Australian Maritime Officers Union v Sydney Ferries Corporation

The authorities 9 In R v Portus; Ex parte ANZ Banking Group Ltd (1972) 127 CLR 353 ("Portus") the High Court considered an industrial claim that employers pay union dues out of salaries earned by employees. The fact that the payments were to be made to third parties from entitlements which had already been earned was an important element in the discussion. The leading judgment was given by Menzies J (with whom Barwick CJ and McTiernan J agreed). Menzies J said (at 360): In this case, to bring the dispute within the description of 'industrial dispute', counsel for the association rely upon two propositions, one broad and the other narrower, each relating to the imposition upon banks of an obligation to pay union dues out of moneys earned by employees in accordance with authorities given by such employees. First, it was contended that a dispute whether employers should, as a matter of obligation, disburse earned salaries in accordance with the authority of the employee who had earned that salary is an industrial dispute. Alternatively, it was contended that, in any event, a dispute whether employers should, as a matter of obligation, pay out of earned salaries, union dues of any employee who authorized such payment is an industrial dispute. 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. 10 The High Court considered a similar industrial claim in Re Alcan Australia Limited; Ex parte Federation of Industrial, Manufacturing and Engineering Employees (1994) 181 CLR 96 ("Alcan"). In an apparent attempt to avoid the fatal issue identified in Portus, a second demand was advanced to the effect that wages should be increased by an amount equivalent to union dues. The High Court confirmed the earlier approach in Portus even though it accepted that a claim for deduction of union dues which was authorised by employees probably fell within the popular conception of "industrial dispute". The Court said (at 107): The considerations which lead to the conclusion that a dispute as to deduction of union dues (at least, where authorized by individual employees) is an industrial dispute within s 51(xxxv) of the Constitution, tend in favour of the conclusion that the subject matter does not pertain to the relationships of employers and employees in their capacity as such. Those considerations, which depend on the nature and role of trade unions in Australia, show that although the subject matter pertains to a relationship between employers and employees, it is a relationship involving employees as union members and not at all as employees. That appears even more clearly if, as earlier suggested, the industrial character of the claim for the purposes of s 51(xxxv) comes about only in the case of a claim for employee-authorized deductions. Finally and so far as the statutory definition of 'industrial dispute' is concerned, the character of a claim for the deduction of union dues is not altered simply because it is bound up with a claim for a wage increase equivalent to the dues to be deducted. 11 On this occasion the difficulty appeared to be that the relationship in question was one with employees as union members rather than simply as employees. By contrast, in Re Manufacturing Grocers' Employees Federation of Australia; Ex parte Australian Chamber of Manufactures (1986) 160 CLR 341 ("Manufacturing Grocers") the High Court found that a claim for payment into superannuation funds for the benefit of employees did pertain to the relations of employers and employees as such. The High Court said (at 353): The words 'pertaining to' in the definition of industrial matters mean 'belonging to' or 'within the sphere of' and the expression 'the relations of employers and employees' refers to the relation of an employer as such with an employee as such: R. v. Kelly; Ex parte Victoria; Reg. v. Commonwealth Industrial Court Judges; Ex parte Cocks. The matters which will answer that description have been dealt with from time to time and the propositions to be derived from the cases are collected by Mason J. in Federated Clerks' Union (Aust.) v. Victorian Employers' Federation. For present purposes, it is sufficient to say that a matter must be connected with the relationship between an employer in his capacity as an employer and an employee in his capacity as an employee in a way which is direct and not merely consequential for it to bean industrial matter capable of being the subject of an industrial dispute. (Citations omitted.) 12 However, a limitation should be noted. The Court said (at 355): What is important for the purposes of this case is that the claims made are, as we have said, no more than demands for the payment during the currency of an award of employer contributions to superannuation schemes which will take an approved form. It is because the claims are in this limited form that it is, in our view, impossible to sustain the argument that they are not made with respect to industrial matters, whatever may have been the position had the claims been made in a more elaborate form. 13 Importantly, the Court also said, referring to Portus, (at 357): Because the payments are to a superannuation fund, they form, to use the words of Menzies J., an incident of the employment. Nor can it be said that the payments contemplated by the claims in the present case will be made by the employer as the agent for the employee. There is no reason why those payments should be seen in any other way than as contributions by an employer to a fund for the benefit of an employee. No doubt the payments represent money earned in an industrial relationship, but they do not represent money to which an employee is himself presently entitled. They must be regarded as having been made to the fund by the employer in his capacity as employer and not as an agent acting on behalf of an employee. 14 In Electrolux Home Products Pty Limited v The Australian Workers' Union (2005) 221 CLR 309 ("Electrolux") the High Court rejected an argument that a claim by a trade union that an employer should deduct a "bargaining agent's fee" from the wages of employees and pay it to the union was a matter pertaining to the relationship between employers and their employees. The Court applied the reasoning in Alcan and Portus. Gleeson CJ referred to the judicially settled meaning of the phrase to be applied in that case (as in the present) and then said (at [9]): In one sense, anything that is capable of being made the subject of an agreement between an employer and employees could be said to be a matter pertaining to their relationship. An employer could agree, for example, to make regular donations to a particular political party. The established principle, however, is that, in the context with which this legislation is concerned, it is matters which affect employers and employees in their capacity as such that 'pertain to the relations of employers and employees'. 15 A majority of the Court held that claim did not pertain to the relations of employers and employees and that Parliament's use of the concept must be regarded as informed by the weight of authority (e.g. per Gummow, Hayne and Heydon JJ at [162]). 16 In Hamilton Knight; Ex parte The Commonwealth Steamship Owners Association (1952) 86 CLR 283 ("Hamilton Knight") a majority of the High Court took the view that a claim which sought, amongst other things, payment of compensation to an employee for personal injury, illness or accident arising out of or in the course of the employment pertained to the relations of employers and employees (see per Dixon CJ at 295-6, per Webb J at 307-8 and per Kitto J at 328-9). Another claim in that case, for pensions to take effect after employment had ceased, was struck down but, as explained in Manufacturing Grocers (at 349-351), that was not because, in the view of a majority of the Court, the claim did not pertain to the relations of employers and employees but for the reason that it sought an award which would operate beyond a five year limit established by statute. Such a complication does not arise in the present case. 17 Hamilton Knight was applied by the New South Wales Court of Appeal when it upheld the validity of an award made by the Industrial Commission of New South Wales granting accident pay (an extra payment by employers to finance an insurance scheme to provide additional "accident pay", or "make up pay", for employees receiving workers compensation) (Ex parte Master Builders' Association of New South Wales; Re Industrial Commission of New South Wales [1971] 1 NSWLR 655 ("the Accident Pay Case")). 18 The particular form of the payment considered in the Accident Pay Case, and its destination, owed much to the transient nature of employment in the building industry and the perceived need to create a fund out of which payment of accident pay might be made. In more permanent forms of employment it became common to award an obligation against employers to directly make up the shortfall between workers compensation payments and ordinary pay. One such award was examined for validity by this Court in Federal Firefighters' Union v Minister of State for the Capital Territory (1982) 62 FLR 341, although not by reason of a challenge which raised the issue for present attention. After the Accident Pay Case there does not seem to have been such a challenge.

The agreed term 19 The term which was agreed by SFC requires payments by way of insurance premiums which would operate to protect employees' income in the event of long term illness or injury. It does not suffer from the defect that it seeks payment out of entitlements which have already accrued to employees. A matter of considerable importance is that the agreed term provides a benefit to employees during their employment, even though it might also generate a benefit to them after employment has ceased. No obligation is imposed on SFC, or any immediate right created for employees, outside the period of employment. Even a post-employment benefit would depend upon the happening of an entitling event (accident, injury or illness) during a period when a policy was in force - ie during employment pursuant to an agreed obligation to pay the necessary premiums. 20 Assessment of the character of the agreed term must take place in a context where there are few hard and fast rules about what does, and what does not, pertain to an employment relationship. Ultimately, the question is one of appropriate characterisation based on all the relevant circumstances. The primary judge came to the view, illustrated by the conclusions we extracted earlier, that the agreed term did not pertain to the relations of employers and employees. We have reached a different view. In particular, we attach less significance, than did the primary judge, to the features he found decisive. In reaching our view we have not found it necessary to consider whether the payments required by the agreed term can be characterised as a reward for services. 21 As a general rule, a payment made to, or for the benefit of, an employee by an employer is normally presumed to pertain to their relations unless it falls into a category identified as outside the relationship. Neither the fact that an injury or illness does not arise directly from attendance at work (or going to or from work), nor the fact that an entitlement might be generated which subsists after employment ceases, are necessarily indicative of a matter that does not pertain to the relations of employers and employees. There are examples of such entitlements which indisputably pertain to the relations of employers and employees and which have similar features to the agreed term. Three such examples will suffice to make the point. 22 Sick leave is an example of protection against loss of income arising from circumstances or incidents away from the workplace. The fact that payments may continue after employment has ceased, pursuant to insurance arrangements, is a characteristic of workers' compensation schemes. The notion of economic security after the cessation of employment, funded by employer payments during employment, is the hallmark of superannuation and pension schemes, many of which contain arrangements which are activated by medical incapacity to continue working although an ordinary retirement age has not been reached. 23 A term directed to the protection of income in the event of illness or injury may pertain to the relationship of employers and employees in the same way as those other forms of employment benefit and may do so where the protection endures after the obligation to make the payment which secures it has ended. Whether or not the term pertains to the relationship of employers and employees depends upon all the circumstances. 24 What of the decided cases? Much of the debate at first instance took place by reference to the facts and circumstances of earlier cases, none of which provide a direct analogy with the agreed term. However, the circumstances of the present case are much closer in principle to Manufacturing Grocers than any of Portus, Alcan or Electrolux. The agreed term in the present case does not suffer from the defect identified in Portus and Alcan. It does not direct a payment from a pre-existing entitlement to satisfy an obligation arising outside the employment relationship. Neither is it directed, as in Electrolux, to ensuring that a payment is made by employees to a union, regardless of choice or of union membership. The agreed term operates during the employment relationship only. There is no obligation upon SFC to pay a premium in respect of a non-employee. The circumstance against which an employee would be protected is the loss of income arising from the employment relationship. 25 Under the regulations the agreed term contains prohibited content only to the extent that it does not pertain to the relations of employers and employees. There are some uncertainties about the precise content of the agreed term and the specific obligations which it imposes but, as was the case in Manufacturing Grocers, it is in part because the agreed term is not expressed in more elaborate terms that it is not correct to say it does not pertain to the relations of employers and employees. Whether, if some more elaborate provision was advanced it might not pertain to the relations of employers is not, at present, to the point. Re Amalgamated Metal Workers' Union of Australia; Ex parte The Shell Company of Australia Limited (1992) 174 CLR 345 provides an example of provisions claimed about superannuation arrangements at a level of detail which exposed some provisions as ones not pertaining to the relationship of employers and employees. Furthermore, neither the trial judge, nor the Court on the appeal, was asked to give any consideration to what might constitute full compliance with the agreed term. Breach of the term was admitted. The proceedings were dismissed only because the trial judge found that the term, as drafted, had no valid operation. Whatever uncertainties may remain about the precise content of the obligation imposed by the term, it is not invalid by reason that it contains only prohibited content, as presently drafted. 26 Despite the careful analysis of the authorities by the trial judge, in our view ultimately the wrong conclusion was reached. The appeal should be upheld. The order of the trial judge should be set aside and declarations made in lieu thereof that the agreed term does not contain prohibited content and has been breached by SFC. The matter must be remitted to the trial judge to assess any penalty for breach of the Agreement. I certify that the preceding twenty-six (26) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Chief Justice Black and Justices Jessup and Buchanan.

Associate: Dated: 15 October 2009 Counsel for the Appellant: S Crawshaw SC with M Gibian

Solicitor for the Appellant: J Wydell, Australian Maritime Officers Union

Counsel for the Respondent: The Respondent did not appear

Counsel for the Minister for Employment and Workplace Relations: R McKenzie QC with A B Gotting

Solicitor for the Minister for Employment and Workplace Relations: Blake Dawson