The ACTU, Unions NSW and asbestos groups have today signed a Heads of Agreement with former asbestos products manufacturer James Hardie for what is believed to be the largest personal injury settlement in Australia’s history.

Speaking in Sydney earlier today ACTU Secretary Greg Combet who has led negotiations with Hardie of behalf of union, asbestos groups and the NSW Government said:

“I am pleased to announce that thanks to the support of the Australian
community and the hard work and determination of asbestos groups, unions and the
NSW Government – Bernie Banton and I have signed a Heads of Agreement with James
Hardie Industries NV.

“The Heads of Agreement is not legally binding but it is a highly significant
step in the campaign to ensure that the company funds current and future
compensation liabilities to Australian victims of its asbestos products.

“This is a very significant achievement and will be welcome news to
Australian asbestos victims and their families. The Heads of Agreement is
designed to provide the basis for a legally binding ‘Principal Agreement’ to be
concluded by June next year. The Heads of Agreement that has been concluded
between James Hardie, the ACTU, Unions NSW, Bernie Banton and the NSW Government
provides for:

  • An open ended funding commitment – i.e. no cap on the overall funding;

  • No cap on payments to victims;

  • The creation of a Special Purpose Fund, which may be the MRCF, which will
    receive funding from James Hardie and make payments to claimants;

  • The payment of an up-front cash ‘buffer’ equivalent to two years of claims
    plus the payment of a further year of claims in advance – this buffer will be
    approximately $250 million;

  • Additional annual payments from James Hardie based on an annual actuarial
    assessment of the liability for asbestos claims;

  • A maximum amount, or cap, on the annual James Hardie payment will be set at
    35% of the company’s free cash flow. In the first year of the agreement this cap
    is equivalent to over $70 million;

  • A minimum term of the funding arrangement of 40 years. The term of the
    agreement will be extended indefinitely if this is required;
    and

  • Funding from James Hardie for asbestos education and medical research.

    • The Heads of Agreement also deals with other important details such as how
    funding for asbestos compensation will be secured, how the arrangements entered
    into will be made legally binding on the company and how the company can ensure,
    that with this episode behind it, it can get on with business. The binding
    Principal Agreement that is expected to be finalised by mid 2005 will need to be
    voted on and accepted by James Hardie shareholders.

    Mr Combet said, “While there are still some important steps to be taken
    before we can be sure James Hardie will fulfil all its responsibilities to the
    Australian community, the signing of this Heads of Agreement is an enormous
    achievement for everyone involved. In particular it is an important achievement
    for Australian unions and union members who have been so strong and committed in
    their support for asbestos victims.

    While James Hardie performs its obligations towards a binding agreement the
    ACTU does not wish to see any further conduct that would be harmful to the
    business of James Hardie.”

    For further information

  • Summary of Heads of Agreement – James Hardie
  • Make James Hardie Pay – unions campaign index