Provisions of the workplace relations amendment (Prohibition of compulsory union fees) Bill 2001
Committee’s consideration of
the bill
1.1
The Workplace Relations Amendment (Prohibition
of Compulsory Union Fees) Bill 2001 bill was introduced into the House of
Representatives on 23 May 2001. On 19 June 2001 the Senate referred the bill
to its Employment, Workplace Relations, Small Business and Education
Legislation Committee.
1.2
The Committee received 25 submissions in
relation to this bill and held a public hearing in Canberra on 31 August 2001.
A list of submissions and witnesses at the hearing are to be found in the
appendices to this report.
Background to the bill
1.3
The Workplace Relations Amendment (Prohibition
of Compulsory Union Fees) Bill 2001 would amend the Workplace Relations Act
1996 (WRA) to prevent employer organisations and unions from demanding fees
from non-members (without the individual members consent) for bargaining
services and would proscribe certain discriminatory conduct in relation to decisions
by employees about payment of such fees. An exemption to the prohibition of
fees would be provided where the industrial association obtains an individual’s
written agreement to pay a fee in advance of the bargaining services being
provided.[1]
In particular, the bill will prohibit the inclusion in enterprise agreements of
a clause allowing industrial organisations to charge a fee for service in
respect of enterprise bargaining negotiations.
1.4
The WRA provides for three
main methods of regulating conditions of employment:
- Australian Workplace Agreements (AWA) -
basically individual agreements between the employer and employee. AWAs are
subject to minimum entitlements but have mostly been restricted to higher paid
employees.
- Certified Agreements (CAs) - there
are two principal forms of CAs, with employers able to enter agreements with
unions which have at least one member in the business (section 170LJ
agreements) or with the employees of the business (section 170LK agreements).
- Awards - where neither of the above two
apply, these are usually lower paid employees, such as those covered by recent
'Safety Net' cases.
This bill is concerned with
section 170LJ agreements (LJ agreements), which cover a substantial majority of
employees covered by the WRA.[2]
1.5
The bill is not simply a reaction to recent
developments in the Australian Industrial Relations Committee (AIRC) nor
recently made 170LJ agreements. The policy intention of this bill was adopted
by the Government as far back as the WRA Amendment (More Jobs, Better Pay) Bill
1999, albeit in a slightly different statutory form. It is also the normal (and
frequent) practice of governments to amend legislation in accordance with
judicial interpretations which may render it inoperative. A judgement of the
AIRC handed down by Vice President McIntyre on 9 February 2001 has cast some
doubts on whether current legislation is fulfilling its intention. The ‘fee for
service’ issue arose from an agreement between the Communications, Electrical,
Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of
Australia (ETU) and a number of employers to have such a clause inserted in new
LJ agreements providing a ‘fee for service’. The Employment Advocate took
action in the AIRC to have the clauses removed from the agreements on the
grounds that they breached the freedom of association provisions in Part XA of
the WRA. The AIRC found that the clauses did not breach Part XA because they
would not lead to conduct by the employer which would discriminate against employees
because they are not, or do not propose to become, a member of an industrial
association, the relevant ‘prohibited reason’ in section 298L. This decision is
the subject of an appeal by the Employment Advocate.
1.6
In June 2000 the ACTU Congress endorsed a policy
by which member unions may seek to insert a ‘fee for service’ clause in new
certified agreements. This would allow a negotiating fee to be levied on those for
whom the union had negotiated a LJ agreement.
1.7
Given that the Government’s 1999 legislation
remains blocked by the Senate and given the issues arising in the case pending
before the AIRC, the Government has introduced the bill to counter a trend
whereby some trade unions are attempting to use the workplace relations system
to place an obligation on non-member employees to pay a fee, without the
employees consent, for services in relation to negotiations of certified
agreements. It is the Governments position that such arrangements, in the
absence of employee consent, amount to compulsory union fees. The Government
considers that the inclusion of bargaining agents fee clauses typically place
an obligation upon the employer to inform employees that a fee for bargaining
services is payable to the relevant union. The Government also considers that
the clauses purport to place an obligation on the employees to pay the fee to
the union.[3]
This service fee effectively means that:
Employees who have chosen not to be members of a trade union are
faced with the payment of a bargaining fee to that union, or payment of annual
trade union membership fee. Employees who are members of trade unions but who
wish to resign their membership are placed in an equally invidious position. [4]
1.8
The amount of the fee varies
between being equivalent to and in excess of annual union fees. The Hon Tony
Abbott MP, Minister for Employment, Workplace Relations and Small Business
noted in his second reading speech that in many cases the fee demanded had been
set at about $500 per year, well above the level of annual union dues. [5]
General Policy Intentions
1.9
The bill is consistent with workplace relations
policy that has been implemented since 1996. This legislation, as may be taken
from its title, emphasises the primacy of the workplace as the determining body
wherein wages ad conditions are negotiated. The role of unions is recognised
to the extent that they represent only their members and only in a given
workplace. The WRA emphasises the rights of the individual employees to
negotiate freely with employers regardless of union attitudes. It is therefore
inconsistent with the intention of the Act to allow practices to remain which
impose a continuing relationship between non-union employees and a union.
1.10
The Government therefore considers the bill to
be necessary to prevent union attempts to require non-union members to bear a
cost for union activities through the imposition of ‘bargaining agents fees’.
Such fees are typically stated to relate to costs incurred in negotiating
certified agreements with employers. The Government considers that what the
unions are seeking are not ‘bargaining agents fees’, but rather compulsory
union fees, because the unstated (and in some cases the stated) intention of
the union is that they are intended to compel employees to join the union.[6]
1.11
Government and employer organisations oppose
compulsory unionism which is, in any case, prohibited by the freedom of
association rules contained in the WRA.[7]
As outlined by the Minister in his second reading speech:
An important characteristic of Australia’s reformed workplace
relations system is the opportunity it has given for workers, union and
non-union alike, to fully participate in the formal processes of the system,
particularly in making collective or individual workplace agreements. A
significant contributing factor in this transformation has been the Coalition’s
commitment to freedom of association in the workplace. This fundamental
principle is reflected in both the objects and provisions of the Workplace
Relations Act 1996, such as those which prohibit compulsory unionism,
preference to unionists or coercion in agreement making; and in the promotional
and enforcement functions of the Office of the Employment Advocate. [8]
1.12
It has been noted that this argument is
strengthened when the fee for service to be levied is
greater than the union dues payable, providing a financial incentive for
employees to seek the lower cost union membership. [9]
1.13
The Explanatory Memorandum for the bill noted
that following the AIRC decision, union moves to have such clauses included in
certified agreements have recently increased. The Government’s position is
that such clauses are contrary to the freedom of association principles that
underpin the current workplace relations framework. Accordingly, such clauses
should not be able to be included in certified agreements and should not be
able to be sought from non-union members in the absence of prior individual
agreement. [10]
1.14
The Minister further stated that:
Certain trade union leaders have attempted to coerce non-union employees
into joining a union by making a demand that all non-unionists pay a ‘service
fee’ on account of union participation in agreement negotiations in their
workplace. The coercive nature of the compulsory fee demand is highlighted by
the fact that it is typically made without consent of the relevant employee,
and may not even be made until after the so-called services are rendered. [11]
1.15
In addition to the issue of compulsory unionism
the Minister has further identified that the ‘fee for service’ issue attempts
to subvert, in part, the WRA mechanism. Trade unions are attempting to use an
industrial instrument recognised by the WRA to give demands for bargaining fees
a legitimacy that they would not otherwise have. The Minister stated that it
was in the public interest that the Act not only prohibit such non consensual
demands but also prevent the misuse of certified agreements to advance these
coercive purposes. [12]
1.16
In response to the AIRC decision that such fees
are designed for coercive purposes but under the current terms of the WRA are
not prohibited from inclusion in certified agreements, the Government considers
that it is necessary to amend the WRA to preclude such action because:
The fact that there is no specific statutory prohibition on such
provisions means that their coercive impact may remain until such time as the
loophole allowing their inclusion in certified agreements is closed by
legislative amendment. [13]
Outline of Changes
1.17
It should be noted that the Government’s bill
does not create an absolute bar to a genuine ‘bargaining fee’ being negotiated
by a non-union employee and the relevant trade union. The Government’s bill
would allow genuine bargaining fees where the prior written consent of the
individual employee has been given and the bargaining services have been
delivered. In this way the bill addresses union concerns about so-called’ free
riders’ without impeding freedom of association. The bill will amend the
freedom of association provisions in part XA of the WRA to prevent the inclusion
of clauses in certified agreements which purport to require payment of fees for
the provision of bargaining services, and prohibit action by unions to collect
fees which have not been agreed in writing in advance. [14]
1.18
Part XA of the WRA will be amended to prohibit;
- Unions and employer organisations from requiring non-members to
pay fees for ‘bargaining services’, except where an employee has agreed in
writing to pay a fee in advance of the bargaining services being provided (such
a fee is defined in the Bill as a ‘non-compulsory fee’): and
- Certain discriminatory or injurious conduct towards a person,
because he or she has refused to pay a fee claimed by a union for bargaining
services, or because he or she has paid, or proposes to pay a non-compulsory
fee: and
- Unions and employer organisations from encouraging or inciting
others to take discriminatory action against a person because he or she has
refused to pay a fee claimed by a union for bargaining services, or because he
or she has paid, or proposes to pay a non-compulsory fee. [15]
1.19
An additional effect of the amendments would be
that fees for bargaining services cannot be included in certified agreements
and any such clause in existing certified agreements can be removed by the AIRC
under section 298Z. Under the proposed amendments, the AIRC would be required
to refuse to certify an agreement if satisfied it contained a provision
requiring or purporting to require people who were not members of an industrial
association to pay a fee to an industrial association for bargaining services.[16] In his second reading speech
the Minister noted:
Given that agreement to any payment of such fees should be a
private matter for the individual choice of each employee unfettered by others,
the Bill will prohibit a certified agreement from including any provision
relating to payment of fees for bargaining services.[17]
Main Provisions
Items 1 and 2 of Schedule 1 of the bill will insert two new definitions
into section 298B of WRA:
-
'Bargaining services': services
provided by, or on behalf of, an industrial organisation in relation to a
certified agreement.
-
'Non-compulsory fee': a fee or levy
that is wholly or partly for the provision of bargaining services if it is
payable to an industrial organisation or someone else on behalf of the
organisation and the person who is liable to pay the fee or levy agrees in
writing before the services are provided, to pay the fee or levy.
Item 3 will insert additional 'prohibited reasons' in section
298L of WRA. The additional prohibited reasons provide that an employer must
not discriminate against an employee or independent contractor if:
- the employee or independent contractor
has agreed to pay a non-compulsory fee, or
- has not paid or agreed to pay any fee
or levy wholly or partly for the provision of bargaining services (this
includes fees or levies extending beyond the definition of a non-compulsory
fee).
Section 298Q of WRA prohibits
industrial organisations from under-taking certain action. Item 4 will
add to this that an officer of an industrial organisation must not take,
threaten to take, or encourage a third party to, prejudice a person as the
person has undertaken the actions described in item 3.
Proposed section 298QA will prohibit an industrial organisation, or an officer or
member of such an organisation, from demanding that a person pay a fee or levy,
other than a non-compulsory fee, for the provision of bargaining services. This
provision may prevent a union from even requesting or suggesting that a
non-member pay such a fee or levy. The term demand is defined as purporting to
demand, having the effect of demanding or purporting to have the effect of
demanding. The distinction between demanding (which suggests an obligation) and
requesting is not dealt with (Item 5).
Section 298S of WRA, which
prohibits certain conduct by industrial organisations against independent
contractors, will also be amended to prohibit action being taken against an
independent contractor on the basis that they undertaken either of the actions
for a prohibited reason as described in item 3 (Item 6).
Item 8 provides that the AIRC may have consideration of the above
matters when determining whether to certify an agreement after the commencement
of the Bill.
Item 10 provides that the amendments do not apply to any payments
received before commencement.[18]
Considering the evidence
Consensus of employers
The favourable reaction of employers is easy to understand
in the light of the onerous responsibilities that are placed on them by the
AIRCs interpretation of subclause 14.3. As Vice President McIntyre stated in
his judgement:
In my view, subclause 14.3 requires or permits (etc) conduct by
the employer of at least one of the types described in s.298K(1). Subclause
14.3 has to be read in context, not in isolation. Subclause 1.3, as earlier
noted, provides that the terms and conditions of the agreements shall be a
condition of employment. This, in my view, means, among other things, that, if
an employee failed to pay the fee to the ETU, he or she would be in breach of his
or her obligation to the employer and, accordingly, the employer would be
entitled to take such disciplinary action against the employee as was legally
available to it. In these circumstances, it is my view that subclause 14.3
requires or permits (etc) the employer to take action against an employee who
fails to pay the fee to the ETU; for instance, by dismissing the employee or
altering the position of the employee to the employee’s prejudice. Such actions
are conduct of the type described in at least one of the paragraphs of
s.298K(1).[19]
1.20
This clearly puts employers in a most difficult
position. As the Australian Industry Group (AIG) argued, it may be claimed
that employers would be entitled to take action against employees who failed to
pay bargaining fees because such employees would be in violation of their
employment obligations. Yet such employer actions would violate the protective
provisions of the statute and would be carried out for a prohibited reason, in
this situation, because of a failure to join the union.
1.21
Where clauses exist in enterprise agreements
which provide for collection of bargaining fees, employers may be harassed by
unions to enforce the clause, and employees may find themselves harassed both
by the union and employer even though, as will be noted further on, it is
almost certain that such clauses are legally unenforceable.
1.22
The AIG, referring to a statement from the Full
Bench inviting submissions for an appeal, stated:
The upshot of the Full Bench statement is that the question of
whether or not agency shop clauses in certified agreements offend freedom of
association law hinges upon another technical issue: whether such clauses are
enforceable and/or within the jurisdiction of the AIRC to certify, in
particular whether they sufficiently pertain to the employer-employee
relationship?
Given this high degree of legal uncertainty surrounding agency
shop clauses in certified agreements, it is imperative for Australia’s elected
representatives to deal with this central public policy issue. Notwithstanding
the legal niceties, union demands for agency shop clauses continue unabated and
are likely to feature increasingly in enterprise bargaining. We submit that
Parliament - as the supreme policy-making body in Australia – should deal with
the issue of compulsory bargaining levies, rather than simply await the outcome
of the AIRC proceedings or any other possible legal proceedings.[20]
1.23
The Australian Chamber of Commerce and Industry
(ACCI) is unequivocal in its position and considers that compulsory union fee
clauses in certified agreements are contrary to the freedom of association
principles. ACCI sees the bill as a measure designed to clarify the WRA in
respect of the increasing trend by trade unions to include such clauses as part
of the bargaining process.
Attitudes to bargaining fees
1.24
Whilst ACCI saw trade unions as service
providers who should be able to offer their services without undue
restrictions, they also consider that employees should not be forced to use
their services. Accordingly, they support the proposed bill. When questioned
about the fee for service issue, the ACCI representative replied;
The way to approach this
would be to say that we are not trying to treat trade unions and their services
unfairly, nor are we trying to allow compulsion or coercion in favour of the
payment of such fees.[21]
Compulsory unionism by the back door
1.25
It should be noted that in his decision of 9
February 2001 Vice President McIntyre of the AIRC concluded that the
‘bargaining fee’ in question was being pursued for a coercive purpose, that is
to compel non-union employees to join the union.
1.26
Opposition senators and others have complained
about the long title of the bill, calling it misleading on the grounds that it
is ‘negotiating fees’ rather than ‘compulsory unionism’ which is the point at
issue. The Government and its members on the Committee disagree with this
position, and in any event prefer to deal with political realities and see
union stratagems for what they are. What the ACTU proposes to encourage is
nothing more than a re-institution of compulsory unionism under the guise of
demanding a fee from an employee who has not negotiated the delivery of the
service and who may not agree to so-called bargaining services the union
pursues.
1.27
The Australian Mines and Metals Association
(AMMA) considers that the impact of allowing a fee for bargaining services for
certified agreements is disproportionate to the low number of union members
within the resources sector. Introduction of clauses allowing bargaining fees
in certified agreements which cover the resources sector will lead to a
possible increase in union membership as employees seek to avoid the cost of
such fees. Accordingly the AMMA supports the bill because it will block the
backdoor attempt to introduce compulsory unionism through the imposition of
bargaining fees.[22]
1.28
The Australian Retailers Association (ARA)
concurs with the views of ACCI and considers that bargaining fees levied by
trade unions should not be used as an alternate method to provide de facto
union fees.[23]
1.29
The AIG notes that an integral part of the
industrial relations system has been the framework of rules which govern the
membership of registered industrial associations. Central to these rules is the
principle of freedom of association. The AIG submit that compulsory bargaining
fees are anathema to the principle of freedom of association and that the
proposed bill would ensure that this principle was upheld.[24] The AIG considers that the
bill will meet its stated objectives by outlawing compulsory bargaining fee
arrangements while at the same time preserving the ability of industrial
relations groups to allow for non-compulsory fees. The AIG raised the issue of
coercive pressure being placed on non-union employees through such clauses. The
AIG representative noted :
I suppose the question
raised by that is: if there is to be allowance for fees or levies to be imposed
under collective agreements, should they be coercive or voluntary? That is the
key issue here. The organisations I represent have no problem at all with
provisions in certified agreements which call for voluntary contributions by
non-union members to unions. That is a matter for the industrial parties to
agree upon. But where we take exception to what is currently going on out there
is this element of coercion directed at individual non-unionists and the
unfairness which is then placed upon the employer to undertake enforcement of those
arrangements.[25]
1.30
It is the view of the AIG that the current
system places pressure upon employees and stated:
...is that pressure
illegitimate? The pressure operates by way of the double bind which the
non-unionist is placed in. Either they pay this hefty fee or they face
disciplinary action, with the net result that they are driven towards taking
out membership even against their will.[26]
1.31
In its submission the AIG recommends that the
bill should be passed by the Senate because:
It is clear that the trade unions view agency shop arrangements
as a means to boost declining membership levels and/or penalise non-unionism.
Such arrangements are impossible to square with the explicit freedoms of
association and non-association found in s.3(f) of the Act. [27]
1.32
The AIG also raised other reasons for the bill
to be passed. Firstly, they saw the need for legal certainty on this issue
submitting that it is appropriate for the Parliament, as the supreme policy
making body in Australia, to determine this issue rather than await the
decision of the AIRC. Secondly, the AIG also saw bargaining fees as encouraging
a closed shop situation and thereby destroying freedom of choice and freedom of
association. Thirdly, the AIG considers that payment of bargaining fees to
trade unions will provide funding to these organisations for union activities
not strictly related to certified agreements.[28]
Allegations of ‘premature legislation’
1.33
As mentioned
earlier, the Government’s desire to legislate on this matter dates back to 1999
well before the current AIRC proceeding. In any event, what the AIRC is
dealing with is the interpretation of the existing statute and not formulating
industrial policy. It is for the Government and the legislature to develop
policy and make legislation clearly expressed beyond doubt. It has been
claimed that the introduction of the bill is premature because of the case
before the AIRC. The Government does not agree with this view. While the AIRC decision may clarify the existing law, there still
remains the outstanding issue relating to compulsory union fees in general
which would not be clarified regardless of the outcome. As the submission from the Department of
Employment, Workplace Relations and Small business has stated:
For instance, even if the
commission were to determine that bargaining agents fees were unenforceable,
their very existence in certified agreements gives rise to a perception of
legitimacy which the government believes is wrong and contrary to freedom of
association principles, and for that reason this legislation will still be
necessary. In addition, even if the commission were to determine that such
clauses were invalid and should be excised from certified agreements, there is
still the issue of associations purporting to impose bargaining agents’ fees
outside the certified agreement system. This bill also addresses that issue.[29]
The Committee recognises
that the importance of the legislation lies in putting to rest the perceptions
that exist among some employers and employees that provisions in enterprise
agreements containing offending clauses are legally enforceable. Such misconceptions
need to be put to rest.
1.34
Further on the
imposition of compulsory agency fees, the Department noted that the imposition
of such a fee upon someone who has not agreed to it contravenes the principle
of freedom of association. Accordingly, trade unions seeking to include
bargaining fee clauses in certified agreements should be treated like any other
commercial entity and not be able to charge for unsolicited services.[30]
1.35
Critics of the
bill have claimed that it contravenes the position of the International Labour
Organisation (ILO) on service fees. It is the Governments view that the ILO
has indicated that regimes which permit or prohibit bargaining agents fees are
not incompatible with ILO conventions. Thus, the bill will enhance the WRA
while still abiding by Australia’s commitment to ILO principles.[31]
1.36
The ACTU claimed
before the Committee that the bill constituted unacceptable interference in the
collective bargaining process.[32] The Government disagrees with this
position noting that it has committed itself to the principle that employment
bargaining issues should be negotiated between employers, employees and their
representatives at the enterprise level. The bill further clarifies the
mechanism of this process. The ACTUs submission in this regard conveniently
overlooks the broader principles of Government policy which are under threat
unless remedied by this legislation; the right of individuals to negotiate
unencumbered by union membership or at least independent of it. The Government
has consistently argued that freedom of association is non- negotiable. In fact
the statute currently proclaims freedom of association as one of its principal
objects (section 3(f)).
1.37
Finally, the Government and employer
organisations are also concerned about possible discrimination against
employees who do not pay fees for bargaining services. Opponents of the
proposed legislation consider that this is not a valid reason for introducing
the bill, however, the Government considers that the bill will ensure that as such
fees will not be payable there will be no avenue for discrimination.
Conclusion
1.38
The proposed bill is part of the continuing
commitment by the Government to workplace reform within Australia. In
particular this Bill seeks to protect the principle of freedom of association
within the workplace. It is the Government’s position that demands by unions
for fees for bargaining services are contrary to this principle and that
amendment to the legislation is necessary to achieve this protection. The
Department of Employment, Workplace Relations and Small Business notes in its
submission to the Committee that:
The Bill is the Government’s response to what it considers to be
union attempts to undermine this principle of freedom of association and to
circumvent the protections afforded by the provisions of the WR Act.[33]
1.39
The Minister emphasised the Governments position
in this regard when he said:
The principles of freedom of association and freedom in
agreement making mean that an employee should be entitled to exercise their own
choice about how and if they wish to participate in negotiating workplace
agreements in their workplace. Indeed under the Workplace Relations Act 1996
employees are not only entitled to the protection of the law if they choose to
join or not join a trade union, but they are also entitled to nominate
themselves or any other person as their bargaining agent in workplace
negotiations. Unless such fees are the product of informed prior written
consent by individual employee subject to the demand, they are coercive and
should be unlawful.[34]
1.40
In introducing this bill, the Government does
not intend to restrict lawful negotiating activities of registered
organisations but rather to ensure that all employees have the freedom of
choice in making certified agreements. The bill will enhance the service
delivery by requiring organisations wishing to act on behalf of non-union
members in bargaining matters to negotiate that service before bargaining takes
place. The Minister has stated that:
In introducing this Bill I emphasise that the government does
not seek to impede the proper activities of trade unions and employer
organisations.[35]
1.41
Government senators commend this bill to the
Senate.
Senator John Tierney
Chair
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