 |
Bills Digest No. 56, 2004–05
Workplace Relations Amendment (Agreement Validation) Bill 2004
WARNING:
This Digest was prepared for debate. It reflects the legislation as introduced
and does not canvass subsequent amendments. This Digest does not have
any official legal status. Other sources should be consulted to determine
the subsequent official status of the Bill.
CONTENTS
Passage History
Purpose
Background
Main Provisions
Conclusion
Endnotes
Contact Officer & Copyright Details
Passage History
Workplace Relations Amendment
(Agreement Validation) Bill 2004
Date Introduced: 17 November 2004
House: Senate
Portfolio: Employment and Workplace Relations
Commencement: On
the day of Royal Assent
This Bill proposes to retrospectively validate certain
Certified Agreements whose validity has been brought into question following
the High Court of Australia’s decision in Electrolux
Home Products Pty Ltd v The Australian Workers’ Union and Others
(Electrolux).(1)
On 2 September 2004, the High Court delivered its judgement in the Electrolux
matter. The case concerned a question as to whether ‘bargaining agent’s
fees’—in which employees are required to pay a fee to a union as a contribution
to the costs of negotiating a certified agreement—could be included in
Certified Agreements (CA) made under the Workplace Relations Act 1996.(2)
Under s. 170LI of that Act, an agreement can only be certified if it
is ‘about matters pertaining to the relationship between’ employers and
employees. Under s. 170ML, parties are entitled to take industrial action
in support or advancement of a proposed CA. The Act provides that action
taken under this provision is ‘protected action’ immune from civil or
criminal liability. Under s. 170NC, industrial action taken or threatened
in pursuit of a new agreement or a variation to an agreement is illegal,
unless it is protected action. The interaction between ss. 170LI, 170ML
and 170NC means that action taken in pursuit of matters that do not
pertain to the employment relationship may not be protected action and
may therefore be illegal. Accordingly, Electrolux also concerned
a secondary question as to whether action taken in pursuit of bargaining
agent’s fees was protected and legal action.
By a majority of six judges to one—with Justice Kirby the dissenter—the
court made the following key findings:
i. CAs can contain only matters which
pertain to the relationship between employers and employees ‘in their
capacity as such’.(3) Provision for the collection of bargaining
agent’s fees from employees by employers is not such a matter and therefore
may not be included in CAs
ii. any CA which contains matters which
do not pertain to the employment relationship (‘non-pertaining matters’)
is invalid, and
iii. any action taken in support or advancement
of a proposed agreement which includes non-pertaining matters is not
protected action.
Each of these findings has brought its own uncertainty to the conduct
of industrial relations in Australia.
The first finding reaffirmed a test that has been used by previous courts
to determine the allowable content of awards and agreements (hereafter
referred to as the ‘pertaining to’ test).(4) As far as the
application of that test to bargaining agent’s fees was concerned, the
Court’s finding was moot—at least with respect to any future cases—as
Parliament had enacted legislation specifically prohibiting such provisions
while Electrolux was still being litigated.(5) But by
reaffirming a narrow test as to what ‘pertains’ to the employment relationship,
the Court has left some observers wondering about what other types of
matters might also be ‘non-pertaining’. The Australian Financial Review
suggested that ‘restrictions on the use of casuals, labour hire or non-union
contractors, rights of union entry, dues deductions and training leave
for delegates’ were all ‘now unenforceable’.(6)
The second finding, that any CA containing non-pertaining matters was
invalid, cast into doubt the validity of many existing agreements. The
full bench of the Federal Court had earlier decided that, even if a CA
contains some non-pertaining matters, it could be a valid agreement if
the agreement ‘as a whole’ could be said to pertain to the employment
relationship.(7) The High Court took a much narrower approach,
requiring that valid certification only occurs where ‘all the terms of
the agreement are about matters pertaining to the requisite relationship’
(with an exception for matters that are merely ‘ancillary, incidental
or machinery’ in nature).(8)
Electrolux made it clear that inclusion of a bargaining agent’s
fee provision could invalidate an entire agreement, but uncertainty remains
about agreements that contain other matters that might be ‘non-pertaining’.
The narrower the pertaining test is applied in practice, the larger the
number of agreements in question. Doubt over the validity of existing
agreements can create serious concerns for both employers and employees.(9)
For employers, the prohibition in the Workplace Relations Act on industrial
action during the life of a valid agreement would be ineffective if the
agreement is in fact invalid under the Electrolux test. This would
allow unions to initiate new bargaining periods and take industrial action
before the nominal expiry date of the old (invalid) agreement. For employees,
a question mark over the validity of a CA puts a question mark over any
of the employment conditions it guarantees. Accordingly, a simple underpayment
claim could quickly escalate into major—and costly—litigation over the
validity of the CA itself.
It is the uncertainty created by this finding that the current Bill seeks
to address.
The third finding has also introduced uncertainty into the legal status
of protected action. By deciding that industrial action is not protected,
and potentially illegal, when it is taken in pursuit of a proposed agreement
that includes even one non-pertaining matter, the High Court has cast
doubt over the status of both past and future industrial action. As Electrolux
shows, industrial action which was thought to be protected and legal at
the time it was taken may later be found to be unprotected under a different
application of the ‘pertaining to’ test. It is possible that some employers
or other parties adversely affected by industrial action will use the
Electrolux precedent to initiate proceedings for penalties or compensation
in relation to industrial action taken long ago.
Given the uncertainty over what is and is not ‘pertaining’, the status
of any future industrial action will be also uncertain. As Electrolux
shows, even High Court and Federal Court judges can disagree over
whether or not matters pertain to the employment relationship. Yet an
effect of Electrolux is that unions are expected to make a reliable
prediction as to whether proposed provisions ‘pertain’ before commencing
any industrial action, or risk penalties later on. As Justice Kirby noted:
To expose an industrial organisation of employees to
grave, even crippling, civil liability for industrial action, determined
years later to have been “unprotected”, is to introduce a serious chilling
effect into the negotiations that such organisations can undertake on
behalf of their members.(10)
The present Bill is the Government’s proposed legislative response to
the uncertainty that Electrolux has generated. As the second reading
speech said:
The Government is determined to address the concerns of employers
and workers across Australia in putting forward this Bill. Not to remedy
the uncertainty raised by the Electrolux decision would be unjustifiable,
particularly in the lead up to the Christmas holiday period.(11)
In summary, the Bill specifically addresses the uncertainty over the
status of existing CAs and Australian Workplace Agreements (AWAs). It
does not address the uncertainty over the application of the ‘pertaining
to’ test, nor the uncertainty over future agreements, nor the uncertainty
over the status of past and present industrial action.
This Bill has been referred to an inquiry
by the Senate Employment, Workplace Relations and Education Committee.
At the time of writing, it has received submissions and is due to report
on 29 November 2004.
Significant interest groups have submitted to the inquiry and their positions
are summarised below.
The ACTU
submits that the Bill ‘does little, if anything, to resolve the problems
associated with the need for certainty for parties to certified agreements’.(12)
In particular, the ACTU notes that the Bill does not address concerns
about the validity of post‑2 September 2004 agreements. The
ACTU also submits that the narrowing of the allowable content in agreements
undermines the principles of collective bargaining, which requires Government
to enforce those agreements reached between employers and unions on matters
they believe are relevant.(13)
The ACTU makes the following recommendations:
(i)
Remove the requirement for industrial disputes and certified agreements
to be about matters pertaining to the employment relationship;
(ii)
Amend the current requirement that the dispute or agreement be about
matters pertaining to the relationship between employers and employees
to permit it to, alternatively, pertain to the relationship between
employers and unions, employer organisations and unions, unions and
employees or employer organisations and unions;
(iii)
Amend the Act in either of the above ways in respect of agreements only;
(iv)
Amend the Bill to validate agreements in their entirety, irrespective
of when they were certified;
(v)
Amend the Bill to validate, in their entirety, agreements certified
prior to the Bill’s commencement date and, in respect of agreements
certified after that date, to provide for their certification if, taken
as a whole, they pertain to the employment relationship.(14)
The ACTU also recommends ‘that the Act should be amended to protect industrial
action which has been taken in support of claims for a certified agreement,
whether or not those claims include matters which might be held not to
pertain to the employment relationship’.(15)
AIG
submits that the Bill is ‘a sensible and practical piece of legislation’
that it ‘strongly supports’.(16) According to AIG, ‘[s]ome
unions have sought to exploit the uncertainty regarding the validity of
existing agreements and embarked upon industrial campaigns to renegotiate
existing certified agreements’.(17) For this reason, it supports
the Government’s attempt to validate existing agreements through this
Bill.
AIG also supports the Government’s decision not to address other consequences
of Electrolux. In particular, it would not support any attempt
to validate post-2 September agreements as these have been vetted by the
Australian Industrial Relations Commission (AIRC) or the Employment Advocate
already. Similarly, it considers the Government’s decision not to provide
a fuller definition of the ‘pertaining to’ test sensible as ‘to do so
would be almost impossible’ and the ‘issue is best left to the AIRC and
relevant Courts to determine’.(18)
The ACCI
submission also supports the Bill. However, ACCI does suggest that
some leeway might be provided to validate those agreements certified after
2 September 2004 but agreed and voted on before that date. (19)ACCI
makes no comment on the areas the Bill does not address.
The Australian Labor Party has not stated its position on this Bill.
Its new industrial relations spokesperson, Stephen Smith, has been reported
as saying that, along with any other new workplace relations proposals,
the ALP will be judging this Bill on its merits.(20)
Newspaper reports suggest that the Australian Democrats intend to support
the Bill. Senator Andrew Murray has been quoted as saying that the Bill
‘appeared to be sensible, but he needed to see it and consult his colleagues.’(21)
The Australian Greens do not appear have stated a position on the Bill
at this stage.
Item 1 would retrospectively validate certain certified agreements
made or varied before 2 September 2004, the date the High Court delivered
its judgment in Electrolux. Specifically, it provides that agreements
made or varied before that date remain valid to the extent that they contain
permitted matters, even if they contain one or more matters that
are not permitted (proposed s. 170NHA for new agreements and
s. 170NHB for variations to agreements).
Proposed s. 170NHC defines permitted matters for the purposes
of CAs under s. 170LI (otherwise known as ‘Division 2 agreements’) in
almost the same terms used in s. 170LI to describe the content of certifiable
agreements. In other words, a permitted matter under the Bill is a ‘pertaining
matter’ under the Electrolux test.
The effect of these provisions is to rectify the uncertainty regarding
the validity of existing CAs that has followed Electrolux.
It will be recalled from the Background that one of the key findings of
Electrolux was that an agreement is invalid if it contains even
one non‑pertaining matter. That rule would remain for all agreements
concluded and certified after the 2 September 2004. However, the Bill
proposes to retrospectively declare valid any such agreements certified
before that date, at least as far as the pertaining matters are concerned.
Any non-pertaining (or, in the language of the Bill, non-permitted) provisions
will be unenforceable, but they will not undo the validity of the remainder
of the agreement.
The Bill goes beyond validation of CAs made under s. 170LI (which were
the subject of Electrolux) but also deals with agreements made
under ss. 170LO and 170LP and with Australian Workplace Agreements (AWAs).
Certified agreements can be made under ss. 170LO and 170LP to settle,
prevent or maintain a settlement of an ‘industrial dispute’ or ‘industrial
situation’ (these are known as ‘Division 3 agreements’).(22)
As with Division 2 agreements, proposed s. 170NHC would define
‘permitted matters’ in similar terms to those used in ss. 170LO and 170LP
to describe the circumstances in which these agreements can be made. As
the definition of the industrial dispute includes a requirement that the
dispute concerns ‘matters pertaining to the relationship between employers
and employees’, this essentially means that permitted matters are pertaining
matters. As with Division 2 agreements, the effect of the Bill would be
to ensure that pre-2 September Division 3 agreements are not invalid simply
because they include one or more non-permitted matters.
Item 2 deals with AWAs. As with CAs, the Bill would ensure that
pre-2 September AWAs are not invalid simply because they contain some
matters that do not pertain to the employment relationship. Electrolux
did not consider AWAs at all. Nonetheless, the Government felt that the
logic of Electrolux could apply equally to AWAs and have accordingly
made appropriate provision to validate pre-Electrolux AWAs in this
Bill.(23)
Comments
What the Bill
does not do
This Bill is less likely to be controversial for what it does than for
what it does not do. There seems to be a consensus that Electrolux
has generated intolerable uncertainty over the validity of existing agreements
that contain potentially ‘non-pertaining matters’. This Bill is an effective
mechanism to correct that uncertainty.
However, Electrolux has also generated uncertainty in other ways
which this Bill does not address. Firstly, and most importantly, is the
uncertainty over what may and may not be included in agreements. Following
from this is the uncertainty over whether new agreements are valid or
invalid. Electrolux has demonstrated that parties cannot rely on
certification as an indication that they have a reliable and enforceable
agreement. Also following from the first uncertainty is uncertainty over
the legal status of protected action, both past and future. In the absence
of Parliamentary intervention, these uncertainties will either be resolved
by the AIRC and the Courts or linger on for years to come.
The first uncertainty that Electrolux generated, and the most
serious, is over the question of what is and is not a ‘pertaining matter’
and therefore a matter which may be provided for in an industrial instrument.
The majority in Electrolux adopted the test which had been used
in previous cases involving the definition of ‘industrial dispute’, which,
as we have seen, also involves a test of whether the matters concerned
pertain to the employment relationship.(24) Noting that Parliament
had adopted very similar language in the enactment of the provision relating
to certified agreements (s 170LI), the majority applied the old test to
the new instrument of certified agreements.(25) Justice McHugh
summarised the test in the following terms:
The cases emphasise that “matters pertaining” to relations
of employers and employees must pertain to the relation of employees
as such and employers as such, that is employees in their capacities
as employees, and employers in the capacities as employers.(26)
The test is vague and difficult to apply to actual provisions. The majority
held that bargaining agent fee provisions did not pass muster under the
test. Such provisions were more appropriately characterised as
pertaining either to the relationship between the union
and employees; or, to the extent that the claim concerned deduction
of the fee from the employees’ wages, to the relationship between the
union and the employer in its effective capacity as agent for the union.(27)
But how the test applies to other types of provisions remains unclear.
Questions have been raised about the validity of:
provisions on shop stewards’ time off for trade union
training leave; deducting union dues; encouraging union membership;
extending right of entry; giving unions a role in recruitment of employees;
obliging employers to contribute to trust funds for redundancy and employee
entitlements; and the use of contractors and casuals.(28)
Other commentators have also suggested that provisions dealing with alternative
dispute resolution, grievance procedures and post-separation employee
obligations (such as confidentiality requirements) might cause problems.(29)
Even provisions importing parts of a corporate strategic plan or mission
statement might be non-pertaining and affect the validity of an entire
agreement. Absent parliamentary modification of the law, the status of
these types of provisions can only be tested through the AIRC and the
Courts.(30) As Electrolux shows, the Commission, the
Federal Court and the High Court can easily disagree on whether a provision
‘pertains’, so protracted litigation and lingering uncertainty could be
expected for many years until reliable precedents are established on each
of the contentious species of provision.
There is a strong policy rationale against applying the test that has
traditionally be used to define ‘industrial disputes’—and by extension
the permitted scope of awards—to agreements. The move toward enterprise-level
bargaining was intended to provide more room for parties at the enterprise
level to ‘self-regulate’ their relations, without the intervention of
third parties such as the arbitral commission.(31) The interventionist
nature of compulsory arbitration arguably warrants a short legislative
leash restraining the scope of matters dealt with in awards. But where
parties at the workplace are expected to negotiate the substance of the
rights and obligations which will govern their relationship, it seems
logical that they should be given a broader scope to determine the range
of matters that might be relevant to that relationship. This changed context
was recognised by Justice Kirby who explained that the purpose of s. 170LI
was:
to restore the capacity of employers and employees, with
or without the interposition of arbitrated awards, freely to negotiate
employment conditions to govern employment relationships. They were
to be able to do so largely on an enterprise basis, without all of the
constraints of arbitrated industry-wide awards that had been such a
feature of regulation of Australian industrial conditions virtually
from federation and until recent years.(32)
This argument seems even more powerful when applied to AWAs. These allow
negotiation of employment conditions on an even more decentralised basis,
between employer and individual employee without the intervention of the
collective of employees. Yet, as the Government acknowledges through this
Bill, Electrolux’s narrow ‘pertaining to’ test logically applies
to AWAs as it does to CAs, thereby reducing the negotiating terrain for
employers and employees in concluding an AWA.
In rejecting Justice Kirby’s reasoning for a broader ‘pertaining to’
test for agreements, the majority of the High Court has effectively strengthened
the hand of state intervention in employment relationships. Applying Electrolux,
the Commission and Employment Advocate must now take much closer interest
in the content of proposed agreements to vet them for allowable and non‑allowable
content. This reduces the ambit of self-regulation and, with it, the negotiating
options available to employers and employees alike. Where the Commission
or Employment Advocate fails and lets a non-pertaining matter through,
Electrolux requires the Courts to rule the entire agreement invalid.
Now that the High Court has determined that the same narrow test that
governed the scope of awards does apply to CAs and, by extension, to AWAs,
Parliament has an opportunity to clarify what it wants of these agreements.
If the self-regulatory philosophy of CAs and AWAs is to be maintained,
a variety of options are open to the legislature, such as:
-
reinstating the position adopted by the full Federal Court, that
agreements must pertain to the employment relationship when considered
as a whole. If there are concerns that certain objectionable or irrelevant
matters might become enforceable provisions of agreements if left
to this broad test, Parliament could match this approach with specific
prohibition of those types of matters. This approach has already been
taken with the prohibition on bargaining agent’s fees in the Workplace
Relations Amendment (Prohibition on Compulsory Union Fees) Act 2003,
or
-
clear statutory provision for the types of matters that may be included
in agreements, notwithstanding the Electrolux test. This approach
suffers the disadvantage that Parliament would have to pre-empt new
categories, rather than allow them to develop organically through
negotiation between employers and employees.
Either of these approaches would have the advantage of involving Parliament—and
through it, broad public debate—in deciding what types of matters that
ought to be included in statutory agreements. If the post-Electrolux
status quo is maintained, these important policy choices will be made
by the Commission and the courts, with little public discussion until
after judgement is delivered.
While this Bill addresses the uncertainty over pre-Electrolux
agreements, it does not deal with the uncertainty generated by Electrolux
for new agreements. It would remain the case that if a new agreement contains
a single non-pertaining matter the entire agreement could be invalid and
unenforceable. Given that the pertaining/non-pertaining distinction is
not always clear, and that this Bill makes no effort to make it clearer,
the status of new agreements will remain under a cloud of uncertainty,
at least until clear precedents are developed by the Commission and the
courts.
A possible legislative response to this aspect of Electrolux might be
to provide that non‑pertaining provisions do not invalidate an entire
agreement but are simply unenforceable. This is the approach the Bill
takes to pre-Electrolux agreements. If this approach were taken,
the party insisting on the inclusion of a non-pertaining provision would
carry the risk that such a provision would be an unenforceable part of
the agreement. Such uncertainty over a provision would be an incentive
for parties to stick to clearly pertaining matters as the core of their
negotiating position. The benefit of this approach would be that any uncertainty
is quarantined to the questionable provision, not undoing the entire agreement
and the many pertaining matters therein.
The Bill does not address the uncertainties for both past and future
protected action that has followed Electrolux.
The uncertain status of industrial action taken before Electrolux
was discussed in the Background. Although the Bill would retrospectively
validate agreements certified before Electrolux, it has deliberately
chosen not to take legislative action to retrospectively ensure that industrial
action taken before the decision is deemed protected. The second reading
speech explained the rationale for this approach:
Parties could not have reasonably expected that protected
action was available to support claims for non-pertaining matters. Further,
validating past industrial action would be complex and practically difficult.(33)
Nonetheless, the speech went on to add that:
… the Government considers it would be highly undesirable
for parties to exploit uncertainty in relation to past industrial action
by initiating or threatening legal action.(34)
The statement that parties could not have ‘reasonably expected’ to take
protected action in pursuit of non-pertaining matters seems at odds with
the Government’s recognition that ‘prior to the High Court’s decision,
there was uncertainty about the correct interpretation of s. 170LI.’(35)
In making judgements about the likely legal status of action they were
about to commence, unions suffered the same uncertainty over the meaning
of s. 170LI—and therefore the scope of protected action—as everyone else.
Should it want to, Parliament could take action to retrospectively protect
industrial action which was taken before Electrolux based on misreading
of s. 170LI. The difficulty would be in distinguishing between industrial
action based on a genuine misreading of s. 170LI and action that
was clearly beyond the scope of s. 170LI however construed. This would
be a much easier task if Parliament had taken the approach of more clearly
defining the ‘pertaining to’ test, as discussed above. Then action could
be retrospectively protected if it was in pursuit of an agreement which
conformed to the new test. In the absence of this approach, Parliament
could nonetheless retrospectively protect action taken in pursuit of an
agreement which is, by virtue of this Bill, valid except in a defined
list of cases. That list could include bargaining agent’s fees and other
provisions considered objectionable. Alternatively, the list could take
its lead from Justice Kirby’s interpretation of s. 170LI and include ‘wholly
extraneous demands—such as those concerned with purely political issues,
overseas matters or matters having no relevant connection to the particular
Australian employment relationship’.(36) Many options are available
and the task need not be as ‘complex and practically difficult’ as the
Minister suggests.
The Department of Employment and Workplace Relations has suggested the
following policy rationale for the decision to validate pre-Electrolux
agreements but not pre‑Electrolux industrial action:
… unlike certified agreements, no third party vets protected
action to ensure it meets the requirements of the Act. It has always
been up to the party taking industrial action to ensure that they meet
the requirements of protected action in order to take advantage of the
very generous immunity that applies to protected action. While some
decisions of courts and the Commission may have suggested that non-pertaining
matters could be included in agreements, parties taking industrial action
could not have reasonably thought there was no risk involved in taking
industrial action in respect of matters that do not pertain to the employment
relationship.(37)
The nub of DEWR’s argument seems to be that the incorrect certification
of an invalid agreement is not the fault of the parties whereas a misjudgement
as to the status of industrial action is. Accordingly there is a more
important rationale for validating those wrongly certified agreements
than for validating misjudged industrial action.
However, it should be noted that there are immediate opportunities for
other parties to bring industrial action to an end where it is not protected
action. Accordingly, it is not only up to the party taking action to ensure
it is acting within the requirements for protected action. First among
these mechanisms is an order to return to work under s. 127 of the Workplace
Relations Act, which may be made by the Commission on its own motion or
on the application of a party to the dispute or any other person directly
affected by it. Second, the Federal Court may order an injunction against
anyone taking unprotected action in pursuit of an (invalid) certified
agreement under s. 170NG (on the basis of a contravention of s. 170NC).
If these remedies are not pursued, a unions’ misjudgement as to the status
of protected action might be considered to have been shared by the other
parties and the Commission. It seems anomalous that Parliament should
enact legislation to validate agreements all parties previously considered
to be valid, while not enacting legislation protecting industrial action
which all parties previously considered protected.
The Bill does not address the ‘serious chilling effect’ in the negotiation
of CAs that Justice Kirby identified as a result of Electrolux.(38)
As discussed in the Background, an effect of that judgment is that unions
must be very careful to ensure that any action they take is not in pursuit
of a proposed agreement containing non-pertaining matters. A misjudgement
on that issue can result in the action being ‘unprotected’ and possibly
subject to penalties and substantial civil remedies. This issue might
not be so problematic if the test of what does and does not pertain were
clearer, but this Bill makes no effort to provide a clearer test. Electrolux
itself shows that highly educated and experienced commissioners and judges
can disagree on whether a matter pertains. As the full Federal Court said:
If the parties are to make rational and confident decisions
about their courses of conduct, they need to know where they stand.
It would be inimical to the intended operation of [the relevant provisions
of the Act] to interpret s. 170ML(2)(e) in such a way as to make the
question whether particular industrial action is ‘protected action’,
and therefore immune from legal liability, depend upon a conclusion
concerning a technical matter of law… As this case demonstrates, that
may be a matter about which well-informed people have different views.(39)
This is the effect of the High Court’s majority decision in Electrolux.
This may act as a strong disincentive to taking any industrial action
and/or a strong disincentive to think of new and creative (but untested)
ways of regulating the employment relationship through agreements.
Given the High Court’s interpretation of the current law, Parliament
may want to consider whether a different approach is warranted to ensure
that the liability of parties does not depend on such ‘technical matters
of law’. The following approaches might be considered:
-
providing that all action in pursuit of an agreement—assuming other
requirements such as notification of a bargaining period and notification
of proposed action are met—is protected, unless in pursuit of specifically
prohibited provisions (such as bargaining agent’s fees, political
matters or other provisions determined by Parliament)
-
providing a very short limitation period for actions and prosecutions
arising out of protected action, to encourage any remedies to be pursued
at the time of the dispute, not years afterwards, or
-
providing that industrial action is not unprotected on the basis
that a matter in the proposed agreement is non-pertaining unless notice
is given by the other parties, the Minister or the Commissioner to
those participating in the industrial action, before or during the
action, that the status of the relevant provisions is in dispute.
The Electrolux decision has generated significant
uncertainty in Australian workplace relations. This Bill effectively addresses
one very important aspect of that uncertainty, being the validity of existing
certified agreements and Australian Workplace Agreements.
However, it does not address the post-Electrolux
uncertainty in the following areas:
-
the lack of clarity over what is and is not a matter pertaining
to the employment relationship
-
the uncertainty over the validity of agreements concluded after 2
September 2004, given the remaining uncertainty over the ‘pertaining
to’ test
-
the uncertainty over the protected or unprotected status of industrial
action taken prior to the 2 September 2004, and
-
the uncertainty over the protected or unprotected status of future
industrial action, given the continuing uncertainty over the ‘pertaining
to’ test.
In the absence of Parliamentary intervention, much of this uncertainty
will only be resolved after cases have appeared and been resolved by the
Commission and the courts. This could take many years and involve millions
of dollars in litigation expenses to taxpayers and parties.
In addition, the narrow approach to the ‘pertaining to’ test will be
an obstacle to the development of new types of agreement provisions. This
will reduce the dynamic benefits that can be expected to flow from the
decentralisation of employment regulation embodied in the shift to CAs
and AWAs from awards. The ability for employers and employees to develop
enforceable instruments that remain up-to-date with contemporary management
techniques and business models may be stymied by an overly restrictive
approach to the allowable content of these instruments. It is true that
non-pertaining matters can be formalised through non-workplace relations
mechanisms such as common law contracts and deeds. But these lack the
practical and inexpensive enforcement options available through the AIRC
that make CAs and AWAs so useful and attractive in the first place.
As well as generating uncertainty, Electrolux can also be seen
as a re-exertion of active state intervention in workplace relations.
Following more than a decade’s worth of reforms in which self-regulation
at the workplace or individual level has been promoted, Electrolux
requires the Commission and courts to play a more integral role in policing
the borders of self-regulation. While employers and employees remain free
to determine the content of agreements, subject to certain minimum requirements,
the breadth of those agreements has been circumscribed. Parliament now
has an opportunity to decide whether agreements should be so limited,
and if so how.
-
[2004] HCA 40. (Hereafter, Electolux.)
-
See Steve O’Neil, ‘Workplace Relations Amendment (Prohibition on
Compulsory Union Fees) Bill 2002 [No.2]’, Bills Digest, 101, Parliamentary
Library, Canberra, 2002-2003 for background to the bargaining agent’s
fee issue.
-
Electrolux, op. cit., per Gleeson CJ at para 9, McHugh J at
para 60, Gummow, Hayne and Heydon JJ at paras161-162.
-
The most important previous cases had been R v Portus; Ex parte
ANZ Banking Group Ltd (1972) 127 CLR 353 and Re Alcan Australia
Ltd; Ex parte Federation of Industrial, Manufacturing and Engineering
Employees (1994) CLR 96.
-
Workplace Relations Amendment (Prohibition of Compulsory Union
Fees) Act 2003.
-
‘Labor in limbo on right to strike’ (Editorial), Australian Financial
Review, 6 September 2004, p. 62.
-
Automotive, Food, Metals, Engineering, Printing & Kindred
Industries Union v Electrolux Home Products Pty Limited [2002]
FCAFC 199, quoted from Andrew Stewart, ‘Electrolux in the High Court:
Strict interpretation, uncertain results’, Australian Industrial
Law News, Issue 9, 30 September 2004.
-
Elextrolux, per McHugh J, para 100.
-
See ‘Court clarification raises new IR doubts’ (Editorial), The
Age, 10 September 2004, p. 12.
-
Electrolux, per Kirby J, para 193.
-
Senator Ian Campbell, ‘Second reading speech: Workplace Relations
Amendment (Agreement Validation) Bill 2004’, Senate, Debates,
17 November 2004, p. 12.
-
Australian Council of Trade Unions, Submission to Senate Employment,
Workplace Relations and Education Legislation Committee, Melbourne,
23 November 2004, p 4.
-
ibid, p. 5-6.
-
ibid, p. 6.
-
ibid, p. 6.
-
Australian Industry Group, Submission to Senate Employment, Workplace
Relations and Education Legislation Committee, Sydney, 23 November
2004, p. 1.
-
ibid, p. 9.
-
ibid, p. 11.
-
Australian Chamber of Commerce and Industry, Submission to Senate
Employment, Workplace Relations and Education Legislation Committee,
Melbourne, 23 November 2004, p. 15.
-
Karen Middleton, ‘Labor won’t be pushed on IR reforms’, West Australian,
1 November 2004, p. 4.
-
Megan Shaw, ‘IR laws to receive second airing’, The Age, p.
6.
-
‘Industrial dispute’ and ‘industrial situation’ are defined by s.
4, of the Workplace Relations Act 1996. For relevant purposes,
an ‘industrial dispute’ is an industrial dispute that ‘extends beyond
the borders of any one State’ and ‘is about matters pertaining to
the relationship between employers and employees’. An ‘industrial
situation’ is a situation which could lead to an industrial dispute
if preventative action is not taken.
-
Senator Campbell, op.cit.
-
Principally, the majority relied on R v Portus and Re Alcan.
See note 4 above.
-
Electrolux, op. cit., per Gleeson CJ at para 8, McHugh J at
para 61.
-
Electrolux, op. cit., per McHugh J, para 60.
-
Stewart, op. cit.
-
‘Electrolux: The ramifications’, Workplace Express, 3 September
2004. http://www.workplaceexpress.com.au
-
Paul Munro, ‘Swings, roundabouts and allowable matters’, paper for
the Centenary Convention of the Industrial Relations Association of
South Australia: The Conciliation and Arbitration Journey, Adelaide,
22 October 2004, p. 35.
-
A series of possible test cases are already being litigated: see
‘Matters pertain: Win for unions in post-Electrolux case’ Workplace
Express, 22 October 2004, ‘WA court case shaping up as next Electrolux
test’ Workplace Express, 27 October 2004 and ‘Electrolux uncertainty
continues as Merkon case withdrawn’, Workplace Express, 8 November
2004.
-
See Breen Creighton and Andrew Stewart, Labour Law: an Introduction,
3rd Edition, Federation Press, Sydney, 2000, p. 122.
-
Electrolux, per Kirby J, para 183.
-
Senator Campbell, op. cit.
-
ibid
-
Department of Employment and Workplace Relations, ‘Submission to
the Senate Employment, Workplace Relations and Education Legislation
Committee’, Canberra, 23 November 2004, p. 2. (Hereafter, DEWR.)
-
Electrolux, per Kirby J, para 219.
-
DEWR, op. cit., p. 5.
-
See above p. 4.
-
Automotive, Food, Metals, Engineering, Printing and Kindred Industries
Union v Elextrolux Home Products Pty Ltd (2002) 118 FCR 177, p,
195. Quoted in Electrolux, per Kirby J, para. 190.
Jacob Varghese
29 November 2004
Bills Digest Service
Information and Research Services
This paper has been prepared to support the work of the Australian Parliament
using information available at the time of production. The views expressed
do not reflect an official position of the Information and Research Service,
nor do they constitute professional legal opinion.
IRS staff are available to discuss the paper's contents
with Senators and Members and their staff but not with members of the
public.
ISSN 1328-8091
© Commonwealth of Australia 2004
Except to the extent of the uses permitted under the Copyright Act
1968, no part of this publication may be reproduced or transmitted
in any form or by any means, including information storage and retrieval
systems, without the prior written consent of the Parliamentary Library,
other than by members of the Australian Parliament in the course of their
official duties.
Published by the Parliamentary Library, 2004.
|
 |
