Note: An appeal pursuant to s.45 (C2001/2221) was lodged against this decision - refer to Full Bench decisions [PR925566], [PR953368], [PR957746] and [PR961054] for result of appeal.


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Workplace Relations Act 1996

s.170CE application for relief in respect of termination of employment

Robert David Smith

(U No. 20854 of 1998)

Robert Edward Cusack

(U No. 20855 of 1998)

Gary Wayne Mannion

(U No. 20856 of 1998)

Todd Andrew Rogers

(U No. 20857 of 1998)

Alan McGuiness

(U No. 20858 of 1998)

Ron Frank Bettridge

(U No. 20859 of 1998)

Edward Hugh Appleton

(U No. 20860 of 1998)

Donald George Halverson

(U No. 20861 of 1998)

Bruce Charles Mitchelson

(U No. 20862 of 1998)

Garry William Barnes

(U No. 20863 of 1998)

Brian Peter Walsh

(U No. 20864 of 1998)

Morgan Kenneth Ray Lindley

(U No. 20865 of 1998)

Mitchell Joseph Albert

(U No. 20866 of 1998)

Athol Earnest Finger

(U No. 20867 of 1998)

Trevor Murray Kelly

(U No. 20868 of 1998)

Gabriel Pani Crichton

(U No. 20890 of 1998)


Pacific Coal Pty Ltd



Alleged unlawful termination - restructure and selection for retrenchment based on performance effectiveness review process - implementation and application of review process


[1] This decision deals with sixteen applications filed under section 170CE(1) of the Workplace Relations Act 1996 (the Act) identified as R. D Smith and others, all of such applicants being members of and represented by the Construction, Forestry, Mining and Energy Union (the CFMEU). Each application expresses in its grounds that the respective individual's termination of employment as a coal miner related to retrenchment from their employment by Pacific Coal Pty Ltd (Pacific Coal) from its Central Queensland Blair Athol Mine was "harsh, unjust or unreasonable".

[2] The applicants named hereunder in alphabetical order, commenced employment at the Blair Athol mine on various dates and were terminated upon various dates, which resulted in an approximate number of years and months of respective employment up until the time of termination as outlined hereunder:

U Matter Number

Name of employee

Effective Date of Termination

Approximate length of service


20866 of 1998

Mitchell Albert

17 August 1998

8 years, 4 months

20860 of 1998

Edward Appleton

24 August 1998

12 years, 8 months

20863 of 1998

Garry Barnes

17 August 1998

15 years

20859 of 1998

Ron Bettridge

19 August 1998

15 years

20890 of 1998

Gabriel Crichton

9 October 1998

10 years

20855 of 1998

Robert Cusack

24 August 1998

10 years

20867 of 1998

Athol Finger

4 September 1998

13 years

20861 of 1998

Donald Halvorsen

24 August 1998

13 years

20868 of 1998

Trevor Kelly

17 August 1998


20865 of 1998

Morgan Lindley

24 August 1998

10 years

20856 of 1998

Gary Mannion

19 August 1998

10 years

20862 of 1998

Bruce Mitchelson

24 August 1998

15 years

20858 of 1998

Alan McGuiness

17 August 1998

18 years

20857 of 1998

Todd Rogers

17 August 1998

13 years

20854 of 1998

Robert Smith

17 August 1998

14 years

20864 of 1998

Brian Walsh

24 August 1998

18 years

[3] In terms of the relief sought each application seeks the reinstatement of the applicant together with an amount in respect of the remuneration lost, or likely to have been lost because of the individual's termination of employment.

[4] The applications were joined with the consent of the parties and proceeded to an arbitral hearing before this Commission as presently constituted (this Commission) and were heard in conjunction and share common transcript and exhibits as well as individual and collective submissions.

[5] The following chronology in relation to these applications reveals the following. The applications were filed in July of 1998 followed by a conciliation conference under section 170CF of the Act which failed to settle any of the applications. This was followed by an Election to Proceed to Arbitration under section 170CFA which first came on for hearing on Wednesday, 11 November 1998.

[6] The proceedings, in the sense of hearings for the purpose of taking evidence, progressed to finalisation by way of final written submissions in reply on behalf of the applicants, forwarded under cover of correspondence on 30 March 2000.

[7] Further to this, on 21 June 2000 the CFMEU forwarded correspondence which raised matters by way of further submission arising from a decision of the High Court of Australia (the High Court) in Re Pacific Coal Pty Limited & Ors, Ex Parte Construction Forestry Mining & Energy Union and Anor [2000] HCA 34 - 15 June 2000 - S137/1998 (the High Court decision) which, it was submitted, were relevant to the considerations of this Commission in these matters.

[8] On receipt of such correspondence the parties were directed to provide any further submissions upon the issues raised by the CFMEU on 21 June 2000 as to such High Court decision, following which Pacific Coal provided submissions in answer and the CFMEU responded thereto on 21 July 2000.

[9] However, at the time such directions on this question were issued, it was indicated to the parties that this Commission had not formed a view as to whether or not any weight or reliance upon such submissions would follow.

[10] I note that the CFMEU, on behalf of the applicants raised submissions on the question of seniority and the incorporation of certain rights emanating from original letters of appointment of the applicants, which question was revisited within submissions originating on 21 June 2000 by reference to the High Court decision insofar as the question of common law contracts of employment and the incorporation of certain rights emanating from letters of appointment.

[11] In that regard I have considered the submissions of the parties as to the High Court matter referred to in paragraph 7 of this decision which, in summary, reveals that the more recent CFMEU submission implored this Commission to adopt the supposedly favourable inferences it draws but does not articulate from the paragraphs extracted from the High Court's decision that support the CFMEU's contention that the Reductions in Hand clause as at the time individual contracts of employment were entered into form part of those contracts.

[12] Set out below is a summary of the employer's response to the initial CFMEU submission and the CFMEU's reply thereto:

Submissions of CFMEU

[13] The CFMEU's further submission could be summarised as follows:

_ The High Court did nothing to alter the pre-existing law.

_ The applicants reiterated their earlier submissions that suggest if one analyses the elements of a contract and apply it to the facts in the situation then the Commission should be satisfied that the relevant terms (of the awards) were "incorporated by signature and reference into each individual contract".

_ A justification of the claim in the further submission of 21 June regarding the "same factual matters".

_ The applicants placed a number of cases before the Commission which it claimed purported to support their position regarding importation of the terms of the award(s) into their contracts of employment.

_ The employers have failed to refer the Commission to any case law to threaten the applicants' arguments that the present cases are all about the enforcement of individual rights by reference to past events.

_ No reference can be found to Cliffe v Hoechst Australia Limited in reported cases and the suggestion that McHugh J approved that decision was "puffery".

[14] Research conducted on these issues has, insofar as the relevant law and other considerations revealed:

Relevant law

[15] The current law is that in Byrne & Frew and Australian Airlines Limited (Byrne)1995 185 CLR 410. In that case the High Court determined that award provisions do not automatically become incorporated into contracts of employment and that the two modes of regulation are distinct. Wallace Bruce in Employee Relations Law (1998) at 64, summarises the principle determined in this case:

Other considerations

[16] If a choice as to one of the two interpretations of the applicability of the High Court decision is made then, it would be necessary to determine whether the "principles" contained in that reasoning constitutes binding authority. Set out below are a number of definitions believed relevant and useful as a reminder of the principles involved in making an assessment as to whether something is binding or not:

The issues

_ Did any of the Judges in the High Court decision consider the issue of importation of award provisions into individual common law contracts of employment?

_ If "yes", did those considerations form part of the ratio decidendi or obiter dicta?

_ If it formed part of the ratio decidendi of the majority, can the current unfair dismissal cases before this Commission be distinguished from the High Court decision?

_ If the proceedings before this Commission are distinguishable, is the reasoning of any of the High Court Judges in the High Court decision persuasive authority?

_ If yes, what weight should be given to the Judge's reasoning?

_ If the authority is persuasive only, does it displace the existing law?


[17] It is apparent from the above summaries that Gummow J, Hayne J and McHugh J each considered to some extent the issue of the importation of award provisions into common law contracts of employment. The relevance on this subject is considered below.

[18] First, McHugh J's comments in paragraph 120 seem to be directly on the importation of award provisions into contracts of employment cannot, as his is a dissenting judgement, form part of the ratio. Morris, Cook, Creyke and Geddes Laying Down the Law, (1992) Butterworths at page 39 note:

So, while McHugh J's reasoning in this regard may be of interest, it has no precedent value.

[19] Whether Gummow and Hayne JJ's consideration of the issue of the importation of award provisions into the terms and conditions of a contract of employment forms part of the ratio decidendi is less certain. As Chisholm and Nettheim Understanding Law, (1992) Butterworths at page 43 note:

[20] It appears that the issue was considered by their Honours but as illustrative of the character of the amendments. In this sense it does not form an essential stepping-stone in their reasoning and arguably is not "logically necessary" to their argument and as such is not binding on the Commission. Furthermore, according to Morris Cook Creyke and Geddes (at page 39) in circumstances when different judges arrive at the same conclusion via different arguments and rules, the individual judgments may be seen as persuasive but not binding.

[21] If this is the wrong assessment of the reasoning of their Honours, it seems the ratio would still be of little direct assistance to the applicants as their Honours do not find as a matter of fact or law that the "Reduction in Hands clause" was imported into the applicants' contract of employment, merely that it was commonplace for such provisions to be incorporated into contracts. Furthermore, as Pacific Coal noted, the clause in question is itself called into question as an example of a clause that if imported from an award, is one that should find no place in an employment contract as it purports to establish obligations on persons not party to the contract.

[22] In that sense the matters before this Commission can be distinguished from that of the High Court decision. Their Honours' references to the effect of the legislation on awards and award terms included in common law contracts of employment was made in the context of a theoretical analysis of the outcome or effect of statutory created rights in contrast to the application of a specific award clause in various contracts of employment entered into by various employee parties and the employer over a protracted period.

[23] In any event it would appear that McHugh J and Gummow and Hayne JJ are each of the view that award provisions are not incorporated by osmosis, there must be specific intent of the parties. So, even if this Commission were to arrive at an opposite view on the binding nature of their Honours' reasoning, the applicants would still need to establish that the parties intended to expressly incorporate some or all of the terms of an award at a particular time or, as varied from time to time. Even, if that hurdle is overcome, the relevant provisions may be in a form that cannot give rise to a contractual obligation between an employer and an employee.

[24] I am not persuaded that the law on importation on award provisions in common law contracts of employment has changed from that enunciated in Byrne's case. Certainly there is nothing in the various judgments of the majority that would warrant such a conclusion.

[25] In view of the above, whilst I accept the submissions raised by the CFMEU upon this question, I do not find that such attracts me to further consider the matters raised in my deliberations in this matter and intend to determine this matter on the basis of the submissions and evidence put to the Commission earlier in the proceedings.

Further submissions

[26] Further submissions were raised by Pacific Coal on 22 December 2000 and accepted by this Commission in relation to a decision of a Full Bench of this Commission in Dahlstrom & Ors v Wagstaff Cranbourne Pty Ltd (Dahlstrom) [Print T1001].

[27] It was submitted in support of having this Commission accepting such further submissions that:

[28] Appropriate consideration has been given to what the parties had to say upon this in the overall consideration of the authorities presented by the parties.

Witnesses for both parties

[29] In addition to the evidence of the sixteen applicants who were represented by Counsel, evidence was also called from Mr A. Vickers and Mr R. Barker, both of whom are officers of the CFMEU. Evidence was also called from a Mr M. Pidgeon, a mine worker at Blair Athol Mine who had signed an Australian Workplace Agreement (AWA) on 7 January 1999 and a Ms J. Hoch who was a former administrative employee at the mine.

[30] The applicants also called two expert witnesses, firstly Ms Martha Knox, an Industrial Psychologist who gave evidence about Performance Appraisal Systems (PA's), whilst a Mr John Heath, a handwriting expert, gave evidence in relation to what was to become known as "Joe's Book", (Exhibit CFMEU 84 at p 301).

[31] The applicants worked in the following identified areas of the mine and were called to give evidence in the following order:

[32] Pacific Coal, also legally represented, called evidence from nineteen witnesses who comprised supervisors, superintendents and management staff and an expert witness in PAS's, a Ms Kay Arnold. These witnesses were called in the following order:


[33] The enterprise operated by Pacific Coal at which the applicants were employed as coal sminers is an open-cut coal mine facilitated by an associated coal preparation plant and is located near the town of Clermont in Central Queensland.

[34] In gaining an understanding of the background to these matters the following extract from the Pacific Coal Year 2000 submissions which, whilst not the total comment upon this question which I reproduce later, is helpful in gaining an understanding of the inherent issues:

[35] Further, Pacific Coal submitted within its Year 2000 submissions consistent with the above that the terminations were the result of genuine operational requirements and that the selection of the applicants for redundancy should not be set against the Performance Effectiveness Reviews (PER) used to rank employees against a range of criteria as this was not the determinant factor and was only a part of the reasoning applied to the applicants being selected for termination by being made redundant.

[36] This is supported by the following extract from Pacific Coal's submissions:

CFMEU's rebuttal of this

[37] What the CFMEU had to say in this regard runs counter to this by way of the following extract from the Year 2000 submissions made on behalf of the applicants:

[38] Both of the parties went to considerable detail and volume in their submissions detailing significant aspects of the evidence presented with both parties referring to numerous authorities in support of their respective positions .

[39] I do not however intend to specifically refer to all of such evidence or submissions within this decision however where appropriate, I intend to refer directly to evidence and/or submissions where it is pertinent and helpful in constructing this decision.

Submissions made on behalf of the applicants

[40] The Year 2000 submissions of the CFMEU contained the following extract of grounds for relief.

Summary of submissions generally

[41] The following is a summary of and/or reproduction of the Year 2000 submissions on behalf of the applicants and, where appropriate, reference to the evidence of the witnesses for both parties. This commences with an introduction which talked about the evidence supporting the financial soundness of the mine and that the mine could be described as having mining conditions amongst the best in the world.

[42] The submissions in support of the abovementioned eleven grounds attack the process used to select the applicants for redundancy/termination to the extent that it was alleged that the evidence presented as to the application of the PER used to select the applicants reveals a flawed and manipulated process.

[43] This allegation was said to be supported by submissions that steps were ultimately taken by supervisory, superintendent and management staff designed to ensure by way of manipulation of the PER process used to rate the workforce in descending order, placing the applicants as the lowest ranked employees within the mine workforce

[44] The design of this style of manipulation ultimately, it was submitted, was to ensure the selection of the applicants for termination by way of redundancy as opposed to others who had signed an AWA.

[45] Those persons having signed an AWA were said to have been favoured and advantaged against the applicants by Pacific Coal in part because of their refusal to sign an AWA and maintenance of CFMEU membership or affiliation aligned with an adherence to collective negotiations and what they believed were their industrial rights under a collective agreement.

The standing of respective witness evidence

[46] As far as the evidence of the applicants generally and, in particular to the abovementioned allegations, as opposed to the evidence of the Pacific Coal staff witnesses, the CFMEU submitted that this Commission, having observed the demeanour of these witnesses and alleged inconsistencies in the evidence of Pacific Coal's staff witnesses should, in all instances, have a preference for the applicants' evidence.

[47] Based upon the above and reflective of the Year 2000 submissions made on behalf of the applicants, I have summarised by way of the following, the allegations made on behalf of the applicants alleging that the assessments of the applicants carried out by the relevant supervisors reveal a flawed process .

[48] Such flawed process, it was submitted, contained but was not limited to the following elements which were said to support the claims that the applicants' termination, using the results of the PER system to select them for redundancy, was harsh, unjust or unreasonable and not reflective of a valid reason and that it therefore denied the applicants a "fair go all round".

[49] In reflection of the above reference as to a flawed process, I note in the Outline of Submissions by Pacific Coal dated 3 February 1999 (Exhibit PC21) that it was submitted that Pacific Coal had informed the employees of the importance of the PER process and that it would be one of the factors taken into account in selection for any future redundancy.

[50] This allegedly led to the adoption of a PER system by arbitrary methods denying the applicants procedural fairness in that neither they nor the CFMEU had a voice in the development of the PER system.

[51] Aligned with this, the Year 2000 submissions upon examination of the evidence was said to reveal a failure to properly explain the requirements of the system to the applicants and disregard for, the application of, and research of the literature of acknowledged authorities in the field useful in developing a PER system capable of ensuring a fair and transparent PER process.

[52] A further criticism was an alleged lack of proper and appropriate training of supervisory staff responsible for the application of the PER system insofar as the recognised training in this area. It was submitted that whilst the supervisory staff were given some training on how to provide feedback to employees and to conduct PER sessions there was no training on PA's feedback and participation offered for subordinates (see evidence of Mr Gardner and Mr Duncan respectively at Transcript pages 2571 and 2651).

[53] The result of this was described as a failure to ensure a fair assessment regime with checks and balances which would result in a transparent system capable of withstanding scrutiny to the extent that an individual's assessment could be observed as fairly arrived at.

[54] In support of the above allegations, issue was taken with a document described as an advice to "All Overburden Employees" dated 5 August 1997 under the hand of the then Overburden Superintendent a Mr S. Prebble (Annexure B to Exhibit CFMEU 23), sent out six weeks after the first of the reviews of staff in the PER 1 Review period had taken place.

[55] This was received by nine of the applicants who happened to work in that area and was described as the first time Pacific Coal had attempted to explain to any of the Production Engineering workforce the "why and how" the PER's will be carried out. Attached to such advice was what was described as a copy of a PER document that would be used to record the one on one discussion intended to give an idea of what was involved in the process.

[56] However it was pointed out that the Overburden area waited until the end of October 1997 to receive the employer's completed individual PER 1 document which meant that approximately two months of PER 2 period was left or alternatively ten months of the PER process had elapsed and the applicants were still none the wiser about what was required of them in such process.

[57] A further criticism was an alleged failure to involve, if not all of the applicants, the greater percentage of them in training about the process as opposed to non CFMEU members or AWA participants, and/or by way of a briefing provided by Pacific Coal in Emerald at a three day course from 8 September 1997 called "Effective Workplace Program".

[58] Mr Appleton, one of two applicants, attended the briefing and gave evidence about this. The effect of his evidence was that nothing in the course touched upon the PER system, nor for that matter was any coaching provided by their raters as to what was expected of them in and during the review process. This point was said to have been corroborated by a Pacific Coal witness Mr Duncan at Transcript page 2651).

[59] Alleged preferential treatment of employees engaged under the terms of an AWA was described as up to $10.000.00 per year financial advantage as opposed to those employed under the collective arrangement, enhanced training to acquire skills in production work roles resulting in better scores for ranking purposes, preferential treatment in providing information and advice as to the PER system and more liberal rating results as opposed to the applicants, allegedly said to have been a reward to such persons for having signed an AWA.

[60] The submissions were also critical of the process of selection as to the use of a retrospective review process as opposed to one in advance of its implementation rather than by way of the initial six month period from 1 January 1997 to 30 June 1997 (PER 1) including, in some instances, retrospective review back to 1993 and 1994 for the first performance review for assessment purposes. This retrospective process involved the use of impirical information which was based upon alleged inaccurate or improper information said to support the flawed process allegation.

[61] At its end, this initial period for PER 1 involved a one on one session between the rater and the employee which the applicants, given that attendance was voluntary, collectively chose not to attend. This was never revisited by Pacific Coal with the applicants collectively or individually insofar as PER 1 was concerned, even though this was accepted as a learning tool for the employees. (Transcript, Mr Paul McRae, pages 1288 -1289).

[62] The preparation of the supervisors responsible for ratings for PER 1 was allegedly inadequate caused by such supervisors not being in possession of what was described as the "4 criteria" intended to be used to rate employees at the time they conducted the PER 1 reviews.

[63] This was said to be vindicated by what the CFMEU expert witness Ms Knox said in her report (Exhibit CFMEU 55) and referred to within the Year 2000 submissions as set out hereunder:

[64] Further periods of assessment from 1 July 1997 to 31 December 1997 (PER 2) and 1 January 1998 to 30 June 1998 (PER 3) were alleged to have suffered from similar and other flaws in the process used. An example of this was submitted as the applicants having been marked down in their rating results for the taking of genuine sick leave or personal unpaid family leave, and the non-agreement to perform duties contrary to award entitlements.

[65] Included in the above scenario were allegations of inappropriate work practices said to have been carried out by applicants which led to lower ratings which were said to have never been substantiated, or by not agreeing verbally with contracting out of work performed by

[66] permanent employees, or stating opposition to acceptance of an AWA but not by any other act or by allegedly being quiet at safety meetings, all of which it was claimed, led to lower ratings.

[67] Further, it was alleged that Pacific Coal failed to inform the applicants of the reasons for their ratings in each review period demonstrated by either non-existing diary notes held by the raters or a refusal to provide such notes relating to good or bad work behaviours for feedback to the applicants as an aid to their performance.

[68] The extent of this, it was submitted, was that the applicants were unaware of the method and information applied by each assessor and the accuracy of same in arriving at their individual rating . This was said to have diminished the applicants' capacity to have been in a position to challenge such rating by way of the appeal provisions provided for that purpose because of no opportunity being provided to examine such records.

[69] Attention was drawn to evidence which was said to reveal the failure to provide factual examples of alleged incidents which led to lower ratings of the applicants, aligned with the failure to provide the applicants with the results of their PER's. Attention was also drawn to the failure to provide an interview to Mr Garry Barnes, in view of his request to tape record his PER 2 interview for the sake of accuracy.

[70] The inability of some raters and those responsible for qualifying the ratings to accurately rate an applicant in view of the applicant being on night shift and the rater and those responsible for qualifying the ratings being on day shift or, alternatively, in having limited opportunity to observe an applicant because of job location logistics was also raised.

[71] The verification, standardisation, or normalisation process used by Pacific Coal was described as inadequate to the extent that the process used had the capacity to throw up inconsistent scales of comparison with the result being a replication of the alleged original biases that team leaders had come up with.

[72] It was alleged that there was a failure to provide PER interviews to applicants prior to a Production Matrix having been completed on 22 June 1998, with such matrix being used and applied to the finalisation of the selection of the continuing workforce and not disclosed to the applicants.

[73] This process was said to have been fundamentally flawed to the extent that the applicants were always intended to be rated low in view of a hidden agenda which included their names having been entered into what was described as a `black list" with reference to the applicants having been identified as "still to go". The existence of this black list, it was submitted, ensured that the applicants were identified as those still employed and still to go and that such black list was never revealed to the applicants or the CFMEU prior to their termination.

[74] In addition to this allegation it was submitted that Pacific Coal failed to respond to a Summons which sought the production of ranking lists and that the use of coloured lists (black, blue, brown and red) only revealed and produced after Ms Hoch, a former administrative employee, gave her evidence on 2 July 1999 and that this non-production was contrary to the terms of a Summons to Produce issued by this Commission.

[75] However it was alleged that some employees (obviously other than the applicants) who were initially on this black list were able to get themselves removed from the black list by signing an AWA which led to what was described as "massaging of scores".

[76] This black list was said to have been used as the identification of the applicants during the selection process under the PER system as those employees who were targeted by Pacific Coal to be made redundant. The status of the black list was said to have been known to those responsible for the ratings to the extent that this was said to have had an impact upon their impartiality when rating the applicants. It was submitted that the end result was that those who were identified and remained upon such black list were targeted for termination by way of redundancy even though the applicants were not aware that this was a function of the PER system.

[77] This, it was alleged, ensured that those who remained upon the black list were ultimately given rating marks ensured to place them in ranking below any other employee at the mine during the period the PER process was applied, given that such ratings were to rank and identify the lowest ranked employees who were to be made redundant.

[78] The ratings for each applicant prior to PER 3 basically meant that applicants were rated in such a way that it was submitted that it would have been near impossible for them to have achieved a rating in the period for PER 3 to the extent that they could have achieved a position above any other employee. (Refer Transcript page 2654 to 2656, cross-examination of Mr Duncan).

[79] This allegation was particularly raised about those who had signed an AWA irrespective of whether such persons had previously been named on the black list. That action was personified as Pacific Coal failing to make an objective and fair ranking selection for redundancy and not according the applicants procedural fairness or due process and that the evidence of Ms Arnold (the expert witness for Pacific Coal) under cross-examination at Transcript, page 2713 supported such claim.

[80] It was alleged that all of the applicants were members of the CFMEU and that part of the process applied by Pacific Coal was to diminish CFMEU influence on the site either by way of having CFMEU members accept the terms of an AWA, or to take a redundancy package which became less attractive if accepted after a certain date.

[81] The actions of Pacific Coal by its alleged attempts to deny that such black list existed or had existed and its alleged resistance to producing such list, even though same was sought by Summons to Produce, was said to be supportive of such allegations. The acknowledgement of the existence of such list when the document was revealed as having been in existence in the relevant period by a former administrative employee, Ms J Hoch, was said to show that Pacific Coal had something to hide about the list.

[82] This evidence, it was alleged, led to the production of other lists which were described by Pacific Coal in its Year 2000 submissions as:

[83] Much has been said about the black list upon which ultimately the applicants' names were the only names recorded. As far as the applicants were concerned this, it was submitted, effectively meant that having their names placed upon such list placed a stigma, so to speak, upon them with those responsible for not only carrying out their individual assessments but also the management staff when their results under the PER system were confirmed. The extent of this, it was said, meant that the system, in a collusive manner, was manipulated to ensure that the applicants were selected for redundancy.

[84] The following extract from the CFMEU submissions goes to this point:


[85] The existence of and knowledge of the black list to those responsible for rating the applicants and the raters' understanding of the implication of this for the individuals upon such list is exampled by the following extract of the evidence arising under cross-examination of a Pacific Coal witness:

[86] The Year 2000 submissions highlighted the convergence of thought of Ms Knox and Ms Arnold, the expert witnesses called respectively by the parties, and exampled by way of the following:

[87] In support of what was alleged directly before, further issue with the information provided as to the PER system and dissemanation of such information and allegations as to denial of procedural fairness is outlined by way of the following:

[88] The submission then turns to the fairness of the PER system as follows:

[89] The above summary of the applicants' submissions and extracts of evidence and cross-examination is, in my view, representative of the issues but do not, understandably, cover every issue and point raised.

The Year 2000 submissions of Pacific Coal

[90] I reiterate that I have considered all of the evidence and submissions presented and produced by Pacific Coal. I do not however intend to specifically refer to all of such evidence and submissions in detail in this decision other than to comment and/or summarise, and/or reproduce elements of the evidence and/or submissions I consider pertinent and which have assisted me in reaching my decision.

[91] The introduction to the submissions and the section defined as "2 Overview and Summary" of Pacific Coal as indicated earlier are reproduced hereunder as they directly confront what the CFMEU said about a number of the aspects which I have either summarised and or reproduced above, arising from the submissions made on behalf of the applicants:

[92] It was then submitted by Pacific Coal that the following summary puts these proceedings in proper context:

[93] At this point in the submissions it is relevant to note that the Pacific Coal stamp is put on the PER system in such a way that the differences between what the CFMEU's submissions allege about the applicant's treatment under the application of the PER system are put in stark relief:

[94] The structure of the Pacific Coal closing submissions were presented in two parts defined with the first part, as the Main Closing Submissions containing the relevant legal principles and evidentiary matters which relate to the applicants generally.

[95] Following the Main Closing Submissions, the submissions were then individualised for each individual applicant. These submissions were described as setting out the evidentiary basis for the Pacific Coal submissions in relation to the particular applicant based on the legal principles set out in the Main Closing Submissions and included in part, but are not limited, to the following:

[96] The following passage is, in my view, very important as the CFMEU alleged that the treatment of the applicants was unfair in that their selection was based upon an abuse of the criteria chosen by Pacific Coal in the application of the PER rankings to the extent that there was inconsistency in the application of the criteria.

Applicant's general submissions in reply

[97] The submissions in reply for the applicants raised questions about the defence of Pacific Coal to the allegations made and responded to in the Pacific Coal submissions by way of the following:

[98] The submissions in reply then provided examples of the above allegation which I do not intend to repeat hereunder other than for one example which is indicative of the thrust relied upon by the applicants. The example reproduced relates to Mr Walsh and Mr Mannion:

[99] Reference was made to the term "variation among assessors" and alleged inconsistencies in the PER system as set out hereunder:

[100] The submissions in reply then turned to the reply to be made on behalf of each applicant to the allegations made against each individual applicant. I do not however intend to repeat each and every reply but have included as an example the following which relates to Mr Albert as it is indicative of the structure of reply for each other applicant. In each particular case, there was reliance upon the claim that the Pacific Coal Year 2000 submissions, in regard to each applicant are misleading and misinterpret the totality of the evidence in relation to each applicant:


[101] In reaching conclusions which may form the basis of findings upon these applications I have taken account of the clear distinction between the respective positions advanced by the parties as to what should and should not be considered in determining whether or not the grounds as to harsh, unjust or unreasonable termination advanced in support of the individual applications have been made out.

[102] In taking that into regard I have also necessarily considered the behaviour of the applicants and the CFMEU as opposed to the behaviour of Pacific Coal and its management staff during the three PER periods of assessment by way of the PA system.

[103] This PA system had, as its centrepiece, three PER ratings periods of six months for each of the individuals who made up the workforce used to determine who should be selected for redundancy as different to what Pacific Coal said below in its Year 2000 submissions:

[104] My consideration of this has also included on balance which construction of the evidence and supporting authorities relied upon by both parties I should prefer.

[105] The submissions made by Counsel for the applicants contained allegations insofar as the conduct of some of the Pacific Coal witnesses, when giving evidence, to the extent that it was suggested that some of such witnesses committed perjury and should be referred to the Director of Public Prosecutions (DPP) and that generally the evidence of the Pacific Coal witnesses was so unreliable that this Commission should pay no regard to such evidence.

[106] However, in the alternative, I have been asked to accept the applicants as having given truthful evidence. In turn, Pacific Coal submitted that this Commission should accept that its witnesses were truthful and that there should be no adverse finding about the evidence presented nor should this Commission entertain referral of any Pacific Coal witness to the DPP insofar as the perjury allegations are concerned.

[107] It is not this Commission's intention to refer any witness who gave evidence in these proceedings to the DPP as other avenues are available to a party if it wishes to pursue issues surrounding such allegations.

[108] I have considered what both parties have had to say on the question of the evidence given by witnesses for the parties and I intend, where I believe that it is appropriate and or necessary, to refer specifically to a witness and his or her evidence.

[109] Attention was also drawn to the question of hearsay evidence and the weight which should be attached to this. This arises from a submission about what was claimed by the applicant's Counsel to be a failure by Pacific Coal to cross-examine applicants upon issues which it then sought to lead in evidence from its own witnesses.

[110] This submission, to that extent, sought reliance upon the Rule in Browne and Dunn (1894) 6 R 67 which was quoted extensively in support of such allegation.

[111] During the course of these proceedings I had cause to issue a decision which made reference to this question in Print S0195 of 18 October 1999 and nothing put following this by Pacific Coal has convinced me that I should resile from the point of view expressed therein as to how I would view and give weight to hearsay evidence.

[112] Essentially the issue in this matter is that Pacific Coal relied on claims that the terminations were based upon redundancy emanating from operational requirements as a defence against the claims of the applicants submitting that:

[113] This requires a consideration of and examination of whether or not in all of the circumstances the selection of the applicants for termination, albeit that such were upon operational requirement imperatives, offends the principles of selection of each applicant to the extent that such represents a "valid reason" and is representative of a "fair go all round" and are not terminations which could be described in all of the circumstances as "harsh, unjust or unreasonable".

[114] Given that the applicants' terminations were based upon a claim of redundancy brought about by operational requirements, under all of the circumstances of such selection for redundancy, was such capable of scrutiny revealing that this was as an end result of the application of an evenhanded process for selection applied equally to all of the employees by way of a fair selection process? To that extent could it be said that the terminations do not offend the concept of a valid reason and are also representative of a "fair go all round" to both the employer and the employee.

[115] Further, were the terminations not capable of attracting the description of harsh, unjust or unreasonable which, after all, was the reason for the filing of the applications, the subject of this decision.

[116] Accordingly, the upside of that would therefore be terminations representative of a valid reason, and ones which could be observed as providing a fair go all round and not of a harsh, unjust or unreasonable character.

[117] This requires a consideration of the circumstances to the extent that I could be satisfied that either Pacific Coal does not have a case to answer or alternatively it does have a case to answer.

[118] It seems to me that Pacific Coal had the managerial right to reduce its workforce and to rely upon operational requirements as outlined in its submission to do so. However, of its own volition in selecting those to be made redundant from its Blair Athol mine, even though this was based upon operational requirements, Pacific Coal chose to rely upon a selection method based upon PA's which in turn relied upon an associated PER process to determine the persons from its workforce who should be selected for termination upon operational grounds.

[119] This necessitates that the circumstances of each applicant's termination and application of such associated PA's and PER process to achieve this be scrutinized by this Commission with a view to assessing whether or not, having regard to section 170CG(3) of the Act, the redundancy selection process and consequent termination offends section 170CG(3) of the Act and, if so, to what extent.

[120] An assessment of the evidence and submissions reveals significant disagreement between the parties, which can readily be seen from the submissions of both parties. Clearly, what each party has submitted as being the appropriate matters to be addressed in reaching a determination upon the applications, is a long way apart.

[121] In the submissions in reply for the applicants, issue was taken with the contentions of Pacific Coal as contained in its Year 2000 submissions, wherein such contentions are described as "Another Employer Recant" by way of:

[122] As a further example of the above, an extract of the evidence of Rod Bates was raised by way of the following:

[123] Mindful of the evidence and the submissions and specifically in the face of the above, I am of the view that Pacific Coal does have a case to answer as to whether or not the termination of each of the applicants in all of the circumstances was one representative of a valid reason, reflecting a fair go all round and was not a harsh, unjust or unreasonable termination.

[124] The applicants' submissions referred to above are an accurate description of an attempt by Pacific Coal to direct attention away from and separate out the PA's and PER process to the extent that Pacific Coal submitted that this Commission should not give weight to the applicants' claims as to the unfairness of the PER system and its unfair application in selecting each for termination.

[125] Also requiring consideration is the extent to which, in all of the circumstances, section 170CG(3) of the Act needs to be applied when assessing the appropriate criteria for the purpose of determining the arbitration of these matters. Obviously, whilst there are implications capable of having some universal application to the circumstances generally, because each application involves a distinct individual situation, an examination as to each individual applicant's circumstances is also required.

[126] Certain obligations are imposed upon this Commission in determining whether or not an individual's termination was harsh ,unjust or unreasonable and requires consideration of subsection 170CG(3)(a) to (e) which provides:

[127] I am obliged to have regard to each of the elements contained within this section of the Act to the extent that each must be treated as a matter of significance in the decision making process. (See Edwards v Giudice and Others (1999) 169 ALR 89, at p.92 per Moore J; King v Freshmore (Vic) Pty Ltd, [Print S4213], 17 March 2000 per Ross VP, Williams SDP and Hingley C).

[128] In determining for the purposes of the arbitration, whether a termination was harsh, unjust or unreasonable, I am attracted to the following in part extraction of rebuttal, on behalf of the applicants, against the Pacific Coal position taken from the CFMEU's submissions in reply:

[129] My conclusions as to the above extract are that insofar as precedent and the appropriate method of assessing the circumstances which led up to the termination of the applicants as individuals is that this is an appropriate way to consider the individual applicants circumstances by setting the above against the individual circumstances of the applicants.

[130] This, in my view, is consistent with the obligation I have in relation to the matters I must have regard to in reaching conclusions upon these matters.

[131] Obviously to give weight to the above it would firstly be necessary to determine if the application of the PER system was so flawed as to result in an outcome which denied the applicants, as individuals, a fair go all round and offended the valid reason criteria, and in turn was representative of a termination at the instigation of the employer that was harsh, unjust or unreasonable, in that, as raised above:

[132] If that conclusion emerges, then in turn, this requires as suggested earlier, a requirement to have regard to and consideration of the individual applicants' circumstances against that background, as such proposition represents, in my view, an appropriate approach to these questions;

[133] In having said what I have had to say above, I accept that the issue between the parties about the nature of that which is before this Commission is represented by the following construction placed upon this issue by the applicants:

Regard to section 170CG(3)

[134] As mentioned above, as far as the application of section 170CG(3) is concerned, it has been necessary to consider, given the circumstances as to which elements of subsections 170CG(3)(a) to (e) require application, after a consideration of the reasons advanced by Pacific Coal for the selection and termination of the applicants.

[135] To assist me in reaching a conclusion upon this question I have reconsidered what Pacific Coal had to say in relation to this issue. To that end there seems to be a lack of consistency in that, on the one hand, it was submitted in the following extract from the Pacific Coal Outline of Submissions of 3 February 1999 (Exhibit Pacific Coal 21), that:

[136] Under the heading "Redundancy Selection Process Fair", it was said:

[137] The only evidence of similar processes used specifically at Rio Tinto companies concerned PA's processes including at Hamersley Iron and Kennecott (Exhibits CFMEU 60 and 61).

[138] Under the heading "Ranking" it was said

[139] Under the heading "Procedural Fairness" it was said:

which is at odds (as pointed out by the CFMEU) as far as the Year 2000 submissions of Pacific Coal in reply are concerned, as referred to above.

[140] The nature of the above extracts taken from the initial Outline of Submissions of Pacific Coal are the ones upon which I intend to concentrate upon. I do not accept the latter proposition of Pacific Coal described earlier above under the heading "Another Employer Recant" as it is clear that the applicants presented a case based upon what Pacific Coal submitted initially in its Outline of Submissions contained in Pacific Coal Exhibit 21, accepting that this represented the terms relating to its case, which the applicants would have to overcome.

[141] It seems to me that whilst Pacific Coal had the right to reduce its workforce and to rely upon operational requirements to do so, that in selecting those to be made redundant of its own volition, it chose a selection method reliant upon both a PA's and PER process it had adopted at the Blair Athol mine to determine which of its workforce should be selected for termination.

Last on/first off implications

[142] Historically, the method of selecting persons in the black coal mining industry for redundancy where offers of voluntary redundancy had not achieved the numbers sought, was to make persons redundant upon the application of "last on/first off"principle. However, such capability was removed from the industry award from 1 July 1998 by way of amendments to the Act which were reflected within section 89A(2) of the Act which regulates allowable award matters.

[143] It seems to me that Pacific Coal, having a knowledge of the history of the last on/first off regime, were mindful of a need to be able to justify any of the selections ultimately made, given that there was potential for long term employees, as opposed to shorter term employees, being included within those ultimately selected for redundancy.

[144] Historically the applicants would have, but for the changes to the Act referred to above, been some of the last to go and would not have been selected in the 1998 workforce reduction at the Blair Athol mine which has led to the applications dealt with herein.

[145] I am satisfied that this was in part some of the reasoning behind the development of the PER system, albeit elements of such were designed to also improve performance and production, but also to create a defensible selection process for redundancy based terminations.

[146] What followed, in my view, was that the PA's and PER system at Blair Athol had a dual purpose as far as the restructuring of the mine was concerned, as it was also the tool to be used to select those to be made redundant. This process was in the knowledge that such would more than likely be challenged where seniority was not applied to the extent of proceedings of the order before this Commission and that application of the PER system would provide a means to justify such selections.

Fair go all round implications and authorities

[147] The issues raised as to the harsh, unjust or unreasonable questions which require consideration, aligned with the fair go all round scenario are, in my view, supported by the following summary and reference to authorities upon this which are extracted from the applicants' submissions:

[148] I am particularly mindful of the following as it applies to the matters before me:

Evidentiary burden

[149] The submissions of the applicants revealed an acceptance of the onus being upon them to show that the terminations were harsh, unjust or unreasonable. However, I accept that Pacific Coal carries the evidentiary obligation to prove the factual issues which support its case and, in my view, the following in part extract of submission made on behalf of the applicants is on point in that regard:

[150] The method of selection used to select the applicants for redundancy was always of an order whereby it would be open to challenge and given the existence of the black list and its accompanying connotation "still to go", which became an ongoing reference at some point in time, together with the knowledge of this list by those responsible for rating the applicants, becomes an important and significant issue which, in my view, is not easily swept away in the manner suggested by Pacific Coal.

[151] Specifically in that regard I refer to the following passage from the Pacific Coal submissions:

[152] However, my view of this is that the reference to "some secret black list" above is accurate as this list was kept from the knowledge of the workforce and the CFMEU and was the subject of an attempt to make such term indistinguishable in Exhibit CFMEU 84. In relation to that, after an examination of the notebooks of Mr Riordan described as Joe's Book (Exhibit CFMEU 84) which comprised of photocopied extracts taken from six Spirax Notebooks, I have reached the following conclusions:

· I reject the above Pacific Coal depiction placed upon the changes made to a number of pages included within such exhibit. This Pacific Coal depiction of such pages asserts that the changes were caused by Mr Riordan, being a chronic overwriter, and that there is nothing more to it than that.

· My rejection of this assertion is on the grounds that my understanding of the term overwriting is that where overwriting occurs, the result is over emphasis of the original written word or words.

· By comparison however, in the instances drawn to my attention, the nature of the overwriting is better described as it was by the handwriting expert as obliteration, as clearly what results is a change to the intent and meaning of what was originally written.

· This is best exampled by a careful examination of the handwriting expert's report as to the words concerned, to see the extent of this.

· An examination of what Mr Riordan wrote within his note books, which were numbered from 1 to 523 for identification purposes with such numbering attended to by this Commission, reveals in my view the following:

· Such reveals, in my view, attempts to change the intent of what the original writing intended to record.

· Upon examination, the changes to the passages I have examined above reveal a totally different intent and to that extent the description, overwriting, simply does not stand up to scrutiny.

[153] It is clear to me that the whole issue of the black list and/or black list still to go, in its different forms, has led to a significant degree of concern amongst those responsible for the rating of the applicants, even though I note the submission of Pacific Coal that:

[154] In my view, it is questionable that the purpose of the originating black list was genuinely based upon performance and in any event, what was used to rate performance was the PER system, and the black list seemed to me to have been used as an aid to achieve this end.

[155] The evidence of the Pacific Coal witnesses referred to earlier in an examination of the applicants' submissions is testament to that as there are inconsistencies about knowledge of and application of the black list, yet this was a knowledge known only to Pacific Coal management staff and not shared with the workforce, or the applicants, or the CFMEU.

[156] The impact and implications of the inclusion of and maintenance of an employee's name upon such black list is, in my view, properly characterised by Ms Knox where she said at Exhibit CFMEU 55 at page 4:

and, later in her report at page 28, where she also said:

[157] It is clear, based upon the evidence, that knowledge of the existence of the black list and other coloured lists was well known to those responsible for the ratings and in the qualification of such ratings. Importantly, this was something which Pacific Coal did not make known to the applicants, or their union, at any time from the time such list came into existence during the PER review periods. In fact, the evidence makes it clear that it was only during the course of the proceedings before this Commission that the applicants and their union became aware of this.

[158] It is also fair to say that not only were the applicants and their union not told of the existence of the black list nor, for that matter was this Commission made aware of the existence of colored lists which were used as identification of the workforce in a status sense, until it became untenable for Pacific Coal not to do so.

[159] The following construction placed upon this by the CFMEU where it was submitted that:

is an appropriate view to be placed upon this.

[160] This interpretation of the potential for unfair treatment to the applicants is exampled by way of reference to the following extract from page 4 of the statement of Ms Knox:

[161] The applicants' submissions to give weight to the above, submitted that:

[162] In that sense, such an attitude would be contrary to what was held in Gibson v Bosmac Pty Ltd (1995) 130 ALR 246 as referred to in the applicants' Year 2000 submssions as follows:

[163] In that sense, Ms Arnold the expert witness for Pacific Coal, under cross-examination concurred with what Ms Knox had to say on that point as referenced by the following extract from the CFMEU submissions:

[164] This then is set against questions of procedural fairness by way of the following extract from the Year 2000 submissions for the applicants:

[165] The following goes to the question of the appropriate method to engage and involve an employee in the PER process:

[166] The following extracts of evidence taken during cross-examination of Mr Bates, the General Manager of Operations at the mine and Mr Yeates, the Manager of Production, were described as admissions supporting the above claim that the applicants were denied due process to the extent that such admissions represented terminations which were harsh, unjust or unreasonable and that support for such construction by way of authority resided within Antonakopoulos v State Bank of New South Wales, unreported 30 July 1999. The alleged admissions have been extracted from the submissions of the applicants under the heading:

[167] In relation to the alleged admission of Mr Yeates, this was posed as:

[168] The questions which arise from the above are reflected within the following extract from the applicants' submissions in reply as to how the PER system and its application should be considered and in that sense is brought into relief as under:

[169] The appropriate test to be applied to the PER system and its application to the applicants is properly, in my view, founded in the following extract taken from the applicants' submissions in reply:

and is an important principle in my consideration of that which I must consider and have regard to insofar as the application of subsections 170CE(3)(a) to (e) to the circumstances before me.

[170] In terms of what I intend to consider in that regard, I have the view that not only are the applicants entitled to rely upon what Pacific Coal had to say in its Outline of Submissions of 3 February 1999 (Exhibit Pacific Coal 21) made at the commencement of these proceedings, but for that matter, so is this Commission and I adopt the following principles raised below in that regard. The following authority and commentary provides a set of descriptors which can be applied to the circumstances applying to each of the applicants:

[171] Interestingly, the following, which also contains an attribution to von Doussa J seems to me to accurately depict the methodology used by Pacific Coal in its application of the PA's and the accompanying PER system:

[172] The allegations made on behalf of the applicants as to inconsistent and inaccurate individual ratings are exemplified, in my view, by the following:

[173] The opportunity for removal from the black list was limited, as the following in part extract from the submissions on behalf of the applicants reveals:

[174] In terms of the opportunity for an applicant by way of individual performance to respond to the PA's and PER process requirements of Pacific Coal, what follows hereunder by way of the following extract from the applicants' Year 2000 submissions, is indicative of the lack of opportunity provided to an applicant to actually do this, revealing in my view, a manipulation of the process where the applicants were concerned:

[175] The issue of the "black list still to go" permeates, in my view the whole of the PER process used to the extent that it hangs like an albatross around the neck of Pacific Coal. By way of clarification, I am of the view that such is elevated to the status of being a central plank in the submissions of the applicants given that this list, from November 1997, contained the names of the applicants through the whole of the PER process referred to. Notwithstanding the fact that there were obviously other employees upon this list who were able to, in one way or another get themselves removed from such list (see above in paragraph 172), this list was ultimately relied upon to formalise the selection of the only employees remaining upon such list, namely the applicants, for termination in July 1998.

[176] The following extract depicting the evidence of Garry Barnes is an example of the way Pacific Coal went about demeaning the applicants and denying them opportunities to perform work which would have provided an opportunity to have improved their standing insofar as their rating was concerned:

and this was depicted within the applicants' submissions as something akin to a joke by reference to the following:

[177] The authorities which have bearing upon this matter were raised by both parties and put in issue, firstly by the applicants, by way of the following:

[178] As far as the actions of Pacific Coal in allegedly favouring one set of employees over another (those who had signed AWA's as opposed to the applicants), the following construction is placed on this by the submissions of the applicants:

[179] The applicants further attacked the application of the PER system as set out hereunder:

[180] To summarise my conclusions, I conclude that the PA's and its supporting PER process, whilst a system open to application by Pacific Coal at its Blair Athol mine, upon my considerations of the system and process and its application, have failed to satisfy me that the applicants or anyone else for that matter, could feel comfortable with or be satisfied with in losing their employment by way of its application to them, for the following reasons:

[181] There was no procedural fairness or due process extended to the applicants and such PA's and PER process operated unfairly for the applicants whereby each was subjected to bias caused by the manipulation by Pacific Coal through those responsible for its administration (see CFMEU v Curragh Queensland Mining Limited [Print R 8490]), aided by the description of flaws and inconsistencies in the Pacific Coal systems as set out hereunder drawn from the applicants' Year 2000 submissions:

[182] This is an appropriate description of the application of such to the applicants and is, in my view, supported by the numerous references as to the construction of the evidence of Pacific Coal witnesses made on behalf of the applicants, to the extent that such supports the above description attached to it.

[183] It is open to conclude, following an examination of the evidence of the applicants as opposed to that of the Pacific Coal witnesses, that the Pacific Coal witnesses, involved in the application and implementation of the PA's and PER system, were of a mind that they would never be held accountable for their actions in terms of their treatment of the applicants and that their performance, under cross-examination which was vigorous and searching but no more than that, revealed this.

[184] This led to the giving of evidence by some of such witnesses of a nature which was not capable of defending the individual actions by some of such persons, when it is considered that they were supposedly trained to administer and apply the PA's and PER system, whilst the applicants essentially had no training or assistance from their raters, which worked to their individual detriment.

[185] In contrast to this the applicants gave consistent evidence which could reasonably be expected of witnesses who were, to a large degree, in the dark about allegations made about them and their work performance. The applicants cannot be held to have given inconsistent or misleading evidence, given the failure of the persons responsible for the administration of the PER process to appropriately bring matters upon which they intended to rely, to the attention of the applicants.

[186] As to the evidence of Ms Hoch, I accept that this witness was truthful. In fact, the evidence this witness disclosed has been borne out and is evidence which I prefer when an examination of the evidence which flowed from Pacific Coal witnesses, who attempted to put in issue Ms Hoch`s evidence, is considered.

[187] In regard to the valid reason question and authority upon this, and accepting that whilst this question of itself is determinative of applications under section 170CE, which claim that the individual's termination of employment was harsh, unjust or unreasonable, I note the following extract from the applicants' Year 2000 submissions:


[188] In having reached the above conclusions I now turn to the findings which I believe, based upon the evidence and the submissions and the numerous authorities raised by the parties, are reasonably open to me:

(A) I find that the PER system implemented by Pacific Coal in itself was a system open to Pacific Coal to implement for the purpose of improving and measuring performance, and improving production at the Blair Athol mine which led to a downsizing of its workforce under the "operational requirements" banner and authority for this is reasonably open, based upon the following:

(B) I find that the system was also capable of use as an associated tool for the purpose of restructuring the business at its Blair Athol mine, to select from its workforce those individuals it wanted to retain, subject to the proper application by and of those responsible for the administration of such PER system, an approach which it seems to me would not offend what the Full Court of the Industrial Relations Court said in Kenefick v Australian Submarine Corporation (No. 2) (1996) 65 IR 366 at 372, subject to it being fair, consistent with the following authority:

(C) However I also find that in order for the PER system to be fair it needed to be properly understood by all who would be subject to it and that this required that appropriate training of all persons in the system was necessary. To that extent whilst some training within the system was provided to certain management and supervisory staff and some of the workforce, there was a failure by Pacific Coal to appropriately train all of the supervisory staff and the entire workforce. This failure was detrimental to the applicants not trained at the time of the system's implementation and that the evidence in these proceedings reveals that Pacific Coal failed, among other things, the following tests:

(D) In particular, I find that the applicants suffered prejudice and detriment as a result of their lack of understanding and/or training in relation to the PER system and the manner in which it would affect their employment. As a consequence, this prejudice and detriment continued to affect the applicants up until the time of the termination of their employment.

(E) Accordingly, I find that the termination of the employment of the applicants, in view of Pacific Coal's failure to properly and fairly administer, educate and enforce the PER system in respect of the applicants, was unreasonable to the degree that such offends what was held in Kenefick v Australian Submarine Corporation (No. 2) (1996) 65 IR 366 referred to in sub-paragraph 188(B) above, to the extent that the application of the selection criteria was not fair.

(F) Further I find that such detriment was twofold in that there was an inappropriate application of the system. This inappropriate application was caused by a lack of discipline amongst those supervisors responsible for one on one interviews with employees in their areas as to the method of rating of such individual employees. This was compounded by a failure by the superiors of the raters to apply the necessary discipline to those responsible for such one on one interviews and ratings. This in turn led to a denial of natural justice to the detriment of the applicants, in particular, brought about by this lack of discipline which was essentially sanctioned by their superiors and that this was unjust and unreasonable.

(G) I find that the denial of natural justice afforded to the applicants was, in my view, initially underpinned and ultimately compounded by the inclusion of the names of all of the applicants upon a list described as a black list. This list was derived as a result of the outcome of a collective meeting of supervisors who were imbued with the authority to identify based upon a "gut feeling" the so-called 50 worst performers at the mine.

(H) I find that the applicants, when regard is had to section 170CG(3)(b) of the Act were not informed in a manner necessary about the existence of such black list or of the reasons for their inclusion upon this list, inconsistent with the requirements of such subsection which states:

(I) From an assessment of all of the evidence, I find that the impact of the existence and non-revelation of the black list and its continued application during the period leading up to and including the date of the termination of each of the applicants' employment, coloured (so to speak), the thinking of the individuals administering such list. I find that this led to a continuing desire (or agenda) of the individuals responsible but acting on behalf of Pacific Coal, to ensure the initial selection process in respect of the black list was maintained.

(J) I find that the applicants, by way of their early identification upon the black list which at some point in time became further enhanced by the term "still to go", were targeted and singled out for termination from the very commencement of the process.

(K) I find that there was an apparent history wherein the Pacific Coal management team had been at odds with the Blair Athol CFMEU Lodge and its members for years. I also find that certain members comprising such management team were suddenly presented with an opportunity to put the CFMEU Lodge and some of its member in what, some if not all, of the management team felt was their proper place. This reflects an unreasonable intent in terms of the applicants' ultimate terminations which in turn led to a conspiratorial allegiance amongst those responsible for the ratings given to each of the applicants through the application of the PER system.

(L) I find that this conspiratorial allegiance existed by way of a shared knowledge amongst the supervisors and upper and senior levels of management within Pacific Coal at Blair Athol mine to the extent that the applicants could be given a "hard time" without rebuke from upper management. This involved a strategy designed to force the applicants to accept the redundancy package and various methods were used to achieve this, such as:

(M) I find that based upon my observations of the evidence relating to the actions of Mr Scott Browne towards those applicants who came under his purview, that such could be likened to "blood sport" for Mr Browne and the term "King Browne's snake pit" used to characterise the culture of the work area under his control into which some of the applicants were placed during the PER reviews, is indicative of this.

(N) I find that the evidence of the two expert witnesses in performance systems, Ms Knox and Ms Arnold, called in the first instance, by the applicants and in the second instance by Pacific Coal, concurred upon many issues to the extent when the Blair Athol PER system is set against what is the acknowledged content model of a fair performance system, that the termination of each applicant was individually harsh. This finding is confirmed by way of the following extracts from the applicants' submissions and goes to serve and highlight the discrepancies and weaknesses in the Blair Athol PER model in that the following reference to an authority on this subject drawn from the applicants' Year 2000 submissions is an accurate reflection of what should have occurred but however, did not:

(O) I find that based upon the above, that the Blair Athol Performance Appraisal System was lacking in application by those responsible for the appropriate concept of consultation between Pacific Coal and all of its employees. This, I find, created a lack of fairness in the sense that there was a bias which led to inconsistency in rating employees unless they fell into a certain mould. That certain mould, I am satisfied, represented among other things, being a non CFMEU member and/or a signatory to an AWA. Another criteria to fit the mould required included the open acceptance at Blair Athol mine by an employee of Pacific Coal agreeing to the use of contractors to the potential detriment of what the applicants perceived as being the job security of the permanent workforce.

(P) I find that appropriate steps were not taken by Pacific Coal designed to eliminate the possibility of variation amongst assessors. This, I have concluded was deliberate because what became a bias was a shared bias amongst those capable of redressing such bias. Accordingly, when applied to the applicants, the appraisal failed the due process and accuracy test essential for a Performance Appraisal System and as a result was not capable of scrutiny if challenged. The outcome for the applicants was unjust and unreasonable by way of overlap (see Byrne).

(Q) As far as each individual applicant is concerned, it seems to me that upon an examination of the above conclusions and findings and consistent with my obligations to have regard to subsection 170CG(3) of the Act and its application to the circumstances reveals, when set against such subsection of the Act, the following:

(R) I find that the attempt by Pacific Coal to deflect attention from the PER system and its use as to the selection of the applicants for redundancy hereunder described as "Another Employer Recant" earlier by the CFMEU as follows:

(S) I find that insofar as the question of whether the termination of the employment of each of the applicants was concerned and having regard to subsection 170CG(3) of the Act, that such terminations were harsh, unjust or unreasonable as follows:

(T) In regard to the valid reason and the fair go all round questions and authorities upon this, whilst this question of itself is not determinative of applications made under section 170CE which claim that the individual applicant's termination was harsh, unjust or unreasonable, I note the following extract from the applicants' Year 2000 submissions:

(U) Consistent with the obligation I am required to have in relation to having regard to section 170CG(3) as to the issue of a valid reason for the termination question and, aware that the question of whether there was a valid reason for the termination, whilst not determinative, but merely one factor which I must have regard to in making the assessment of whether the termination was harsh, unjust or unreasonable I also make the following findings:

[189] The above findings are of such an order that there was a compelling case made out that each of the applicants were denied a fair go all round when consideration of all of the relevant circumstances as have been made above within the submissions and the Findings are considered.

[190] Such is a factor properly to be taken into account in determining whether the termination was harsh, unjust or unreasonable, particularly when section 170CA(2) as raised in National Jet Systems Pty Ltd v Mollinger [Print R3130] enjoins the Commission to apply basic notions of fairness in carrying out its functions. To that extent the only logical conclusion is that the termination of each of the applicants, given the extent to which such denial of a "fair go all round" occurred, and in consideration of section 170CG(3), reveals that each applicant's termination of employment was harsh, unjust and unreasonable.


[191] Having made the above findings I now turn to the question of remedy, and the need to have regard to that provided for under section 170CH of the Act - Remedies on Arbitration:

[192] In having determined that the termination of the employment of each of the applicants was harsh, unjust or unreasonable, consistent with Australian Meat Holdings Pty Ltd v McLauchlan [Print Q1625], where the Full Bench of this Commission (Ross VP, Polites SDP, Hoffman C) observed that:

I have had regard to subsections 170CH(3) and (4) as to the appropriate remedy in light of such findings.

[193] From my assessment of the evidence and material before the Commission which led to the above findings in my judgment and having had regard to subsection 170CH(2), I am satisfied in all of the circumstances that reinstatement is appropriate for each of the applicants.

[194] I have therefore had regard to the provisions of subsection 170CH(2) of the Act:

[195] Having found that the termination of the employment of each of the applicants was harsh, unjust or unreasonable, I am satisfied, having had regard to subsection 170CH(3), that the appropriate remedy in that regard as to each of the applicants is that each applicant should be reinstated and awarded lost remuneration which each applicant would have received or would have been likely to receive if his employment had not been terminated.

[196] In reaching this conclusion I have had regard to each of the factors identified in section 170CH(2) to which I have referred earlier. After having considered, consistent with the Full Bench decision in Henderson and Department of Defence [Print S8591), 28 July 2000 (Giudice J, Williams SDP and Huxter C) having regard to section 170CH(6), I am satisfied that it is not inappropriate to reinstate the applicants.

[197] I am also satisfied that as there is no evidence before the Commission that indicates whether any of the dismissed applicants' former position is vacant or not and that such makes it possible for the Commission to make an order under subsection 170CH(3)(a), and in the alternative, under subsection 170CH(3)(b). By way of clarification, this Commission orders that each of the applicants be reinstated to his former position on and from 9 April or, if that is not available, to another like position on terms and conditions no less favourable than those on which he was previously employed. (See Yousif v MM Cables Energy Products [Print R2805], Cargill C).

[198] In this regard the unavailability of a position vacancy does not provide the basis for refusing to order reinstatement.(See Smith and Roulston v Capral Aluminium [Print R9808] Whelan C.

[199] Having had regard to all of the circumstances and consistent with subsection 170CH(2) of the Act:

[200] Having made the above finding as to remedy, this Commission orders the reinstatement each of the applicants from 9 April 2001, without loss of continuity of employment and also orders payment for remuneration lost by each applicant since the date of termination up until the date of actual reinstatement of employment or the date upon which lost remuneration payment is made, whichever event first occurs.

[201] I am aware that there will be some adjustments because of various applicants having gained income in the relevant period. Additionally, I am conscious that all of the applicants received redundancy payments and other accrued leave entitlements or benefits and that these moneys will also need to be taken into account in arriving at the amount of remuneration lost.

[202] Further, I direct the parties to settle the draft orders necessary within 21 days of the date of issue of this decision as to the amount of remuneration lost for each applicant within the period described above and failure to reach agreement between the parties upon such amount of remuneration will, on notification to this Commission, cause a relisting of these matters for the purpose of a determination of the amounts, subject to the submissions of the parties.




Mr Docking, of Counsel with Ms Doust of the Construction, Forestry, Mining and Energy Union for the applicants.

Mr Allen with Mr Longland for Pacific Coal Pty Ltd.

Hearing details:



November 11.



February 8 to 11.


February 15 to 19.

March 24 to 26.

April 14 to 16.

July 1 to 2 and 5 to 9.

September 6 to 10.

November 15 to 19 and 29 to 30.

December 1 to 2.

Decision Summary


Termination of employment - unfair dismissal - redundancy procedural fairness - contract of employment - sixteen matters joined involving coal miners terminated between August and October 1998 from Blair Athol mine - all members of CFMEU who had not signed AWA's - preliminary issue - after hearings and written submissions concluded correspondence received from CFMEU raising new issues following High Court decision in Re Pacific Coal P/L & ors [2000] HCA 34 - applicants inferred this decision supported their proposition that "reduction of hands" clause as existed in award at time of entering into contracts of employment was incorporated in individual's contracts - respondent submitted applicants' letters of appointment fail to meet test of expressly importing term of award into employment contract, further Pacific Coal did not overturn relevant law as existed at time of original proceedings - Commission considered Pacific Coal and its effect on relevant law including weight to be given to dissenting decisions and concluded that matters should be decided on original submissions as law had not relevantly altered from that enunciated in Byrne & Frew [(1995) 185 CLR 410] - submissions - applicants argued process used to determine list of employees to be terminated was fatally flawed, that Personal Effectiveness Reviews (PER's) were unreasonably used, respondent breached seniority clauses in individual contracts of employment, preference given to AWA employees, and other grounds - also claimed use of blacklists including one listing employees "still to go" - respondents submitted PER's only one factor in Performance Appraisal (PA) leading to terminations and process used was open and fair - extensive evidence brought by both parties - allegations of false evidence - findings - lack of procedural fairness, flaws and inconsistencies in process, insufficient training of those involved in PER and PA processes - bias against applicants including use of blacklists - terminations harsh, unjust and unreasonable - not notified of real reason for termination - not satisfied valid reason for termination of applicants - claim of operational requirements does not stand up to scrutiny - terminations capricious, spiteful and prejudiced - remedy - satisfied reinstatement appropriate - parties to draft orders providing for reinstatement and payment for remuneration lost since terminations, after allowing for redundancy and other termination payments made.

Smith and ors v Pacific Coal P/L

U Nos 20854 - 68 & 20890 of 1998

Print PR902679

Hodder C


9 April 2001

Printed by authority of the Commonwealth Government Printer

<Price code N>

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