OECD complaint

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Complaint by Australian unions to the OECD

The Australian Council of Trade Unions, the peak body of trade unions in Australia, has lodged a detailed formal complaint with the Australian Government under the Guidelines for Multinational Enterprises of the OECD, the group of advanced industrialised nations. The Australian Government is required to act on this complaint under its obligations as a member of the OECD.

It is clear that Rio Tinto's conduct in Australia is in breach of numerous parts of the guidelines, which seek to set the benchmark for acceptable corporate conduct for multinational enterprises based in OECD nations.

The complaint is based for the most part on findings of fact made by the Australian Industrial Relations Commission, an independent statutory body charged under Australian industrial law with regulating employer-worker relations.

The full text of the complaint is reproduced below. See for yourself the unequivocal findings that Rio Tinto has actively sought to de-unionise its workplaces and discriminated against workers solely on the basis of union membership and their desire to bargain through their union.

July 1999 update: After a nine month delay, the Australian Government replied in February 1999 that, because Rio Tino had ultimately complied with Australian laws, it had therefore compiled with the OECD Guidelines. (Whereas in fact the Guidelines seek company conduct beyond that which may be required by domestic law.) The Australian Government also argued that the Guidelines were not relevant to the issue as Rio Tinto Ltd is an Australian corporate entity and the dispute was within Australia - conveniently ignoring the fact that the majority of the Board of Directors and all senior management are based in London.

Due to the poor response of the Australian Government, the ACTU has progressed the complaint to the next level, asking the Trades Union Congress of the UK to take up the matter directly with the UK Government. The Trade Union Advisory Committee to the OECD is also using the complaint as a case study in the OECD's current review of the Guidelines.

Complaint by the Australian Council of Trade Unions made under the Guidelines for Multinational Enterprises of the Organisation for Economic Cooperation and Development (OECD)

Executive Member
Foreign Investment Review Board
C\- The Treasury
Parkes Place
Parkes ACT 2600

23 April, 1998

Dear Sir/Madam,

Re: The OECD Guidelines for Multinational Enterprises

I am writing to you in your capacity as the National Contact Point on matters relating to the OECD Guidelines for Multinational Enterprises.

The ACTU wishes to raise serious breaches of the Guidelines on Employment and Industrial Relations by Rio Tinto Limited, a multinational enterprise with its headquarters in the UK. The company's actions have focussed on a strategy of replacing collective bargaining and union representation with a system of individual contracts.

The ACTU is seeking your assistance to resolve the issue, in accordance with the Guidelines.

Over the last five years Rio Tinto (formerly known as CRA) has pursued an industrial relations program clearly in breach of clauses 1, 2, 4, 7 and 9 of the Guidelines

Details of the company's activities outside its coal operations have been documented in a number of decisions of Full Benches of the Australian Industrial Relations Commission, particularly relating to the Bell Bay aluminium smelter in Tasmania and the Weipa bauxite operation in Queensland. Copies of these decisions are attached.

In both these cases the Commission found that the company had consciously frustrated attempts by unions to negotiate collective agreements and had then induced employees to sign individual contracts, thereby losing any right to collective representation, in return for a wage increase and improved conditions.

The ACTU is particularly concerned because Rio Tinto is continuing this pattern of industrial behavior in relation to the coal industry. Information regarding this is dealt with in the attached supporting material.

In accordance with the process determined by the OECD for dealing with issues under the Guidelines, I request that you take these issues up with Rio Tinto and meet with the ACTU / and the relevant unions in an attempt to resolve the matter.

I also request that you contact the National Contact Point for the United Kingdom and request that the NCP raise this matter with Rio Tinto's head office which is in the UK. I would also appreciate receiving copies of any relevant correspondence.

Contact details for the UK National Contact Point are:

Department of Trade and Industry
International Trade Policy Division
Ashdown House
123 Victoria Street
London SW1E 6RB

Telephone: (44) 171 - 215 61 47 Fax: (44) 171 - 215 67 67

As you might be aware, the OECD Committee on International Investment and Multinational Enterprises (CIME) issued a clarification of the Guidelines in June 1997 which dealt with the relationship between a parent company and its subsidiaries. A copy of the clarification is attached.

The clarification makes it clear that all entities making up a corporate group are expected to co-operate and assist, as necessary, in observing the Guidelines. The clarification also confirms that:

"To the extent that parent companies actually exercise control over the activities of their subsidiaries, they have a responsibility for observance of the Guidelines by those subsidiaries."

The ACTU has been in contact with TUAC with a view to raising the issue with the relevant OECD Committee should the binding commitments applying to NCPs not be carried out as set out in the 1991 revised Decision of the OECD Council of Ministers (see The OECD Guidelines for Multinational Enterprises OECD Paris 1994, pp71-73)

Please contact Linda Rubinstein at this office if you require further information and to arrange a meeting.

Yours sincerely,

Jennie George

President

BREACHES BY RIO TINTO IN AUSTRALIA OF THE OECD GUIDELINES FOR MULTINATIONAL ENTERPRISES ON EMPLOYMENT AND INDUSTRIAL RELATIONS

Details Of Rio Tinto's breaches of the Guidelines, based on findings by the Industrial Relations Commission, are set out under each relevant paragraph from the Guidelines.

Enterprises should, within the framework of law regulations and prevailing labour relations and employment practices, in each of the countries in which they operate:

1. Respect the right of their employees to be represented by trade unions and other bona fide organisation of employees and engage in constructive negotiations. either individually or through employers' associations, with employee organisations with a view to reaching agreements on employment conditions, which should include provisions for dealing with disputes arising over the interpretation of such agreements, and for ensuring mutually respected rights and responsibilities;

It should be noted that the OECD Committee on International Investment and Multinational Enterprises (CIME) has clarified this paragraph as follows:

"This paragraph expressly provides for management engaging in constructive negotiations on employment conditions with employee representatives. The thrust of the Guidelines in this area is towards the activities of trade unions and other bona fide organisations of employees of all categories and, in particular, an open attitude towards organisational activities of workers within the framework of national rules and practices." (see The OECD Guidelines for Multinational Enterprises OECD Paris 1994, pp39-40)

In the Bell Bay case, later overturned by the Federal Court on technical grounds unrelated to issues of the company's conduct or motives, the Commission found that the contracts included a grievance procedure which:

"...does not enable the employee concerned to have his/her union involved in the grievance procedure and allows the company to unilaterally exclude any issue as a matter subject to a grievance procedure. (AMFEU - and - Alcoa of Australia Limited 8 December 1994, Print L7449, p28)

In examining the experience of the unions in attempting to negotiate a collective enterprise agreement, the Commission found:

"The company restated its position that any enterprise bargaining must involve a process of working directly with employees and that unions should have no direct role in enterprise bargair1ing processes................

"In our view, the failure to reach either an enterprise agreement or an enterprise flexibility agreement was a direct result of the attitude of the company to the role of unions at the smelter and their objective of seeking an all-staff workforce." (pp6-7)

Further, the Commission commented:

"The company seems to have formed a corporate view as to the presence of unions and of the Commission in relation to their business. That view is that these institutions should be excluded from having any real role. In the case of unions they are seen to be a barrier to company loyalty and hence the development of a workplace culture in which employees are able to identify their aspirations with those of the company." (p39)

The Commission concluded, in relation to unions:

"We would, as a Commission, fail in our statutory duty to carry out the objects (of the Act) if we were simply to ignore the conduct of one party to a proceeding who had, as an objective in an industrial dispute, the effective elimination of registered employee organisations in the employee-employer relationship and the replacement of a paid rates award by a system of employment by contract." (p40)

In discussing the process by which employees were encouraged to sign the contracts, the Commission said:

"The employees are also confronted with a company that conveyed a view that company loyalty was bound up in staff contracts and hence an award with union involvement meant, at least inferentially, disloyalty."

The Commission found that a secret strategy was developed to ensure employee loyalty went to the company, not the unions and that as part of this strategy employees were incorrectly told that there was no role for unions. The Commission concluded:

"The company by its actions ensured that there was never going to be a real contest between the company and the unions on the matter of employees agreeing to enter into the staff contracts.....

"It was a case of the company deciding what it considered to be in the best interests of the employees and the company and then making a non-negotiable offer on terms which precluded any role for the unions or the Commission.......

"The power to alter the terms and conditions of employment under the contract was a power which could be exercised without the need for consultation or agreement of the individual employee and without any interference from the union or the Commission in circumstances where the contract excluded any role for the unions or the Commission."

2(a) Provide such facilities to representatives of the employees as may be necessary to assist in the development of effective collective agreements;

Apart from the strategy to eliminate effective union representation described above, the company has acted to restrict access by union representatives to members and other employees. At Bell Bay, the company acted to prevent union representatives having access to meal areas, restricting them to a separate office and instituting a process whereby employees who wished to talk to union representatives would have to identity themselves.

4. Observe standards of employment and industrial relations not less favourable than those observed by comparable employers in the host country;

During the Weipa proceedings, thc Commission considered the experience of the Alcoa aluminium smelter at Point Henry which had achieved significant efficiencies through a process of collective bargaining with unions. The Commission concluded that it was possible to achieve the same efficiency outcomes through a collective process in which the unions are active participants. (Weipa Case 23 January 1996 Print M8600, p54)

7. Implement their employment policies including hiring, discharge, pay, promotion and training without discrimination unless selectivity in respect of employee characteristics is in furtherance of established governmental policies which specifically promote greater equality of employment opportunity;

The Commission found that at Bell Bay employees were offered wage increases and other benefits on the basis that they signed the individual agreements.

In a later decision also concerning Bell Bay, a single Commissioner concluded, on 1 September 1995 (Print M4848):

"...the material before the Commission in this matter can only lead the Commission to conclude that up to fourteen employees, because they will not agree to staff contracts, have been discriminated against."

In the proceedings concerning the Rio Tinto bauxite mine at Weipa, the Commission found, as at Bell Bay, that employees received increased wages and conditions solely on the basis that they were prepared to sign individual staff contracts. The Commission held:

"The only way, based on the Company's clear and unequivocal policy, in which any award employee would be able to reach the same level of benefit as a staff employee is he or she signs a staff contract. At that point, irrespective of how poorly the employee may have been performing his or her tasks, the act of signing the contract immediately brings improved benefits.

"We have decided that the evidence supports a conclusion that the policy of the Company was to treat award employees less favourably than those under staff contacts.........

"This policy, we conclude, is unfair and discriminates against the award employees concerned based solely on their choice to enter into collective bargaining through their respective union, rather than 'negotiate' one to one on the basis of the Company's two party staff system." (pp58-9)

Further in the decision, the Commission held:

"This individual discrimination exists, not because the award employee might be performing his or her work in a less efficient manner or not working to the same flexible working arrangement, but solely on the basis that he/she has chosen to remain a member of a union and to be represented by that union in negotiating with the Company.'' (p68)

Current activities of Rio Tinto

In spite of adverse findings by the Commission, Rio Tinto has largely succeeded in establishing a system of individual contracts in its non-coal operations. The company has recently turned to attempting to extend its strategy for de-unionisation to the Australian coal industry. At the large Hunter Valley No 1 coal mine the company frustrated efforts at reaching a collective agreement over a period of two years to May 1997. It then began offering individual contracts which gave an immediate pay rise of ten per cent, similar to the tactics adopted at its non-coal sites.

The unions involved have engaged in strike action in pursuit of a collective agreement for a total of 14 weeks since 11 June 1997. Currently only 11 workers out of an original production workforce of over 400 have accepted individual contracts and a collective agreement has still not been achieved despite the express desire of the unionised workforce to negotiate such an agreement.

In a major manifestation of the de-unionisation goals of the company in this dispute, mine management handed out awards for the production of non-union coal in a ceremony on 25 June 1997. Photographic evidence of this event is attached.

Whilst the Commission has not been asked to make a finding in respect of this action, it is clear that it breaches the spirit and intent of paragraph 1 of the Employment and Industrial Relations Guidelines.

Further, management at the Hunter Valley No. 1 mine has prohibited "unauthorised" union meetings on company property since 17 March 1998. Whether a meeting is able to be authorised is determined by the company on the basis of whether or not the meeting will further company interests.

Similarly, the company now routinely refuses to provide leave for union representatives and members engaged in bona fide union business. Under the company's "Employee Representative Activities Policy and Procedure", permission for leave for trade union business will only be granted where the company has the view that the purpose of the leave will be of benefit to the company. These actions are in breach of paragraph 2(a) of the Guidelines.

With respect to the Mt Thorley mine, a sister operation to the Hunter Valley No. 1 mine, there has been a series of industrial disputes over the attempts of the company to retrench workers other than in accordance with enterprise agreement existing at the site and the industry Award.

In March 1998, during the course of a nine week strike over the retrenchment of 96 workers, an agreement was reached between site management and the unions to resolve the dispute. This agreement was subsequently vetoed by more senior off-site management. Ultimately the dispute was resolved when the Industrial Relations Commission ordered the reinstatement of the retrenched workers. (17 March 1998, Print P9489)

The veto action by the off-site management constitutes a breach of paragraph 9 of the Guidelines in that the company failed to provide representatives who were fully authorised to take decisions on the matters under negotiation.

Paragraph 9 is as follows:

9. Enable authorised representatives of their employees to conduct negotiations on collective bargaining or labour management relations issues with representatives of management who are authorised to take decisions on the matters under negotiation.

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For the photographic evidence of trophies for the production of non-union coal (referred to above) please click here.