[2017] FWCFB 584

The attached document replaces the document previously issued with the above code on 27 January 2017.

Typographical error in [21]

Helen Hamberger

Associate to Vice President Hatcher

Dated 31 January 2017

[2017] FWCFB 584


Fair Work Act 2009

s.156 - 4 yearly review of modern awards

4 yearly review of modern awards




Four yearly review of modern awards – Black Coal Mining Industry Award 2010 – industry-specific redundancy scheme

Introduction and background

[1] Clause 14 of the Black Coal Mining Industry Award 2010 (Modern Award) makes provision for severance and retrenchment payments to be made to redundant employees. Prior to April 2015 it relevantly provided:

[2] On 10 April 2015 a Full Bench of the Fair Work Commission (Commission) issued a decision 1 and determination2 varying the Modern Award by deleting clause 14.4 (c).

[3] In that decision, the Full Bench stated the following concerning the history of the black coal mining industry redundancy scheme (footnotes omitted):

[4] In deciding to delete clause 14.4(c), the Full Bench found:

[5] The Full Bench also found that clause 14.4(c) was a term which discriminated directly against employees at or over the age of 60, as well as employees nearing 60, on the ground of their age. The effect of this conclusion was that clause 14.4(c) was a provision which was not permitted to be included in a modern award under s.153 (1) of the Fair Work Act 2009 (FW Act) and therefore due to s.137 of the FW Act had no effect. 4

[6] The Full Bench concluded its decision with the following:

[7] As part of the 4-yearly review of awards, the Coal Mining Industry Employer Group (CMIEG) 5 subsequently proposed a variation to clause 14 of the Modern Award as follows:

[8] The CMIEG initially proposed that there be no ‘grandfathering’ arrangement. However it subsequently suggested that any employee who had more than nine years’ service with their employer at the date the proposed variation took effect (the operative date), and was subsequently retrenched by that employer, would be entitled to severance and retrenchment payments based on the employee’s number of years of continuous service with that employer at the operative date.

[9] Hearings were held on 7, 8 and 10 November 2016 to consider the CMIEG’s proposal. The CMIEG was represented by Mr Shariff, of counsel. Mr Bukarica appeared for the Construction, Forestry, Mining and Energy Union (CFMEU). Mr Taylor SC appeared with Mr Fagir of counsel for the Association of Professional Engineers, Scientists and Managers, Australia (APESMA). Mr Basiacik appeared for the Australian Manufacturing Workers’ Union (AMWU).

Relevant statutory provisions

[10] The CMIEG’s application arises as part of the 4 yearly review being conducted pursuant to s.156 of the FW Act. As part of the 4 yearly review process, the Commission has the power, pursuant to s156(2)(b)(i) to make “one or more determinations varying modern awards”. The power to vary a modern award involves the exercise of “modern award powers”.

[11] In exercising these powers the Commission is required to apply the “modern awards objective” contained in s.134. This provides that:

134 The modern awards objective

[12] Section 139 identifies the terms that may be included in a modern award. Redundancy pay is not one of the matters included in s.139.

[13] However s.141(1) provides that a modern award can include an “industry-specific redundancy scheme” (such as that provided by Clause 14 of the Modern Award) in certain circumstances, including where such a scheme was included as part of the “award modernisation process”.

[14] The explanatory memorandum to the Fair Work Bill 2008 noted that:

[15] Sections 141(3) to (5) provide for the circumstances in which the Commission may vary or omit industry-specific redundancy schemes from modern awards:

[16] The Full Bench in the “Preliminary Jurisdictional Issues Decision” 6 set out a number of considerations applicable to the 4 yearly review. This included the following:

The arbitral history of the redundancy scheme

[17] As was noted by the Full Bench in the Preliminary Jurisdictional Issues Decision, in conducting the 4 yearly review the Commission will have regard to the historical context applicable to each modern award and will take into account previous decisions relevant to any contested issue.

[18] Severance pay was first introduced into the coal industry by a decision of the Coal Industry Tribunal (CIT) on 16 February 1973 (the 1973 decision). 8 In that decision the CIT found that there was insufficient evidence to warrant a finding of a general industry standard in respect of severance pay. It continued:

[19] The scheme was further enhanced by the addition of the retrenchment pay scale as a result of a decision of the CIT in 1984 (the 1984 decision). 10 The 1984 decision included the following:

[20] Following the abolition of the CIT in 1995, the main award covering employees in the coal mining industry was the Coal Mining Industry (Production and Engineering) Award 1997 (the P&E Award). This award consolidated a number of previously separate awards as set and varied by the CIT during the course of its existence from 1946 to 1995.

[21] During the award modernisation process, the industry parties agreed that the Modern Award should be based upon the core conditions of employment contained in the P&E Award and the pre-reform award covering coal industry “staff” employees. Amongst these core conditions were the existing redundancy and severance pay provisions contained in the P&E Award. These were largely replicated in the Modern Award on the basis that they constituted an industry-specific redundancy scheme, with some minor modifications including the insertion of a definition of redundancy.

[22] No further changes were made to the redundancy provisions until the decision of the Full Bench on 10 April 2015.


[23] Evidence was given on behalf of the CMIEG by:

• John Edwards (former General Manager – Human Resources, Centennial Coal Company Limited) 13;

• Lorraine Merritt (State Manager, Audrey Page and Associates Pty Ltd); 14 and

[24] Mr Gunzburg produced a table based on data from five CMIEG members in relation to a total of 953 employees retrenched in the black coal mining industry over the period from 2012 to 2014 showing their age brackets and lengths of service. 16

[25] The table was as follows:

Age Range


as a %

Average LOS





















Under 25







[26] Mr Gunzburg also presented a table showing the age distribution of black coal mining industry employees in NSW over the four years to 2010, based on data he had obtained from Coal Services. 17

[27] The table was as follows:


Under 20





40- 44




60 or over













































[28] Ms Martin produced a somewhat similar table, based on data she obtained from the Queensland Department of Natural Resources and Mines. 18 The table was as follows:


Under 20









60 or over



































































[29] Mr Gunzburg also presented data sourced from the Australian Bureau of Statistics (ABS) which showed the length of time that employees from 19 different industries had been out of work at various points in time between November 1991 and November 2015. Figures were presented for the mining industry as a whole, as data is not available separately for the black coal mining industry. 19 This data indicates that the average duration for time out of work for employees in the mining industry was the second highest of all industries in November 2015, sixth highest in November 2010, 16th highest in November 2005, second highest in November 2000, 16th highest November 1995 and 12th highest in November 1991.

[30] Mr Edwards gave evidence about three mines where he had been involved in retrenching coal mine employees: Mannering, Newstan and Angus Place. 20 At Mannering 113 employees were displaced when the mine ceased operations in November 2012. All the employees, other than six, were transferred to other mines within the Centennial Group. The average age of the affected employees was 43.8 employees. At Newstan 147 employees covered by the Modern Award were affected when operations ceased in August 2014, with 64 being forcibly retrenched and paid redundancy pay. The average age of the affected employees 45.2 years. At Angus Place 267 employees covered by the Modern Award were affected when the mine was placed into care and maintenance in November 2014. While some employees transferred to other mines, others took voluntary redundancy and 32 were retrenched and paid redundancy pay. The average age of these 32 employees was 50.1 years.

[31] Mr Edwards also tendered information about the age of retirement of employees across mines operated by Centennial between January 2004 and February 2016. The average age of retirement of these 230 workers was 59.9. 21 78 employees (34%) retired between the age of 61 and 70 years, 52 (23%) retired at age 60 years, and the remaining 100 (43%) retired between the age of 55 and 59 years. Their length of service at retirement went from less than a year to 43 years. Around 60% had 20 or more years of service at retirement, with the median being 25 years.

[32] Evidence was given on behalf of APESMA and the CFMEU by:

• Gavin White (Account Director, UMR Research); 23

• Andrew Vickers (General Secretary, Mining and Energy Division, CFMEU); 24

• Peter Colley (National Research Director, CFMEU); 25

• Bob Timbs (Vice-President, South Western District Branch, Mining and Energy Division, CFMEU); 26

• Anthony Fardell (Mechanical Services Installer); 27

• Barry Elliott (Coal Miner); 28

• Craig Trusty (Coal Miner Electrician); 29

• Dan Watson (Coal Mine Fitter); 30

• Dennis Edwards (Coal Miner); 31

• Geordie Estatheo (Coal Miner); 32

• Mark Joseph Wallace (Coal Miner); 33

• Paul Byron (Civil Construction Worker); 34

• Robert Bennett (Coal Miner); 35

• Wayne Saunders (Coal Miner); 36

• Wilf O’Donnell (Fitter); 37

• Stephen Donald Took (Deputy); 43

[33] Professor Peetz presented a report he had prepared into various aspects of employment in the black coal mining industry 45. Professor Peetz drew on a range of sources such as the ABS and other government agencies. He also drew on a survey of 2000 employees in the mining industry, who were members of either APESMA or the CFMEU conducted by Essential Research (“Essential survey”).

[34] According to Professor Peetz, for much of the last century, black coal mining employed an average of approximately 25,000 persons. It fell to below 20,000 in the early 2000s and then grew rapidly to over 50,000 around 2012, with a decline thereafter. 46

[35] However these trends mask developments at individual mines. Professor Peetz noted that:

[36] Professor Peetz also stated:

[37] In analysing the evidence provided by Mr Edwards, Professor Peetz stated that:

[38] Professor Peetz went on to note that this trend towards later retirement is consistent with the trend in the rest of the labour force. 50

[39] Professor Peetz sought to estimate the incidence of redundancies in the black coal mining industry by examining media reports from late 2008. This suggested approximately 9500 redundancies between December 2008 and March 2016, equivalent to an average of about 1300 per year. 51

[40] Professor Peetz used the evidence of Mr Gunzburg to estimate that the odds of a black coal mine employee 55 years or older being retrenched are about 1.9 times higher than the odds of a similar employee aged 35-44 being retrenched, and over four times higher than a worker aged under 25 being retrenched. 52 He found a similar pattern when analysing the data from the Essential survey.53

[41] In analysing the results from the Essential survey Professor Peetz drew a number of conclusions, including the following:

[42] Professor Peetz compared the results of the Essential survey with data sourced from the Household Income and Labour Dynamics in Australia study (HILDA). This comparison suggested that – when compared to workers in other industries who had been made redundant – workers in the black coal mining industry were more likely to move from a permanent to a casual job; 55 were more likely to be working part time56 and were more likely to have suffered a reduction in wages57.

[43] The Essential survey indicated that of those employees who had been retrenched (and who answered the relevant question:

[44] A number of statements were made by employees outlining their experience working in the coal mining industry, including their experience with redundancy 59. These employees were not required for cross examination. Much of their evidence concerned the difficulties they had faced after being made redundant. A number of the employees indicated that they had found it hard to obtain work outside the coal mining industry, due to the specialised nature of their qualifications and experience.

[45] Ms Bolger gave evidence that, despite efforts by APESMA, only about 12% of staff are currently covered by an enterprise agreement. 60 Approximately one half of APESMA’s membership is aged 50 and over with around 13% aged 60 and over.61


[46] The CMIEG, noting the Full Bench’s decision of 10 April 2015, submitted that the redundancy entitlement of employees covered by the Modern Award is now entirely uncapped.

[47] The CMIEG rejected that there was a need to show a substantial change in circumstances to establish a departure from an earlier provision in a modern award and that every term of a modern award as it currently exists can be taken to have satisfied the modern awards objective, particularly in the case of a provision which was inserted into a modern award on a consent basis without any argument on its merits.

[48] The CMIEG submitted that it had in the current proceedings made out a substantive merits case. It had attended to the task that the Full Bench identified in its decision of 10 April 2015, which was to present evidence of the age profile and length of service of coal mining employees; the circumstances they face on redundancy, and the cost impact on employers of the scheme. In addition, steps had been taken to demonstrate how these matters ought to be weighed so as to propose a cap that would be consistent with ‘common industrial practice’.

[49] The CMIEG submitted that the decisions of the CIT establishing the industry redundancy scheme could not be seen as binding on a Full Bench of the Commission. Moreover, the criteria relied upon in the Commission decisions either no longer have any relevance or are inconsistent with the authorities binding on the Commission or are ‘plainly wrong’. 63 In particular, the CIT decisions were made in a particular industrial context where there was no collective bargaining at an enterprise level. By contrast, the role of the Modern Award is to provide a fair and relevant minimum safety net.

[50] The CMIEG submitted, based on the evidence, that there was no reason to suggest that the experience of those retrenched in the black coal mining industry was any different from the experience of employees made redundant in other industries. The CMIEG also pointed out that black coal mining industry workers receive benefits additional to those available in other industries, including portable long service leave and the payment of untaken personal leave.

[51] The CMIEG submitted that, since the retrenchment entitlements were established in 1973 and 1983, there had been a change in the circumstances relating to the industry. These included that:

[52] The CMIEG noted that, since the establishment of the industry redundancy scheme, the Australian Industrial Relations Commission had developed principles in relation to severance and retrenchment entitlements. The two key criteria were loss of non-transferrable credits and inconvenience and hardship (in particular, loss of seniority and loss of security of employment), and the Commission had specifically rejected the notion that severance and retrenchment pay was about income maintenance. Therefore, the CMIEG submitted, the factors that the CIT used to justify the introduction of a highly generous redundancy scheme no longer applied. However to the extent that there is any justification for a departure or variation from the NES or community standards the CMIEG position acknowledged that by retention of the three week period per year rate of accrual and its grandfathering proposal.

[53] The unions submitted that

[54] The unions further submitted that:

[55] The unions submitted that, unlike the unions, CMIEG failed to present any independent expert evidence, and the vast bulk of the evidence of the unions’ expert witness Professor Peetz was unchallenged. The unions summarised a number of conclusions that, it submitted, should be drawn from the Professor’s evidence. These included that:

[56] The unions drew attention to the following conclusions it said could be drawn from the Essential Survey:

[57] The unions emphasised that:


[58] We agree with the unions that we are not called upon to determine an appropriate redundancy provision for the black coal mining industry from scratch. The Full Bench in the ‘Preliminary Jurisdictional Issues Decision’ referred to the requirement to maintain a ‘stable’ modern award system. It also stated that regard must be had to the historical context applicable to each modern award. There needs to be a good or ‘cogent’ reason to make a change to a Modern Award.

[59] We also reject the notion that having an industry-specific redundancy scheme with provisions that are more generous than the NES is inherently inconsistent with the modern awards objective. The legislative scheme, when combined with the award modernisation request made by the Minister, makes clear provision for such arrangements in modern awards where they are an established feature of an industry.

[60] We do note that Clause 14 was put in the Modern Award largely by consent. That does not mean however that we should not proceed on the basis that prima facie the Modern Award achieved the modern awards objective at the time that it was made. In considering whether to make any changes to the Modern Award, we need to be satisfied that the award, as varied, would meet the modern awards objective of ensuring that it provides a fair and relevant minimum safety net.

[61] We are satisfied that it remains appropriate for the Modern Award to continue to contain an industry-specific redundancy scheme broadly along the lines of that contained in Clause 14. This is largely because of the long history of the scheme, and its acceptance by employers and employees in the industry over many years.

[62] We are also satisfied that there are certain distinctive features of the black coal mining industry that support the retention of the industry-specific redundancy scheme. In particular, we accept the evidence that retrenched employees in the coal mining industry are significantly more likely to be re-employed on worse terms and conditions than is generally the case for employees in other industries.

[63] However we agree with the CMIEG that, given the abolition of the 60 years of age redundancy cap, the current entitlement is not the industry based scheme that previously existed.

[64] Accordingly, we consider some amendment is necessary to Clause 14 of the Modern Award, while retaining the essential characteristics of the scheme. No age-based cap ever applied to the one week per year of service severance payment, and we do not consider it would now be appropriate to impose a cap or make any other change to this aspect of the clause. However we do consider that a cap, based on complete years of employment, should be applied to the retrenchment payment of two weeks for each completed year of employment in order to restore the industrial balance in the scheme in a non-discriminatory way.

[65] Having regard to the evidence presented to us about the age and length of employment of employees who have been made redundant in the black coal mining industry we think that an effective cap of 15 completed years of employment (or 30 weeks payment) should be applied to the retrenchment payment.

[66] We consider that a ‘grandfathering clause’ should be adopted to protect those employees who have already completed more than 15 years of employment. It is modelled on the clause proposed by the CMIEG. It provides where an employee who is made redundant had, at the operative date of the variation, completed more than 15 years of employment with the employer, that employee will be entitled to a retrenchment payment based on the employee’s number of completed years of employment as at the operative date.

[67] In our view the award as varied will meet the modern awards objective of providing a fair and relevant minimum safety net of terms and conditions. In reaching that conclusion, we have taken into account each of the matters specified in paragraphs (a)-(h) of s.134.


[68] A draft revised Clause 14 of the Modern Award is attached which is designed to give effect to this decision. Interested parties are invited to file written submissions about the form of the proposed clause within 14 days of the date of this decision.

scription: Seal of the Fair Work Commission with the member's signature.



Y Shariff of counsel with T Sebbens and E Lloyd, solicitors, for the Coal Mining Industry Employer Group.

I Taylor SC with O Fagir of counsel for The Association of Professional Engineers, Scientists and Managers, Australia.

A Bukarica and G South for the Construction, Forestry, Mining and Energy Union.

O Basiacik for the “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU).

Hearing details:



November 7, 8, 10.

Draft Revised Clause

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.

 1   [2015] FWCFB 2192

 2   PR562586

 3   Decision at [39]

 4   Decision at [41]

 5   For the purposes of the redundancy cap proposal the participants in the CMIEG are Anglo American, BHP Coal (BHP Mitsubishi Alliance), Centennial Coal, Ensham, Glencore, Jellinbah, Peabody, Vale, Wesfarmers, Whitehaven, and Yancoal.

 6   [2014] FWCFB 1788

 7   Ibid at [60]

 8   Coal Mining Industry (Composite Log of Claims), Coal Industry Tribunal, 16 February 1973, CR 2183

 9   Ibid at p.7

 10   Coal Mining Industry (Severance and retrenchment Pay: New South Wales and Queensland), Coal Industry Tribunal, 19 January 1983, CR3132

 11   Ibid 36-37

 12   Exhibits 1 and 2

 13   Exhibit 3

 14   Exhibit 5

 15   Exhibit 9

 16   Exhibit 1, attachment DG-2

 17   Exhibit 1, attachment DG-4

 18   Exhibit 9, attachment HM-1

 19   Exhibit 1, attachment DG-5

 20   Exhibit 3, paragraphs 12-26

 21   Exhibit 3, paragraphs 34-35

 22   Exhibits 11 and 12

 23   Exhibit 16

 24   Exhibit 17

 25   Exhibit 18

 26   Exhibit 19

 27   Exhibit 20

 28   Exhibit 21

 29   Exhibit 22

 30   Exhibit 23

 31   Exhibit 24

 32   Exhibit 25

 33   Exhibit 26

 34   Exhibit 27

 35   Exhibit 28

 36   Exhibit 29

 37   Exhibit 30

 38   Exhibit 31

 39   Exhibit 32

 40   Exhibit 33

 41   Exhibit 34

 42   Exhibit 35

 43   Exhibit 36

 44   Exhibit 37

 45   Exhibit 11

 46   Ibidpp 21-26

 47   Ibid, p.27

 48   Ibid pp 33-34

 49   Ibid p.39

 50   Ibid p.40

 51   Ibid pp 46-51

 52   Ibid p.70

 53   Ibid pp 71-72

 54   Ibid pp 76-81

 55   Exhibit 12 [13]-[14]

 56   Ibid [15]-[17]

 57   Ibid [18] – [21]

 58   Exhibit 14, p. 18

 59   Exhibits19-36

 60   Exhibit 37, [5]

 61   Ibid,[37]

 62   Final submissions of the CMIEG, [4]

 63   Ibid [24]

 64   Ibid [119]

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