Bills Digest No. 138 2004–05
Workplace Relations Amendment (Extended Prohibition of
Compulsory Union Fees) Bill 2005
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
Concluding Comments
Endnotes
Contact Officer & Copyright Details
Passage History
Workplace
Relations Amendment (Extended Prohibition of Compulsory Union Fees)
Bill 2005
Date Introduced: 9 February 2005
House: House of Representatives
Portfolio: Employment and Workplace
Relations
Commencement: The
formal provisions commence on Royal Assent. The substantive
provisions commence the day after Royal Assent.
The Bill seeks to amend the
Workplace Relations Act 1996 to extend the Act s (WR
Act) prohibition on federal certified agreements containing
bargaining fees or bargaining service fees (as used in the current
Bill), to State employment agreements containing such fees where
the employer is a constitutional corporation.
In Parliamentary Library publication Bargaining Fees and
Workplace Agreements, a bargaining fee was described as:
a charge made for the negotiation of a workplace
agreement. They are not dissimilar to fees charged by professionals
such as solicitors (or accountants). In the federal jurisdiction, a
workplace agreement may take a variety of forms (certified
agreements and Australian Workplace Agreements). 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.(1)
The Government terms such fees levied by unions against
non-unionists as 'compulsory union fees' as often it may be cheaper
for the employee to join the union rather than pay the fee. The
Government thus sought to prohibit certified agreements from
containing bargaining fee clauses (measures discussed below).
-
The background to the adoption of bargaining fees by unions in
certified agreements has been canvassed previously in Bills
Digests, but might be again reviewed and updated.
-
In June 2000 the ACTU Congress endorsed a policy that member
unions may seek to insert a 'fee for service' clause in new
certified agreements (CAs), under which a negotiating fee would be
levied on those for whom the union had negotiated a section 170LJ
agreement. (Section 170LJ agreements are one form of CA permitted
under the WR Act).
-
The purpose of bargaining fees was to prevent non-unionists
'free riding' on members. A number of unions became acquainted with
the inclusion of such fees in US and Canadian collective agreements
to eliminate the free-rider problem, following overseas study tours
in the 1990s.
-
Certain unions then sought to recover the expenses involved with
enterprise bargaining by charging a fee to non-members. In some
cases a provision of the agreement itself provided for the payment
of the fee, usually via deduction from pay, on other occasions by
direct invoice.
-
Where a CA contained a bargaining fee provision, the policy
could be justified on the basis that under section 170LT of the WR
Act, all employees bound by the agreement are required to approve
it, usually by a ballot, and section170MDA prevents the CA
discriminating between unionists and non-unionists.
-
However, the use of bargaining fees in CAs was opposed by the
Federal Government which viewed the use of these fees as a de facto
compulsory union membership fee, with recourse to their imposition
being prompted primarily by the fall in union membership.
-
In 2000, the Employment Advocate (EA) intervened in the
certification process of a number of agreements negotiated by the
Communications, Electrical, Electronic, Energy, Information,
Postal, Plumbing and Allied Services Union (CEPU, its electrical
division sometimes referred to as the ETU). These contained
provisions for the levying of these fees (set at 1 per cent of an
employee's salary or $500 pa whichever was the greater).
-
The EA argued that these agreements contained an 'objectionable
provision' in contravention of subsection 170LU(2A), because the
provision required conduct allegedly violating the 'freedom of
association' provisions of the WR Act (Part XA). It is helpful to
understand these provisions are supposed to prevent coercion to
associate, meaning not to join (usually) a union, as well as
preventing conduct preventing employees from joining unions, that
is allowing them freedom to join or associate (see discussion
below), and the WR Act s freedom of association provisions are
based, inter alia, on the Constitution s corporations power.
-
The EA's objections in the CEPU agreements matter were brought
before the Australian Industrial Relations Commission (AIRC) over
2000-01. Under section
298Z (removal of objectionable provisions) of the WR
Act, the EA sought to have the clauses removed. The AIRC
concluded that although the action (charging a fee) may be for a
prohibited reason, the intention or motive of the conduct was an
essential component of a breach of section
298K, and the provision did not disclose a prohibited reason as
the intention or motive. (In January 2003 however a Full Bench of
the AIRC held in a challenge to the certification of a number of
agreements, that such fees did not pertain to the
employment relationship, offending section
170LI.(2))
-
The Electrolux company contested elements of a log of claims
served upon it by unions including the Australian Workers Union
(AWU) in the Federal Court in 2000 (referred to here as Electrolux
No.1).(3) In 2001 Justice Merkel found against the
industrial action taken in support of including bargaining fees in
a certified agreement, that is, that the industrial action was
unprotected as at least one component of the claim, the bargaining
fee provision, could not be validly included in a certified
agreement as it did not pertain the relationship of employer and
employee.
-
In the appeal decision, a Full Bench of the Federal Court held
on 21 June 2002 that industrial action taken to pursue a union log
of claims was legitimate, including over all of the claims
(referred to as Electrolux No.2).(4)
-
The Electrolux company and the employers' association,
Australian Industry Group (AiG) commenced a challenge to the
Electrolux decision in the High Court in July 2002. In 2004, the
High Court found that bargaining fees did not
pertain to the employment relationship, that is, of the employer
and employees in their capacity as such. Further, the High Court
found that CAs containing non-pertaining matters were void
(referred to as Electrolux No.3).(5)
-
The inclusion of bargaining services fees in (federal)
union-negotiated certified agreements was addressed in the first
Bill prohibiting bargaining services fees, the Workplace Relations
Amendment (Prohibition of Compulsory Union Fees) Bill 2001. That
Bill failed to pass the Senate.
Following the November 2001 federal election, the Government
introduced the Workplace
Relations Amendment (Prohibition of
Compulsory Union Fees) Bill 2002 (see Bills Digest No.108
2001-2002). That Bill was laid aside on 18 September 2002,
following the Government's rejection of Senate amendments. However
its successor Bill was passed by the Parliament on 26 March 2003
taking the form of the
Workplace Relations Amendment (Prohibition of Compulsory Union
Fees) Act 2003, which prevents the inclusion of bargaining
fees in certified agreements amongst other changes (see also the
Senate Report on the Bill).
In Bills
Digest 101, 2002-03 it was noted that the New South Wales and
South Australian jurisdictions had addressed bargaining fees in the
context of collective bargaining negotiations in the respective
States.
The following extracts from the Australian Labour Law
Reporter updates these and other developments.
New South
Wales
In its 2002 review of the principles for
approving enterprise bargaining agreements the full bench of the
NSW Industrial Relations Commission inserted a new clause relating
to union bargaining fees
(see cl 2.9).
The Commission rejected arguments from
employer bodies that the Act or any principle of law prohibited the
inclusion of a provision in an enterprise agreement permitting the
payment of a fee by employees to a third party involved in the
negotiating or maintenance of an enterprise agreement. While the
inclusion of such a provision might be appropriate in some
circumstances and unacceptable in others, there was no
jurisdictional impediment to approval.
The Commission will thus have to consider
whether it is appropriate for a bargaining fee clause to be
included in registered enterprise agreements on a case by case
basis. Issues that the Commission will have to consider when
determining whether or not to approve an enterprise agreement
containing a bargaining fee clause are:
whether the provision is a condition of employment;
whether questions arise under sec 209 and sec 210 of the Act (Industrial Relations Act
1996 NSW ie, concerning freedom of association and freedom
from victimisation);
for the purposes of sec 35(1)(b) (allowing approval so long as there is
no net detriment) and principle 4 (requiring consultation), the
nature and extent of the involvement of non-member employees in the
process of bargaining and ratification of the provision, and the
information provided to those persons about the bargaining agent
and the nature and extent of the fee charged; and
for the purposes of sec 35(1)(d) (prohibiting approval if there has been
duress) and principle 4 (requiring consultation), the relationship
between the bargaining agent and the persons affected by the fee
and the nature of any consultative process with such
persons.(7)
The effect of sec 141(1) (Industrial Relations Act 1999,
Qld) is that an agreement cannot be certified if it contains a
provision that is not about the relationship between the employer
and employees, unless the provision is necessary for the effective
operation of another provision of the agreement that is about the
relationship: AWU v Skills Training Mackay
(2002) 51 AILR 9-206. In that decision the Full
Bench held that certified agreements may not contain bargaining fee
clauses irrespective of whether the parties have agreed to such a
provision
However, a different finding was reached with respect to
provisions for the deduction of union fees. It was held that if
parties to an agreement agreed to the provision, then it fell
within the employment relationship, particularly as payments to a
third party of this kind often provided a corresponding benefit to
both the employer and employee.(8)
The South Australian Industrial Relations Commission has
approved the inclusion of bargaining fees in South Australian
enterprise agreements but warned that the level of the fee may be
discriminatory and all applications will be dealt with on a
case-by-case basis.
In an agreement between the Liquor, Hospitality and
Miscellaneous Workers Union (LHMU) and security company Ian Gregory
Morrison Pty Ltd, the Full Bench allowed the inclusion of a
bargaining fee clause which will see non-members of the union pay
80 per cent of union membership dues per year (non-members will pay
$232.96 per year while members of the union will pay $291.20 per
year): Ian Gregory Morrison Pty Ltd (SA) Patrol and Security
Officers Enterprise Agreement 2002-2004 (No 2) - Bargaining Agents
Fee [2004] SAIRComm 15 (14/4/04).
The decision follows on from an earlier case where the Full
Bench found that it had jurisdiction to vary an enterprise
agreement to include a bargaining fees
clause: Ian Gregory Morrison Pty Ltd (SA) Pty Ltd Security
Officers Enterprise Agreement 2002-2004 [2003] SAIRComm 36 ; (2003) 53 AILR 350-018 (17 June 2003).
The Full Bench found that the definition of an industrial matter
under State law is broad enough to include bargaining fees, in
contrast to decisions in the federal jurisdiction.
However, the Full Bench warned that in some cases the fee level
may be discriminatory, as was the case in the initial form of the
agreement between the LHMU and Ian Gregory Morrison, where the
clause submitted by the parties was equal to a full year's union
payroll deductions. The Full Bench found that the fee set a
disproportionate cost for the bargaining service, given the union
dues paid by members cover more services than just the union's role
as a bargaining agent. If the fee was designed to penalise
non-members or those that use alternative bargaining services it
was doubtful the clause could be sanctioned. (9)
The Minister for Employment and Workplace Relations, the Hon
Kevin Andrews has argued in his
second reading speech for this Bill that bargaining fees,
including those sanctioned in state jurisdictions, impose
obligations on non unionists for a service which they did not
request, and that such fees may be negotiated in state industrial
jurisdictions:
Bargaining agent fee clauses in agreements purport to impose an
obligation to pay a fee on an employee who is not a member of a
union for bargaining services that they did not request. This means
non-union workers have to pay for union negotiations at their
workplaces even though their concerns may not be represented at
all. Effectively, bargaining agent fees act as backdoor compulsory
unionism. They are contrary to the principles of freedom of
association and should not be included in any form of industrial
instrument.
The Workplace Relations Amendment (Prohibition of Compulsory
Union Fees) Act 2003 has been successful in addressing
bargaining agents fee clauses in federal agreements with bargaining
fee provisions removed from 10 certified agreements in January and
February of 2004. A further 572 applications made by the Office of
the Employment Advocate are currently being considered by the
Commission. However, as progress is made in the federal
jurisdiction, a number of unions have sought to include such
clauses in agreements made under State legislation. Recent cases in
State jurisdictions have confirmed that bargaining agent fees
clauses can be included in State agreements
The Workplace Relations Amendment (Extended Prohibition of Compulsory Union Fees) Bill 2005
will extend the prohibition on the inclusion of bargaining agents'
fee clauses in agreements beyond agreements certified under the
Workplace Relations Act 1996 to also cover any state employment
agreement to which a constitutional corporation is a
party.(10)
Two issues raised in the second reading speech
to the Bill raise questions about the principles of freedom of
association and in this context, freedom of association in the
negative (that is e the Bill attempts to ensure that workers are
not compulsorily forced to join unions), and, the use of the
Constitution s corporations power (section 51(xx)) to extend the
application of federal law.
Convention 87
of the International Labour Organisation establishes freedom of
association in an industrial context.(11) It provides
that workers and employers shall have the right to establish, and
subject to the rules of the organisation, join organisations of
their own choosing without authorisation (for example, from an
employer). The convention is silent on the negative freedom, that
of workers not being compelled to join. Australia ratified this
convention in 1973.
A negative freedom of association however was
found by the European Court of Human Rights (ECHR), in a now
landmark case which involved the closed shop and the British rail
industry in the 1970s.(12) Non union employees
challenging the closed shop relied on the Council of Europe s
Convention for the Protection of Human Rights and Fundamental
Freedoms, which as written did not confer or guarantee any
right not to be compelled to join an association.
Council
of Europe s freedom of association case -
Majority decision
The majority decision noted that the relevant
article of the convention did not stipulate a negative freedom of
association:
Article 11 Freedom of assembly and association
1. Everyone has the right to
freedom of peaceful assembly and to freedom of association with
others, including the right to form and to join trade unions for
the protection of his interests.
2. No restrictions shall be
placed on the exercise of these rights other than such as are
prescribed by law and are necessary in a democratic society in the
interests of national security or public safety, for the prevention
of disorder or crime, for the protection of health or morals or for
the protection of the rights and freedoms of others. This article
shall not prevent the imposition of lawful restrictions on the
exercise of these rights by members of the armed forces, of the
police or of the administration of the State.(13)
The majority decision also quoted the view of the Conference
drafting the convention that in light of the practice of closed
shop arrangements, it was undesirable to introduce a non-one shall
be compelled to join provision in that convention:
On account of the difficulties raised by the
'closed-shop system'
in certain countries, the Conference in this connection considered
that it was undesirable to introduce into the Convention a rule
under which 'no one may be compelled to belong to an association'
which features in [Article 20 par. 2 of] the United Nations
Universal Declaration of Human Rights" (Report of 19 June 1950 of
the Conference of Senior Officials, Collected Edition of the
"Travaux Pr paratoires", vol. IV, p. 262).
The majority decision also argued that it did not follow that
the negative aspect of a person's freedom of association fell
completely outside the ambit of Article 11, or that each and every
compulsion to join a particular trade union was compatible with the
intention of that provision:
To construe Article 11 as permitting every
kind of compulsion in the field of trade union membership would
strike at the very substance of the freedom it is designed to
guarantee (14)
Council
of Europe s freedom of association case -
Dissenting judgment
A dissenting judgement by three judges sought to resolve the
positive and negative aspects of the freedom of association by a)
supporting the closed shop as a union security device and b)
suggesting as a means to protect conscientious objectors, that
national laws exclude non-membership of a trade union as a reason
for dismissal, much as Australia s WR Act does: subparagraph170CK(2)(c).
The dissenting judgement argued:
The positive freedom of association safeguards the possibility
of individuals, if they so wish, to associate with each other for
the purpose of protecting common interests and pursuing common
goals, whether of an economic, professional, political,
cultural,
recreational or other character, and the protection consists in
preventing public authorities from intervening to frustrate such
common action. It concerns the individual as an active participant
in social activities, and it is in a sense a collective right in so
far as it can only be exercised jointly by a plurality of
individuals.
The negative freedom of association, by contrast, aims at
protecting the individual against being grouped together with other
individuals with whom he does not agree or for purposes which he
does not approve. It tends to protect him from being identified
with convictions, endeavours or attitudes which he does not share
and thus to defend the intimate sphere of the personality. In
addition, it may serve the purpose of protecting the individual
against misuse of power by an association and against being
manipulated by its leaders. However strongly such protection of the
individual may sometimes be needed, it is neither in logic nor by
necessary implication part of the positive freedom of
association.
It follows that union security arrangements and the practice of the
"closed shop" are neither prohibited, nor authorised by Article 11
of the Convention. Objectionable as the treatment suffered by the
applicants may be on grounds of reason and equity, the adequate
solution lies, not in any extensive interpretation of that Article
but in safeguards against dismissal because of refusal to join a
union, that is in safeguarding
the right to security of employment in such circumstances at
present, it is therefore a matter for regulation by the national
law of each State(15).
The Senate s Employment Workplace Relations and Education
Committee reviewed the Workplace Relations Amendment (Termination
of Employment ) Bill 2002 which also proposed to extend the federal
jurisdiction of the Commonwealth in respect of termination of
employment. Professor George Williams of the University of New
South Wales supported the proposed extension of Commonwealth power
(although not necessarily the form of the national dismissal system
proposed) in a submission on the Bill:
It is clearly the responsibility of the
federal Parliament to enact laws for national needs. Our economy
does not consist of discreet and insular sectors of commerce within
each State or even within Australia, but exists within a world of
global markets that creates competition and interdependence with
the economies of other nations. Section 51(xx) of the Constitution
grants legislative power to the Commonwealth over foreign
corporations, and trading or financial corporations formed within
the limits of the Commonwealth Most of the case law on section
51(xx) has concerned trading corporations. There is an unresolved
division of opinion in the High Court on the scope of the power
(although more judges have tended towards a broader view of the
power in later cases). The focus of debate has been upon which
activities of the listed corporations can be regulated under the
power. Two possible views, a narrow and a broad view, border the
possible scope of the power.(16)
A counter opinion to the desirability of
extension of Commonwealth jurisdiction is evident in the views of
Professor Ron McCallum (Dean Faculty of Law, University of Sydney).
In a recent interview, he made the following points:
-
The main problem with relying on the corporations power as the
basis for a move towards a unitary IR system, is that it leaves out
thousands of workers, meaning another tier of regulation is still
required.
-
25 per cent of Australian workers were not employees of trading
or financial corporations. This means that this group would not
have the employment law governed by the proposed national system.
Even if you accepted former Workplace Relations Minister Peter
Reith's figures that the Victorian referral of powers brought the
number of those left out down to 15 per cent, it was still
significant .
-
The question then became, "who was going to ensure my nanny was
paid a minimum wage, who was going to worry about the little
people, the personal services workers".
-
Other problems were that labour law became "corporatised",
because the focus of the legislation shifted to the corporation
rather than to the rights of employees. Also, it was a grey area as
to whether the corporations power extended to all the conditions of
employment of employees of the foreign, trading or financial
corporations it covered.(17)
In summary there conflicting views as to whether the
Constitution s corporations power is a suitable constitutional base
to extend the reach of the federal workplace jurisdiction.
Item 1 repeals and replaces subsection 298B(1)
(definition of bargaining services). The
expanded definition replicates the existing definition (which
applies to federal certified agreements) but adds services provided
by an industrial association in relation to the making of,
variation of or termination of a State employment agreement, or a
proposed State employment agreement to the
definition.(18)
Item 2 inserts proposed subsection
298Y(3) providing that a term of a State employment
agreement to which a constitutional corporation is a party, is void
to the extent that it requires payment of a bargaining services
fee. Proposed subsection 298Y(4) clarifies the
scope of the terms permits and requiresused in
section 298Y, replicating the definition of these terms found
currently under existing subsection 298Z(7).(19)
Item 3 (Application) provides that the
prohibition of bargaining fees in state agreements applies to all
State employment agreements entered into on or after the
commencement of item 2 (the day after the Act receives Royal
Assent).
The Bill when enacted may be used by certain State governments
to challenge the extension of the federal workplace jurisdiction
over the States, with the likely support of unions. In essence such
a challenge may centre on the validity of use of the corporations
power as a basis for a law, which prohibits the payment of a fee to
the union by an employee under a state employment agreement. It may
be found that the corporation s relationship with an employee and a
third party union is not directly related to the employment
relationship, and may not be supported by the corporations
power.
-
Steve O Neill and Bronwen Shepherd, Bargaining
fees and workplace agreements, E Brief, Department of
Parliamentary Library, 2003.
-
AIRC, PR26554, 10 January 2003.
-
Electrolux Home Products Pty Ltd v Australian Workers Union
(FCA, No. S157 of 2001, 14 November 2001.
-
Automotive,
Food, Metals, Engineering, Printing & Kindred Industries Union
v Electrolux Home Products Pty Limited [2002] FCAFC 199 (21 June
2002).
-
Electrolux Home Products Pty Ltd v Australian Workers
Union [2004] HCA 40 (2 September 2004).http://www.austlii.edu.au/au/cases/cth/high_ct/2004/40.html
-
Jacob Varghese, Bills Digest No. 56, 2004-05, The Workplace
Relations Amendment (Agreement Validation) Bill 2004,
Parliamentary Library, Department of Parliamentary Services.
-
CCH, Australian Labour Law Reporter at 60 850.
-
ibid., at: 61 560.
-
ibid., at: 61 770.
-
The Hon Kevin Andrews, Second Reading Speech to the Workplace
Relations Amendment (Extended Prohibition of Compulsory Union Fees)
Bill 2005, House of Representatives, Hansard, 9 February
2005, p. 1.
-
International Labour Organisation, C87 Freedom of
Association and Protection of the Right to Organise
Convention, 1948.
-
Young, James
and Webster v. the United Kingdom (7601/76) [1981] ECHR 4 (13
August 1981).
-
ibid., cited in the majority decision.
-
ibid
-
ibid.
-
Refer to Professor Williams submission to the Senate Inquiry
into Provisions of the Workplace Relations Amendment (Termination
of Employment) Bill 2002,
http://www.aph.gov.au/senate/committee/eet_ctte/completed_inquiries/2002-04/teb02/submissions/sublist.htm
-
Interview with Professor Ron McCallum, Dean Faculty of Law,
University of Sydney reported in Andrews outlines IR plans ,
www.workplaceexpress.com.au,
25 February 2005.
-
A definition of State Employment Agreement is provided in
subsection 4 (1) of the WR Act.
-
Section 298Z WR Act deals with the removal of objectionable
provisions from awards and CAs.
Steve O'Neill
17 March 2005
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 2005
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, 2005.
Back to top