BargainingFees


Current Issues

Bargaining Fees and Workplace Agreements

E-Brief: Online Only issued Date 20 August 2002; updated 28 May 2003

Steve O'Neill Analysis and Policy
Bronwen Shepherd Information/E-links
Economics, Commerce and Industrial Relations Group

Introduction

A bargaining fee is a charge made for the negotiation of a workplace agreement. They are not dissimilar to fees charged by professionals such as solicitors. In the federal jurisdiction, a workplace agreement may take a variety of forms (discussed below). In the course of negotiating such an agreement, an employer may be charged a fee by a bargaining agent, as may an employee or a group of employees.

The issue of bargaining fees came to prominence during the November 2001 federal election. By then over 200 collective workplace agreements negotiated by the Electrical Trades Union (ETU) containing provisions for the charging of such fees had been challenged in the Australian Industrial Relations Commission (AIRC). This was on the grounds that they effectively forced non-unionists to join the relevant union, but the challenge has (so far) failed to hold. The media reported on the bargaining fee charge in these agreements of $500 (per year), apparently to be levied on non-union employees, although the agreements required 1 per cent of an employee's gross annual income or $500 per annum 'which ever is the greater'. Nevertheless the $500 charge firmed in the public mind.

In 2001 the Coalition Government introduced the Workplace Relations Amendment (Prohibition of Compulsory Union Fees) Bill 2001 to amend the Workplace Relations Act's  (WR Act) freedom of association provisions so as to prohibit bargaining fees being charged unless non-member employees individually consented to them. The Bill lapsed when Parliament was prorogued. Then, as part of its workplace relations policy for the November 2001 Federal Election, the Coalition promised to

legislate to prohibit trade unions involved in workplace bargaining from imposing a compulsory $500 per year fee on non-trade union employees.

Similar legislation has been reintroduced with the Workplace Relations Amendment (Prohibition of Compulsory Union Fees) Bill 2002. Bills Digest No. 2 2001-02 and Bills Digest No. 108 2001-02 provide background and main provisions of these two Bills.

The question arises why have these fees become an issue now, but not previously? Is it lawful to be charged a fee, and how far can these fees spread – will everyone have to pay?

In answer to the first question this Brief reviews possible reasons for the fees which in the main reduce to the following:

1)      the freedoms associated with non-award bargaining (a post 1993 phenomenon),

2)      the legislative changes affecting unions as bargaining agents, and

3)      organising strategies adopted by unions in the face of factors 1) and 2).

The Brief reviews also some important tribunal decisions in answer the question as to whether union bargaining fees charged through a collective workplace agreement can be collected. The Brief also looks at the possible spread of such fees on the assumption they continue to be levied via such methods.

Early Union security arrangements

Bargaining fees are a recent innovation in industrial relations since the traditional award system prohibited such arrangements (and federal awards still do). Effective bargaining requires union recognition from employers and the issue of recognising the union as the bargaining agent was at the heart of the watershed 1890s industrial disputes. Andrew Frazer's The Federal Conciliation and Arbitration Power: from Cradle to the Grave? gives an account of the significance of the 1890s disputes in the design of the Commonwealth arbitration system. Thereafter, the conciliation and arbitration system commenced to operate as the dominant method of fixing wages and conditions of employment and registered unions were pivotal to the arbitration process. The system worked, effectively until the mid 1990s, and for most of this time it was understood that the Commission only had constitutional power to deal with 'interstate-industrial disputes', and it is this principle which underpins the prohibition of these fees.

The contents of an award resolving the dispute could only address 'industrial matters' – affirmed by the High Court.(Federated Clothing Trades of the Commonwealth of Australia v. Archer (1919) 27 C.L.R. 207).  Its views on the matters which pertain to the employment relationship can be found in the following extract:

Whether or not in any particular case a dispute concerns an industrial matter may depend, ultimately, upon the degree to which what is in dispute can be said to be demanded by  employees in their role as employees and of  employers in their role as employers. 

...

 The reflection, in the subject matter of a demand, of some other role, whether played by employee or by employer, or the attempted imposition upon employers of another role, is likely to result in the subject of the dispute no longer being industrial in character. Thus if the demand relates to matters predominantly of concern to employees in their role as electors or, say, as conservationists, or of concern to employers as, perhaps, entrepreneurs or exporters or if it seeks to impose upon the employer an obligation unrelated to his role of employer, for instances that of financial agent see per Menzies  J. in  Reg. v. Portus; Ex parte A.N.Z. Banking Group Ltd. [(1972) 127 CLR  at p.360]  it may have thereby lost its character as a dispute concerning industrial matters.   High Court, Justice Stephen: R v Coldham & Ors; Ex parte Fitzsimons & Ors (l976) 137 CLR 153 .

Thus by the 1970s, certain union security clauses had been found not to be 'industrial', notably the 'check-off' system for the payment of union membership fees to the union via the employer's payroll system. Accordingly, union security arrangements such as union fees paid via the employer's payroll and (almost certainly) bargaining fees could not be included in federal awards. The union security devices which remained were registration of the union which allowed it but not employees to be party to an award, and award preference clauses (discussed below).

While unions have sought, on occasions, to exclude non-unionists from the benefits of industrial awards, they have been thwarted as the employer's obligations under an award extend to all employees.(Metal Trades' Employers' Association v. Amalgamated Engineering Union (1935) 54 C.L.R. 387). The award system still remains as an important safety net, but more often terms of employment arrangements are now specified in other forms including collective workplace agreements, non-union agreements and formalised individual arrangements. Nevertheless, the problem of 'free-loading' has been 'a thorn in the side' to unions since the 1930s. As noted by commentators such as Susan Zeitz, former President of the Victorian Employees Relations Commission, the recent development of the bargaining fee facilitated under workplace agreements (outside the award system) now may have provided a remedy to unions.('Bargaining fees' Australian Labour Law Reporter 57-195.)

Collective agreements

Workplace bargaining has brought new flexibilities in respect of bargaining agents and the subject matter of bargaining itself. Non-union bargaining for collective agreements has been available since 1994. Bargaining streams have been expanded under the WR Act. In respect of collective agreements, there are 3 streams of 'Division 2' (WR Act: PartV1B Div 2) collective agreements under the WR Act. These include one non-union stream, and the employer is a corporation or the Commonwealth. See DEWRSB Agreement Making in Australia Under the Workplace Relations Act 1998-99 June 2000, p.9.

In addition there are two agreement streams termed 'Division 3' (WR Act Part V1B Division 3) agreements involving one employer and one or more unions. And, in unusual circumstances, a single certified agreement (by either a union or group of employees) may be negotiated to bind two or more employers. Collective agreements may offer superior terms of employment to the relevant award but are confined to an enterprise.

The question may arise as to why has there been a move from awards to workplace agreements. In answer it helps to recall the inflexibilities levied at the award system, a critique most associated with the influential Business Council of Australia (BCA) in the late 1980s. According to academics Briggs and Buchannan, the BCA view was that the 'antiquated' union structure created unions with no interest in enterprise performance, rigid work demarcations and multi-employer awards which inhibited enterprise flexibility. On the other hand, an 'enterprise approach', would entail greater diversity in employment regulation, would enable work methods to 'constantly' adapt to customer needs, technological change and skill requirements and allow for more enterprise-specific remuneration to encourage a competitive and productive work culture.  In other words workplace agreements would allow the parties greater freedom to choose their own terms and conditions of employment.

It has thus been both the move away from the comparatively cost-effective award system (in administration terms) to bargaining workplace by workplace along with the new freedom of 'designer' agreements which in part has lead to the charging of bargaining fees becoming more a common practice in industrial negotiations.

Individual and alternative bargaining arrangements

In addition to collective agreements and following changes introduced under the WR Act, individuals may negotiate or be offered an individual employment arrangement in the form of an Australian Workplace Agreement (AWA), subject to some constraints. An AWA can also be negotiated as a collective instrument. Also, a group of employees may form and register an enterprise association which may also negotiate a workplace agreement. In short there are now formal alternatives to traditional industry-union bargaining; indeed the objects of the WR Act allow employers and employees to choose the most appropriate form agreement including employment arrangements outside those specified in the Act. (WR Act, s.3 (b)).

The WR Act envisaged that bargaining agents may be required for negotiations in the absence of unions and the Act makes provisions for these, specifically in the case of AWAs (s.170VK). In the case of non-union collective agreements (s.170MI), recognition has been given to the appointment of a bargaining agent to conduct negotiations for a collective agreement (AIRC Print R2415). The appointment of such agents is intended to provide skills and narrow the differences in bargaining power. As the Australian Labour Law Reporter (58-020) notes in the case of AWAs:

The right to appoint bargaining agents is intended to provide equal bargaining power between the parties. Although it may be easier and cheaper for employers to appoint employer associations to act as their bargaining agents, employees may not be able to find a suitable bargaining agent for their purposes. The cost of employing an agent could be prohibitive and the services of the union may not be available.

AWAs are filed with the Employment Advocate (EA) and the EA web site provides contacts for some recognised bargaining agents particularly to assist disadvantaged workers, and in some cases their fees are also displayed. It would appear that $400 for an AWA negotiation seems a likely charge, although it may be higher as evident in one agent's scale of charges:

Free one hour consultation, advice on proposed A.W.A.'s $150 per hour, up to $300 barring complications, advocacy on behalf of the client $150 per hour to a maximum of $750 barring complications.

It is likely that an employee faced with negotiating an AWA may find it advantageous to seek advice on its terms. Unlike other forms of industrial agreement, AWA negotiations allow the employer, under prescribed circumstances, to commence industrial action against an individual employee (WR Act s.170WC). The employer has a similar right to lock out employees in collective agreement negotiations (union or non-union). But it also is the case that employees can take industrial action against the employer. In other words, the stakes can be high in these negotiations and professional advice may well be warranted.

Changes to Union security arrangements

Other changes brought on by the WR Act have rendered illegal forms of compulsory unionism (WR Act Part XA), such as the pre-entry closed shop, although this arrangement was never sanctioned under federal industrial law. In addition, award preference clauses have been removed from awards under the (WR Act s.94) and collective agreements may not contain 'discriminatory' provisions (WR Act s.170 LU). 

It is the combination of new bargaining agents and the reduced legislative recognition (by recognising alternative bargaining arrangements and agents) which have lead unions to search for alternative security methods, and they have come to rely on two devices to retain a recognised role in workplace. The first has been provision for collective agreements to recognise the role of the union sometimes called union encouragement clauses although these have no clear genus.  In evidence to the Senate Estimates hearings, the Employment Advocate, Mr Hamberger observed:

while you might be able to have a provision that promoted union membership that was not objectionable, it sort of depended on how you did it …  the mere fact that you had a clause that said, 'We will encourage people to join the union,' would not necessarily be an objectionable provision.

The second approach has been to charge bargaining fees to non-unionists to prevent free-loading, most often by a provision of the collective agreement itself. The EA has authority under the WR Act to investigate breaches of freedom of association, and the EA's role has been central to the legal contests over unions charging bargaining fees (and also over union encouragement clauses).

Organising strategies

The third factor behind the use of bargaining fees in the union-negotiated collective agreements might be seen arising from union policy of activating workplaces through organising, and of returning the relevance of unionisation to workplaces. Encouraging effective workplace organisation has been a primary goal for the ACTU and affiliates over the 1990s. The aim of reducing the number of duplicated union coverage arrangements by amalgamation, was to release wasted resources which could be directed to expanding union coverage to the unorganised, as noted, for example, in the 1993 ACTU Congress:

The primary aim of the rationalisation process must be to reduce the number of unions in each industry and to develop structures that will enable unions to co-operate one with the other to expand areas of union coverage to those sections of the workforce currently not organised. ACTU Congress

Negotiating union agreements is thus an important part of this organising strategy because of potential attractions to non-union workplaces and employees to join the union and thus obtain a collective agreement which improves pay and employment conditions. However workplace reform consultant, Ken Phillips cautions that under this new organising strategy, business managers must recognise that

new industrial games are at play in which the capacity of managers to do quiet deals with union officials is limited.

One by-product of enterprise bargaining is that where a union-negotiated agreement is finalised it is often seen as the property of those who have negotiated it. Such a perception is buttressed by the legislative requirement that such an agreement be approved (voted on) prior to its presentation to the AIRC for certification (WR Act s.170LT). The majority who support the agreement are also likely to support the charging of a fee to non-unionists employed under the terms of the agreement. This is seen as just by those who have funded the union to conduct the negotiation, particularly as the employer is prohibited from discriminating against non-unionists, for example in differentiated pay scales (WR Act s.170NB).

The idea of negotiating a collective agreement so that the agreement contains a provision for charging a fee can be traced to Canadian and USA labour arrangements. Academic Graeme Orr has provided detailed account of the history of union security arrangements in these and other countries. (see Australian Journal of Labour Law, v.14(1) May 2001).  From study tours, union delegations gained insights from their overseas counterparts in 1996 and 1999, leading to this comment in the report of the 1999 union delegation:

In Canada (and some States in the US), when a site is organised and a collective agreement certified, all employees join the union or effectively pay a bargaining fee to the union, ensuring that all workers take responsibility for, as well as share the benefits of, collective representation. Unions@Work

In June 2000, the ACTU Congress endorsed the policy of including bargaining fees as part of union-negotiated agreements specifying that a negotiating fee be deducted from the wages of all employees to be covered and forwarded to the relevant union, and that the fee be offset against union dues if paid by the employee (DEWR submission).

Employers and bargaining fees

The role of employers (and their associations), is also central to the debate of bargaining fees. As noted, over the past few years union-negotiated collective agreements may have included a provision to charge employees a fee for the service of negotiating  the agreement. The relevant employer as party to the document has accepted the provision, by virtue of its inclusion. The employer does not meet the charge as it is directed towards employees.

On the other hand, employers themselves are increasingly being charged for the services of an employer association (or other agent) for the costs of negotiating a workplace agreement. As the Secretary of the Australian Workers Union of Employees (Queensland) observed in relation to the cost burdens of workplace negotiations:

Employers have at their disposal solicitors, industrial relations consultants and employer associations. All of these services come at a cost for the employer. Solicitors tend to charge either a fixed cost for negotiations or at hourly rates. The latter mechanism is more prevalent. It matters little whether the employer employs these to either argue or help the business reach an agreement or not. The cost can become prohibitive. Employer industrial organisations similar to unions have membership fees. Recently, these employer organisations have added hourly charge-out rates … they too are finding the cost of … enterprise bargaining time-consuming and expensive. (Ludwig, W.P, 1997)

So, the anecdotal evidence suggests that the move from the award system to bargaining at the workplace has been accompanied charging arrangements due to systemic changes. An inquiry into this aspect of the new bargaining arrangements might provide more factual data. However, the costs burden both sides, and thus bargaining fees are becoming more entrenched in the current system bargaining workplace by workplace, and at the level of individual negotiations.

Are union bargaining fees legal?

Vice President McIntyre of the Commission considered the matter of whether bargaining fees charged via a certified agreement (the ETU agreements referred to earlier) contravened the WR Act's freedom of association (FOA) provisions. The FOA provisions under Part XA of the WR Act prevent coercion toward an individual forcing him/her to join or preventing him/her joining the relevant union for the workplace. The Employment Advocate (EA) has a special role in investigating breaches of Part XA [WR Act s.83BB(1)(f)]. In 1999 the EA raised objections to the bargaining fee clauses at the time ETU agreements were to be certified. Where an agreement had been certified, the EA argued that these 'objectionable' clauses should be removed.

The Vice President found that the FOA provisions were not offended since the fees did not require an individual to join a union, as much as the clauses nevertheless may have the effect of influencing an employee to become a member of the union. This decision was appealed, but VP McIntyre's reasoning was supported by a Full Bench which found:

1. The  (bargaining fee) clause did not require employers to discriminate between members and non-members when offering terms of employment. 

2. The discriminatory action alleged would only arise when the union waived the bargaining fee for members. Such an action would not be in breach of s.298K(1), which only covers conduct by an employer. 

3. The bargaining fee clause would bind employees via the contract of employment and the agreement and could not be waived by the union. The likelihood that the fee obligations would only be enforced against non-members did not alter the legal character of the obligations. 

4. A term in an agreement cannot constitute adverse conduct under sec 298K(1), so no question of a proscribed reason under sec 298L(1) arises.  

(Appeal against decision of Vice President McIntyre re Accurate Factory Maintenance Labour Hire Enterprise Agreement 2000- 2003 and other agreements AIRC (Full Bench) (2001) PR 910205 )

So, any discrimination which might take place would be likely when the union served the non-unionist with a claim for the bargaining fee (but not a unionist). If the Union took action only against non-union members seeking payment of the fee, any possible breach of the freedom of association provisions of the Act 'could be dealt with directly'.(see Susan Zeitz, 'Bargaining fees, they're not objectionable but are they enforceable?' CCH Australian Industrial Law News, October 2001).

In June 2002, a Full Bench of the Federal Court considered bargaining fees, this time, in the context of a union log of claims served upon an employer, where protected industrial action followed in the course of negotiations. When certain procedures are complied with, protected industrial action is available to employers to use against employees in workplace agreement negotiations, as well as by employees against employers and has been available since 1994 (for collective agreements Part V1B Division 8 and for AWAs Part V1D Division 8).

The case arose as an appeal by unions (Australian Manufacturing Workers Union, Australian Workers Union & Communications Electrical and Plumbing Union) against a previous decision by the Court (Justice Merkel) who found against industrial action taken to include bargaining fees in a certified agreement (CA). The employer (Electrolux) contested elements of a log of claims served upon it by unions and the AWU in particular. These related to the protection of employee entitlements in the event of employer insolvency and bargaining fees (a fee to be served upon an employee who is employed under the terms of any subsequent certified agreement, usually a 'Division 2' s.170LJ certified agreement under the WR Act).

Merkel J. held that certain contentious items within the AWU's log of claims did pertain to the employment relation, and industrial action could be taken over these to have these included as legitimate matters of an enterprise agreement (WR Act s.170LI), e.g. a claim for the protection of worker entitlements. But other components of the claim, e.g. the payment of bargaining fees, it was held, were not matters pertaining to the employment relation, (following established precedent cited above) and thus could not be the subject of industrial action in negotiations for an enterprise agreement. Electrolux Home Products Pty Ltd v Australian Workers Union  (FCA, No. S157 of 2001, 14 November 2001).

Unions appealed Justice Merkel's decision. The Federal Court (Justices Murray Wilcox, Catherine Branson and Shane Marshall) held in Electrolux on 21 June 2002 that industrial action taken to pursue a union log of claims was legitimate, including over all of the claims, although it did not reach conclusion on which matters of the claim did pertain to the employment relationship.

The Federal Court thus considered issues in relation to bargaining fees which go to the log of claim and industrial action over it. Freedom to include a 'broader' range of employment matters in workplace agreements which when approved by the Commission become certified agreements. Reference was made to the essential purpose of the WR Act and the Full Bench decision quotes the objects of the WR Act contained in Section 3:

"The principal object of this Act is to provide a framework for cooperative workplace relations which promotes the economic prosperity and welfare of the people of Australia by: ...

(b) ensuring that the primary responsibility for determining matters affecting the relationship between employers and employees rests with the employer and employees at the workplace or enterprise level; and

(c) enabling employers and employees to choose the most appropriate form of agreement for their particular circumstances, whether or not that form is provided for by this Act."

Under the same criterion, the payment of union bargaining fees by non-members would not be considered industrial. But the Federal Court has distinguished industrial matters under the arbitration system and the more liberal matters which may be included in certified agreements (the contents of which must pertain to employment: WR Act s.170LI) and therefore can be bargained over, including by using industrial action. As the Court said:

… the words of s 170LI(1) are significantly different from those contained in the definition of "industrial dispute" in previous enactments. Cases decided with reference to that definition may not apply.

Division 2 CA's are constitutionally based on the Corporations power (s.51/20), and not the Conciliation and Arbitration power (s.51/35). Division 2 agreements make up about 80 per cent of recent federal agreements. It might be argued that principles developed under arbitration may not necessarily apply to agreement-making. Note also that these new approaches may not necessarily hold with collective agreements made with unions under Division 3 of the WR Act, since such agreements are made pursuant to the Conciliation and Arbitration power. Nevertheless, the Federal Court has made a significant attempt at distinguishing concepts associated with the award system ('industrial dispute' and 'industrial matters' of the arbitration system), and the still emerging rules for enterprise bargaining.

It might be fair to say that post 1996,the species of award and collective agreement appear more distinct. As a result of the Federal Court's Electrolux case, protected industrial action may now be taken to include 'bargaining fees' as a provision in an enterprise agreement. However, the decision is to be appealed.  Electrolux Home Products initiated the appeal on 19 July 2002.

In another AIRC Full Bench decision, union membership fees paid for via an employer's payroll have been accepted as a legitimate matter to be contained in a certified agreement. The AIRC Full Bench rejected the approach to union membership fees followed in R. v Portus  at it was concerned with a claim for deducting fees which would be ultimately expressed as a provision of an award, whereas this case involved an agreement for deducting the fee, where was no arbitration was involved. National Union of Workers; re Atlas Steels Metals Distribution and Certified Agreement 2001-2003 and Ors  (AIRC, PR917092, 29 April 2002).

In summary, we can see some of the more recent considerations moving away from earlier principles as to what defined the employment relation and thus governed the contents of industrial agreements and awards. However, it is unlikely that these views represent the final word on the contents of agreements and the definition of the employment relation. As Peter Punch, consultant to CCH  conjectured over any challenge to Electrolux:

… in any appellate review, some consideration of the words ''pertaining to the relationship of employer and all employees'' should be made in light of their possible underpinning by the corporations power under sec 51(xx) of the Constitution. 

However, there are no doubt arguments available to suggest that the ''industrial'' character of the relevant provisions under review in Portus  does not carry through to provisions based on the corporations power. For example, a corporation's relationship with its employees might embrace, in terms of achieving corporate goals, a positive relationship with employees' representatives. (CCH Australian Industrial Law News, May 2002)

In summary, union bargaining fees as expressed as a provision of a (Division 2) certified agreement are likely to be lawful, but in practice it may be difficult to enforce payment, since enforcement triggers potential discrimination issues, i.e. of a charge being directed to a non-member.

Is a $500 bargaining fee too high?

The issue of the extent of the charge and the inequity of different income earners meeting a fixed charge is more likely to be the live issue in the compulsory bargaining fee debate. Should a part-time worker pay the same fee as a full-time worker; or casual workers? What about apprentices and trainees, should they be required a fixed charge? It is in this area of the level of the charge where rules are likely to be needed, and one suspects that as these provisions become more frequent in agreements and give rise to objections, it is possible that they may be challenged on the grounds of equity, especially since in the ETU case, the charges were set at a higher rate than the ordinary equivalent membership fee.

The Australian Democrats have proposed the following parameters on the setting of such fees:

  • Advance notice: individuals should know in advance of paying a fee, what that fee will be, and what it purchases
  • The fee should be a one-off for the service, not an annual charge;
  • No coercion: no one should be coerced into paying a bargaining fee. Payment of fees should be entirely voluntary;
  • No payment, no benefit
  • Fee level: individuals have a right to know in advance the relevant fee, and it should be set at a reasonable level.
  • Clear expression in an agreement.

(Source: Report on the provisions of bills to amend the Workplace Relations Act 1996, p.66)

How far can union bargaining fees spread?

It is best to answer this question with reference the available data on the arrangements under which employees are employed. Some recent data on the legal forms of employment (awards, agreements etc) has come from the ABS Employee Earnings and Hours for May 2000. It shows that the largest number of employees (40%) work under direct arrangements with their employer, i.e. not directly under an award, nor under a collective workplace agreement. This arrangement includes those who work under AWAs (and other individual arrangements sanctioned under State laws). Still the bulk of these work without a formal agreement, and appear to work under common law employment contracts. So this group is beyond the grasp of collective workplace agreements which may contain a bargaining fee provision.

Then those whom work directly under awards constitute 23 per cent of employees. As noted federal awards do not countenance bargaining fees as an industrial matter, since these arrangements do not pertain to the relationship of employer and employee. In any case, Parliament would need to broaden the 'allowable matters' of federal awards [WR Act s.89(A)] to allow bargaining fees. Therefore union bargaining fees cannot be charged to this group. Note that in Queensland and New South Wales there are steps being made for the recognition of bargaining fees, perhaps through awards, although provision for bargaining fees was not included in the 1999 amendments to the NSW industrial legislation. (See DEWRSB Submission to the Senate Employment Committee Review of the Workplace Relations Amendment (Prohibition of Compulsory Union Fees) Bill 2002, p.28).

The two groups together thus represent 63 per cent of employees, around 5 million employees.

The remainder of employees are employed under collective workplace agreements, and the bulk of these are likely to be in the federal jurisdiction.  However, possibly up to 10 per cent of the employees so covered are covered by non-union agreements which are not likely to contain union bargaining fees. There are only 1.485  million employees employed under 13 598 federal wage agreements current at 31 March 2002 according to  Trends in Federal Enterprise Bargaining March Quarter 2002 . More are employed under the terms of expired agreements. The data suggests that current workplace agreements are not growing in terms of their coverage.

To provide a more realistic assessment of the potential for these fees to spread, according to DEWR, some 361 (or approximately 5.4 percent) of federal agreements certified in 2001 contained bargaining fees, and the 'average' agreement covers about 110 employees, so about 30 000 employees and probably less may be subject to bargaining fees invoiced by unions.  In any case, such fees are unlikely to extend to even half the workforce.

Conclusion

The general conclusion which can be made is that bargaining fees reflect the heavier cost burden to the parties negotiating workplace agreements, whether these be collective agreements negotiated by unions or collective agreements negotiated by employees, or indeed individual negotiations. This brief has referred to provisions under the WR Act which allows the employer to conduct industrial action against an employee in the course of negotiating individual employment arrangements, and for this reason individuals may seek advice as to their rights and process.

Bargaining fees charged by unions in collective agreement negotiations also reflect the added costs of negotiating at the workplace level, and as well, award negotiations absorb resources. Due to pending litigation over union fees it is unwise to claim that 'they are here to stay'. Nevertheless it appears that both the culture as well as the authority for acceptance of the fees may swing towards more toward their acceptance. However, without more formal recognition, the question of enforcement of the charges may prove their downfall. The level of these charges is another matter altogether and should these fees continue, then rules are likely to be required for the setting of their rate.

Developments in 2003

On 10 January 2003, a full bench of the AIRC ruled that union bargaining agents' fees and union notification clauses are not matters that pertain to the employment relationship between employers and employees and therefore are not industrial matters which can be included in a certified agreement (refer WR Act s.170LI).

The AIRC decided not to follow the Federal Court's Electrolux No.2 case, and has also not been persuaded by moves of the NSW Industrial Commission to adopt bargaining fees (as part of its enterprise bargaining principles).

Instead, the AIRC followed the reasoning of its previous decision in Atlas Steels (National Union of Workers; re Atlas Steels Metals Distribution Certified Agreement 2001-2003 and Ors (PR917092, 29 April 2002), although as noted above in this Brief, prior to both Atlas Steels and this decision, a Full Bench of the AIRC had opined that such fees would fall outside the employment relationship.

(Refer: Appeal against decision of Ives DP, PR920990, decisions of Hamilton DP, PR921988 and PR921937 and a decision of Grainger C, PR922568, FB of AIRC, (Polites and Watson SDPP and Larkin C), PR926554, 10 January 2003.)

Following this decision, the Senate agreed to pass the Workplace Relations Amendment (Prohibition of Compulsory Union Fees) Act 2003 which was introduced into the House of Representatives on 4 December 2002. The Bill passed though Parliament on 26 March 2003 in its amended form.

The Act amends the certified agreement and freedom of association provisions in the Workplace Relations Act to:

  • prohibit conduct designed to compel people to pay compulsory bargaining services fees;
  • prohibit the inclusion of bargaining services fee clauses in agreements, and make void existing clauses; and
  • provide for the removal of such clauses.

The Act will not prevent people from making 'voluntary' contributions (fees to a union), provided there is no coercion or misrepresentation involved. Neither will the Act prevent an industrial association from enforcing payment of a bargaining services fee that is payable to the association under a contract for bargaining services. Thus, ironically, the Act endorses the payment of bargaining fees in certain situations. The Government accepted an amendment made by the Democrats in the Senate prohibiting misleading and deceptive conduct in relation to bargaining services fees. It did not accept the Senate's further amendments, which would have enabled a majority vote agreeing to a certified agreement (cited above), to have as one of its terms a compulsory bargaining services fee on all employees.

Royal Assent was given on 11 April 2003. The substantive provisions of the Act commenced on 9 May 2003.

Note also that leave has been granted by Chief Justice of the High Court Murray Gleeson and Justice Hayne for an appeal against Electrolux No.2 to the Electrolux company (May 2003). One ground for the appeal is that the Workplace Relations Amendment (Prohibition of Compulsory Union Fees) Act 2003 did not address the question of protected action being taken for other 'non-industrial' matters.

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