In what may be a sign of things to come from unions, the CFMEU has made a complaint alleging that Xstrata has breached the OECD Guidelines for Multinational Enterprises with respect to its industrial relations practices in Australia as well as by engaging in anti competitive conduct with a major shareholder.

The CFMEU has made the complaint not only on the basis of its role as a trade union in the coal mining industry but also as a direct shareholder through its wholly owned entity Unite Organising Pty Ltd and as a representative of its members who have holdings in Xstrata through superannuation funds.

As a precursor to making the complaint, the CFMEU through its affiliation with the International Federation of Chemical, Energy, Mine and General Workers’ Unions, arranged for meetings with Xstrata plc management in Switzerland to discuss its concerns. Those meetings did not resolve matters.

The CFMEU has requested the Australian National Contact Point to mediate between the parties to achieve a resolution of the CFMEU’s concerns as well as to cooperate with the National Contact Points in the United Kingdom and Switzerland where Xstrata has its registered office and headquarters.

This is an example of unions developing alternative methods to deal with employers outside the traditional methods of direct industrial action and the Fair Work Act 2009. These types of tactics, leveraging off the role as shareholder and using strategies to play on an international stage, may become more common where multinational enterprises are involved.

The Guidelines

The OECD Guidelines for Multinational Enterprises (Guidelines) which are part of the OECD Declaration on International Investment and Multinational Enterprises (Declaration) are non binding recommendations by governments to multinational enterprises operating in a total of 40 countries including the OECD countries as well as Argentina, Brazil and Chile. The Guidelines provide voluntary principles and standards for responsible business behaviour for multinational enterprises. The supporting governments have agreed to promote observance of the Guidelines. The Declaration is intended, in part, to strengthen the basis of mutual confidence between multinational enterprises and the societies in which they operate.

Adherence to the Guidelines is voluntary and they do not override local laws. The Guidelines are intended to complement and support the private efforts of multinational enterprises to engage in responsible business behaviour wherever they may operate.

The Guidelines do not define ‘multinational enterprise’. However, a multinational enterprise will usually be a group of companies or entities established in more than one country who coordinate their activities in various ways.

The supporting governments are required to set up National Contact Points not only to undertake promotional activities and deal with enquiries but to facilitate discussions between affected parties on matters concerning the Guidelines to assist in the resolution of the issues.

The Guidelines contain recommended standards of behaviour for multinational enterprises in many areas such as taxation, human rights, anti corruption, labour relations, environment, information disclosure and consumer protection. The standards include that enterprises should, within the framework of applicable law, regulations and prevailing labour relations and employment practices:

  • respect the right of employees to be represented by trade unions
  • provide facilities to employee representatives to assist in the development of collective agreements
  • provide information to employee representatives to enable meaningful negotiations on conditions of employment
  • take adequate steps to ensure occupational health and safety in the organisation
  • enable authorised representatives of their employees to negotiate on collective bargaining or labour management relations issues and allow the parties to consult on matters of mutual concern with representatives of management who are authorised to take decisions on these matters.

The Complaint

The Complaint alleges that Xstrata has engaged in the following conduct;

  • employing employees directly on individual contracts to weaken collective bargaining
  • not taking action to mitigate the effect of redundancies
  • failing to respect the right of employees to be represented by the union
  • refusing to accept the workplace rights of unions in collective agreements
  • taking steps to minimise the involvement of unions on sites, and
  • anti competitive conduct with respect to marketing rights and other contracts.

The CFMEU has not alleged that Xstrata has breached Australian law or any other law. The allegation is that Xstrata has breached the behavioural standards expected by the OECD of multinational corporations.

The remedies sought by the CFMEU include that Xstrata:

  • remedy the alleged breaches, or if no remedy is possible, commit to no further breaches
  • commit to working constructively and cooperatively with the CFMEU with specific regard to constructive collective bargaining negotiations to reach agreements on wages and working conditions, and
  • cease allegedly anti competitive practices with respect to exclusive marketing arrangements with a major shareholder.
  • The complaint was lodged on 11 October 2010 and Xstrata has not yet responded to the allegations.

Action required

Multinational enterprises should be aware of the OECD Guidelines for Multinational Enterprises and consider whether they should apply the standards of responsible behaviour contained in the Guidelines to their business, how and to what extent they will apply them, and what their stance will be in case of union complaint that they are not applying them at all, or are not applying them in a manner consistent with union expectations.