[2018] FWCFB 5996  Note: Refer to the Federal Court decision of 27 June 2019 for the result of this matter.
FAIR WORK COMMISSION

DECISION


Fair Work Act 2009

s.156 – 4 yearly review of modern awards

4 yearly review of modern awards – Accident pay – Transitional provisions
(AM2014/190)

BLACK COAL MINING INDUSTRY AWARD 2010

[MA000001]

Coal industry

DEPUTY PRESIDENT KOVACIC
DEPUTY PRESIDENT BULL
COMMISSIONER BISSETT

CANBERRA, 26 SEPTEMBER 2018

4 yearly review of modern awards – Black Coal Mining Industry Award 2010 – Accident pay – Transitional provisions – Reduction of accident pay benefits under the Award – Award to be varied so that the period of accident pay is 52 weeks.

Introduction

[1] This decision concerns an application of the Coal Mining Industry Employer Group (CMIEG) to vary the accident pay provisions of the Black Coal Mining Industry Award 2010 1 (BCMI Award) so that inter alia the period of accident pay is 52 weeks. The Association of Professional Engineers, Scientists and Managers, Australia (APESMA), the Construction, Forestry, Maritime, Mining and Energy Union (CFMMEU – previously the Construction, Forestry, Mining and Energy Union (CFMEU)) and the Australian Manufacturing Workers’ Union (AMWU) (together referred to as the Unions) oppose the application. The Australian Industry Group (AiG) provided a written submission expressing support for the CMIEG’s proposed variation.

[2] The matter was heard on 5 October and 24 November 2017, with the parties given the opportunity to subsequently provide any written submissions they may wish in respect of documents produced by Coal Mines Insurance Pty Limited (CMI) on 23 November 2017 in accordance with an order made by the Commission on 21 November 2017. At the hearing, Mr Yaseen Shariff of Counsel appeared with permission for the CMIEG, while Mr Ingmar Taylor SC and Mr Oshie Fagir of Counsel appeared with permission for the Unions.

[3] Mr David Gunzburg, Managing Director of DGHR Services which had been engaged by the CMIEG to provide advice and assistance in relation to the 4 yearly review of modern awards, gave evidence on behalf of CMIEG, while Associate Professor Keith Adam appeared as an expert witness on behalf of the CMIEG.
[4] For the Unions, witness statements were provided by:

  Mr Andrew Vickers, General Secretary of the Mining and Energy Division of the then CFMEU and a Vice President of the then CFMEU 2;

  Mr David Simm, and Industry Safety and Health Representative for the Northern District Coal Fields in NSW 3; and

  Ms Catherine Bolger, Director of the Collieries Staff Division of APSEMA 4.

[5] None of the Unions’ witnesses were required for cross examination.

[6] For the reasons outlined below we have decided to vary the BCMI Award to reduce the period of accident pay from 78 to 52 weeks and to reduce the period of accident pay paid at the employee’s “classification rate” from 39 to 13 weeks. We do not intend to vary the basis on which the first 39 weeks of accident pay is paid. The variations will only apply to injuries which occur on or after the date on which the variation commences operation.

Background

[7] While the background to this matter is set out in some detail in the decision issued on 17 October 2016 by a differently constituted Full Bench 5 (the October 2016 Decision) some key aspects are worth repeating here to provide context.

[8] In 2013 the then CFMEU made an application to the Fair Work Commission (the Commission) seeking removal of the transitional provision included in the accident pay provision of the BCMI Award. The application was not made in connection with the 4 yearly review of modern awards (the Review). The CMIEG was one of a number of parties to oppose the application.

[9] The application was subsequently heard by a Full Bench at the same time as it dealt with a series of applications made by the Australian Council of Trade Unions (ACTU) seeking the removal of model transitional provisions dealing with accident pay, district allowances and redundancy from various awards, as part of the Review. The CMIEG did not appear at the hearings regarding the ACTU’s applications or at any of the programming conferences held prior to those hearings. The CMIEG did however lodge written submissions which supported the submissions filed by the AiG and the deletion of clause 18.8 Accident Pay of the BCMI Award. The CMIEG also submitted that whatever is decided for modern awards generally in relation to transitional issues should also apply to the Award.

[10] In a decision handed down on 31 October 2014 6 (the October 2014 Decision) the Full Bench said:

[1] The matters before the Full Bench concern transitional provisions relating to accident pay, district allowances and redundancy which were inserted into most modern awards by the Award Modernisation Full Bench in the Award Modernisation Decision 2008 [2008] AIRCFB 1000. The transitional provisions were expressed to operate for a period until 31 December 2014 (the sunset provision), during which time the parties would have the opportunity to give consideration to the future award regulation of those matters.

[2] As part of the four yearly review of awards, a background paper was prepared and distributed to parties and a series of conferences were convened by the President of the Fair Work Commission (the Commission) regarding the Transitional Provisions Common Issues. Several parties made applications in relation to the transitional provisions in awards. Applications were made by the Australian Council of Trade Unions (ACTU) to delete the sunset provision in the model transitional provisions which were inserted into most modern awards relating to accident pay and district allowances. The Construction Forestry Mining and Energy Union, Mining and Energy Division (CFMEU) applied to delete the sunset provision in the non-model accident pay provision which was inserted into the Black Coal Mining Industry Award 2010. The Australian Industry Group (AiG) applied to delete the transitional provisions relating to accident pay, district allowances applying in Western Australia and the Northern Territory, and redundancy from all applicable awards.

[3] A timetable was established for the filing of submissions and evidence in relation to the Transitional Provisions Common Issues. Written outlines of submissions together with evidence and other material were filed by interested parties, mainly in September 2014, and on 29 to 31 October 2014 the Full Bench heard submissions from the parties.

[4] Given the operative periods for the transitional provisions in modern awards, we consider that it is appropriate for the Full Bench to announce our decision, at least in relation to some of the matters before us, as early as possible.

[5] We have decided not to grant the ACTU application to delete the sunset provisions in the transitional Accident Pay and District Allowance provisions in modern awards. We do not consider that the case has been made out for the continuation of those transitional provisions having regard to the basis on which they were inserted by the Award Modernisation Full Bench in 2008 and to the submissions and material presented in the proceedings before us.

[6] In particular we note that no party has sought the inclusion in modern awards of a national standard on accident pay to apply to all award covered employees, as was anticipated by the Award Modernisation Decision 2008. We also note that no substantive case has been advanced such that the allowances applying in Western Australia and the Northern Territory “should be a permanent feature of the awards and, if so, the basis for their fixation and adjustment.” We also refer to the requirement that the Commission have regard, in considering the ACTU application, to the modern awards objective in section 134 and the requirements of sections 139 and 154 of the Fair Work Act 2009.

[7] In relation to the CFMEU application regarding the Black Coal Mining Industry Award 2010, we have decided to delete clause 18.8 of that Award with effect from 31 December 2014. In this regard, we consider that the accident pay provision in the Award provides a clear national standard for the particular industry as described in the Award Modernisation Decision 2008.

[8] In relation to the AiG application to delete transitional arrangements relating to redundancy in modern awards, we have decided to vary the relevant awards with effect from 1 January 2015. In this regard, we note that the transitional redundancy provisions will by their terms cease to operate on 31 December 2014 and that no party has opposed the removal of these provisions from awards.

[9] We will publish the reasons for this decision, and our decision on the other applications relating to the Transitional Provisions Common Issues which were dealt with in the proceedings, in due course.”  7(Endnotes omitted, underlining added)

[11] A Determination varying the BCMI Award to delete the transitional provision relating to accident pay was made on 19 December 2014 8.

[12] On 11 February 2015 the Full Bench published its reasons 9 (the February 2015 Decision) for its decision of 31 October 2014. In relation to the BCMI Award, the Full Bench said:

The Black Coal Mining Industry Award 2010

[65] The CFMEU sought the deletion of the sunset provision (clause 18.8) from the accident pay clause in the Black Coal Award.

[68] In support of its application, the CFMEU tendered a comprehensive statement by Mr Andrew Vickers, the General Secretary of the Mining and Energy Division of the CFMEU. The statement provided a detailed explanation of the history of accident pay provisions in the coal mining industry. It was said that accident pay has a long and largely uncontroversial history as an award provision in the coal mining industry and that the key decisions of industrial tribunals introducing or enhancing accident pay standards in the industry have had regard to the special characteristics of the industry and, in particular, its inherent safety hazards and associated high risk of injury to employees.

[69] It was submitted by the CFMEU that the accident pay provision in the Black Coal Award should be continued having regard to the long history of the provision and its characteristics. It was said that the accident pay clause has largely existed in its current form since 1980. It is simply drafted and easy to understand and is well understood by employees and employers in the coal mining industry. It was submitted that the clause is a necessary part of a fair and relevant minimum safety net of terms and conditions for workers in the coal mining industry, having regard to the matters referred to in s.134 of the Act. It does not offend s.154 as the accident pay entitlement under the award is uniform and not subject to inter-State differentials. It was said that it applies equally to every employee and employer covered by the award, regardless of the State or Territory in which the employer and employee are located.

[70] The CFMEU application was opposed by some employer groups. In its written submissions, the ACCI recognised that the Black Coal Award contains a substantive clause dealing with accident pay which operates in its own right without reference to award-based transitional instruments but which “curiously” contains a transitional end date of 31 December 2014. It was also submitted that the clause stands apart from the model transitional accident pay clause in other awards and does not suffer the “frailties” of s.139(2) or s.154 of the Act. The ACCI did not consent or oppose the variation sought by the CFMEU. The Ai Group submitted that the accident pay clause in the Black Coal Award falls foul of s.154(1)(a) of the Act because the entitlement will fluctuate based on the level of payments under the relevant workers’ compensation schemes. It was said that to the extent that these schemes are State-based the provisions will have force either within or referable to State boundaries and in that sense will contravene s.154 of the Act. The Coal Mining Industry Employer Group supported the submissions of the Ai Group.

[71] As stated in our decision, we consider that the accident pay provision in the Black Coal Award provides a clear national standard for the particular industry as described in the Award Modernisation Decision 2008. In this regard, there was a significant amount of material presented by the CFMEU in the proceedings regarding the history and application of the provision and relevant decisions of industrial tribunals. The application of the provision is understood in the industry and does not depend on reference to other industrial instruments. The provision does not in our view include State-based terms or conditions of employment contrary to s.154 of the Act. As stated above, we do not consider that the fact that the provision may operate in the context of different State workers’ compensation schemes, and that the level of make-up payments may therefore vary for workers in different States, would of itself lead to the conclusion that the provision contravenes s.154.

[72] For these reasons, we decided to remove the sunset provision in clause 18 of the Black Coal Award.” (Endnotes omitted, underlining added)

[13] In subsequent developments, on 18 August 2015 the Full Bench handed down its decision 10 (the August 2015 Decision) concerning the various union applications to insert accident pay and/or district allowance provisions into a number of awards. In the absence of any further application(s) relating to the BCMI Award, the Award was not considered in the proceedings which lead to that decision. In that decision the Full Bench said:

[211] In general we consider that the safety net accident pay entitlement should only apply for a period of 26 weeks from the time of incapacity for work due to injury or illness. This is the period of accident pay entitlement under many of the pre-reform instruments to which we have been referred. We consider that this is the appropriate period to be included as part of the minimum safety net in the awards unless there are special circumstances relating to particular awards which warrant a departure from this standard. Such an entitlement will provide support for low paid and award reliant employees at least in the initial period of absence from work due to injury. It will also limit the cost impact of providing a generally applicable accident pay entitlement under the relevant awards and provide scope for collective bargaining to improve upon the minimum entitlement.

[212] We recognise that there are special circumstances relating to the awards in the first category listed earlier in this decision. The pre-reform instruments in these industries provided a generally applicable accident pay entitlement of 39, 52 or 104 weeks. The accident pay provisions in those awards provided what might be considered to be a clear national standard for the particular industries as described in the Award Modernisation Decision 2008. For similar reasons as were given in relation to the Black Coal Mining Industry Award 2010 we have decided that the previous accident pay entitlements in these award areas should be maintained as part of the minimum safety net. However, having regard to the evidence and submissions in the present proceedings, and given the purpose of modern awards in setting minimum terms and conditions for employees in particular industries or occupations consistent with the statutory objectives, we do not consider that the accident pay entitlement in any of the awards should exceed 52 weeks. We consider that there is a difference in inserting such provisions in awards by arbitral determination at this time and in the context of the present proceedings and a decision to maintain provisions which were still in operation in an award. We do not consider that it is necessary for the minimum award safety net to provide for a period beyond 52 weeks. In so deciding, we note that the evidence presented suggests that there is considerable scope in some of the industries for the safety net entitlement to be supplemented through collective bargaining.” 11 (References omitted, underlining added)

The Statutory framework

[14] The Act provides that the Commission must conduct a 4 yearly review of modern awards (s.156(1)). Section 156(2) deals with what has to be done in a Review:

“(2) In a 4 yearly review of modern awards, the FWC:

(a) must review all modern awards; and

(b) may make:

(i) one or more determinations varying modern awards; and

(ii) one or more modern awards; and

(iii) one or more determinations revoking modern awards; and

(c) must not review, or make a determination to vary, a default fund term of a modern award.

Note 1: Special criteria apply to changing coverage of modern awards or revoking modern awards (see sections 163 and 164).

Note 2: For reviews of default fund terms of modern awards, see Division 4A.”

[15] Subsections 156(3) and (4) deal with the variation of modern award minimum wages in a Review and are not relevant for present purposes.

[16] Section 156(5) provides that in a Review each modern award is reviewed in its own right. However, this does not prevent the Commission from reviewing two or more modern awards at the same time.
[17] The general provisions relating to the performance of the Commission’s functions apply to the Review. Sections 577 and 578 are particularly relevant in this regard. In conducting the Review the Commission is able to exercise its usual procedural powers, contained in Division 3 of Part 5-1 of the Act. Importantly, the Commission may inform itself in relation to the Review in such manner as it considers appropriate (s.590).

[18] The modern awards objective is central to the Review. The modern awards objective applies to the performance or exercise of the Commission’s “modern award powers”, which are defined to include the Commission’s functions or powers under Part 2-3 of the Act. The Review function in s.156 is in Part 2-3 of the Act and so will involve the performance or exercise of the Commission’s “modern award powers”. It follows that the modern awards objective applies to the Review.

[19] The modern awards objective is set out in s.134 of the Act, as follows:

134 The modern awards objective

What is the modern awards objective?

(1) The FWC must ensure that modern awards, together with the National Employment Standards, provide a fair and relevant minimum safety net of terms and conditions, taking into account:

(a) relative living standards and the needs of the low paid; and

(b) the need to encourage collective bargaining; and

(c) the need to promote social inclusion through increased workforce participation; and

(d) the need to promote flexible modern work practices and the efficient and productive performance of work; and

(da) the need to provide additional remuneration for:

(i) employees working overtime; or

(ii) employees working unsocial, irregular or unpredictable hours; or

(iii) employees working on weekends or public holidays; or

(iv) employees working shifts; and

(e) the principle of equal remuneration for work of equal or comparable value; and

(f) the likely impact of any exercise of modern award powers on business, including on productivity, employment costs and the regulatory burden; and

(g) the need to ensure a simple, easy to understand, stable and sustainable modern award system for Australia that avoids unnecessary overlap of modern awards; and

(h) the likely impact of any exercise of modern award powers on employment growth, inflation and the sustainability, performance and competitiveness of the national economy.

This is the modern awards objective.

When does the modern awards objective apply?

(2) The modern awards objective applies to the performance or exercise of the FWC’s modern award powers, which are:

(a) the FWC’s functions or powers under this Part; and

(b) the FWC’s functions or powers under Part 2–6, so far as they relate to modern award minimum wages.

Note: The FWC must also take into account the objects of this Act and any other applicable provisions. For example, if the FWC is setting, varying or revoking modern award minimum wages, the minimum wages objective also applies (see section 284).”

[20] The modern awards objective is directed at ensuring that modern awards, together with the National Employment Standards (NES), provide a “fair and relevant minimum safety net of terms and conditions” taking into account the particular considerations identified in ss.134(1)(a) to (h). The objective is very broadly expressed. 12 The obligation to take into account the matters set out in ss.134(1)(a) to (h) means that each of these matters must be treated as a matter of significance in the decision-making process.13

[21] No particular primacy is attached to any of the s.134 considerations and not all of the matters identified will necessarily be relevant to a particular proposal to vary a modern award.

[22] There is a degree of tension between some s.134 considerations. The Commission’s task is to balance the various considerations and ensure that modern awards, together with the NES, provide a fair and relevant minimum safety net of terms and conditions.

[23] The modern awards objective requires the Commission to take into account, among other things, the need to ensure a “stable” modern award system [s.134(1)(g)]. The need for a “stable” modern award system supports the proposition that a party seeking to vary a modern award in the context of the Review must advance a merit argument in support of the proposed variation 14. While some award changes are axiomatic others require a merit argument. The extent of the merit argument required will depend on the variation sought. As the Full Bench observed in the 4 Yearly Review of Modern Awards: Preliminary Jurisdictional Issues decision (the Preliminary Issues Decision):

“Some proposed changes may be self evident and can be determined with little formality. However, where a significant change is proposed it must be supported by a submission which addresses the relevant legislative provisions and be accompanied by probative evidence properly directed to demonstrating the facts supporting the proposed variation.” 15

[24] In the Review the Commission will proceed on the basis that prima facie the modern award being reviewed achieved the modern awards objective at the time that it was made. 16 The proponent of a variation to a modern award must demonstrate that if the modern award is varied in the manner proposed then it would only include terms to the extent necessary to achieve the modern awards objective [see s.138]. What is “necessary” in a particular case is a value judgment based on an assessment of the s.134 considerations having regard to the submissions and evidence directed to those considerations.17

[25] The Full Bench in the 4 Yearly Review of Modern Awards – Penalty Rates Decision (the Penalty Rates Decision18 made it clear that it was not necessary, in order to justify the variation of a modern award, that a “material change in circumstances” since the making of the modern award(s) under review be demonstrated.19

[26] In performing functions and exercising powers under a part of the Act (including Part 2-3 – Modern Awards) the Commission must take into account the objects of the Act and any particular objects of the relevant part [see s.578(a)]. The object of Part 2-3 is expressed in s.134 (the modern awards objective) to which we have already referred. The object of the Act is set out in s.3 as follows:

“3 Object of this Act

The object of this Act is to provide a balanced framework for cooperative and productive workplace relations that promotes national economic prosperity and social inclusion for all Australians by:

(a) providing workplace relations laws that are fair to working Australians, are flexible for businesses, promote productivity and economic growth for Australia’s future economic prosperity and take into account Australia’s international labour obligations; and

(b) ensuring a guaranteed safety net of fair, relevant and enforceable minimum terms and conditions through the National Employment Standards, modern awards and national minimum wage orders; and

(c) ensuring that the guaranteed safety net of fair, relevant and enforceable minimum wages and conditions can no longer be undermined by the making of statutory individual employment agreements of any kind given that such agreements can never be part of a fair workplace relations system; and

(d) assisting employees to balance their work and family responsibilities by providing for flexible working arrangements; and

(e) enabling fairness and representation at work and the prevention of discrimination by recognising the right to freedom of association and the right to be represented, protecting against unfair treatment and discrimination, providing accessible and effective procedures to resolve grievances and disputes and providing effective compliance mechanisms; and

(f) achieving productivity and fairness through an emphasis on enterprise-level collective bargaining underpinned by simple good faith bargaining obligations and clear rules governing industrial action; and

(g) acknowledging the special circumstances of small and medium-sized businesses.”

[27] Finally, we note that the Full Bench in the Penalty Rates Decision 20 summarised the task of the Commission in the conduct of the 4 Yearly Review as follows:

“1. The Commission’s task in the Review is to determine whether a particular modern award achieves the modern awards objective. If a modern award is not achieving the modern awards objective then it is to be varied such that it only includes terms that are ‘necessary to achieve the modern awards objective’ (s.138). In such circumstances regard may be had to the terms of any proposed variation, but the focal point of the Commission’s consideration is upon the terms of the modern award, as varied.

2. Variations to modern awards must be justified on their merits. The extent of the merit argument required will depend on the circumstances. Some proposed changes are obvious as a matter of industrial merit and in such circumstances it is unnecessary to advance probative evidence in support of the proposed variation. Significant changes where merit is reasonably contestable should be supported by an analysis of the relevant legislative provisions and, where feasible, probative evidence.

3. In conducting the Review it is appropriate that the Commission take into account previous decisions relevant to any contested issue. For example, the Commission will proceed on the basis that prima facie the modern award being reviewed achieved the modern awards objective at the time it was made. The particular context in which those decisions were made will also need to be considered.

4. The particular context may be a cogent reason for not following a previous Full Bench decision, for example:

  the legislative context which pertained at that time may be materially different from the FW Act;

  the extent to which the relevant issue was contested and, in particular, the extent of the evidence and submissions put in the previous proceeding will bear on the weight to be accorded to the previous decision; or

  the extent of the previous Full Bench’s consideration of the contested issue. The absence of detailed reasons in a previous decision may be a factor in considering the weight to be accorded to the decision.” 21 (Endnotes omitted)

[28] In Shop, Distributive and Allied Employees Association v The Australian Industry Group 22 a Full Court of the Federal Court of Australia considered applications made by the Shop, Distributive and Allied Employees Association and United Voice for judicial review of the Full Bench’s Penalty Rates Decision.23 In rejecting the applicants’ case the Full Court stated among other things:

“[38] The meaning of s 156(2) is clear. The FWC must review all modern awards under s 156(2)(a). In that context “review” takes its ordinary and natural meaning of “survey, inspect, re-examine or look back upon”. Consequential upon a review the FWC may exercise the powers in s 156(2)(b). In performing both functions the FWC must apply the modern awards objective as provided for in s 134(2)(a).” 24

[29] The Full Court in its decision also referred to the decision in Construction, Forestry, Mining and Energy Union v Anglo American Metallurgical Coal Pty Ltd 25as follows:

“[45] As explained in Construction, Forestry, Mining and Energy Union v Anglo American Metallurgical Coal Pty Ltd … at [28]–[29] by Allsop CJ, North and O’Callaghan JJ:

[28] The terms of s 156(2)(a) require the Commission to review all modern awards every four years. That is the task upon which the Commission was engaged. The statutory task is, in this context, not limited to focusing upon any posited variation as necessary to achieve the modern awards objective, as it is under s 157(1)(a). Rather, it is a review of the modern award as a whole. The review is at large, to ensure that the modern awards objective is being met: that the award, together with the National Employment Standards, provides a fair and relevant minimum safety net of terms and conditions. This is to be achieved by s 138 — terms may and must be included only to the extent necessary to achieve such an objective.

[29] Viewing the statutory task in this way reveals that it is not necessary for the Commission to conclude that the award, or a term of it as it currently stands, does not meet the modern award objective. Rather, it is necessary for the Commission to review the award and, by reference to the matters in s 134(1) and any other consideration consistent with the purpose of the objective, come to an evaluative judgment about the objective and what terms should be included only to the extent necessary to achieve the objective of a fair and relevant minimum safety net.” (Underlining added, citation omitted)

[30] We respectfully agree with these approaches and follow them in this case.

The BCMI Award provision regarding Accident pay

[31] Clause 18 of the BCMI Award deals with accident pay as follows:

18. Accident pay

An employee in receipt of weekly payments under the provisions of applicable workers compensation legislation will be entitled to receive accident pay from the employer subject to the following conditions and limitations:

18.1 Payment to be made during incapacity

An employer must pay, or cause to be paid, accident pay during the incapacity of the employee, within the meaning of the applicable workers compensation legislation:

(a) until such incapacity ceases; or

(b) until the expiration of a period of 78 weeks from the date of injury;

whichever event will first occur, even if the employer terminates the employee’s employment within the period.

18.2 Meaning of accident pay

For the purposes of this clause accident pay means:

(a) For the initial period of 39 weeks from the date of injury, a weekly payment representing the difference between the weekly amount of compensation paid to the employee under the applicable workers compensation legislation and the weekly amount that would have been received by virtue of this award had the employee been on paid personal leave at the date of the injury (provided the latter amount is greater than the former amount).

(b) For a further period of 39 weeks a weekly payment representing the difference between the weekly amount of compensation paid to the employee under the applicable workers compensation legislation and the rate prescribed from time to time for the classification of the incapacitated employee at the date of the injury (provided the latter amount is greater than the former amount).

18.3 Pro rata payments

In respect of incapacity for part of a week the amount payable to the employee as accident pay will be a direct pro rata.

18.4 When not entitled to payment

An employee will not be entitled to any payment under this clause in respect of any period of paid annual leave or long service leave, or for any paid public holiday.

18.5 Redemptions

In the event that an employee receives a lump sum in redemption of weekly payments under the applicable workers compensation legislation, the liability of the employer to pay accident pay as herein provided will cease from the date of such redemption.

18.6 Damages independent of the Acts

Where the employee recovers damages from the employer or from a third party in respect of the said injury independently of the applicable workers compensation legislation, such employee will be liable to repay to the employer the amount of accident pay which the employer has paid under this clause and the employee will not be entitled to any further accident pay thereafter.

18.7 Calculation of period

The 78 week period commences from the first day of incapacity for work, which may be subsequent to the date of injury. Intermittent absences arising from the one injury are to be cumulative in the assessment of the 78 week limitation.”

The CMIEG’s case

[32] The CMIEG in its submissions provided an overview of the relevant statutory provisions governing the Review and also referred to the parameters as to the scope of the Review as set out in the 4 Yearly Review of Modern Awards: Preliminary Jurisdictional Issues Decision 26.

[33] The CMIEG in its submissions also provided a detailed overview of the genesis of accident pay provisions in industrial awards in general and in coal industry awards specifically. With regard to the latter, key aspects of the CMIEG’s submissions included:

  accident pay was extended to the black coal industry in NSW in February 1973 as a result of a decision 27 by the Coal Industry Tribunal (CIT) to insert a clause providing 26 weeks accident pay into the Coal Mining Industry (Miners) Award 1973;

  clauses in almost identical terms were subsequently inserted into a number of Queensland coal mining awards by the CIT in June 1973 28;

  in its January 1980 decision 29 the CIT considered a claim by unions to remove any time limit on the requirement to pay accident pay and determined to issue an order extending accident pay provisions. The CIT in that decision set out guidelines on which its order would be made and gave the parties an opportunity to confer having regard to those guidelines;

  in a decision issued in February 1980 30 the CIT increased the maximum period of accident pay to 78 weeks, with the first 39 weeks paid at the “paid sick leave rate” and the remaining 39 weeks paid at the employee’s “classification rate”. The CMIEG contended that the CIT decision provided no rationale for the 78 week limit; and

  the May 2005 decision of Deputy President Grayson in Coal Industry (Accident Pay) Interim Award 2004 31 (the 2005 Decision) which reiterated various principles established by the CIT. Among other things, the CMIEG cited the following passage from the 2005 Decision:

“53 As to the general standard of accident pay beyond the coal mining industry, I agree with Mr Slevin that it is no response to the case presented by the CFMEU to point, as the respondents have done, to employees in other industries who may receive less and in so doing, to assert unfairness as a consequence of granting the CFMEU application. The CFMEU application is brought on the basis that in the coal mining industry there is a higher standard and that higher standard is not being applied uniformly due to changing employment relationships. The issue of standards outside the coal mining industry does not arise unless the respondents seek a finding that the industry standard is too generous. The respondents have not put their case on that basis. The evidence of Mr Turner was that it was his view that the provision is too generous but that the members of the Minerals Council had not asked the Council to raise with the union that accident pay is too generous.” 32 (Emphasis as per CMIEG submission)

[34] The CMIEG also contended that the accident pay provision of the BCMI Award did not meet the modern awards objective for a number of reasons including that:

  the accident pay entitlements contained in the BCMI Award are more generous than those contained in any other modern award;

  the evidence discloses inter alia that:

  in light of the above evidence the alleged rationale underpinning the January 1980 CIT decision no longer prevails;

  the issue of whether clause 18 of the BCMI Award is a “fair and relevant minimum safety net” was not considered as part of the award modernisation process, adding that the provision among other things provides entitlements that erect an overly high threshold which discourages any genuine bargaining and productivity trade-offs; and

  its proposed variation provides a benefit which is consistent with the purpose of accident pay provisions.

[35] With regard to the modern awards objective, the CMIEG posited that its proposed variation satisfied the modern awards objective as:

  it would encourage collective bargaining by imposing a more relevant safety net as a platform for enterprise bargaining [s.134(1)(b)];

  the imposition of a more relevant safety net would encourage genuine collective bargaining and associated productivity trade-offs [s.134(1)(c)];

  it would bring the BCMI Award closer in line with other modern awards for similar industries [s.134(1)(e)];

  it would impact on productivity, employment costs and the regulatory burden and employment growth by encouraging collective bargaining and productivity trade-offs [ss.134(1)(f) and (h)];

  it would ensure a simple, easy to understand, stable and sustainable modern award system by bringing the BCMI Award closer in line with other modern awards for similar industries [s.134(1)(g)]; and

  ss.134(1)(a) and (d) do not arise in this case.

[36] Key aspects of the CMIEG’s submissions in reply are set out below.

  With regard to the Unions’ contention that its application should be refused because the matter had been recently determined by a different Full Bench, the CMIEG submitted inter alia that to the extent there was any doubt that the Commission had not determined the CMIEG’s application or not examined the merits of the accident pay provision in the BCMI Award it was quelled by the 2016 Decision which held as follows:

[24] The Full Bench acknowledged in the August 2015 decision the difference between its decision to insert accident pay provisions into a number of awards and its earlier decision to effectively maintain the existing accident pay provision in the BCMI Award (see underlined text in the above extract from the August 2015 decision). However, we note that:

  the Full Bench’s consideration of the accident pay clause in the BCMI Award was limited to the deletion of the transitional provision, i.e. the question of whether the 78 week maximum period continued to be appropriate was not canvassed by any party;

  s.156(2)(b)(i) of the Act provides that in a 4 yearly review of modern awards the Commission may make “one or more determinations varying modern awards”; and

  the 4 yearly review of modern awards is still ongoing.

[25] In this instance, the employers in the coal industry wish to be heard in relation to a matter that has not been considered by the Commission in relation to the BCMI Award. We consider that the Commission has jurisdiction to deal with this question as part of the 4 yearly review as its powers are conferred in broad terms and particularly in circumstances where the 4 yearly review is still ongoing.

[26] Further, we consider that it is appropriate to hear from the parties to ascertain whether changes of the type sought should be made. Such a course will allow the parties to advance their respective provisions and allow the Commission to consider the matter as part of the 4 yearly review. Such a course is consistent with the Commission’s statutory responsibilities and does not involve any prejudice to any party.” 33 (Underlining as per CMIEG submission)

  In respect of the Unions’ contention that its case was based upon a single argument, i.e. that the accident pay clause in the BCMI Award is inconsistent with other modern awards, the CMIEG submitted that its central thesis is that the clause is not a minimum standard or a fair and relevant minimum safety net. The CMIEG further submitted that when the evidence concerning the frequency of injuries and the periods of absence of injured workers in the black coal mining industry and in other industries is considered there is no justification for the retention of an overly generous provision, reiterating that the provision was not a fair and relevant minimum safety net.

  As to the Unions’ contention that the proposed variation would impact on employees via a loss of income, loss of protection from dismissal and risk to overall safety outcomes, the CMIEG responded that each of these contentions either had no basis or was overstated. Among other things the CMIEG provided alternative tables setting out the financial impact for specified mineworkers. The alternative tables were predicated on the assumption that the worker has a dependent spouse and two children (as opposed to the Unions’ estimates which, according to the CMIEG, were based on a single person with no dependent children). Specifically, the CMIEG estimated the difference between the current Award provisions and its proposed clause as being almost $12,400 for a NSW mineworker working a 5 day, Monday to Friday, 8 hour day roster and paid an annualised salary and just over $20,900 for a NSW mineworker working a 7 day, 12 hour day/night roster and paid an annualised salary. For a Queensland mineworker working a standard Monday to Friday roster the difference was estimated as just over $6,850, whilst for a mineworker working a 7-day roster in Queensland the difference was estimated as just over $8,850.

  Finally, in respect of the Unions’ submission that the black coal mining industry continues to have special features which distinguish it from other industries, the CMIEG expressed the view that the Unions’ contentions in this regard did not withstand scrutiny. The CMIEG also highlighted inter alia that the Unions’ had adduced no evidence to support their assertion that there are particular injury risks in the black coal mining industry. The CMIEG further contended that absent any evidence of the proportion of employees who leave the industry by way of injury in the period between 52 and 78 weeks the Commission could not draw any safe or reliable inferences in respect of the Unions’ career industry argument.

[37] In its oral submissions the CMIEG reiterated aspects of its written submissions. The CMIEG also canvassed the statutory task confronting the Commission, contending that it would be an error to approach the review process on the basis that it needed to show that a variation was necessary to meet the modern awards objective or that there has been a material change in circumstances. The CMIEG described that task for the Commission as being to ensure that the Award relevantly meets the modern awards objective of being a fair and relevant minimum safety net.

[38] The CMIEG described its application as having two parts, the first seeking to reduce the accident pay entitlement from 78 to 52 weeks in line with the standard that had been established in respect of accident pay and the second to reduce the initial 39 weeks payment at the paid personal leave rate to 26 weeks, with the remaining current 39 weeks also reduced to 26 weeks and as is currently the case paid at the lower “classification” rate. With regard to the August 2015 Decision, the CMIEG drew three propositions from the Decision – first, a statement that the accident pay standard in modern awards would be 26 weeks; second, in special circumstances accident pay can be more than 26 weeks but should not exceed 52 weeks; with the third proposition relating to rates of pay. In respect of the third proposition, drawing on a document setting out extracts of accident pay clauses in modern awards 34, the CMIEG submitted inter alia that the absence of the exclusion of over award payments during the first 39 weeks is more beneficial than the basis on which accident pay is paid under other awards. The CMIEG stated that while it sought to reduce the period of accident pay which attracted the paid personal leave rate from 39 to 26 weeks, it did not otherwise seek to adjust the basis on which that initial period is paid.

[39] Beyond that, the CMIEG provided an overview of the evidence in this case, contending that having regard to that evidence the Commission should be satisfied that there are not any relevant distinguishing features about the black coal mining industry in terms of it being more dangerous relative to other dangerous industries, or that workers in the industry are at more risk of fatalities or having long term injuries than workers in other industries.

[40] Significantly, the CMIEG made it clear in its oral submissions that its intention was for its proposed variation to only operate from the date of the variation forward, so that it would not retrospectively affect the entitlement of an employee who is currently injured and receiving an entitlement 35. The CMIEG, while not urging such an approach, acknowledged that an alternative approach open to the Commission would be to reduce the cap on accident pay from 78 to 52 weeks, but not alter the basis on which the first 39 weeks of accident pay is paid. As to the impact on employees of this alternative approach, the CMIEG submitted that for those employees covered by the Award in Queensland there would be no relative change at all, while in NSW only those employees whose claims exceeded 52 weeks would be affected. This was estimated in the order of 9% in Associate Professor Adam’s report36.

[41] In its response to the Unions’ Supplementary Note filed on 8 December 2017 and dealing with the material produced by CMI on 23 November 2017 (pursuant to an Order issued by the Commission on 21 November 2017), the CMIEG submitted, among other things, that the Unions’ submission concerning the impact of altering an existing entitlement did not have proper regard to accident pay being a contingent entitlement and the CMIEG’s intention that any variation only apply prospectively. As to the Unions’ submission regarding the impact of the proposed variation on employees, the CMIEG posited that employees in Queensland will not have a reduction in entitlements in the future and there is no impact on them post-26 weeks while in NSW the loss in future when referring to the average worker (as cited in the CMIEG’s submissions in reply) will be moderate to slight. The CMIEG also pointed to data that it had presented which showed that 40% of injured workers in NSW would be affected by its proposed variation, adding that to the extent the experience in Queensland is similar to that in NSW then 26% of injured workers would be affected. Beyond that the CMIEG responded that any implication that Mr Gunzburg presented the CMI data in an inaccurate way or that it was somehow misleading should be rejected and noted that the Unions had sought to exclude the CMI data for the period 1994 to 2004 without any proper basis for its exclusion being established.

[42] Mr Gunzburg provided three witness statements 37 and also updated a number of figures38 contained in his first and second witness statements to take account of figures provided by CMI (in accordance with an Order to produce made by the Commission on 9 November 2017). Key aspects of Mr Gunzburg’s evidence included that:

  CMI is operated by Coal Services which is jointly owned in equal shares by the NSW Minerals Council and the CFMMEU and is one of the “approved companies” under the Coal Industry Act 2001 (NSW);

  CMI is funded by past and current premiums from employers in the coal industry and earnings from investment of those premiums with those employers required to make up any deficit in funds by the Coal Industry Act 2001 (NSW);

  CMI calculates the overall premium rate for workers’ compensation insurance mainly based on the expected future costs of insured accidents predicted to occur in that year against the expected earnings on premiums charged in that year but not utilised until some time in the future;

  the expected future costs of insured accidents will be impacted by both the level of accident pay payments made to employees and by the length of time that an employee is in receipt of workers’ compensation and accident pay payments;

  to the extent that either of these cost factors are reduced, then all things being equal the level of premium that needs to be charged will be reduced, with Mr Gunzburg later disagreeing with the assertion that there was no basis for thinking that the CMIEG’s proposed variation would in fact lower workers’ compensation premiums 39;

  as a result, it is very difficult to determine the exact impact on premiums as a result of the CMIEG’s proposed changes to the accident pay provision of the BCMI Award;

  the Coal Services publication Australian Black Coal Mining Summary 2011-12 states that “At 30 June 2012, there were 124 black coal mines operating in Australia, 81 open cut mines and 43 underground mines (including 29 longwall operations) 40;

  the 14 company groups which form the CMIEG directly employ or engage via long term contracts some 35,000 persons across 74 mines, though Mr Gunzburg was unable to identify how many employees those company groups directly employ 41;

  Australian Bureau of Statistics (ABS) data 42 showed that in May 2017 there were approximately 48,000 persons employed in the broader coal mining industry;

  due to the definition of “coal mining industry” relied upon by the ABS this figure includes persons not employed in the “black coal mining industry” and was also likely to include employees of contractors and other persons working in the industry who may not be covered by the BCMI Award;

  like all industries, underground coal mining has unique safety issues that are not found at other workplaces 43;

  the decision to reduce from 39 to 26 weeks the “paid sick leave rate” and employee’s “classification rate” period of accident pay flowed as a matter of either commonsense or precedence from the August 2015 Decision which set the maximum period of 52 weeks accident pay 44;

  the bulk of the reduction in the amount of accident pay that injured workers would receive if the CMIEG’s proposed variation was made was caused by the reduction in the period of accident pay paid at the paid personal leave rate from 39 to 26 weeks 45;

  the potential for the CMIEG’s proposed variation to impact on workers’ compensation premiums only applied in respect of the small percentage of claims that are made by workers who are off work for more than 26 weeks 46;

  he accepted that the Coal Services Annual Report 2016 47 stated that the complexity or seriousness of claims had increased with this reflected in the number of claims that have been finalised in the first 26 weeks, adding that CMI data showed over a period of time a steady decrease in the length of absence from work48;

  the data provided by CMI 49 indicates that the number of people who claim more than 26 weeks accident pay has been fairly stable since 200550; and

  the impetus for the application to vary the BCMI Award was the August 2015 Decision 51.

[43] Copied below are the updated figures mentioned above. The updated figures were tendered by the CMIEG on 24 November 2017 52.

[44] Associate Professor Adam was engaged on behalf of the CMIEG to provide expert opinion concerning the safety performance of Australian coal mines. Associate Professor Adam is a specialist occupational physician and has been involved in health and safety in coal mines, predominantly in Queensland, since 1993. In his report 53 Associate Professor Adam stated among other things that:

  there has been a gradual reduction in work related safety incidents in the industry over the last 40 years or even longer;

  drawing on data produced by CMI, there has been a significant downward trend in the number of claims as a proportion of the workforce from a peak of 63% in 1982/1983 to 5.3% in 2015/2016, adding that this demonstrated trend is consistent with his observations;

  there has been a significant ongoing reduction in lost time injury severity for all coal mines in Queensland, greater in underground mines, adding that this trend is consistent with his observations over the past 20 years;

  drawing on statistical material provided by SWA in 2013-2014, mining overall has a Lost Time Injury Frequency Rate (LTIFR) of 4.6 which is lower that the all industry average of 5.9 and coal mining with a LTIFR of 6.7 ranks behind a number of other industries including transport, postal and warehousing, health care and social assistance, agriculture, forestry and fishing, manufacturing and construction;

  he would conclude that coal mining has only a slightly higher LTIFR than the all industry rate and ranks behind agriculture, forestry and fishing and construction which he would consider to have an equivalent physical demand;

  the high potential incident rate (i.e. an event, or series of events, that causes or has the potential to cause a significant adverse effect on the safety or health of a person) has remained static over the past 5 years; and

  data provided by Coal Services shows that most injured miners in NSW return to work within 3 weeks of their initial injury though there is a long tail of more protracted claims extending up to approximately 52 weeks with an abrupt drop off after that time.

[45] Key aspects of Associate Professor Adam’s oral evidence included that:

  prior to writing his expert report he had not done any specific research or written any papers on the issues of the nature and frequency of work-related safety incidents in the black coal mining industry and changes to the length of time before a worker returns to work after a work-related incident 54;

  he did not accept that his report was in essence a summary of the statistical material provided to him by the CMIEG’s legal representative together with some additional comments as to whether those statistics were consistent or not with his professional experience, adding that such a characterisation of his report understated what he believed to be the case and that he was not just regurgitating the material provided to him but rather using it to illustrate what he had observed first hand 55;

  the figures quoted in his report were consistent with his observations over a significant period of time 56;

  over the last 20 years injury rates have continued to trend downwards whilst fatality figures are “bumping along the bottom” 57;

  as to the duration of claims in the industry in NSW 58, he was not suggesting that there were few, if any, claims in the coal mining industry which result in an employee being off work and making claims for more than 52 weeks, adding that one of the reasons he commented on the abovementioned drop off was that, although he was not able to establish the reason, there may have been some statutory issue or something about the claims or the way that they are counted which resulted in the drop off59 ;

  he accepted that he did not mention the above in his report and acknowledged that perhaps he should have elaborated on the drop off issue 60;

  agreed that Figure 8 of his report indicated that in 2015-2016, 9.4% of all claims in the industry in NSW extended beyond 52 weeks 61; and

  accepted that as a generalisation Item 7 of the material provided by CMI 62 in accordance with an Order to produce issued by the Commission on 8 December 201663 indicated that there had not been a reduction in the average duration of workers compensation payments over the period 1989/1990 to 2015/2016 (excluding the data for 2016/2017 on the basis that it only consisted of 5 months of workers’ compensation payments processed)64.

The AiG case

[46] The AiG provided a written submission indicating its support for the CMIEG’s proposed amendments and its concurrence with the CMIEG’s submissions. In short, the AiG submitted that the CMIEG’s proposed amendments to the BCMI Award represent a “fair and relevant minimum safety net of terms and conditions” whereas the existing accident pay provisions do not.

[47] Beyond that, the AiG submitted that the Commission has recognised that in determining whether an award represents a “fair and relevant minimum safety net of terms and conditions” as per s.134(1) of the Act, that the provisions of the award need to be fair to both employees and employers. Drawing on several decisions 65 the AiG posited that the Commission has decided that various excessively generous provisions in awards are not fair to employers.

The Unions’ case

[48] The Unions opposed the CMIEG’s application on several grounds including that the matter had been recently decided by the Commission and in view of the potential impact on employees.

[49] Drawing on the underlined text in extract from the August 2015 Decision (set out at paragraph [13] above), the Unions submitted that at the same time as determining that a maximum accident pay entitlement of 52 weeks for other awards was appropriate the Full Bench also determined that the BCMI Award should not have such a cap because it considered the Award to be in a different category to the awards before it. The Unions further submitted that it was clear from paragraph [212] of the August 2015 Decision that the underlined text was not a finding intended to apply to the BCMI Award. The Unions also submitted that the Full Bench reached its conclusions “having regard to the evidence and submissions in the present proceedings” 66 and that no new event had occurred post the August 2015 Decision. The Unions contended that for these reasons, or for reasons that included these reasons, the Commission should refuse the CMIEG application.

[50] The Unions posited that the CMIEG’s case relied on the proposition that the accident pay provisions of the BCMI Award should be reduced because they were inconsistent with other modern awards, adding that the CMIEG had not identified any financial, economic, industrial, practical or other imperative for change. The Unions also posited that the CMIEG had not contended that employers were unduly burdened by the current level of benefit.

[51] The Unions also made a number of observations regarding the CMIEG’s case. Those observations included that:

  the proposition that the variation sought should be made because the accident pay provision in the BCMI Award was higher than other awards has no proper basis and does not engage the modern awards objective;

  no evidence had been led by the CMIEG that any employers would be encouraged to collectively bargain if the accident pay standard were reduced, describing the suggestion as nonsensical and hypocritical;

  the CMIEG’s submissions do not identify the consequences of the variation sought nor does the CMIEG attempt to identify the detriment to employees caused by the withdrawal of benefits; and

  the CMIEG did not address the impact of the proposed change on employers, e.g. the CMIEG did not contend that premiums will be reduced, that employers were unable to meet their existing Award obligations or that there is a need for the relief sought.

[52] As to the impact on employees, the Unions estimated the effect of the variation sought. Applying the paid personal leave rate of pay, the Unions estimated that an Undermanager in NSW paid the $3,611 average base weekly salary for that classification would receive just over $50,000 less accident pay under the CMIEG proposed variation, with the bulk of the reduction occurring in weeks 27 to 39. For employees in Queensland, the Unions contended that the proposed variation would eliminate entirely the benefit of the accident pay provision after 26 weeks and again using the above Undermanager average base weekly rate of pay estimated the reduction as just over $11,700. The Unions also pointed out that a further effect of the variation would be to permit employers in NSW to dismiss injured workers sooner, citing s.248 of the Workers’ Compensation Act 1987 (NSW) which prohibits the dismissal of employees during a period that an employee is entitled to accident pay under a Commonwealth industrial instrument. The Unions contended that if protections were to be reduced in this way that a substantial merits case should be mounted.

[53] The Unions also submitted that there was nothing in the Act which required them to demonstrate that the black coal mining industry had exceptional features in order to successfully resist the CMIEG application. Nonetheless the Unions noted a number of special features of the industry, including the particular injury risks associated with the industry, the special regime for the regulation of safety, workers’ compensation and accident pay, the generally high level of income in the industry and the career nature of the industry. In dealing with the special features of the industry the Unions also referred to the 2005 Decision. In particular, the Unions cited the following extract from the Decision to demonstrate what is significant is that the industry has inherent risks and unique work, health and safety and workers’ compensation regimes and that the relative performance of the industry in safety terms and recent improvements in that area are secondary.

“22 In my opinion, the comprehensive empirical evidence given by Ms Heiler on behalf of the CFMEU and by Professor Cliff on behalf of the employers can be taken as evidence going to the inherent risks of injury routinely encountered by coal miners in New South Wales and although there was a substantial amount of forensic energy expended on both sides of the record in testing the various qualitative research opinions of those expert witnesses, it is beyond argument that coal mining is an inherently dangerous occupation requiring careful risk management strategies albeit with greater success in some circumstances than others.

23 It is not to the point, as I am disposed, that the New South Wales coal mining industry compares favourably or unfavourably with other industries in terms of occupational health and safety performance or whether and to what extent, there have been improvements in that regard in the past decade or so. It can be accepted I think for the purpose of the issues to be tried here that the approach taken within the coal mining industry to the compensation of injured workers has historically been and remains unique and that the premise upon which the CFMEU application is essentially based is one of fairness and reasonableness in that workers performing the same work in the same industrial environment are entitled to enjoy the same conditions of employment.” 67

[54] Beyond reiterating aspects of their written submissions, key aspects of the Unions’ oral submissions included that:

  the length of time that workers were off work was a significant factor in the CIT’s February 1980 decision (see paragraph [33] above);

  based on Figure 1 above, had the CMIEG’s proposed variation been in operation for the last 20 years (i.e. the period to which the figure relates) then 40% of injured workers would have had a lower income during the period they were incapacitated;

  the underlined text in the above extract from the February 2015 Decision, while not conclusive, supported a view that the accident pay clause in the BCMI Award had already been considered as part of the Review of modern awards;

  with regard to the August 2015 Decision, there is no principle that one would discern was established in that case;

  while it was not necessary to demonstrate change, the Commission needed to be satisfied that an existing clear national standard is not a standard that meets the modern awards objective and there needs to be a reason for that;

  with regard to s.134(1)(g) of the Act, stability is important such that there needs to be a good reason to take a different approach to the existing approach;

  while not determinative, history is a relevant matter which the Commission can take into account, highlighting that one aspect of particular importance is that this clause has remained unchanged for 37 years and been accepted throughout that period by the industrial parties as being in an appropriate form;

  it had not been explained by the CMIEG why the first 39 weeks of accident pay which is paid at the paid personal leave rate should be reduced to 26 weeks;

  as to the impact on employees of the CMIEG’s variation, based on the Unions’ estimates, the bulk of the impact is in weeks 27 to 39 for workers in NSW while for Queensland it is the whole of the change proposed by the CMIEG, emphasising that under the CMIEG’s proposed variation the worker in NSW in the Unions’ estimates has their income reduced from $3,600 to $408.60 a week in the 27th week with a lesser but still significant change in respect of the workers in Queensland;

  if the Commission did not reduce the first period of accident pay from 39 to 26 weeks there would still be in the order of 30% of workers who would be affected by the reduction in entitlements; and

[55] In the Unions’ Supplementary Note filed on 8 December 2017 dealing with the material produced by CMI on 23 November 2017 the Unions posited that:

  the data summarised at Figures 1 and 2 of Mr Gunzburg’s second witness statement 68 understated the proportion of injured workers who would be affected by the CMIEG’s proposed variation, noting that this occurred for several reasons including that updated data provided by CMI confirmed that there had been underreporting of the length of more recent claims and that the data on which Figure 1 was based showed a dramatic and wholly unexplained drop in the number of claims between 2004 and 2005; and

  about 67% of all those who are injured at work and whose entitlement to accident pay is derived from the Award would have their income reduced by the proposed variation and about 44% of those in NSW would have their income reduced by the CMIEG’s alternative proposal (which would see the first 39 weeks of accident pay paid at the paid personal leave rate and the remaining 13 weeks paid at the employee’s classification rate).

[56] The Unions in their Supplementary Note compared the duration of accident pay in respect of claims made in the calendar years 2013 to 2016 relying on the data provided by CMI in 2016 and 2017, with the effect of the analysis summarised in the following table.

Percentage of claims leading to accident payments for longer than 26 weeks

[57] Mr Vickers in his witness statements 69 provided an overview of his background in the coal mining industry, key characteristics of the industry in Australia, the CIT, the history of the accident pay award provision as it concerns the black coal mining industry, work health and safety in the industry and the benefit provided by accident pay. Among other things, Mr Vickers deposed that:

  the level of accident pay provided for by the BCMI Award is a very valuable entitlement for coal industry employees;

  while most CFMEU members in the coal mining industry are covered by enterprise agreements, the accident pay provision in the BCMI Award serves a vital role in providing a fair safety net of minimum entitlements;

  advice provided by legal firm Slater & Gordon estimated the difference statutory workers’ compensation payments and accident pay entitlements under the BCMI Award as ranging from -$218.90 to -$663.50 per week for an award dependent employee in receipt of district average bonus (South Western District) in NSW, whilst in respect of an award dependent employee in receipt of a bonus equivalent to South Walker Creek in Queensland the range was +$38.54 to -$269.15 per week;

  an analysis of accident pay clauses in 145 enterprise agreements applying to employees of coal mining employees undertaken by Mr Vickers’ industrial research staff indicated that there are three types of accident pay clauses in enterprises agreements in the coal industry. More specifically, the analysis indicated that there are:

[58] Mr Simm deposed inter alia in his witness statement 70 that the coal mining industry had traditionally been regarded as a high priority and unique industry with respect to occupational health and safety. In particular Mr Simm referred to coalmine specific occupational health and safety legislation, specific coalmine workers’ compensation and specific coalmine working conditions such as accident pay. Mr Simm further deposed that occupational health and safety in the coal industry is approached from many directions, adding that removing or diluting any one of them is a detriment to the prevention or treatment of occupational health and safety in the coal industry.

Ms Bolger in her witness statement 71 referred to the 2014 Employment and Remuneration Survey Report72 prepared by APESMA’s Collieries Staff Division which showed that 80.2% of APESMA members have their terms and conditions set by a written common law contract and some 15.5% of Staff are covered by an enterprise agreement. Ms Bolger deposed that a review of employment contracts applicable to Staff and available to APESMA indicates that 73% of the contracts analysed either made no mention of accident pay or did not contain an accident pay entitlement above that of the BCMI Award, with 27% of the contracts analysed that contained an accident pay clause all providing that accident pay is paid as if Staff are at work or on paid sick leave73. Ms Bolger deposed that the lack of enterprise agreement coverage of Staff is the product of a number of factors, foremost being the in-principle opposition of employers to enterprise bargaining. Against that background, Ms Bolger opined that the attitude of employers and therefore the prevalence of enterprise bargaining in respect of Staff was unlikely to be affected in any material degree by the introduction or otherwise of the 52 week cap on accident pay sought by the CMIEG in this case.

Consideration of the issues

[59] We deal firstly with the Unions’ contention that the issue of accident pay in respect of the BCMI Award has already been determined by the Commission. In particular we note that the underlined text in the above extracts of the October 2014 and February 2015 Decisions state that the then CFMEU applied to delete the transitional provision which was inserted in the BCMI Award (see paragraph [2] of the October 2014 Decision and paragraph [65] of the February 2015 Decision). We further note that in those Decisions the Full Bench also stated that it considered “that the accident pay provision in the Award provides a clear national standard for the particular industry as described in the Award Modernisation Decision 2008” (see paragraph [7] of the October 2014 Decision and paragraph [71] of the February 2015 Decision). In the Award Modernisation Decision 2008 74 the Full Bench had the following to say regarding accident pay:

Accident pay

[83] In our statement of 12 September 2008 we raised for consideration whether the Commission has power to include accident pay provisions in modern awards. A number of submissions were made on the point. We accept that accident pay may be characterised as an allowance for the purposes of s.576J(1)(g) and that it is the Australian Government’s intention that the industrial legislation to operate from 1 January 2010 should have an equivalent provision. The question is in what circumstances should modern awards provide for accident pay.

[84] Accident pay entitlements can be found in a number of awards and other instruments. Section 16 of the WR Act does not exclude State workers’ compensation laws: they continue to operate. Accident pay entitlements are therefore governed by State legislation, NAPSAs and federal awards. While there is a general pattern to the entitlements there is a great diversity in the detail of the provisions.

[85] We also note that while accident pay is an allowable matter for the purpose of modern awards, it was not an allowable award matter from 27 March 2006 by force of s.513(1) of the WR Act. Prior to that time, however, it is well known that accident pay provisions were a feature of many federal awards and had been for more than 25 years. And while the Work Choices amendments invalidated accident pay provisions in pre-reform awards, so far as we can ascertain they did not invalidate the accident pay provisions in NAPSAs. This is a further illustration of the complex legal context in which accident pay must be considered.

[86] The first observation to be made is that the effect of accident pay provisions upon employer costs is related not only to the level of the accident pay entitlement but also to the level of benefits provided through the relevant workers compensation scheme. The cost to employers is a function of the amount of pay that must be made up and the duration in weeks of the liability. Because State workers’ compensation laws are not uniform there will usually be differences in the cost of accident pay from State to State. Looking at the employee side of the equation there are equivalent differences, on a State basis, in the value of accident pay as an entitlement.

[87] In light of these considerations we have decided to deal with accident pay on a transitional basis. Our intention is to preserve accident pay arrangements until 31 December 2014. We anticipate that in the period prior to that date an opportunity will arise to consider the formulation of a national standard to apply to all award covered employees. This task will be made considerably easier if uniformity is developed in relation to workers compensation schemes.

[88] Where the accident pay scheme applying in a particular industry is clear we shall include the terms of the scheme in the relevant modern award. Where there are a variety of schemes operating, whether on a State or sectoral basis, in the industry to be covered by a modern award we shall include a generally worded clause which is designed to preserve the operation of each of those schemes until the end of the transition period. The clause will be in the following form: …” 75

[60] The Full Bench in the October 2016 Decision stated as follows:

[24] The Full Bench acknowledged in the August 2015 decision the difference between its decision to insert accident pay provisions into a number of awards and its earlier decision to effectively maintain the existing accident pay provision in the BCMI Award (see underlined text in the above extract from the August 2015 decision). However, we note that:

  the Full Bench’s consideration of the accident pay clause in the BCMI Award was limited to the deletion of the transitional provision, i.e. the question of whether the 78 week maximum period continued to be appropriate was not canvassed by any party …” 76 (Underlining added)

[61] Nowhere in the decisions referred to above is there anything pointing to the issue of what quantum of accident pay is appropriate for the BCMI Award having been the subject of consideration by the Commission. This does not support a finding that the issue of accident pay in respect of the BCMI Award has been determined by the Commission. Accordingly, consistent with the October 2016 decision, we see no impediment to the Commission determining the CMIEG’s application.

[62] With particular regard to the substance of CMIEG’s application, it is clear from the August 2015 Decision that the Full Bench concluded as follows:

  in general the safety net accident pay entitlement should only apply for a period of 26 weeks from the time of incapacity for work due to injury or illness (see paragraph [211] of the Decision);

  there were special circumstances relating to some of the awards before the Full Bench in that case in that the pre-reform instruments in the industries to which those awards applied provided a generally applicable accident pay entitlement or 39, 52 or 104 weeks such that the accident pay provisions in those awards provided a clear national standard for the particular industries as described in the Award Modernisation Decision 2008 77 (see paragraph [212] of the August 2015 Decision); and

  it was not necessary for the minimum award safety net to provide for a period of accident pay beyond 52 weeks (see paragraph [212] of the August 2015 Decision).

In this case the CMIEG contended that the accident pay provisions of the BCMI Award did not meet the modern awards objective for a number of reasons including that the accident pay entitlements in the Award are more generous than any contained in any other modern award and that the alleged rationale underpinning the January 1980 CIT decision (which provided for 78 weeks accident pay) no longer exists.

[63] On the other hand, the Unions opposed the CMIEG’s application. Among other things the Unions contended that in considering the CMIEG’s application the Commission should have regard to the special features of the industry, including the particular injury risks associated with the industry and the special regime for regulation of safety, workers’ compensation and accident pay.

[64] While it was not disputed that specialist legislation governs inter alia work health and safety in the industry in NSW and Queensland, the evidence before the Commission does not point to the industry being any more dangerous than a number of other industries. For instance, a comparison of industry LTIFR’s indicates that the frequency rate (i.e. serious claims per million hours worked) in the coal mining industry was below the frequency rate for the following industries for each of the years 2009-2010 to 2013-2014:

  non-metallic mineral mining and quarrying;

  health care and social assistance;

  transport, postal and warehousing;

  agriculture, forestry and fishing; and

  manufacturing 78.

[65] The abovementioned comparison also shows that the frequency rate in the coal mining industry was below the frequency rate for the following industries over the same period for each year except 2012-2013:

  arts and recreation services;

  construction; and

  public administration and safety. 79

[66] Further, a comparison of industry LTIFR’s indicates that incidence rate (i.e. serious claims per 1000 employees) in the coal mining industry was below the incidence rate for the non-metallic mineral mining and quarrying and agriculture, forestry and fishing industries for each of the years 2009-2010 to 2013-2014 and below the transport, postal and warehousing, manufacturing and construction industries for each of these years except 2012-2013.

[67] The other evidence before the Commission regarding the safety performance of the industry points to improvements in recent decades. For example, Associate Professor Adam attested that over the last 20 years injury rates in the industry have continued to trend downwards whilst fatality figures are “bumping along the bottom”.

[68] The above evidence does not support a finding that the particular injury risks associated with the industry and the special regime for regulation of safety, workers’ compensation and accident pay warrant a minimum safety net in respect of accident pay in the black coal industry which is in advance of other industries.

One of the other grounds on which the Unions opposed the CMIEG’s application was that it would have a negative impact on injured workers, particularly in terms of loss of income. While it was not disputed that the CMIEG’s proposed variation would impact on employees, the estimates of the reduction in payments that would result varied between those provided by the Unions and the CMIEG. Specifically, the estimated reductions varied from $6,850 to just over $50,000. Further, it is clear from the parties’ respective estimates that the greatest reduction stems from the reduction in the period which an employee receives accident pay at the paid personal leave rate from 39 weeks to 26 weeks. In its oral submissions, the CMIEG, without urging such an approach, acknowledged that an alternative approach open to the Commission would be to reduce the cap on accident pay from 78 to 52 weeks but not alter the basis on which the first 39 weeks of accident pay is paid. The Unions in their oral submissions noted that this would reduce from 40% to in the order of 30% of workers who would be affected by the reduction in entitlements.

[69] With regard to the impact of the CMIEG’s proposed variations to the accident pay clause of the BCMI Award, we make the following observations.

  The impact of those variations is reduced as a result of the CMIEG’s statement in its oral submissions that its intention is that any variations would only operate prospectively, i.e. in respect of injuries occurring on or after the date of the variation forward, so that it would not retrospectively affect the entitlement of an employee who is currently injured and currently receiving an entitlement. As a result, no currently injured worker would have their entitlement to accident pay under the BCMI Award reduced.

  Associate Professor Adam’s report indicates that the proportion of claims in NSW exceeding 52 weeks in duration for the five years commencing 2010/2011 to 2015/2016 is 6.2%, 3.9%, 4.5%, 9.0% and 9.4% respectively 80. Indeed Dr Adam’s report indicates that the proportion of claims in NSW exceeding 52 weeks has only exceeded 5.0% in four of the 12 years over the period 2004/2005 to 2015/2016, those four years being 2009/2010, 2010/2011, 2014/2015 and 2015/201681.

  The above data not only highlights the variability from year to year in the proportion of claims exceeding 52 weeks in duration but also suggests that the proportion of injured workers affected by the alternative approach referred to above is likely to be less than that suggested by Figure 1 at paragraph [43] above.

  As noted by the Unions, those workers that are covered by an enterprise agreement would not be immediately affected by a variation of the accident pay provision of the BCMI Award as sought by the CMIEG. Drawing on Mr Vickers’ evidence, we note that 135 of the 145 agreements that were analysed at his request include accident pay provisions either equivalent to or more generous than those currently in the BCMI Award.

[70] Mr Vickers’ evidence regarding the accident pay clauses in 145 enterprise agreements applying to employees of coal mining companies which were analysed by his staff indicated that 92 of those enterprise agreements had varied the approach to accident pay provided for in the BCMI Award, primarily by way of significant enhancements to the Award provision. This points to there already being considerable bargaining in respect of accident pay which is particularly relevant in respect of s.134(1)(b) of the Act.

[71] Having regard to the above analysis and the material before the Commission, we have concluded that the current accident pay clause in the BCMI Award in providing 78 weeks accident pay exceeds what is necessary for the Award to provide fair and relevant safety net of minimum terms and conditions. Consistent with the conclusion reached by the Full Bench in the August 2015 Decision, we consider that a period of 52 weeks provides an appropriate safety net for accident pay in this industry. In coming to that view, we have had regard to the history of accident pay in the industry, the industry’s relative safety performance and as set out below the modern awards objective. Accordingly, we intend to vary the BCMI Award to reduce the period of accident pay from 78 to 52 weeks.

[72] As to the second element of the CMIEG’s application, i.e. that the periods of accident pay payable at the paid personal leave rate and the employee’s “classification rate” both be reduced from 39 weeks to 26 weeks, the material before the Commission indicates that the bulk of the negative impact on injured workers arises from the reduction of the period of accident pay payable at the paid personal leave rate. Having particular regard to the modern awards objective requirement that modern awards provide a “fair and relevant minimum safety net of terms and conditions” (emphasis added), we do not intend to vary the Award in this respect in the terms sought by the CMIEG. Rather we intend to vary the Award to reflect the alternative approach which the CMIEG acknowledged at the hearing was open to the Commission, i.e. we intend to maintain the basis on which the first 39 weeks of accident pay is paid and reduce from 39 to 13 weeks the period of accident pay which is paid at the employee’s “classification” rate. This approach will minimise the impact of our decision on affected employees.

[73] Finally, we note that, consistent with the clarification provided by the CMIEG in its oral submissions, the variations will only apply to injuries which occur on or after the date on which the variation commences operation. In other words, the variations will not affect the existing entitlement to 78 weeks accident pay of an employee who is currently injured and currently receiving the entitlement.

[74] With regard to the modern awards objective, the variations we intend to make are, as previously noted, likely to encourage collective bargaining [s.134(1)(b)] and, if anything, are likely to impact positively on employment costs and the regulatory burden [s.134(1)(f)]. The proposed variations will also contribute to ensuring a simple, easy to understand, stable and sustainable modern award system [s.134(1)(g)]. Beyond that, the other elements of the modern awards objective are either neutral considerations [ss.134(1)(a), (d) and (h) – with regard to s.134(1)(a) being a neutral consideration we base our view on the Unions’ submission referring to the generally high level of income in the industry as being one of the special features of the industry] or are not relevant in this case [ss.134(1)(c), (da) and (e)].

[75] In summary, the variations to the accident pay provision of the BCMI Award which we have outlined above will as required by the modern awards objective ensure that BCMI Award, together with the NES, provides a fair and relevant safety net of minimum terms and conditions.

Conclusion

[76] For all the above reasons, we have decided to vary the BCMI Award to reduce the period of accident pay from 78 to 52 weeks and to reduce the period of accident pay paid at the employee’s “classification rate” from 39 to 13 weeks. We do not intend to vary the basis on which the first 39 weeks of accident pay is paid. The variations will only apply to injuries which occur on or after the date on which they commence operation. A draft determination reflecting our intended variations is attached to this decision. Interested parties have until 17 October 2018 to comment on the draft determination. The final variation will take effect on 1 November 2018.

Appearances:

Y. Shariff of Counsel for the Coal Mining Industry Employers Group

I. Taylor SC and O. Fagir of Counsel for the Association of Professional Engineers, Scientists

Hearing details:

2017.

Sydney.

October 5 and November 24.

MA000001  PR700811

DRAFT DETERMINATION

fwc_logo

Fair Work Act 2009
s.156 - 4 yearly review of modern awards

4 yearly review of modern awards – Accident pay – Transitional provisions
(AM2014/190)

BLACK COAL MINING INDUSTRY AWARD
[MA000001]

Coal industry

DEPUTY PRESIDENT KOVACIC
DEPUTY PRESIDENT BULL
COMMISSIONER BISSETT

CANBERRA, XX MONTH 2018

4yearly review of modern awards – Black Coal Mining Industry Award 2010 – Accident pay – Transitional provisions – Reduction of accident pay benefits under the Award – Award to be varied so that the period of accident pay is 52 weeks.

A. Further to the Full Bench decision issued by the Fair Work Commission on 26 September Month 2018 [[2018] FWCFB 5996] the above award is varied as follows:

1. By deleting clause 18.1 and inserting the following:

18.1 Payment to be made during incapacity

An employer must pay, or cause to be paid, accident pay during the incapacity of an employee, within the meaning of the applicable workers compensation legislation:

(a) until such incapacity ceases; or

(b) until a period of:

whichever event occurs first, even if the employer terminates the employee’s employment within the period.

2. By deleting clause 18.2 and inserting the following:

18.2 Meaning of accident pay

For the purposes of clause 18, accident pay means:

(a) Initial 39 week period – regardless of when injury occurred

For the initial period of 39 weeks from the date of injury, a weekly payment representing the difference between the weekly amount of compensation paid to the employee under the applicable workers compensation legislation and the weekly amount that would have been received by virtue of this award had the employee been on paid personal leave at the date of the injury (provided the latter amount is greater than the former amount).

(b) Subsequent period – injury occurred before xx month 2018

For a further period of 39 weeks a weekly payment representing the difference between the weekly amount of compensation paid to the employee under the applicable workers compensation legislation and the rate prescribed from time to time for the classification of the incapacitated employee at the date of the injury (provided the latter amount is greater than the former amount).

(c) Subsequent period – injury occurred on or after xx month 2018

For a further period of 13 weeks a weekly payment representing the difference between the weekly amount of compensation paid to the employee under the applicable workers compensation legislation and the rate prescribed from time to time for the classification of the incapacitated employee at the date of the injury (provided the latter amount is greater than the former amount)

3. By deleting clause 18.7 and inserting the following:

18.7 Calculation of the period of incapacity

(a) The period of incapacity for work starts on the first day of incapacity, which may be after the date of injury.

(b) Intermittent absences arising from the one injury are cumulative when assessing the period of incapacity.

B. This determination comes into operation from xx Month 2018. In accordance with s.165(3) of the Fair Work Act 2009 this determination does not take effect until the start of the first full pay period that starts on or after xx Month 2018.

DEPUTY PRESIDENT

 1   MA000001

 2   Exhibits 5 and 6

 3   Exhibit 8

 4   Exhibit 7

 5   [2016] FWCFB 6841

 6   [2014] FWCFB 7767

 7   Ibid

 8   PR559442

 9   [2015] FWCFB 644

 10   [2015] FWCFB 3523

 11   Ibid at [211]-[212]

 12   Shop, Distributive and Allied Employees Association v National Retail Association (No 2) (2012) 205 FCR 227 at [35] per Tracey J.

 13   Friends of Hichinbrook Society Inc v Minister for Environment (No 3) (1997) 77 FCR 153; Australian Competition and Consumer Commission v Leelee Pty Ltd [1999] FCA 1121; Edwards v Giudice [1999] FCA 1836.

 14   [2014] FWCFB 1788 at [60]

 15   [2014] FWCFB 1788 at [60]

 16   Ibid at [24]

 17   Ibid at [35]-[36]

 18   [2017] FWCFB 1001

 19   Ibid at [230]-[264]

 20   [2017] FWCFB 1001

 21   Ibid at [269]

 22   [2017] FCAFC 161

 23   [2017] FWCFB 1001

 24   [2017] FCAFC 161

 25   [2017] FCAFC 123

 26   [2014] FWCFB 1788

 27   [1973] ACIndT 2183 (16 February 1973)

 28   [1973] ACIndT 2234 (26 June 1973)

 29   [1980] ACIndT 2766 (14 January 1980)

 30   [1980] ACIndT 2807 (19 February 1980)

 31   [2005] NSWIRComm 119

 32   Ibid at paragraph 53

 33   [2016] FWCFB 6841 at [24]-[26]

 34   MFI#1

 35   Transcript of 24 November 2017 at PN424

 36   Ibid at PN546

 37   Exhibits 1,2 and 9

 38   Exhibit 12

 39   Transcript of 5 October 2017 at PN322

 40   Exhibit 1 at page 10 of Annexure DG-1

 41   Transcript of 24 November 2017 at PN78

 42   Australian Bureau of Statistics, 6291.0.55.003 Labour Force, Australia, Detailed, Quarterly, May 2017

 43   Transcript of 5 October 2017 at PN202-203

 44   Ibid at PN218

 45   Ibid at PN222

 46   Ibid at PN315

 47   Exhibit 1 at Annexure DG-2

 48   Transcript of 5 October 2017 at PN339-387

 49   Exhibit 1 at pages 194-199

 50   Transcript of 5 October 2017 at PN502

 51   Ibid at PN505

 52   Exhibit 12

 53   Exhibit 10

 54   Transcript of 24 November 2017 at PN175-177

 55   Ibid at PN202

 56   Ibid

 57   Ibid at PN219

 58   See Exhibit 10, Figure 7

 59   Ibid at PN248

 60   Ibid at PN249-250

 61   Ibid at PN289-294

 62   Exhibit 11 – see also Exhibit 1 at Annexure DG-6

 63   Exhibit 1 at Annexure DG-5

 64   Transcript of 24 November 2017 at PN309-315

 65   4 yearly review of moderns awards – Annual leave common issues [2015] FWCFB 3177 at [109], Re Shop, Distributive and Allied Employees’ Association (2003) 135 IR 1 at [11], 4 yearly review of moderns awards – Payment of wages common issues [2016] FWCFB 8463 at [93], [181] and [182], and 4 yearly review of moderns awards – Penalty Rates [2017] FWCFB 1001 at [117] and [118]

 66   [2015] FWCFB 3523 at [168]

 67   [2005] NSWIRComm 119 at paragraphs 22 and 23

 68   Exhibit 2

 69   Exhibits 5 and 6

 70   Exhibit 8

 71   Exhibit 7

 72   Ibid at Annexure CB-05

 73   Ibid at Annexure CB-07

 74   [2008] AIRCFB 1000

 75   Ibid at [83]-[88]

 76   [2016] FWCFB 6841 at [24]

 77   [2008] AIRCFB 1000

 78   Exhibit 10 at Appendix A

 79   Ibid

 80   Exhibit 10 at Figure 8 at Appendix A

 81   Ibid

Printed by authority of the Commonwealth Government Printer

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