Rio Tinto case could have wide consequences if union wins

Resources giant Rio Tinto is currently locked in a court battle with the Construction Forestry Mining and Energy Union (CMFEU) over claims it paid higher redundancy payments to non-union members.

BY HCA 29 Jan 2013

Resources giant Rio Tinto is embroiled in a court battle with the Construction Forestry Mining and Energy Union (CMFEU) over claims it paid higher redundancy payments to non-union members – if the union is able to prove Rio Tinto discriminated against union members, there may be wider consequences for employers.

According to the CMFEU’s Sydney based national legal director, Alex Bukarica, the outcome of the case will show whether a company can apply its own policy in a discriminatory way, he told AAP.

It is being claimed that workers on individual contracts were given more generous payouts than those on collective agreements. In turn, the CFMEU filed a claim in the Federal Court which argues that the differing levels of redundancy pay, which was prescribed in Rio Tinto’s policy, discriminate against union members, and in turn are a breach of the Fair Work Act.

According to the CFMEU, when 70 full-time production and engineering staff were made redundant last year, non-union employees were given a redundancy payout based on their entire salary, including compulsory overtime and bonuses. In addition, those workers received an extra three months' pay as part of their redundancy.

In contrast, unionised staff were given redundancy payments based on their base salary only. “They [Rio Tinto] have treated them less favourably because they have chosen to bargain collectively," Bukarica said.

Rio Tinto has defended its practice of having a two-tiered redundancy scheme – it is arguing that union members on collective agreements had benefitted from secure working conditions.

"Employees [at Blair Athol Mine] were able to choose whether they worked under the collective agreement or on individual arrangements,” a company spokesman said in a statement. “Redundancy payments were made in accordance with the employee's conditions of employment, which Rio Tinto believes was fair.”