Electrolux Home Products Pty Ltd v Australian Workers' Union

[2004] HCA 40

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(Judgment by: Callinan J)

Electrolux Home Products Pty Ltd
vAustralian Workers' Union

Court:

Judges: Gleeson CJ
McHugh J
Gummow J
Kirby J
Hayne J

Callinan JHeydon J

Legislative References:
Workplace Relations Act 1996 (Cth) - Pt VIB; Div 2; Div 8; s 170ML; s 170LI
Industrial Relations Act 1988 (Cth) - s 4(1); Section 170MD
Workplace Relations Amendment (Prohibition of Compulsory Union Fees) Act 2003 - The Act
Workplace Relations Act 1996 - Pt VIB; s 170L; s 170NI)
Conciliation and Arbitration Act 1904 - s 4(1)

Hearing date:
Judgment date: 2 September 2004

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Judgment by:
Callinan J

[224] It is necessary in order to resolve these appeals to construe the following statutory language "matters pertaining to the relationship between an employer [and an employee]" contained in s 170LI(1) of the Workplace Relations Act 1996 (Cth) ("the Act").

Facts

[225] The appellant is a manufacturer carrying on business and employing workers in New South Wales and South Australia. It is bound by the Metal Engineering and Associated Industries Award 1998 ("the Award") made by the Australian Industrial Relations Commission ("the Commission"), and the Email National Manufacturing Agreement 1999 ("the Agreement"), an agreement certified by the Commission pursuant to s 170LT of the Act. The Award and the Agreement apply to the appellant's employees. The Agreement was certified by the Commission on 8 October 1999 and was to expire on 30 June 2001. It continued in operation after that date pursuant to s 170LX of the Act. The first, second and third respondents ("the Unions") are organisations registered pursuant to the Act and each is a party to the Award and the Agreement. Members of the Unions are employed by the appellant. Others who are not members of the Unions are also employed by it.

[226] Between April and September 2001, the appellant and the Unions negotiated for a fresh certified agreement to replace the Agreement. In June and July 2001, each of the Unions issued and served "Notices of Initiation of Bargaining Period" under s 170MI(2) of the Act. Each notice stated that the Unions intended to try to reach an agreement with the appellant under Div 2 of Pt VIB of the Act and to have the agreement certified under Div 4 of Pt VIB of the Act. Further notices were issued and served in early September 2001 to the same effect. The second set of notices stated, in accordance with s 170MJ(c), various matters proposed to be covered by such an agreement including the currently contentious matter of payment of a bargaining agent's fee. The matter was one of contention in both of the States in which the appellant employed workers.

[227] During negotiations between April and September 2001, the claim for such a fee was made by the Unions in these terms:

[T]he Unions claim that the employer should advise new employees that an Agent's fee of $500 is payable to the Union by non Union members to the Unions to reflect the service obtained by those non members from the Unions in negotiating agreements, and that those employees should pay the amount and that the employer should provide a direct debit facility for the payments.

[228] The negotiations did not lead to a concluded agreement. One of the matters upon which the parties could not agree was the claim for the bargaining agent's fee. The fee was claimed on the asserted basis that the non-unionists were the beneficiaries of the services of the respondents in negotiating agreements under the Act.

[229] In September 2001, the Unions gave "Notices of Intention to take Industrial Action" to the appellant under s 170MO of the Act: that the Unions and their members intended to organise and engage in industrial action in accordance with the provisions applying to "protected action" set out in s 170ML of the Act. The industrial action was to consist of a series of rolling stoppages of work for two hours.

[230] Industrial action in accordance with the notices was taken on 14, 21 and 22 September 2001. The stoppages were for the purpose of supporting and advancing a number of claims including the bargaining agent's fee, which was held by Merkel J at first instance to be a substantive, discrete and significant claim ^[218] ..

Previous proceedings

[231] On 17 September 2001 the appellant applied to the Federal Court for various orders and declarations to establish that the industrial action, the stoppages, were not protected action attracting immunity on the basis, relevantly to these appeals, that the claim for the bargaining agent's fee did not pertain to the relationship of employer and employee as required by s 170LI of the Act.

[232] On 20 December 2001 Merkel J made declarations to the effect that the industrial action taken was not protected and that there had been breaches of s 170NC(1) of the Act.

[233] In discussing the bargaining agent's fee his Honour drew attention to the true nature of it ^[219] .:

The claim, implicitly if not explicitly, is that [the appellant] is to act as the union's agent in entering into a contract with new employees which requires the employees, who are not union members, to employ the unions as their bargaining agent to reflect the unions' service in negotiating agreements with [the appellant] under the Act.

The relationship between the employer and the employee that would be created were the claim acceded to is, essentially, one of agency; [the appellant] is to contract with its employees on behalf of the relevant union, as its agent. The agency so created is for the benefit of the union, rather than for the benefit of the employee upon whom the contractual liability is to be involuntarily imposed. The resulting involuntary 'bargaining' agency is, as a matter of substance, if not form, a 'no free ride for non-unionists' claim, rather than one by which the union is undertaking its traditional role of representing the interests of union members in respect of the terms of employment of employees. Although the claim was argued as if it were a claim for future services, it may also be characterised as a claim for payment for the unions' services in securing the new employee's terms and conditions of employment in the proposed certified agreement, notwithstanding that the new employee will only have commenced employment after the date of the agreement. In that regard, it is relevant to note that the proposed draft agreement is to remain in force until 31 March 2003 (cl 7.0) and, in the meantime, no extra claims are to be pursued by the unions in relation to matters dealt with by the agreement except where consistent with the agreement or national wage case decisions (cl 47.0). Thus, payments claimed for bargaining 'services' prior to re-negotiation of a new agreement would appear to relate, primarily, to bargaining services rendered prior to the non-union member having commenced employment.

The other aspect of the claim, the bargaining fee debit facility, is analogous to a demand by unions that an employer pay its employees' union dues by making deductions and payments from salary due and payable to employees in accordance with authorities provided by them. Such a claim has been held to not be within the requisite employment relationship. In Portus, Menzies J observed that such a claim ^[220] .:

[involved] the same critical question, namely, whether the imposition upon an employer of an obligation to make deductions and payments from salary in accordance with the authority of the employee to whom the salary has become due and payable affects the industrial relationship of employers and employees. The identity of the payee does not seem to me to be significant in determining the character of such a dispute, unless, of course, the payment relates to an incident of the employment such as a deduction for and payment to a superannuation fund. In my opinion, the relationship that would be affected by such an obligation is a financial relationship of debtor and creditor arising from the earning of salary, not the industrial relationship in which the salary has been earned and has become payable. What is sought, in reality, is to make the employer the financial agent of the employee for the benefit of the association.

Walsh J observed ^[221] . that the benefit of offering an employee the payment facility was 'not a benefit or privilege of a kind which has any relevant connexion with the relationship of employer and employee'. His Honour also observed ^[222] . that recognising the importance of the functions of unions 'does not warrant a conclusion that anything which serves to benefit one of them and to give it additional strength, by increasing its financial stability or otherwise, is to be regarded as an industrial matter within the meaning of the Act'. Stephen J observed ^[223] .:

If, in the existing circumstances of employment, it was demanded of the employer that it accept back from employees a part of the remuneration paid, retain it for a period of time and then pay it over to a third party, the association, such a demand would be seeking to create a new, distinct relationship between the employer and its employees, having no connexion with the pre-existing employer-employee relationship. The fact that the present demand is made to operate at a slightly earlier stage, before salary is in fact paid over to employees, thereby obviating one step in the imaginary demand I have postulated, that of the acceptance of money back from employees, does not appear to me to convert a transaction foreign to the relationship of employer and employee into one which pertains to that relationship.

Portus was applied by the High Court in Alcan ^[224] .. In Alcan the High Court confirmed that a demand in respect of payment of union dues did not pertain to the relationship between employers and employees as such.

Although the payment of the bargaining agent's fee purports to relate to the unions' bargaining activities for employees, I do not see that as relating to an 'incident of the employment' any more than payment of union dues for a union representing its members at the workplace relates to an incident of employment (see Menzies J in Portus ^[225] .). The involuntary aspect of the claim confirms that, in pursuing the claim, the unions are acting in their own interest and not that of their members or of non-union employees: cf Alcan ^[226] .. Further, although a union claim that relates to services provided by a union to non-members might fall within the requisite employment relationship there are difficulties with such a claim: see Financial Sector Union ^[227] .. Even if the unions' contention that the claim that payment of the fee by the employer providing a direct debit facility can form the subject matter of an industrial dispute were to be accepted, as was held in Alcan ^[228] ., that does not assist in making it one that pertains to the requisite employment relationship. I would add that, although I have treated the claim as one relating to employees who are non-members I would have arrived at the same conclusion had the claim applied to all employees. For the reasons explained above neither claim would pertain to the requisite relationship.

[234] His Honour determined that the action was not protected for reasons which he expressed in this way ^[229] .:

The claim by the unions for payment of a bargaining agent's fee is substantive, discrete and significant (ie, in the sense that it is substantial). The evidence of the parties shows that it was treated by them as such. The industrial action pursued by the unions in September 2001 was for the purpose of advancing claims that included that claim. It follows that that action was pursued for the purpose of supporting or advancing claims made in respect of an agreement about matters that did, and a substantive, discrete, and substantial matter that did not, pertain to the requisite relationship. Accordingly, the agreement proposed by the unions is not an agreement about matters pertaining to the requisite employment relationship.

My decision in the present case is on the basis that the claim in question relates to a substantive, discrete, and significant matter that does not pertain to the employment relationship. While I entertain some doubt as to whether a proper characterisation of an agreement for the purposes of s 170LI involves questions of degree, I leave for another case the question of whether a claim in respect of a matter that does not pertain to the employment relationship, but is not of significance, may be included in a certified agreement.

Conclusion

The industrial action taken in September 2001 by the unions, pursuant to the notices issued under s 170MO, was action for the purpose of supporting or advancing claims made in respect of a proposed agreement that was not an agreement about matters that pertained to the relationship between [the appellant] and its employees, as such. Consequently, the industrial action was not protected action under the Act.

[235] The Unions then successfully appealed to the Full Court of the Federal Court (Wilcox, Branson and Marshall JJ) which concluded that it did not matter whether a particular claim could or could not ultimately be included in an agreement complying with s 170LI: that it was sufficient for the Unions genuinely to want provision for the fee to be contained in an agreement it wished to have certified ^[230] .. Their Honours went on to say that for the purposes of s 170LI of the Act, the presence of terms in the agreement not pertaining to a relevant relationship did not mean that the agreement itself did not so pertain: further, and in any event, the claim for the bargaining agent's fee might well give rise to a matter pertaining to the relationship between the appellant and its employees ^[231] ..

The appeals to this Court

[236] In order to obtain immunity from sanctions against industrial action under s 170MT of the Act, a negotiating party must satisfy a number of conditions. First, the party needs to be seeking an agreement under s 170LI. Secondly, it must have given a valid bargaining notice for the purpose of defining a bargaining period (ss 170MI and 170MJ). Thirdly, a valid notice of industrial action must have been given pursuant to s 170MO. Fourthly, there is a negative requirement, of absence of conduct in concert with other (unprotected) persons or organisations (s 170MN). Fifthly, the industrial action must have awaited the expiration of relevant awards and agreements (s 170MN). Sixthly, there may be no industrial action without prior negotiation (s 170MP). Seventhly, authorization of the industrial action proposed must have been given (s 170MR). And last, there must be an application to the Commission for certification of an agreement within 21 days after the day when the agreement with respect to which the industrial action is taken is made (s 170MS).

[237] Section 170ML(2) should be set out:

Protected action

...

(2)

During the bargaining period:

(a)

an organisation of employees that is a negotiating party; or

(b)

a member of such an organisation who is employed by the employer; or

(c)

an officer or employee of such an organisation acting in that capacity; or

(d)

an employee who is a negotiating party;

is entitled, for the purpose of:

(e)

supporting or advancing claims made in respect of the proposed agreement; or

(f)

responding to a lockout by the employer of employees whose employment will be subject to the agreement;

to organise or engage in industrial action directly against the employer and, if the organisation, member, officer or employee does so, the organising of, or engaging in, that industrial action is protected action.

[238] Section 170LI is as follows:

Nature of agreement

(1)

For an application to be made to the Commission under this Division, there must be an agreement, in writing, about matters pertaining to the relationship between:

(a)

an employer who is a constitutional corporation or the Commonwealth; and

(b)

all persons who, at any time when the agreement is in operation, are employed in a single business, or a part of a single business, of the employer and whose employment is subject to the agreement.

(2)

The agreement must be made in accordance with section 170LJ, 170LK or 170LL.

[239] In my opinion the approach and conclusion of the primary judge is to be preferred to that of the Full Court for these reasons. The reasoning of the Full Court involves the implication of the words "wholly or partly" before the word "about" in s 170LI. In general, statutory implications should only be made in cases of necessity of which this is not one. Furthermore, it can be seen that when some partial criterion is intended for the application of the Act, it generally says so in terms. Several examples of this may be given. In order to identify employees who may be excluded by regulation from the operation of Div 3 of Pt VIA of the Act, s 170CC(3)(a) refers to an employee whose remuneration was not wholly or partly determined on the basis of commission or piece rates. Section 170CM(6) makes like provision. Section 170CP makes provision for an application if the applicant has received a certificate with respect to an application made wholly or partly on the ground of the alleged contravention. And, pursuant to s 170MU, an employer must not dismiss an employee wholly or partly because the employee is proposing to engage in protected industrial action.

[240] A party's desire for the inclusion of a particular term of agreement, no matter how genuinely and dearly wished, cannot, absent express words so saying, be determinative of the true nature of the term. Nor can the fact that it may use words such as "employee" or "employer" or refer to the use and application of remuneration or any part of it receivable by the employee, be determinative of its true character.

[241] Whether the agreement pertains to the relationship between an employer and employee is to be objectively determined by the Court. The term providing for a bargaining fee may appropriately be described as one which seeks to impose upon an employer an obligation to act as collecting agent for the union to deduct from an employee's remuneration, an involuntary payment to the union for a "service" which the employee has not sought and which may have been of no benefit to him or her. Such a term pertains to, because it seeks to impose, an involuntary financial relationship between a union and a person who is not a member of it, rather than to a relationship between employer and employee. The only relevant relationship as far as the fee is concerned, between the employer and the non-unionist employee, is of an involuntary contract for the payment of an exaction sought to be made by a third party on the latter.

[242] Section 170MD of the earlier enactment, the Industrial Relations Act 1988 (Cth), provides no assistance in construing s 170LI of the Act. Section 170MD(1) of the former dealt with the Commission's powers to refuse to certify an agreement. The structure and wording of s 170MD(1) are quite different from s 170LI.

[243] Upon the termination of a bargaining period under s 170MW of the Act, if the Commission proceed to exercise its powers of arbitration under ss 170MX(3) and 170MY, it must make an award that deals with the matters that were in contention during the bargaining period. The power to arbitrate conferred on the Commission by s 170MY of the Act contemplates that the matters in contention during the bargaining period be matters which pertain to the relationship of employer and employee.

[244] It is right, as the Minister, who became a party to the appeals, submits, that there is no distinction between awards and certified agreements for the purposes of the enforcement of instruments under s 178 of the Act. An award can only be made in settlement of an industrial dispute with respect to matters which relate to both employers and employees as such ^[232] ..

[245] The conclusion that I have reached is consistent with other cases in which the Court has held that the rejection of demands of an academic, political, social or managerial nature will not generate an industrial dispute capable of being settled by the making of an award ^[233] ..

[246] In R v Coldham ; Ex parte Fitzsimons ^[234] ., Stephen J approved what was said by Menzies J in R v Portus ; Ex parte ANZ Banking Group Ltd ^[235] ., that the creation of a role of financial agent on the part of an employer did not constitute a relationship between employer and employee.

[247] The latter of those cases heavily influenced, and correctly so, the reasoning of Merkel J ^[236] .. It was not referred to at all in the reasons of the Full Court. The union there had demanded that an employer deduct and pay from its employees' wages sums of money in accordance with authorities provided by them. It was held that the demand did not give rise to an industrial matter. Barwick CJ, as well as agreeing with Menzies J, said this ^[237] .:

In my opinion, the demand that the employer should pay out of earned wages some amounts to persons nominated by the employee is not a matter affecting the relations of employer and employee. It does not seem to me to advance the matter that the intended payee is the organization registered under the Act of which the employee is a member.

[248] Menzies J (with whom McTiernan J also agreed) said this ^[238] .:

Each contention, it seems to me, involves the same critical question, namely, whether the imposition upon an employer of an obligation to make deductions and payments from salary in accordance with the authority of the employee to whom the salary has become due and payable affects the industrial relationship of employers and employees. The identity of the payee does not seem to me to be significant in determining the character of such a dispute, unless, of course, the payment relates to an incident of the employment such as a deduction for and payment to a superannuation fund. In my opinion, the relationship that would be affected by such an obligation is a financial relationship of debtor and creditor arising from the earning of salary, not the industrial relationship in which the salary has been earned and has become payable. What is sought, in reality, is to make the employer the financial agent of the employee for the benefit of the association.

[249] Walsh J made observations to a similar effect ^[239] .:

The making of the deductions depends upon an authority given by an employee, who is free to withdraw the authority if he wishes to do so. The system should, therefore, be regarded, in my opinion, as pertaining primarily to the relationship between an employee and his own union, from which relationship arises the obligation which is discharged by the payment made to the union by the employer. In so far as the practice also involves any relationship between an employee and his employer, this is not, in my opinion, a relationship between the employer as employer and the employee as employee, but is one in which the employer acts as agent for an employee in the making of a payment at his request and on his behalf from money to which he has become entitled.

[250] And Stephen J said this ^[240] .:

[t]he demand does not seek to operate within the sphere of [the employment] relationship but instead would create a new relationship between the parties, in which the employer is agent or debtor and the employee is principal or creditor.

[251] The present case, as well as factually bearing much similarity to Portus, falls within the principle for which it stands and which is stated generally in unanimous terms in the passages that I have quoted. It is also a principle applied fairly recently by this Court in Re Alcan Australia Ltd ; Ex parte Federation of Industrial, Manufacturing and Engineering Employees ^[241] . It is unlikely that a legislature in enacting the Act would have intended to depart from a meaning settled by a series of cases in this Court the most recent of which was decided only two years earlier. The principle governs this case and provides sufficient and necessary reason to allow the appeals. Neither it nor the other reasons which I have given however exhaust the reasons why the appeals must succeed.

[252] The statutory conferral of an immunity from suit, specifically the sorts of suits which might otherwise be brought in respect of industrial action, for example, inducement of breach of contract and breach of contract, interferes with or takes away fundamental rights to sue. Another consequence would be that an employee's right to receive his or her remuneration in full from an employer would be seriously reduced. Either of those consequences provides reason to read the relevant sections of the Act as intending to interfere with such rights only to the extent and in respects clearly stated. It certainly provides no reason to import into the statutory language words not actually used and capable of embracing matters beyond the relationship of employer and employee.

[253] If s 170LI were to be read as capable of going beyond the relationship between a particular employee and its present and future employer so that an agreement might be certified which contains matters which pertain to the relationship between specified parties, but not in their respective capacities as employer and employee, there would be little effective limit upon the terms that could be included in an agreement brought for certification under Div 2 of Pt VIB of the Act.

[254] The appeals should be allowed. The declarations made by the primary judge on 20 December 2001 as follows should be restored:

1.

The industrial action of the First Respondent on 14, 21 and 22 September 2001, being action threatened in notices issued by the First Respondent dated 5, 11, 13 and 14 September 2001:

(a)

was not protected action within the terms of s 170ML of the Workplace Relations Act 1996 (Cth) and;

(b)

breached s 170NC(1) of that Act.

2.

The industrial action of the Second Respondent on 14, 21 and 22 September 2001, being action threatened in notices issued by the Second Respondent dated 5 and 14 September 2001:

(a)

was not protected action within the terms of s 170ML of the Workplace Relations Act 1996 (Cth) and;

(b)

breached s 170NC(1) of that Act.

3.

The industrial action of the Third Respondent on 14, 21 and 22 September 2001, being action threatened in notices issued by the Third Respondent dated 6, 11, 13 and 14 September 2001:

(a)

was not protected action within the terms of s 170ML of the Workplace Relations Act 1996 (Cth) and;

(b)

breached s 170NC(1) of that Act.

[255] Because no party contended that orders for costs be made, there should be no such orders.