Fair Work (Transitional Provisions and Consequential Amendments) Act 2009
Sch. 6, Item 4 - Application to make a modern award to replace an enterprise instrument.

NORSKE SKOG ALBURY MILL AWARD 2002

Application by "Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union" known as the Australian Manufacturing Workers' Union (AMWU) (188V) - Whether the Norske Skog Albury Mill Award 2002 is capable of being the subject of an application - Factors to be considered when making a modern enterprise award - No case made out for making of modern enterprise award - Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 - Schedule 6 Item 4, Schedule 6 Item 6, Schedule 6 Item 9 - Fair Work Act, s. 134.

Introduction

[1] This decision relates to an application to make a modern enterprise award to replace the Norske Skog Albury Mill Award 2002 (the Albury Award). The application is made by the Australian Manufacturing Workers' Union (the AMWU). It is opposed by the other party to the Award, Norske Skog Paper Mills (Australia) Limited T/A Norske Skog Albury.

The Legislative Task

[2] The role of the Commission in an application to make a modern enterprise award is governed by sub-item 4(5) of Schedule 6 to the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (the Transitional Act) which provides:

“(5) In deciding whether or not to make a modern enterprise award, and in determining the content of that award, the FWC must take into account the following:

(a)  the circumstances that led to the making of the enterprise instrument rather than an instrument of more general application;

(b)  whether there is a modern award (other than the miscellaneous modern award) that would, but for the enterprise instrument, cover the persons who are covered by the instrument, or whether such a modern award is likely to be made in the Part 10A award modernisation process;

(c)  the content, or likely content, of the modern award referred to in paragraph (b) (taking account of any variations of the modern award that are likely to be made in the Part 10A award modernisation process);

(d)  the terms and conditions of employment applying in the industry in which the persons covered by the enterprise instrument operate, and the extent to which those terms and conditions are reflected in the instrument;

(e)  the extent to which the enterprise instrument provides enterprise-specific terms and conditions of employment;

(f)  the likely impact on the persons covered by the enterprise instrument, and the persons covered by the modern award referred to in paragraph (b), of a decision to make, or not make, the modern enterprise award, including any impact on the ongoing viability or competitiveness of any enterprise carried on by those persons;

(g)  the views of the persons covered by the enterprise instrument;

(h)  any other matter prescribed by the regulations.”

[3] It is also necessary to consider the modern enterprise awards objective: Item 6 of Schedule 6 of the Transitional Act. This is a legislative requirement for the Commission to recognise, in the context of the modern awards objective and the minimum wage objective, that modern enterprise awards may provide terms and conditions tailored to reflect employment arrangements that have been developed in relation to the relevant enterprises. The modern awards objective, set out in s.134 of the Fair Work Act 2009 (the Act), is as follows:

“134 The modern awards objective

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.”

[4] We turn to consider these factors in relation to the circumstances of this case. Many of the circumstances are similar to those considered in a recent case 1 concerning the company’s sister mill at Boyer, Tasmania.

The circumstances that led to the making of the enterprise instrument rather than an instrument of more general application: Item 4(5)(a)

[5] This history of the instrument is similar to the history of Norske Skog’s other newsprint mill which we have recently dealt with. The Albury Newsprint Mill has been in operation for about 30 years less than the Boyer Mill. When it commenced, separate industrial regulation to the Boyer Mill was established but it followed a similar enterprise award approach. The Albury Award was first made in 1981 when the operation was owned and operated by Australian Newsprint Mills Ltd (ANM). ANM was established by Fairfax and News Ltd to supply its Australian newspapers and over many years was the only manufacturer of newsprint in Australia. That situation has continued to the present day via the current owner, Norwegian company, Norske Skog which operates the Albury Mill and an older mill at Boyer, Tasmania.

[6] The Albury Award was varied many times since it was first made. It was initially made by consent and most of the variations since that time have also been made by consent. At the time the Albury Award was made, the two newsprint mills operated by ANM were the only newsprint manufacturing operations in Australia. The operations included activities that would be found in a timber mill, and further paper manufacturing processes that were similar to other paper manufacturing operations. No single industry award existed that would have applied to the whole operations. As a major employer in the area it obviously made sense to make an enterprise award so that the award could reflect the actual circumstances of employment at the Albury Mill.

Whether there is a modern award that would, but for the enterprise instrument, cover the persons who are covered by the instrument: Item 4(5)(b)

[7] There is acceptance by the AMWU and Norske Skog that a modern award would apply to the Albury Mill operations if the Albury Award is terminated and not replaced by a modern enterprise award. There is some disagreement on what award or awards would apply. Norske Skog submits that the Timber Industry Award 2010 would apply. The AMWU submits that the Graphic Arts, Printing and Publishing Award 2010 and the Manufacturing and Associated Industries and Occupations Award 2010 would apply.

[8] There are no major differences between the awards so the identity of the applicable award may not be significant. However we indicate that the broad reach of the Timber Industry Award 2010, its coverage of forestry, timber processing, pulp and paper manufacturing and the fact that the Albury Mill operations encompass those elements but does not involve printing any of its newsprint product suggests, on a preliminary basis at least, that the Timber Industry Award 2010 would be the appropriate award. The pulp and paper sector is defined in the award as:

“Pulp and paper sector

The manufacture, process and supply of: pulp and recycled pulp; plastic materials where obtained from the wood and cooking chemicals derived from the manufacture, processing and supply of pulp and recycled pulp; paper, including paper board, strawboard, paper bags or any similar commodity, brown papers, copy paper, envelope grade paper, hardboard paper, kraft paper, linerboard, publication and printing papers, sackcraft, security papers, watermark papers, fruit trays, egg cartons, wine trays, paper towel, facial tissue, toilet tissue, paper napkins, printed tissue products (including printed and laminated) where printing and conversion occurs in conjunction with the processing of pulp for tissue manufacture.”

The content of the modern awards referred to in paragraph (b): Item 4(5)(c)

[9] The parties have provided a comparative table of provisions comparing the terms of the Timber Industry Award to the terms of the Albury Award. In some respects the Timber Industry Award contains additional entitlements. In other respects the benefits under the Albury Award are more beneficial, most significantly by providing for a 36 hour week. In both cases the number of differences is small. In most respects the entitlements of employees in the two instruments are similar.

[10] The more generous benefits of the Timber Industry Award concern training provisions for employee representatives, a minimum engagement period, protections for apprentices, a higher more beneficial duties allowance, a more beneficial meals allowance, leading hand allowances, Saturday penalties and more beneficial overtime provisions.

[11] The lower benefits of the Timber Industry Award concern enterprise-specific allowances, slightly lower rates of pay, lower allowances received in relation to tools and working environment, longer notice period and a period of notification in relation to weekend work.

The terms and conditions of employment applying in the industry: Item 4(5)(d)

[12] Norske Skog is the only manufacturer of newsprint in Australia. Its operations at Albury and Boyer are covered by enterprise agreements. A number of other large companies operate paper mills, including Amcor, Visy and Australian Paper. Their operations are commonly covered by enterprise agreements with the Timber Industry Award, the Graphic Arts, Printing and Publishing Award or the Manufacturing and Associated Industries and Occupations Award as the safety net. It is common for the enterprise agreements to contain benefits for employees well in excess of the safety net awards.

The extent to which the Albury Award provides enterprise-specific terms and conditions of employment: Item 4(5)(e)

[13] The AMWU contends that provisions of the Albury Award regarding hours of work, overtime, annual leave and public holidays are enterprise-specific in the sense that they have been in operation for a long time in enterprise instruments applying to the Albury Mill operations. Norske Skog submits that some of these matters are unsustainable in the longer term or not operational because of the operation of the annualised pay rate under the enterprise agreement. We accept that there are some terms that can be described as enterprise-specific, but these relate more to the level of entitlements than operational arrangements. They do not appear to be necessary from an enterprise perspective where various operational differences usually feature in both salary structures and conditions.

The likely impact on the persons covered by the Albury Award, and the persons covered by the modern awards referred to in paragraph (b), of a decision to make, or not make, the modern enterprise award: Item 4(5)(f)

[14] The AMWU contends that the safety net for employees will be reduced if the Albury Award is not modernised. Norske Skog submits that there will be no actual disadvantage because of the ongoing application of the more generous enterprise agreement. Norske Skog submits that the continuing decline of newsprint production in Australia is likely to lead to a need to review terms and conditions and the ongoing application of a more generous and prescriptive safety net may affect competitiveness and viability.

[15] In our view, both of these contentions are overstated. We do not apprehend that there will be a significant impact on either party from either the ongoing application of the Albury Award or the termination of it. The actual terms and conditions of employment are reflected in an enterprise agreement although we accept that the safety net will change for the purpose of the statutory test. Future terms will arise from the renegotiation of agreement at the time.

The views of the persons covered by the enterprise instrument: Item 4(5)(g)

[16] The AMWU supports the modernisation of the Albury Award. Norske Skog opposes it. The AMWU held meetings of employees about the matter. About 45% of the relevant workforce attended the meetings. To the extent that employees have a view about the matter they are likely to support the position expressed by the AMWU.

Any other matter prescribed by the regulations: Item 4(5)(h)

[17] No matters are prescribed.

Should a modern enterprise award be made?

[18] The enterprise award at Albury followed the approach that assisted at the sister mill at Boyer. We have decided not to make a modern enterprise award at Boyer. The same outcome for much the same reason is appropriate for the Albury Mill.

[19] Although the Albury Award has a long history and has provided particular benefits for employees that are more generous than standard industry awards, the extent of changes that have occurred over that time are very significant. Technological advances have drastically affected the scale of its operations and its future viability. It now employs a much smaller workforce and has diversified into the production of other paper products. The circumstances that led to the creation of the enterprise award and the benefits it contained effectively no longer exist.

[20] In our view, the AMWU has not established a case for retaining an enterprise award. Other comparable operations are covered by the modern industry award.

Conclusions

[21] For the above reasons the application to make a modern enterprise award is dismissed. Pursuant to Item 9 (3) of schedule 6 to the Transitional Act the Albury Award terminates as at the date of this decision.

VICE PRESIDENT WATSON

Appearances:

Mr M. Nguyen, with Mr D. Corben, for the Australian Manufacturing Workers' Union.

Mr L. Izzo, with Mr N. Bright, for Norske Skog Paper Mills (Australia) Limited.

Hearing details:

2014.

Melbourne.

16 September.

Final written submissions:

Australian Manufacturing Workers' Union on 9 October 2014.

Norske Skog Paper Mills (Australia) Limited on 14 October 2014.

 1   [2014] FWCFB 6827.

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