Automotive, Food, Metals, Engineering, Printing & Kindred Industries Union v... [2002] FCAFC 199 | Case summary

The decision of Merkel J 46 Merkel J noted certain facts agreed between the parties. They included the background facts set out above and also a list of 20 "union claims" with which the negotiations were concerned. Most of the claims concerned terms and conditions of employees' employment with Electrolux; on any view, they related to the employer-employee relationship. However, the list also included the three claims that were at suit before Merkel J, including the claim for payment of a bargaining fee. Merkel J took the wording of that claim from the statement of agreed facts viz: "Bargaining fees and the Unions' claim that the employer should advise new employees that an Agents' fee of $500.00 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." 47 Merkel J referred to a draft agreement that had been produced by officials of the Unions during the course of negotiations. The draft clause concerning the bargaining fee did not confine its operation to non-members of the Unions. However, Merkel J noted, on the basis of the statement of agreed facts and the filed evidence, that it was intended to be so confined. His Honour found the bargaining fee claim was being pursued in a similar fashion to the claims in respect of security for employee's entitlements and shop stewards' access rights: "the unions were prepared to negotiate with Electrolux about the detail of the claims". 48 After identifying some of the relevant statutory provisions, Merkel J said at para 13: "It was common ground that the industrial action taken by the unions was for the purpose of supporting and advancing claims in respect of the proposed agreement. The issue between the parties was whether the proposed agreement satisfied the requirements of s 170LI and was therefore capable of being certified. In particular, the parties were in agreement that the outcome of the present application depended upon whether the proposed agreement was about matters pertaining to the requisite employment relationship." 49 All counsel accept the accuracy of the first sentence in this paragraph. However, counsel for the Unions dispute his Honour's characterisation of the issue. They say the critical issue was whether or not the action taken by their clients was action "supporting or advancing claims made in respect of the proposed agreement": see s 170ML(2)(e). It is immaterial, according to counsel for the Unions, whether or not the claims, if accepted and incorporated into an agreement, would have the effect of rendering that agreement unable to be certified under s 170LI(1). If it is necessary to go to that question, counsel say, they would not have that effect. 50 Electrolux put contrary submissions, both before us and before Merkel J. At paras 15 and 16, his Honour described Electrolux's case in this way: "Electrolux contends that industrial action taken by the unions to support or advance the employee entitlements, agent's bargaining fee, and the shop stewards access claims was not action in respect of claims that were capable of being the subject of a certified agreement as they did not pertain to the relationship of Electrolux and its employees as required by ss 170LI and 170ML. Electrolux's contention is based on the premise that if any term of, or matter provided for in, the proposed agreement does not pertain to that relationship the agreement cannot be certified under Div 2 of Pt VIB and no protected action can be taken to support or advance claims in respect of that agreement. Accordingly, so it is contended, the action taken breached s 170NC and was subject to the enforcement and penalty provisions in Div 10 of Pt VIB. Under s 170NF penalties may be imposed for a contravention of s 170NC. The Court may also grant an injunction under s 170NG requiring a person not to contravene, or to cease contravening, inter alia, s 170NC." 51 Merkel J focussed on the words "pertaining to the relationship" in s 170LI and said: "The relationship is between the employer, as such, and the persons employed, as such: see Re Alcan Australia Ltd; Ex parte Federation of Industrial Manufacturing and Engineering Employees (1994) 181 CLR 96 ('Alcan') at 105-107. In that regard in Re Manufacturing Grocers' Employees Federation of Australia; Ex parte Australian Chamber of Manufactures (1986) 160 CLR 341 ('Manufacturing Grocers') at 353 the Court observed that the words 'pertaining to' mean belonging to or within the sphere of the requisite relationship and that the matters in question '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." 52 Merkel J went on at para 21: "The initial issue is whether the claims the unions were supporting or advancing by their industrial action, if acceded to, were in respect of matters that were capable of being included in an agreement that is to be certified under s 170LT. The general approach to be adopted in determining the characterisation of an industrial claim is to look at the substance of the demand and to identify the aspect that is central to the claim, or a critical part of it, having regard to the context in which the claim is made: see Re The Amalgamated Metal Workers Union of Australia; Ex parte Shell Co. of Australia Ltd (1992) 174 CLR 345 ("Shell") at 358-359. The claim is not to be construed as if it were a document creating legal rights and obligations: see Shell at 359. Finally, a claim can be properly characterised as pertaining to the relationship of an employer and its employees notwithstanding that parts of a claim that are machinery provisions giving effect to the claim …, or ancillary aspects of it …, may not pertain to that relationship. If a claim pertains to the requisite relationship in accordance with the above principles it is because it is in respect of a matter that pertains to that relationship." (Original emphasis) 53 The learned primary judge discussed at some length the claims made by the Unions in respect of employees' entitlements and shop stewards' access. He held both these claims pertained to the employer-employee relationship and concluded his discussion with this comment (at para 39): "I have dealt with Electrolux's contentions in respect of the employee entitlement and shop stewards access claims on the basis argued by Electrolux, that is that the claims are to be characterised essentially by reference to the unions' formulation of those claims in the draft agreement proffered by them. On that basis Electrolux construed the unions' claims as if the draft agreement expressed the precise legal relationship and obligations the unions were seeking to create. There is substance in the unions' criticism of that approach on the ground that, in the present context, it is impermissible to examine in detail each term of the draft agreement as if it were already a provision of an award about to be made or an agreement about to be certified. That is particularly so where the draft agreement is proffered as "the basis for further negotiations" and the context in which the claims were being advanced in September 2001 included the unions' stated preparedness to negotiate on the detail of the claims. It is unnecessary for me to further consider the unions' criticisms in view of the conclusions that I have reached as to the proper characterisation of the matters the subject of the claims." 54 Merkel J thought it inappropriate to take a similar approach to the bargaining agent's fee. He continued at para 39: "The bargaining agent's fee stands in a different position. On the evidence before me the unions' claim requires that, prior to commencing employment with Electrolux, Electrolux advise all employees who are not, or do not become, union members that they are required to pay to the union a bargaining agent's fee of $500 per annum and that the employer, at the request of the employee, is to provide a direct debit facility to pay the bargaining agent's fee to the union. The claim, implicitly if not explicitly, is that Electrolux 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 Electrolux 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; Electrolux 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." (Original emphasis) 55 Merkel J then said the "other aspect of the claim, the bargaining fee debit facility" is analogous to a demand that an employer pay its employees' union dues by making deductions from their salaries and remitting the proceeds to the union. His Honour noted such a claim had been held not to be within the requisite employment relationship. He cited The Queen v Portus; Ex parte Australian and New Zealand Banking Group Limited (1972) 127 CLR 353. 56 Merkel J thought that, in proposing the bargaining fee, the Unions were acting in their own interests, rather than the interests of their members. He said at para 46: "It is not suggested that the bargaining services to be provided by the unions in the present case are other than the services that are provided to their members to protect their terms and conditions of employment. The claim by a union for the imposition on a non-member of a fee for the bargaining services, provided by the unions acting in the interests of the members they are representing, is confirmatory of the view that they are acting in their own interests in making and pursuing that claim." 57 Merkel J summarised his reasons thus far by saying at para 48: "I have concluded that the employee entitlements and the shop stewards access claims pertain to the relationship of employer and employee but, for the reasons set out above, the bargaining agent's fee claim does not. The issue therefore is whether, in the context of ss 170LI and 170ML, the agreement proposed by the unions is not a proposed agreement about matters pertaining to the requisite relationship because one of the claims relates to a matter that does not pertain to the relationship." 58 Merkel J returned to the form of s 170LI of the Act. After quoting a passage from Shell concerning the definition in the then Act of the term "industrial dispute", his Honour said at paras 49-53: "The question is whether the industrial action being pursued as protected action by the unions in September 2001 was for the purpose of supporting or advancing claims made in respect of an agreement about matters pertaining to the requisite employment relationship. The requirement that the agreement be 'about' the requisite matters enables the statutory requirement to be satisfied by a less direct relationship than might have been necessary previously. Further, Div 2 of Pt VIB relies on the corporations, rather than the conciliation and arbitration, power and the legislature has departed from its previous formulation that required that each of the terms of the agreement be as to the requisite relationship. Section 170LI does not require that all of the terms of the proposed agreement must pertain to the requisite relationship. As explained above, s 170LI requires that the agreement be characterised as one that is about matters pertaining to the relationship. If a term of the agreement does not pertain to that relationship it does not follow that the agreement is not about matters pertaining to the relationship. For example, the term may be ancillary or incidental to, or a machinery provision relating to, a matter pertaining to the employment relationship. Thus, an agreement may be about the requisite matters notwithstanding that some of its terms may not, strictly, be about such matters. However, if the term relates to a subject matter that does not pertain to the requisite relationship then the agreement might not be an agreement about the requisite matters. Of course, to the extent the agreement is not about the requisite matters it may have effect according to the general law but, if it does not meet the requirements of ss 170LI and 170LT, it cannot be certified and have effect as an award: see Construction, Forestry, Mining and Energy Union v Australian Industrial Relations Commission (2001) 203 CLR 645 at [33]-[35]. If one of the substantive matters provided for in the agreement is not within the required description and that matter is discrete and significant then the proposed agreement may properly be characterised as about matters that are within the relationship and a matter that is not. While it is arguable that s 170LI only requires that the agreement in question be characterised as one that is 'substantially' or 'primarily' about the requisite matters it would be inappropriate to add those words absent a clear legislative purpose in favour of that construction: see Saraswati v The Queen (1991) 172 CLR 1 at 22 per McHugh J. I doubt that the legislature intended that protected action was able to be taken to advance or support claims in respect of a substantive, discrete, and significant matter that does not pertain to the requisite relationship, or that an agreement about such a matter is to be capable of certification. It is not to the point that the offending matter is only one of many matters dealt with in the agreement. More importantly, however, I am not able to discern any legislative purpose that a certified agreement can include a substantive, discrete, and significant matter that does not pertain to the requisite relationship. 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). … Accordingly, the agreement proposed by the unions is not an agreement about matters pertaining to the requisite employment relationship." (Original emphasis) 59 Merkel J concluded (at para 55): "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 Electrolux and its employees, as such. Consequently, the industrial action was not protected action under the Act."

82 Counsel for Electrolux said: "The prohibition in section 170MN on industrial action during the currency of an agreement does not lead to the conclusion that industrial action for any purpose is protected during a bargaining period. Rather, … the fact that the prohibition is lifted during a period in which there are negotiations for a further certified agreement strongly favours the respondent's contention that action is only protected insofar as its purpose is to advance agreements about matters pertaining to the employment relationship." 83 In relation to s 170NC, counsel submitted: "Section 170NC applies to action taken with intent to coerce another person to agree or not to agree to the making of an agreement. Such an intention may exist whether the agreement answers the description in section 170LI or not. In any event if section 170NC has a narrower operation than it might otherwise have had it does not affect the construction of section 170LI or section 170ML." 84 Counsel pointed out that, in this case, claims were clearly made in respect of the bargaining fee proposal. They said that was not a matter relating to the employment relationship; accordingly the industrial action taken by the Unions was not protected action. They submitted the approach of Merkel J should be affirmed and the appeal dismissed. Submissions for the Minister 85 Counsel for the Minister, Mr M McDonald, supported the submissions made on behalf of Electrolux. In his written outline, Mr McDonald identified two issues: "(i) whether the Appellants' claim for a bargaining agent's fee was a claim which pertained to the relationship of employer and employee ('the requisite relationship'); (iii) whether, if the bargaining agents fee claim did not pertain to the requisite relationship, the proposed agreement was nevertheless about matters pertaining to the requisite relationship for the purposes of s.170LI of the Workplace Relations Act 1996." 86 Mr McDonald put submissions about both these issues. He supported the views expressed by Merkel J and made much the same points as those made by counsel for Electrolux. He added a comment about certainty. Mr McDonald contended the appellant's construction of s 170LI "gives rise to weighing up of provisions which are about matters which do pertain and those which do not in order to reach a conclusion as to whether the agreement as a whole is about matters which pertain". Counsel argued that an agreement either does, or does not, fit the description employed in s 170LI(1). He drew an analogy with the issue of characterisation considered in Comalco Aluminium (Bell Bay) Ltd v O'Connor (1995) 131 ALR 657 at 683. Conclusions 87 The issue in the present case is whether the industrial activity organised by each of the Unions in September 2001 was "protected action" within the meaning of s 170ML(2) of the Act. So it is appropriate to start with that subsection. That subsection entitles an organisation of employees, which is a "negotiating party" in respect of a possible agreement under Division 2 or 3 of Part VIB of the Act, "to organise or engage in industrial action directly against the employer". However, it may do so only for a purpose stated in para (e) or para (f) of the subsection. In the context of the present case, that means "for the purpose of supporting or advancing claims made in respect of the proposed agreement". 88 The effect of paras (e) and (f) of the subsection is to impose a limitation upon an organisation's entitlement to take legally-immune industrial action. The limitation is significant. Even if a bargaining period is in existence, the effect of the limitation is that there is no protection in respect of industrial action that was, or is being, organised for a purpose extraneous to claims in respect of the proposed agreement; for example, in sympathy with industrial action by other people. The effect of paras (e) and (f) is to make it clear that, in such a case, s 170ML does not apply. 89 However, this is the limit of the restriction imposed by paras (e) and (f). The paragraphs are concerned only with the purpose of the relevant organisation or individuals; not with their realism, or legal knowledge or the likely result of their industrial action. Of course, the claimed purpose must be the organisation's or individuals' real purpose. But no other limitation is imposed. 90 A claim is a claim. The only essential, for para (e) purposes, is that the claim be genuinely made "in respect of the proposed agreement"; however optimistically or even misguidedly. It does not matter whether or not the claim is likely to be conceded by the employer or whether or not its embodiment in an agreement will give rise to a problem in obtaining certification. These are matters for the future. 91 Provided the claims are genuinely made, it does not matter that others may think them unrealistic. In the industrial relations area, as in other spheres of life, extravagant claims are often made. Mostly, an extravagant claim is unsuccessful; but sometimes it is conceded, perhaps in a modified form. 92 There are sound policy reasons for reading para (e) literally. Fundamental to Part VIB of the Act is the notion that, within strict and objectively definable limits, organisations, employees and employers are entitled to engage in industrial warfare. We agree with the comment of North J in Australian Paper Limited v Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (1998) 81 IR 15 at 18: "The purpose of this statutory scheme is to allow negotiating parties, both employer and employee, maximum freedom consistent with a civilised community to take industrial action in aid of the negotiation of agreements without legal liability for that action." 93 If that purpose is to be achieved, a high degree of certainty is essential. If parties are to make rational and confident decisions about their courses of conduct, they need to know where they stand. It would be inimical to the intended operation of Part VIB to interpret s 170ML(2)(e) in such a way as to make the question whether particular industrial action is "protected action", and therefore immune from legal liability, depend upon a conclusion concerning a technical matter of law: whether a particular claim, if conceded, would cause any resultant agreement to fall outside s 170LI(1). As this case demonstrates, that may be a matter about which well-informed people have different views. 94 Further, there is usually more than one way of achieving a desired end. If an employer is disposed to concede a claim expressed in language that might create a problem, if repeated in an agreement presented for certification under s 170LI(1), the parties may find it possible to substitute different words. They may even agree on a different methodology. 95 Section 170NC points up the undesirability of narrowly reading s 170ML(2). We think counsel for the appellants are correct in submitting that, on their opponent's argument, there would be a lacuna in the operation of this section. If the making of a claim about a matter that did not pertain to the employment relationship was enough to take a proposed agreement outside the description "an agreement under Division 2", coercive action in support of such a claim, that was undertaken outside a formal bargaining period, or without a valid s 170MO(2) notice, would not be a contravention of a "penalty provision". It would not attract a penalty under s 170NF or injunctive relief under s 170NG. 96 Electrolux does not suggest the industrial action organised by the Unions in September 2001 was organised otherwise than for the support or advancement of the claims they were making against the company, including the bargaining fee claim. And Electrolux accepts that all the claims were genuinely made, in the sense that the Unions genuinely wished the substance of these claims to be included, in some form or other, in one or more certified agreements with the company. That being so, it seems to us the purpose of the industrial action clearly fell within the terms of para (e) of s 170ML(2); it does not matter whether or not the insertion of a provision along the lines of the bargaining fee claim would give rise to a certification difficulty under s 170LI(1). 97 It follows that we would allow the appeal and set aside the declarations made by Merkel J. We respectfully feel his Honour fell into error because he incorrectly identified the critical issue. The issue was not "whether the proposed agreement satisfied the requirements of s 170LI was not therefore capable of being certified": see para 48 above. The issue was whether the purpose of the industrial action fell within s 170ML(2)(e). 98 Under the circumstances, it is not necessary for us to express a final view about Electrolux's other propositions: first, that each individual term of an agreement presented to the Commission for certification must concern matters pertaining to the relationship between the employer and the employer's employees from time to time; and, second, that a term along the lines of the Union's bargaining fee claim would not concern such a matter. However, we doubt that either proposition is correct. 99 We do not see why the presence of one or more provisions that do not pertain to the relationship necessarily takes an agreement outside the description embodied in s 170LI(1). As counsel for the Unions pointed out, s 170LI(1) does not refer to the terms of an agreement. It talks about "an agreement … about matters pertaining to the relationship". So it is necessary to characterise the agreement itself, considering it as a whole. An agreement for the sale of a house is an agreement pertaining to real estate, notwithstanding it includes a provision regarding furniture. 100 Nothing in the statutory scheme suggests that a certified agreement that, considered as a whole, answers the description of s 170LI(1) may not include a particular term that does not. The only effect of certification is that prescribed by ss 170LY and 170LZ. Certification provides a statutory override of certain inconsistent awards and orders. A term dealing with matters outside the employer-employee relationship is unlikely to be inconsistent with, and therefore to override, any award or order; but it has contractual effect as between the parties: see CFMEU. 101 In connection with this point, it is relevant to remember that the Act wishes parties to have maximum flexibility in arranging their workplace relationship. Section 3 of the Act includes the following: "The principal object of this Act is to provide a framework for cooperative workplace relations which promotes the economic prosperity and welfare of the people of Australia by: … (b) ensuring that the primary responsibility for determining matters affecting the relationship between employers and employees rests with the employer and employees at the workplace or enterprise level; and (c) enabling employers and employees to choose the most appropriate form of agreement for their particular circumstances, whether or not that form is provided for by this Act; …" 102 In relation to the second proposition, everything must depend upon the precise formulation of the term. But the words of s 170LI(1) are significantly different from those contained in the definition of "industrial dispute" in previous enactments. Cases decided with reference to that definition may not apply. Moreover, the claim by the Unions is that Electrolux impose a requirement (being a condition of their employment) upon future employees. It might give rise to a matter pertaining to the relationship between Electrolux and those employees, notwithstanding that the relevant Union, and its members, will benefit from the imposition: cf. The Queen v Gaudron; Ex parte Uniroyal Pty Limited (1978) 141 CLR 204 at 211, 226. The requirement of a direct debit facility seems to be merely facilitative and intended to be there for the benefit of those who wish to use it. Disposition 103 Each appeal should be allowed. Each of the declarations made by Merkel J should be set aside. That will have the result that the proceeding brought by Electrolux will stand wholly dismissed.

Automotive, Food, Metals, Engineering, Printing & Kindred Industries Union v Electrolux Home Products Pty Limited

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