2015] FWCFB 2192
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redundancy which determines an employee’s entitlement, the clause merely ensures
that no employee can receive more than he or she would have received if no
redundancy had occurred at all. In my view, such a clause is, in all of the
circumstances, reasonable.”
[35] The retirement proviso to the standard award redundancy pay provisions was revisited
by a Full Bench of the AIRC in the 2004 Redundancy Case18 in the context of an application
by the Australian Council of Trade Unions (ACTU) to have it removed and another
application by the AIG to have the reference to “normal retirement date” changed to refer to
the age of 65. The Full Bench rejected both applications and decided to retain the proviso in
its existing form. Its reasons were as follows (underlining added):
“[163] We have decided to reject the ACTU's claim to delete the retirement date
limitation. In our view the current provision should be retained. The original purpose
of the provision - to ensure that employees who are retrenched in reasonable proximity
to their projected retirement date should not receive more than they would have earned
had they remained employed until retirement - is still apposite. The principle
underpinning the existing provision is sound. The amount of money paid to a
retrenched employee by way of severance pay should not cause that individual to be
better off than if they had never been retrenched.
[164] The ACTU did not seek to challenge the original rationale for including this
restriction in the TCR standard clause. Rather, as we have noted, it argued that the
provision ought to be removed because the concept of a normal retirement date will
cease to have relevance. We do not find these arguments persuasive. It seems to us
that despite the passage of age discrimination legislation, the concept of a normal
retirement date will continue to be relevant where a particular occupation or industry
continues to have a fixed retirement date.
[165] Where employees and employers agree in advance to a retirement date the
principle underlying the current provision will also continue to be relevant. It is not
uncommon for employees and employers to discuss and plan retirement dates in
advance. Where they do so, the principle underlying the existing retirement age
provision remains relevant - if the employee is retrenched before the agreed retirement
date, severance pay should be capped so that the employee does not receive more than
if the employee had worked through to the retirement date.
[166] Nor are we persuaded to amend the current retirement date limitation in the
manner proposed by AiG. While the proposal has the virtue of clarity it seems to us
that it erroneously assumes that 65 years of age is the common retirement age across
federal awards. Further the proposed amendment does not seem to take into account
the prospect that an employer and employee may agree on an earlier retirement date.
[167] We note AiG's concern that the existing provision has led to debate at the
enterprise level with an attendant risk of unnecessary industrial action, but in our view
such matters are best addressed on a case-by-case basis by way of dispute notification.
18 (2004) 129 IR 155
[2015] FWCFB 2192
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[168] We have decided to retain the retirement date limitation in its current form.”
[36] The statutory provisions mandating the retirement of coal miners at the age of 60 were
progressively repealed in the light of community recognition (ultimately embodied in the Age
Discrimination Act 2004 (Cth) and in State anti-discrimination legislation) that discrimination
on the basis of age was no longer socially acceptable and should be eliminated. It is clear that
by the time of the 2000 decision of Commissioner Wilks earlier referred to, there was no
longer a mandatory retirement age of 60 in Queensland, although it remained an industry
practice at that time. The last of the statutory provisions to be repealed was in New South
Wales in 2006, by way of the Coal and Shale Mine Workers (Superannuation) Amendment
Act 2006.
[37] When the award modernisation process took place in 2008-9 pursuant to Pt.10A of the
Workplace Relations Act 1996, the existing coal industry award redundancy pay provisions,
including the age cap, was incorporated as clause 14 of the Award as an industry-specific
redundancy scheme by consent of all relevant parties, including the CFMEU and the
APESMA. It is apparent from that time that it was no longer a requirement or a practice in the
coal industry that retirement necessarily occur at the age of 60.
[38] The federal statutory entitlement to redundancy pay established as part of the NES in
the FW Act (Pt.2-2 Div.11 Subdiv.B) does not contain any limitation on the amount payable
by reference to retirement age. Because, as earlier discussed, redundancy pay is not a general
matter about which there may be terms in a modern award, the large majority of modern
awards do not contain provisions concerning redundancy pay but merely cross-refer to the
NES provisions, and only a minority have different redundancy pay entitlements as a result of
the incorporation of industry-specific redundancy schemes. The effective result of the
inclusion of redundancy pay in the NES has therefore been that the retirement age limitation
has ceased to be a standard redundancy provision.
Is clause 14.4(c) consistent with the modern awards objective?
[39] Having regard to this history, we consider that it is clear that clause 14.4(c) of the
Award is not a provision which can legitimately form part of a “fair and relevant minimum
safety net of terms and conditions” as required by the modern awards objective in s.134(1) of
the FW Act. Taking into account the matters identified in paragraphs (a)-(h) of s.134, we have
reached that conclusion for the following reasons:
(1) The original rationale for the provision, namely the existence of an industry
retirement age of 60, no longer exists. The position now is therefore clearly
distinguishable from that which existed at the time of the 2000 decision of
Commissioner Wilks.
(2) The standard provision established by the 1984 Termination, Change and
Redundancy Case capping redundancy payments by reference to an
employee’s normal retirement date has effectively been abolished. In any event
the clause does not have any rational connection with the individual retirement
dates of redundancy employees such as to serve the purpose of preventing a
windfall gain upon redundancy to an employee about to retire.
[2015] FWCFB 2192
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(3) The employment of persons over the age of 60 is now an established feature of
the coal mining industry. The effect of clause 14.4(c) is to deny such
employees any retrenchment pay upon being made redundant in circumstances
where younger employees made redundant in identical circumstances may
receive a substantial retrenchment payment. Clause 14.4(c) therefore operates
in a way which is clearly unfair.
(4) The effect of clause 14.4(c) is likely to discourage greater participation in the
coal mining workforce by employees over the age of 60, directly contrary to
the need identified in s.134(1)(c) to “promote social inclusion through
increased workforce participation”.
(5) There is no alternative rationale for the retention of clause 14.4(c). We reject
the submission of the CMIEG that the accessibility of superannuation benefits
forms any sort of retrospective justification for the provision. That submission
itself demonstrates that the requirements for access to superannuation and
associated tax concessions vary over the age span of 55 to 65, so that the age of
60 is not of talismanic significance. Further, that submission is predicated on
the inherently ageist assumption that a person aged over 60 who is retrenched
will necessarily go into retirement rather than seek further employment.
Is clause 14.4(c) discriminatory?
[40] Additionally, we find that clause 14.4(c) is a term which discriminates directly against
employees at or over the age of 60, as well as employees nearing 60, on the ground of their
age. We consider that the reasoning and conclusion in the Centennial Mining Decision, with
which we agree, are directly applicable to clause 14.4(c). We do not accept CMIEG’s
submission that the substantive and operative purpose of clause 14.4(c) is not to treat
someone adversely because of their age but rather to set a “reasonable limit” on economic
compensation paid by reason of the retrenchment. The background history which we have
earlier set out belies this, and the provision does not provide any “reasonable limit” in its
operation. It may be accepted that it is common and legitimate for redundancy schemes,
particularly those of a more generous nature, to be subject to a cap on the total payment to be
made in respect of employees who have reached or surpassed a particular period of service.
This is not, however, what clause 14.4(c) does. For example a person aged 50 who is
retrenched after 30 years’ service is subject to no limitation upon his or her retrenchment pay
and will receive 60 weeks’ retrenchment pay (in addition to 30 weeks’ severance pay). An
employee aged 60 or over will receive no retrenchment pay whatsoever, regardless of the
employee’s length of service. The difference in outcomes is only rationally explicable on the
basis of age.
[41] The effect of this conclusion is that clause 14.4(c) is a provision which is not permitted
to be included in a modern award under s.153(1), and therefore under s.137 has no effect. We
do not of course have the power to make a binding declaration to that effect, but we are
entitled to act on the basis of the conclusion we have reached in deciding whether or not to
vary the Award to delete clause 14.4(c).
Variation of the Award
[2015] FWCFB 2192
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[42] We consider that the appropriate course, in the light of the conclusions we have
reached, is to make a determination varying the Award to delete clause 14.4(c). Such a
provision should never have been placed in the Award because at all times since the Award
became effective on 1 January 2010 it was inconsistent with the modern awards objective in
s.134(1) and offended s.153(1). The immediate removal of the provision will not have any
adverse consequence for any employer bound by the Award, since the provision has in our
opinion never had legal effect by virtue of s.137.
[43] Contrary to the submissions of the CMIEG, there are ample sources of power in the
FW Act to remove clause 14.4(c): under our general power in s.156(2)(b)(i) to vary modern
awards as part of the 4 yearly review, under the power in s.141(3)(a) to vary an industry-
specific redundancy scheme to vary the amount of any redundancy payment in the scheme
(which would necessarily occur by removal of the age cap), and under s.160(1) to correct the
error of clause 14.4(c)’s inclusion in the Award.
[44] We do not consider that we have sufficient material before us to reach any conclusion
that, by reason of the deletion of clause 14.4(c), clause 14 in its entirety should either be
deleted in its entirety or modified to add a new limitation on the amount of retrenchment
payments that is not discriminatory in nature. We would certainly need a very substantial
merits case before us to be persuaded that we should, to borrow Buchanan J’s expression,
“take the axe” to the whole redundancy pay scheme, and no case of that nature has been
advanced before us. There may potentially be some merit in the proposition that a new
limitation on retrenchment payments should be introduced to replace clause 14.4(c). Clause
14.4(c) did have the indirect effect of imposing a limitation on retrenchment payments of
about 80 weeks (if one assumes a hypothetical minimum starting age of about 18), albeit that
limitation operated in an unfair and discriminatory way for the reasons we have discussed.
Arguably, in circumstances where the original consensual industry-specific redundancy
scheme will now be altered to remove one of its starting-point features, a new cap upon what
is a fairly generous scheme should be imposed in line with common industrial practice.
However, to give proper consideration to this, we would need to have before us greater
evidence as to a range of matters including the age profile and length of service of coal mine
employees who have been made redundant, the typical circumstances they face on
redundancy, and the cost impact on employers of the scheme.
[45] We will therefore grant liberty to apply to any party which wishes there to be any
further variation to clause 14 of the Award as a consequence of the removal of clause 14.4(c).
If the parties to the proceeding consider that there would be utility in convening a conference
to discuss this issue further, we will make a member of this Full Bench available for this
purpose.
[46] A separate determination [PR562586] to vary the Award to delete clause 14.4(c) will
be issued in conjunction with this decision.
VICE PRESIDENT
OF THE FAIR WORK MISSION THE
[2015] FWCFB 2192
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Appearances:
I. Taylor SC and O. Fagir of counsel for the Construction, Forestry, Mining and Energy
Union and the Association of Professional Engineers, Scientists and Managers, Australia.
Y. Shariff of counsel with H. Fairhall solicitor for the Coal Mining Industry Employer Group.
B. Ferguson for the Australian Industry Group.
Hearing details:
2015.
Sydney:
16 February.
Final written submissions:
19 March 2015 - The Construction, Forestry, Mining and Energy Union and the Association
of Professional Engineers, Scientists and Managers, Australia
19 March 2015 - Coal Mining Industry Employer Group
19 March 2015 - Australian Industry Group
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