Australian Financial Review http://www.afr.com.au/content/991008/news/news1.html October 8, 1999 Rio's win a historic shift for IR By Stephen Long Rio Tinto won a decisive victory against the coal mining union yesterday in a decision that has major implications for the future of industrial relations. The historic decision effectively signals the end of the Australian Industrial Relations Commission's traditional role as an arbitration tribunal. A Full Bench of the commission found that even though it had to terminate a 16-week enterprise bargaining strike at Rio Tinto's Hunter Valley No 1 mine and arbitrate because the dispute was causing wider economic and social harm it should not "interfere with the result" on the ground. And it found that it was lawful and fair for Rio Tinto to unilaterally change work practices to the detriment of employees and to cut workers' take-home pay during what it described as a "battle of titans". Its findings outraged union officials. "Reith doesn't need a second wave. He's destroyed arbitration already with the first wave, under this crew," said the general president of the Construction Forestry Mining and Energy Union's mining division, Mr Tony Maher. "It's absolutely cowardly. Quite frankly you have got to wonder why the commission is there at all." But the Workplace Relations Minister, Mr Peter Reith, welcomed the decision. "It sends a signal that if unions want anything more than the safety net offered by the award system then they must bargain for it at the enterprise level," his spokesman said. "It's good news for employers and it's good news for employees."Rio Tinto's management proclaimed the decision a "total victory". "I am pleased that after the last two years, where we have come in for fairly heavy criticism, the AIRC has said we acted fairly and legally in the action we have taken," said the managing director of Rio Tinto Coal (NSW), Mr Kim Tronson. The CFMEU argued that vast improvements in productivity and large profits earned at the Hunter Valley No 1 justified the granting of a substantial pay rise and above-award conditions to workers. But the commission rejected this, upholding the company's position that it should not be required to give workers more than the "safety net" of conditions provided by the coal industry's production and engineering award. "The adage `all is fair in love and war' is, we think, as much applicable to industrial warfare as any other type," it said. "What the unions seek is an award that would place them in, or close to, the position in which they would have been had they won the industrial war. We are not prepared to do this. "The unions chose to engage in warfare. We do not criticise them for this. The company chose to fight back. We do not criticise them for this. We are not, however, prepared to interfere with the result. In our view, it would be unfair to do so. The union's claim ... fails on its merits." The sole burden that the commission imposed on the company was a $2,500 increase in a production bonus paid to workers at the mine, after finding that the formula used to calculate a change to the bonus was unfair. It made an award expiring in nine months providing employees with the wages and conditions that apply under the industry award and the higher bonus, urging the parties to reach an agreement "that will end the state of industrial warfare" by that time. Senior labour lawyers said the decision under section 170MX of the Workplace Relations Act sent a clear message that the commission would take a minimalist approach to arbitration in all circumstances. "It signals that the commission will adopt a restrictive approach to the exercise of its residual arbitral powers," said Mr Breen Creighton, a partner with the law firm Corrs Chambers Westgarth and a former professor of labour law. "It is consistent with the spirit of the Government's changes to the system that arbitration should have a very minor role." The decision also demonstrates the scope for tough bargaining under the Workplace Relations Act including a company reducing employees' wages and imposing basic award conditions on workers in order to strengthen its bargaining power. Rio Tinto offered significant pay rises to employees provided they accepted a non-negotiable set of work-practice changes providing greater flexibility. The AIRC rejected the CFMEU's claim that Rio Tinto had acted unreasonably by rejecting commission recommendations, changing work conditions without consultation and engaging in "tactics of intimidation" such as the forced retrenchment of workers after the bargaining period at the mine was terminated. 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