Rio Tinto disputes summary 3/2000

Policy paper / backgrounder

Summary of disputes at Rio Tinto Australian Operations

March 2000

The CRA/Rio Tinto Strategy

In the early 1980s CRA in Australia developed a strategy of de-unionising its blue-collar work force and thereby increasing the power of its line managers in an effort to reduce resistance to the exercise of management prerogative.

The strategy is well tried and has worked for the company in the Australian metalliferous mining sector. The modus operandi is to refuse to reach collective agreements with trade unions representing the work force and to resist any attempts made by those unions to gain increases in wages and conditions by other means.

The company has also used fluctuating market conditions in the commodity sector to retrench widely and in doing so ensure that union activists are the first to be retrenched. The tactics used by the company include the intimidation of workers and their families and the use of any legal means available to frustrate efforts to protest the company's actions. This has included the use of injunctions against picketing workers and a habit of appealing every decision of every court that does not fall the company's way. The latter strategy has the effect of inordinately delaying any gains unions may make through the legal avenues available.

Whilst thwarting the efforts of the unions, the company through its line managers and supervisors approaches employees directly with offers of individual contracts or non-union agreements. The managers make it clear to employees that the only way they can improve their lot is by abandoning the union. The company's aim is to delay a union-backed collective outcome so that employees come to the view that the only way to achieve improvements in wages and conditions is to abandon the union and enter into an individual contract or non union agreement.

After the merger with RTZ in the mid 90s, and armed with the draconian anti-union changes to Australian industrial laws introduced by the newly-elected conservative government, the company moved on the unions involved in its Australian coal operations.

There are now disputes at each of Rio Tinto's coal operations in Australia where Rio Tinto are at various stages of implementing its strategy.

Hunter Valley No. 1 Coal

Rio Tinto has waged an all out affront on its workers at its Hunter Valley No. 1 Mine in the Hunter Valley. The campaign waged by the company involves a ruthless cost cutting exercise that has seen massive job losses and reductions in the take home pay of its workers. There have also been concerted efforts to de-unionise the site using a dual strategy of intimidating workers and extensive litigation designed to thwart any resolution of an ongoing dispute over wages and conditions.

In November 1997 the CFMEU was able to convince the Australian Industrial Relations Commission (AIRC) that the bargaining dispute at the mine, after 2 years of failed negotiations and 16 weeks of strike action had become intractable and needed to be resolved by arbitration.

Arbitration was opposed by the company, as it would result in a collective outcome achieved by the union. The company's response was to commence legal proceedings, which have had the effect of delaying a resolution to the dispute.

After court delays an arbitration was eventually held. The union's case was in essence that the company had refused to negotiate in good faith and had during bargaining withdrawn from a number of agreements with the union about crucial issues regarding rosters, penalty payments and production bonuses.

The evidence in the case revealed that the company had unilaterally introduced many workplace changes and had made record profits in 1998 and 1999. The number of employees has halved since 1997 yet the amount of coal produced is the same, making the mine one of the most productive in the world. At the same time since 1997 the employees' take home pay has dropped by 18% because the company has manipulated rosters to minimise payments and has unilaterally reduced production bonus payments.

In September 1999 the arbitration Commission handed down a decision that only gave the workers a moderate increase in bonus payments. The tribunal said that there had been an industrial war and that "all is fair in love and war." The CFMEU is appealing the decision to the Federal Court.

In the meantime the company has gone to the High Court of Australia in an attempt to have the arbitration process held invalid. The hearing of this case will occur in April 2000.

The result of all of this litigation is that the workers at the Hunter Valley mine are amongst the most productive coal miners in the world yet Rio Tinto pays them less than the average earnings in the Australian coal industry. Furthermore, the company is still pursuing litigation attempting to take away the modest gain awarded by the industrial tribunal.

One aspect of the campaign at Hunter Valley has been the use of individual contracts to undermine collective bargaining. In 1997 and 1998, whilst the company was resisting the union's attempts to have the dispute resolved by arbitration it was offering employees the option of a pay rise if they left the union to work under individual contracts. Those who signed the contracts became immune from the company's attack on overtime pay and other entitlements. They were to earn more money for performing the same work as those who remained on the collective agreement who suffered a reduction in pay and conditions. Only 20 out of 400 workers choose to take up the offer.

Unable to make inroads by offering individual contracts the company moved to plan B; the offer of a non-union collective agreement. The scene was set in February 1998 when Rio Tinto NSW announced that 190 employees would be retrenched. The announcement was followed with the presentation of a non-union agreement to the work force offering wage increases in exchange for the forfeiture of existing conditions of employment and depriving the union of an effective representative role.

Each employee was sent correspondence that set out the terms proposed by the company and the effect the new agreement would have on their retrenchment benefits. The letters in effect said “give up hard won conditions of employment, vote out the union and when we retrench you we will pay a premium”. Many employees stood to gain $A20,000 in retrenchment benefits if they voted for the non-union agreement. The agreement was defeated in a secret ballot by 335 votes to 28.

The company then commenced a process of ranking employees on the basis of subjective performance assessments arrived at without consultation by management. The criteria for this ranking included such ephemeral criteria as ”attitude towards the company”, “ability to accept change” and “ability to work in a team”. Employees who management felt were aligned to the union or who resisted attempts by the company to introduce changes to their conditions of employment were marked down and identified as “surplus to needs”.

In October 1998 the company retrenched 190 employees paying only the base rate required by law. Twenty of those sacked were current or past union delegates; only two delegates were kept on.

The union has taken 105 unfair dismissal cases to the AIRC challenging the dismissals. The hearing of 10 test cases began in early 1999 and are not due to finish until mid 2000.

During the case it has been revealed that the company was secretly trialing the performance review system 6 months before it told the employees that it would be using it. Employees were being assessed without their knowledge. The company's case has been riddled with inconsistencies as the union has established that the employees were never given any concrete examples to support the dubious rankings and scores given to them as part of this assessment process. The employees have no confidence whatsoever in the assessment process used.

In March 1999 the company offered another non-union agreement, openly stating that the company would delay any arbitrated settlement on wages and conditions until 2001 and that the only way employees would get a wage rise would be through voting to accept the agreement. The agreement was again defeated in a vote of workers.

During 1999 the union successfully prosecuted the company in the Federal Court of Australia for victimising union delegates. During 1997 and 1998 the company had taken disciplinary action against delegates for attending union meetings and representing members at cases in industrial tribunals. The Federal Court found that the company's actions were in breach of Australian laws on freedom of association.

In a show of the company's real agenda it has been revealed that the 20 employees who signed individual contracts in 1997 and 1998 were offered replacement contracts which are $5,000 less per annum than the original deal. The new deal offered to the individuals will see them returned to a similar remuneration as those who remain on the collective arrangements.

In July 1998 the conservative Government removed the legal requirement that retrenchments in the coal industry occur on the basis of seniority. Most mines continue to apply this system, usually combined with the offer of voluntary retrenchment, even though it is not a legal requirement.

Blair Athol Coal

The Blair Athol mine owned by Rio Tinto was the first mine to retrench on the basis of a so-called individual assessment or performance review criteria. The company announced the retrenchments twelve months in advance, making it clear that it would use the performance review criteria rather than seniority. Between the announcement and the retrenchments the company offered individual contracts and made it clear through their supervisors that the company had a strong preference for individual contracts over the collective agreement.

The company also commenced a performance review process and by November 1997 identified those workers they had decided were not good performers. These workers were given the option of signing individual contracts which would give them up to A$20,000 more in retrenchment benefits. Many decided to leave employment before July, taking the additional payments. Sixteen workers decided to stay and fight the dismissals in the AIRC. Their cases are currently being heard.

There has been evidence in those cases that throughout 1997 line managers had prepared lists of those who were targeted for retrenchments. Union delegates and union activists were recorded on a black list. Employees who had signed individual contracts were listed to stay. A former employee who worked as secretary to the Industrial Relations Manager has given evidence of regular meetings where reports were given by supervisors about how many on the black list had been convinced they should take the extra money and leave.

The evidence in those cases has revealed that in 1997 the company established a business unit at the mine which appears to have served no other purpose other than to intimidate and harass employees who were on the company's “Black List”. These employees were coerced to either sign an individual contract or accept a voluntary redundancy. Employees have given evidence that they were moved from their mining duties and forced to paint rocks and old tyres with small paint brushes. A recent resume of the supervisor in this new business unit was put into evidence and shows that he lists as achievements in his job at Blair Athol involves the following: remove support for union activities; continue operation during strikes; train loading etc by non-union members; staff work during strikes; implementation and signing of Australian Workplace Agreements (individual contracts).

The hearing of the case have concluded and the industrial tribunal has reserved its decision.

The industrial laws that removed the requirement that retrenchments in the coal industry be carried out on the basis of “last on first off” have come under challenge in the High Court of Australia. The proceedings are being brought by the CFMEU using the example of the effect the laws have had on one of the union delegates who was dismissed from Blair Athol. That case was heard in November 1999 and the High Court has reserved its decision.

Mt Thorley Coal

In December 1997 Rio Tinto retrenched 96 mine workers at its Mt Thorley mine in the Hunter Valley. The employees were dismissed in contravention of a legal requirement that selection for retrenchment be based on seniority. Those selected for retrenchment were union delegates and other union activists. The retrenchments occurred in the week before Christmas and the employees were given no prior notice. The company had also failed to meet its legal obligation to consult with the union. At the time the union and the company were in the middle of enterprise bargaining negotiations and the company attempted to use the sackings as part of the bargaining process.

The employees who were not sacked joined their work mates on a picket line outside the mine and remained on strike for 9 weeks. In February 1998, the AIRC found that the company had acted unlawfully and ordered the company to reinstate all 96 workers.

Having failed to retrench the union activists, the company began a new attack 12 months later. The company tabled a document in enterprise bargaining negotiations with the union that reduced the union's role at the mine. The agreement was put on the basis that this would be the only basis on which the next agreement would proceed. The company also introduced an individual performance assessment system similar to the system used at the Blair Athol and Hunter Valley mines.

In June 1999 the company announced that it would withdraw from the existing agreement as soon as it expired. Just as the company had done at other mines, it had line managers approach individuals and offer them non-union individual contracts. As if reading from a song sheet the company followed this by announcing further retrenchments. It was stated that they would use the supervisors' performance assessments to determine who would go.

The company then applied to the industrial commission twice to have the enterprise agreement terminated. On the first occasion the company application was unsuccessful; the commission found that it was preferable that a replacement agreement be reached and that the company had not allowed enough time for negotiations for a replacement agreement. The company then entered into a process of meeting with the unions providing a “take it or leave it” offer. On one occasion the union organiser turned up to the mine to find that there were 4 solicitors on site during the negotiations.

A second application was made to terminate the agreement. The mine manager told the commission that the termination of the agreement would mean on average a loss in income of $5,000 per annum. The application was successful with the commission finding that it was required to terminate the agreement but again stated that there should be a replacement agreement.

In December 1999, applying the same “merit based” approach that has been the subject of complaint in the Hunter Valley and Blair Athol unfair dismissal proceedings, the company retrenched 92 workers. The retrenchment notices took effect on Christmas Eve.

86 unfair dismissal applications have been lodged in the industrial commission. The hearings are yet to commence. This makes the total number of unfair dismissal cases at Rio Tinto mines 203. The tribunal has the power to award reinstatement with backpay or award compensation of up to 6 months pay to each of these applicants.

Howick Coal

The Howick mine is also in the Hunter Valley. The collective agreement at this mine expired in 1999. The company was able to use a provision of the new industrial laws to have the agreement terminated thereby reducing workers' pay and protections. The management have presented union negotiators with a replacement agreement in identical terms to the Mt Thorley “take it or leave it” draft agreement and have let the workers know that they are preparing for retrenchments and will be implementing the same performance review system used at Blair Athol and Hunter Valley mines.

The union has taken the company to the Federal court seeking a declaration that the previous agreement rates still apply.

Gordonstone/Kestrel Coal

On 1 October 1997 multinational company ARCO sacked its work force of 312 mineworkers because it no longer wanted to pay the wages and conditions that it had agreed to in 1996. The company's plan was to sack the entire work force so it could hire a new work force on individual contracts.

When the company attempted to reopen the mine with new employees the industrial commission made an order that the former employees be given back their jobs. In response to the order the company abandoned its plans to reopen the mine.

The CFMEU took 282 unfair dismissal cases to the AIRC and in February 1998 the Commission found that the workers had been dismissed unfairly under an aggressive strategy designed to avoid the legal obligations under the collective agreement. The AIRC also found that the company had adopted an aggressive stance towards the union in an atmosphere where the employees had made it clear that they wanted to be represented by the CFMEU. The workers were awarded 4 months pay in compensation for the dismissals.

ARCO made another attempt in July 1998 to reopen the mine with a new work force. The industrial commission again ordered the company to re-employ the former employees. Again the company refused to reopen the mine under the conditions of the order.

Instead, ARCO decided to sell the mine to Rio Tinto. In October 1998, Rio Tinto announced that it was buying the mine. The sale would take some months to complete and in November 1998 Rio Tinto started to secretly recruit workers.

By December 1998 Rio Tinto had offered employment to 22 persons on the basis that a non-union certified agreement would cover their wages and conditions. Most of those hired were existing Rio Tinto employees from other operations.

In January 1999, before taking over the mine, Rio Tinto applied to the AIRC to have the non-union agreement registered. The agreement purported to override any order that the former workers be re-hired. The agreement, made with the 22 employees, would bind the entire work force of around 200 workers. The rest of the 200 workers would have no say in their wages and conditions.

Rio Tinto was attempting to achieve the same aim that ARCO set out to achieve when it sacked its entire work force ie. a non-union work force working to wages and conditions dictated by the company.

Rio Tinto took over the mine in February 1999 and in an Orwellian twist changed the name of the mine to Kestrel Coal. Over 250 people were arrested on a picket line outside the mine after Rio Tinto took over. The company has used Court injunctions against the union and individual workers to restrict activity on the picket line.

The CFMEU took the company to the Federal Court seeking orders that Rio Tinto employ the former employees and a declaration that the certified agreement is invalid. The thrust of Rio Tinto's submissions in this case was that regardless of the fairness or otherwise of the company's actions they believed what they had done was lawful.

The Federal Court handed down its decision in June 1999 stating that the circumstances that led to Rio Tinto recruiting from other than the pool of retrenched workers were unlawful but the Court found that it was powerless to act to redress the wrong. The Court also found that the non-union agreement was invalid.

The company employed 120 workers in the period between November 1998 and June 1999 and claimed they had recruited on merit. But at no stage did the company publicly advertise the jobs. There are still over 50 jobs available at the mine and the union continues to pursue justice for the former Gordonstone employees. The company however is continuing to use the courts to frustrate any attempt at gaining justice for these workers.

Weipa Bauxite

Through its subsidiary Comalco Aluminium, Rio Tinto carries out bauxite mining at Weipa in north-western Queensland. These operations were an early “success” for CRA in substantially de-unionising the site. While the operations are not involved in coal mining, the CFMEU has been active in re-unionising the site.

In December 1995 a national strike occurred in support of 70 workers at the Weipa mine. The 70 workers had been refused pay rises from the company because they would not resign from the union and enter into individual contracts. The non-unionists at the site were being paid up to $15,000 per year more than the unionists for doing the same work.

In proceedings in January 1996, the AIRC ordered that the 70 union workers should be paid the same as the non-union workers.

The 70 workers were and continue to be members of the CFMEU. The company has refused to recognise the CFMEU because in 1991 the industrial commission issued an order refusing the CFMEU the right to represent any workers at the site and declaring the Australian Workers Union (AWU) as the sole representative of the production employees. By 1996 the AWU had no members at the site.

The union has been seeking to have the 1991 order overturned since 1996. The company has engaged two senior barristers and an armoury of legal support to resist the CFMEU application. The legal proceedings now involve two cases before the AIRC and there have been two cases in the Federal Court of Australia. The CFMEU was successful in the Federal Court. The company continues to contest the proceedings in the AIRC. In the meantime the company is refusing to recognise the CFMEU.

Late in 1999 the company made application to the industrial commission to have the decision that award workers be offered the same entitlements as contract workers revoked. If successful the proceedings will allow the company to return to the discriminatory practices of the past. The application is made on the basis that the laws have changed since the commission found in 1996 that the discrimination should not be allowed to continue.