Biggest change in pay for 30 years
Full bench of FWC agrees to make major changes to employee redundancy.
Wednesday 01 February 2017
The redundancy payout for miners who lose their job in a mining downturn will be capped at 30 weeks, following a landmark decision by the Fair Work Commission.
For more than 30 years, miners made redundant in the coal sector were entitled to 1 weeks severance pay and two weeks redundancy pay for every year of employment.
So under the current rules, a lifelong employee at Peak Downs earning average mining wages, redundancy and severance at the end of their 30-year career could be 90 weeks of normal pay and worth more than $250,000.
For that reason, these scenarios were often referred to as the “golden handshake” in mining circles.
However, in was is the biggest change to the Black Coal Industry Award since at least the 1980’s, a full Bench of the FWC has decided that redundancy payments will be paid at the rate of two weeks a year, for no longer than 15 years. The severance payment of one week per year remains unchanged.
If an employee is offered work on the same pay and conditions elsewhere, the employer remains exempt from paying the redundancy.
The issue was contested in the FWC, because the Coal Mining Industry Employer Group (CMIEG) had wanted a cap of nine years, arguing that the existing uncapped redundancy was out of sync with other comparable awards and way too generous.
“The CMIEG submitted, based on the evidence, that there was no reason to suggest that the experience of those retrenched in the black coal mining industry was any different from the experience of employees made redundant in other industries,” the FWC wrote.
“CMIEG also pointed out that black coal mining industry workers receive benefits additional to those available in other industries, including portable long service leave and the payment of untaken personal leave.”
Union and professional employee representatives, on the other hand, argued that the redundancy schedule should not change.
They argued that coal mining was characterised by peaks and troughs, profits per employee were very high during boom periods, coal mining companies could afford it, and retrenched employees - if re-employed at all - were likely to be re-employed on inferior conditions.
To support their claims, the CFMEU quoted from a survey they commissioned from Professor David Peetz from Griffith University, who surveyed more than 2000 coal workers.
According to the survey results, less than half of those retrenched were currently working in the coal mining industry, only 21% of those who had been retrenched are in full-time work, and of those who are in paid work, 72% are worse off than they were before retrenchment.
While technically the CMIEG didn’t get what it was asking for, the compromise decision by the FWC represents a huge reduction in employer liabilities for any future downturns like those we have seen in the last five years.
“We are satisfied that it remains appropriate for the Modern Award to continue to contain an industry-specific redundancy scheme….. because of the long history of the scheme, and its acceptance by employers and employees in the industry over many years,” the FWC said in its ruling.
“We are also satisfied that there are certain distinctive features of the black coal mining industry that support the retention of the industry-specific redundancy scheme.
“In particular, we accept the evidence that retrenched employees in the coal mining industry are significantly more likely to be re-employed on worse terms and conditions than is generally the case for employees in other industries.
“However we do consider that a cap, based on complete years of employment, should be applied to the retrenchment payment of two weeks for each completed year of employment in order to restore the industrial balance in the scheme in a non-discriminatory way.
“Having regard to the evidence presented to us about the age and length of employment of employees who have been made redundant in the black coal mining industry we think that an effective cap of 15 completed years of employment (or 30 weeks payment) should be applied to the retrenchment payment.”
THE FWC also ruled that anyone with more than 15 years of service at the time of the amendment to the redundancy rules would still be entitled to the previously uncapped payment rules.