Metal Trades Industry Association of Australia v Amalgamated Metal Workers' & Shipwrights' Union

High Court of Australia|1983-07-01|Before: Dawson JJ

High Court of Australia Gibbs C.J. Mason, Murphy, Wilson, Brennan, Deane and Dawson JJ. Metal Trades Industry Association of Australia v Amalgamated Metal Workers' & Shipwrights' Union [1983] HCA 28

ORDER Each demurrer overruled. Declare that the Employment Protection Act 1982 N.S.W. is inconsistent with the:Metal Industry Award 1971Metal Industry Award 1971 - Part II - Draughtsmen, Production Planners and Technical Officers Metal Industry Award 1971 - Part III - Professional Engineers Metal Industry Award 1976 - Part IV - Professional Scientists Metal Industry Award 1978 - Part V, Foremen and Supervisors and is to that extent inconsistent with the Conciliation and Arbitration Act 1904 Cth, as amended, and is to that extent invalid.

The first fourteen defendants are organizations of employees registered under the Commonwealth Act and are respondents to and bound by one or more of the Metal Industry Awards. The last-named defendant is the Minister of the Crown in right of the State of New South Wales whose consent is a condition precedent to the institution of proceedings for offences against the State Act. All these defendants demur to the whole of the statement of claim basically on the ground that there is no inconsistency. This is the sole question which is now in issue.

An Act to require the giving of notice in relation to the termination or proposed termination of employment in certain cases; to confer jurisdiction on the Industrial Commission of New South Wales in relation to any such termination or proposed termination; and for other purposes.

The key expressions used in the State Act are defined in s. 4 except in so far as the context or subject matter otherwise indicates or requires. They include the following:

"agreement" means an industrial agreement within the meaning of the Principal Act;

"award" means an award within the meaning of the Principal Act;

"Commission" means the Industrial Commission of New South Wales established under the Principal Act;

"employee" means a person employed by an employer, but does not include an employee of the Crown within the meaning of the Principal Act;

"employer" means a person, firm, company or corporation employing persons working in any industry within the meaning of the Principal Act, but does not include the Crown or a public authority within the meaning of the Principal Act;

"Principal Act" means the Industrial Arbitration Act, 1940;

"Registrar" means the industrial registrar appointed under the Principal Act;

"union" means an industrial union registered as such under the Principal Act.

Except where the contrary intention appears, the Principal Act is to have effect, and be construed, as if the State Act formed part of it (s. 6(2)).

Part II of the State Act deals with the obligations of employers and its provisions, so far as material, are as follows:

(1) Subject to section 9, an employer shall not terminate the employment of any employee unless he has, at least 7 days -

(a) before notice of the termination is given to the employee; or

(b) where notice of the termination is not given to the employee - before the termination of the employment,

served on the Registrar a notice of intention to terminate the employment.

(i) the termination of an employee's employment if the termination is made in consequence of misconduct on the part of the employee; or

(b) in such cases or classes of cases as are prescribed.

(6) For the purposes of subsection (5), employment is casual employment if and only if -

(a) it is, in accordance with the regulations, to be so treated; or

(b) any award or agreement applicable to the employee concerned treats or classifies his employment as being casual employment.

(i) is given notice of termination of his employment; or

(ii) his employment is terminated without notice; and

(b) a notice of intention to terminate the employment has not been served on the Registrar under section 7,

the employer shall, not later than 7 days after the employee is given notice or his employment is terminated without notice , serve on the Registrar a written notice giving particulars of the reasons for the termination.

(a) in relation to the termination or proposed termination of employment of an employee unless, at the time of termination of his employment he has been, or will have been, continuously employed by his employer for at least 12 months ending at that time; or

(b) in such cases or classes of cases as are prescribed.

Neither section 7 nor section 8 requires a notice to be served on the Registrar in relation to the termination or proposed termination of an employee's employment if, immediately before the termination or proposed termination of employment, the employer employed fewer than 15 employees.

Part III of the State Act deals with the jurisdiction of the Industrial Commission of New South Wales. So far as material, it provides:

(1) It is the duty of the Registrar, as soon as practicable after receiving a notice under section 7, to furnish the President [of the Commission] with a report containing a copy of the notice and such other matters as the Registrar thinks appropriate.

(2) Subject to any directions of the President, subsection (1) does not apply if the Registrar is of the opinion that the Commission would make no orders in consequence of the notice.

(3) The Registrar may, of his own motion, furnish the President with a report where he is of the opinion that an employer has or may have contravened or failed to comply with this Act in any respect or that a notice under section 8 contains or may contain inadequate, false or misleading particulars.

(1) The Commission has jurisdiction to consider and inquire into a report referred to the President under section 11 and, in consequence thereof, to make such orders under this Act as appear to be just and proper.

(1) The Commission may, after consideration of a report under section 11 and such inquiry as it thinks proper, make orders as to any or all of the following matters: -

(a) requiring the payment of serverance payments to the employee concerned;

(b) requiring the payment of a gratuity to the employee;

(d) requiring the payment of benefits from a superannuation scheme of which the employee is a member, as if the benefits ordered to be paid were provided for by the scheme;

(e) requiring the payment of an amount to the employee to compensate him for any loss of accrued benefits under a superannuation scheme of which he is a member;

(f) requiring the employer concerned to give preference to the employee for employment in a position for which the employee is or may become qualified, in the event that the employer requires additional staff within a specified period;

(g) requiring, in special cases, the retraining of the employee, and requiring the payment by the employer of any costs of any such retraining;

(i) requiring the payment of any other sums, or the doing of any other act, matter or thing, in consequence of the termination of the employment of the employee, as appears to the Commission to be just and proper;

(2) An order may be made under this Act in consequences of a report under section 11 so as -

(i) all or any of the employees to whom the report relates; and

(ii) such other employees of the employer concerned as may thereafter have their employment terminated by him and as are specified or described in the order; or

(b) to rescind, cancel or vary any relevant award or agreement or any relevant order under this Act.

The power which s. 14 confers on the Commission to rescind or vary any relevant award or agreement does not authorize any interference with awards or agreements made pursuant to the Commonweath Act (cf. the definitions accorded to these terms in s. 4 of the State Act). Indeed, the distinction which the State Act draws between Commonwealth and State awards prompts the question whether the State Act reveals a legislative intention to limit its application to employers and employees covered by State awards. This question was raised during argument but any such intention was disclaimed by the learned Solicitor-General for New South Wales. Reference was made to the absence of any limitation contained in the definition of "employee" and "employer" and it was submitted that in terms the State Act applies to all employment, whether or not that employment is governed by any industrial award or agreement. It is unnecessary to pursue the question because whatever may be the correct answer in that regard, it is manifestly convenient to determine the issue of inconsistency on the basis that the Act is intended to apply to all employment. It is in this sense that the issue has been perceived by all parties and argued accordingly.

Each of the Metal Industry Awards upon which the plaintiffs rely contains provisions relating to the termination of employment. The provisions in each award on this topic are not identical but it will be sufficient to identify the issues that are to be determined by referring to two of them. The Metal Industry Award 1971 provides in cl. 6(d) for termination of employment as follows:

(i) Employment except in the case of casual employees, shall be terminated by a week's notice on either side given at any time during the week or by the payment or forfeiture of a week's wages as the case may be.

(ii) Notwithstanding the provisions of paragraph (i) hereof the employer shall have the right to dismiss any employee without notice for malingering, inefficiency, neglect of duty or misconduct and in such cases the wages shall be paid up to the time of dismissal only.

(iii) Where the employee has given or been given notice as aforesaid he shall continue in his employment until the date of the expiration of such notice. Any employee who having given or been given notice as aforesaid without reasonable cause (proof of which shall lie on him) absents himself from work during such period shall be deemed to have abandoned his employment and shall not be entitled to payment for work done by him within that period. Provided that where an employer has given notice as aforesaid, an employee other than a casual employee, on request shall be granted leave of absence without pay for one day in order to look for alternative employment.

Clause 24a, dealing with maternity leave, was inserted in the award in October 1979. The clause deals with termination of employment in this way:

(i) An employee on maternity leave may terminate her employment at any time during the period of leave by notice given in accordance with this award.

(ii) An employer shall not terminate the employment of an employee on the ground of her pregnancy or of her absence on maternity leave, but otherwise the rights of an employer in relation to termination of employment are not hereby affected.

None of the awards in question contains provisions relating to termination of employment more detailed than those we have cited. The least prescriptive provisions are found in The Metal Industry Award 1976 - Pt IV - Professional Scientists, as amended in March 1983. Clauses 14 and 16 read as follows:

A professional scientist, on engagement, shall be advised in writng of his commencing salary, the conditions relating to annual leave and the period of notice governing his employment. Upon request, an employer shall advise a professional scientist of other details of his conditions of employment, including the award classification (i.e. Group "A", Group "B", or Group "C") which the employer considers to be appropriate having regard to the definitions of the duties performed by the professional scientist concerned.

Leave is reserved to the association to apply with respect of the following matters:

(ii) A minimum of one month's notice of termination;

(iv) A formal written warning prior to dismissal on the basis of unsatisfactory performance.

The question then is whether the material provisions of the State Act are inconsistent in the constitutional sense with these provisions of the awards. In approaching that question, past decisions of this Court provide authoritative guidance. Although the principles are well established and are not in dispute in the present case, a brief review is appropriate.

The Metal Industry Awards were made under the authority of the Commonwealth Act. They are not themselves laws of the Commonwealth and without more could not attract the operation of s. 109 of the Constitution so as to override inconsistent State laws or awards. However, the Parliament has made specific provision in this regard in s. 65 of the Commonwealth Act, which reads as follows:

Where a State law, or an order, award, decision or determination of a State Industrial Authority, is inconsistent with, or deals with a matter dealt with in, an award, the latter prevails and the former, to the extent of the inconsistency or in relation to the matter dealt with, is invalid. The words "or deals with a matter dealt with in" and "or in relation to the matter dealt with" were added by amending Act in 1928. In Ansett Transport Industries (Operations) Pty. Ltd. v. Wardley [1] , Aickin J. observed that "[T]he added words have given rise to some difficulty as they appear to go beyond s. 109 and if so would be beyond power." In making that observation, his Honour was reinforcing the reservation expressed in the joint judgment of Dixon C.J., McTiernan, Williams, Webb, Fullagar and Kitto JJ. in Collins v. Charles Marshall Pty. Ltd. [2] , where their Honours said: In terms this provision goes beyond any operation possessed by s. 109 because it relates not only to inconsistencies but to the valid application of State law to a matter dealt with in an order or award. It may be that no contrast was intended between the latter conception and the conception of actual inconsistency. But if a distinction is intended the extension seems unwarranted The provision may be used as indicating an intention on the part of the Federal Parliament that the power of the arbitrator to determine an industrial dispute enables him to make an exhaustive provision completely governing matters within the ambit of the dispute to the exclusion of any other regulation. But it is difficult to support the provision as directly operating to amplify or extend s. 109. See also T. A. Robinson & Sons Pty. Ltd. v. Haylor [3] . The problem therefore is to be approached on the basis that the alleged inconsistency is between the Commonwealth Act which authorizes the making of the awards and the State law, and the solution is to be found in the application of s. 109 and the well-established doctrine of inconsistency derived therefrom. At the heart of the doctrine is the call to take the law or the award with which the State law is alleged to be inconsistent and to discern precisely the matters which it is the intention of the Parliament, or the Commonwealth arbitrator as the case may be, are to be exhaustively determined thereby. 1. (1980) 142 C.L.R. 237, at p. 278. 2. (1955) 92 C.L.R. 529, at p. 549. 3. (1957) 97 C.L.R. 177.

In the case of an award which deals with a dispute between parties whose relations apart from the award are ordinarily governed by State law, including the common law, the existence of the State law is for the most part assumed and this assumption will be relevant in discerning any inconsistency (cf. Wardley , per Wilson J. [4] ). The contract of employment itself is the most obvious illustration. To the extent that it is not varied by the award, its obligations will ultimately be derived from State law. The question will often be whether the award provisions are intended to supplement or modify rather than supplant State law.

A law of a State will be inconsistent with an award and consequently with a law of the Commonwealth if "its effect, if enforced, would be to destroy or vary the adjustment of industrial relations established by the award with respect to the matters formerly in dispute": per Isaacs J. in Clyde Engineering Co. Ltd. v. Cowburn [5] . Another helpful formulation of the relevant test of inconsistency was expressed by Dixon J. in Victoria v. The Commonwealth [6] :

When a State law, if valid, would alter, impair or detract from the operation of a law of the Commonwealth Parliament, then to that extent it is invalid. 1. (1926) 37 C.L.R. 466, at p. 499. 2. (1937) 58 C.L.R. 618, at p. 630.

We do not draw any material distinction between the provisions of the different Metal Industry Awards dealing with the termination of employment. Although expressed in different words, the relevant clauses in each case deal with the manner in which the employment may be terminated. In the case of the first award to which we have referred, cl. 24a(ii) moves beyond this field into the area of the grounds upon which the employer is entitled in the particular circumstances to terminate the employment. It seems to us that this is the only provision which could be said to deal with the employer's right to dismiss as distinct from the machinery which is to attend a dismissal. It might be thought that cl. 6(d)(ii) of that award also falls into the former category but in our opinion on its proper construction the sub-clause is merely stipulating the circumstances in which a termination of employment may be effected without notice.

In any event, we do not think that the distinction which we have drawn between the right to dismiss and the machinery of termination (upon which some members of the Court in Wardley expressed different opinions on the effect of the award provisions then under consideration [7] ) is material in the circumstances of this case, because we do not read the State Act as limiting or otherwise affecting in any way the grounds upon which an employer in New South Wales may terminate a contract of employment. It is not concerned with the employer's right to dismiss an employee. Part II of the State Act is concerned with the procedure which an employer is to follow in exercising that right. Section 7 obliges an employer to notify the Registrar of his intention to terminate the employment of an employee. The penalty for failure to do so is $5,000. Section 8 deals with the case where a notice of intention to terminate the employment has not been served on the Registrar under s. 7. In such a case, the employer must serve on the Registrar a written notice giving particulars of the reasons for the termination. Again, the penalty for non-compliance is $5,000. The State Act contains some limited exceptions to the exposure of an employer to these obligations but they do not bear on the question in issue. Part III of the State Act confers jurisdiction in some circumstances on the Industrial Commission of New South Wales to make certain orders in relation to a termination.

(1980) 142 C.L.R., at pp. 253-254, 263-264, 266-267, 287.

In our opinion, these provisions plainly interfere with the relationship of employer and employee as established by the awards with respect to the termination of the employment. Both in subject-matter and effect, Pt II of the State Act is dealing precisely with the same topic as is covered by the awards, namely, the procedure which the employer must observe if he wishes to terminate the employment. On their proper construction, the awards do not leave any room for a State law to attach additional obligations on an employer in consequence of a termination of employment under the awards. In attempting to do so the State Act is inconsistent with the awards.

Mr. McHugh, counsel for the defendant unions, argues that the decision of this Court in Wardley demonstrates that the State Act is not inconsistent with the awards. He submits that the State Act should be seen as part of the general law which serves as the context in which the award provisions operate. It is said that, in substance, it imposes a public duty on those who terminate the employment of their workers to notify the Registrar in order that appropriate steps can be taken if necessary to mitigate the serious personal and social effects of unemployment. It does not prevent the employer from exercising such right as the award or the general law gives him to terminate the employment. The submissions are supported by the learned Solicitor-General for New South Wales appearing for the Minister and by the learned Solicitor-General for Victoria intervening. It is also urged that the whole purpose of the State Act is directed to the exercise by the Commission of the jurisdiction to make the orders outlined in s. 14. This is a jurisdiction which will be exercised ordinarily after the industrial relationship of employer and employee with which the award deals has come to an end. There is therefore no interference with the operation of the award.

It is convenient to deal first with the last-mentioned argument. Although superficially plausible, in our opinion there are three reasons why it must be rejected. The first is that although in terms the orders outlined in s. 14(1) might be seen to operate independently of the relationship of employer and employee, they are necessarily consequential on the termination of that relationship. The second is that s. 14(2) empowers the Commission, at the time that it makes any orders pursuant to sub-s. (1) to make the orders apply to such other employees of the employer concerned as may thereafter have their employment terminated by him. Alternatively, the sub-section empowers the Commission to rescind, cancel or vary any relevant award or agreement. Although the award or agreement referred to is one made under the State Industrial Arbitration Act, the sub-section clearly reflects a legislative intention to empower the Commission to affect existing relationships of employer and employee. The third reason is that Pt III of the State Act, which includes s. 14, does not stand independently of the obligations imposed on an employer under Pt II. Section 12(1) conditions the existence of the jurisdiction of the Commission on the receipt by the president of a report from the Registrar under s. 11. The latter section requires or empowers the Registrar to furnish a report to the President as soon as practicable after receiving a notice under s. 7 or whenever he is of the opinion that an employer has or may have contravened or failed to comply with the State Act in any respect or that a notice under s. 8 contains or may contain inadequate, false or misleading particulars. It is for these reasons that we conclude that Pt III of the State Act cannot be given an operation independently of Pt II. It is therefore unnecessary to consider whether, if it were given such an operation, its reach would be affected by the allegation of inconsistency with the Metal Industry Awards.

Nor does the decision of this Court in Wardley afford any comfort to the defendants. In that case the question was whether s. 18 of the Equal Opportunity Act 1977 Vict. was inconsistent with the Airline Pilots Agreement 1978, an agreement which had been certified under s. 28 of the Commonwealth Act. The Court, by majority, held that in the instant case there was no inconsistency. The Agreement provided for the services of a pilot to be terminated on notice subject in the case of some pilots to resort to grievance procedures. Several of the members of the Court alluded to, without determining, the possibility of a direct inconsistency between the grievance procedures and some provisions of the Act. On the other hand, s. 18 of the Act rendered it unlawful for an employer to discriminate against an employee on the ground of sex or marital status. Stephen J. said [8] :

I regard the right of termination of the contract of employment which cl. 6 of the Agreement confers as no absolute right, such as that for which Ansett contends. The right which it confers is not one which is capable of exercise regardless of the unlawfulness under State law of the ground for its exercise. On the contrary it is a right the nature of which is to be understood against the background to its operation which general laws of the land, whether State or federal in origin, provide. Mason J. said [9] : The Agreement does not confer on Ansett a substantive right of dismissal; it merely assumes the right of dismissal for which the general law provides. Similarly, Murphy J. [10] , and Wilson J. [11] held that the Agreement did not confer an unqualified right to dismiss a pilot regardless of the general law. It is also to be observed, as Stephen J. emphasized [12] , that the agreement and the Act dealt with entirely disparate subject-matters, the former being narrowly confined to employment relationships determined in settlement of an industrial dispute and the latter with the general social question of equality of opportunity between men and women. 1. (1980) 142 C.L.R., at p. 246. 2. (1980) 142 C.L.R., at p. 263. 3. (1980) 142 C.L.R., at pp. 266-267. 4. (1980) 142 C.L.R., at pp. 287-288. 5. (1980) 142 C.L.R., at pp. 248-249.

The present case is entirely different. The Employment Protection Act, as its name clearly implies, is concerned with industrial relationships with particular reference to the hardships associated with the termination of employment in the present difficult economic climate. However laudable its objectives may be, the fact is that it intrudes into the industrial relationship established by the award with respect to matters formerly in dispute. Part II of the State Act imposes on an employer who proposes to terminate the employment of his employee a specific obligation. It is not to the point that he could obey both the State Act and the award, for as the joint judgment of Dixon C.J., McTiernan, Williams, Webb, Kitto and Taylor JJ. in T. A. Robinson & Sons Pty. Ltd. v. Haylor [13] makes clear:

The theory upon which the operation of State law gives way in favour of an award providing an inconsistent industrial regulation imputes to the Conciliation and Arbitration Act an intention to confer power upon the arbitrator to make on a subject of dispute an exhaustive determination containing an industrial regulation that, on the subject with which it deals, will cover the ground to the exclusion of any different or further provision. There can be no question here of Pt II of the State Act having a subject-matter which is separate and distinct from the subject with which the awards deal. Both the awards and that Part of the State Act are dealing with procedures associated with the termination of employment. In our opinion, in these circumstances, the State Act must give way to the system of regulation provided by the awards. 1. (1957) 97 C.L.R., at p. 182.

The issue presented by these demurrers is whether the Employment Protection Act 1982 N.S.W. ("the State Act") is inoperative to the extent to which, if at all, it is inconsistent with the first five federal awards mentioned in the plaintiffs' amended statement of claim, viz., (a) the Metal Industry Award 1971; (b) the Metal Industry Award 1971 - Pt II - Draughtsmen, Production Planners and Technical Officers; (c) the Metal Industry Award 1971 - Pt III - Professional Engineers; (d) the Metal Industry Award 1976 - Pt IV - Professional Scientists; and (e) the Metal Industry - Pt V, Foremen and Supervisors - Award 1978. An issue as to locus standi was raised by one of the demurrers at a time when the only plaintiff was the Metal Trades Industry Association of Australia. The statement of claim was subsequently amended to include two employers as plaintiffs. In the event the locus standi point is no longer pressed.

With the exception of the award relating to professional scientists, each of the awards is in the form of a general industrial award, covering the relationship of employer and employee and regulating, in a comprehensive way, the employee's conditions of work. For present purposes the material provisions of the awards are those which relate to engagement and termination of employment. As they have been set out, along with the material provisions of the State Act, in the reasons for judgment prepared by Gibbs C.J., Wilson and Dawson JJ., we need not repeat them. The plaintiffs' case is that there is an inconsistency between these provisions and the State Act. According to the plaintiffs, the State Act, by requiring an employer of fifteen or more employees to give antecedent notice to the Industrial Registrar of the employer's intention to terminate the services of an employee and by conferring jurisdiction on the Industrial Commission of New South Wales to make a variety of orders conferring rights on dismissed employees and imposing obligations on employers with respect to those employees, derogates from the operation of those provisions of the awards relating to engagement and termination of services.

During the course of argument reference was made to the question whether the State Act applies to employees whose employment is governed by federal awards. Some provisions of the State Act, e.g., the definitions in s. 4(1) of agreement, award and union, s. 7(5) and (6) relating to the termination of "casual employment" and s. 10 providing for notification to "unions", might be taken to support the view that the State Act is intended to apply to employees whose employment is not regulated by federal awards. It was, however, common ground between the parties and interveners that the statutory provisions apply, according to their terms, to employees covered by federal awards and we are prepared to accept that this is so and to decide the case raised by the demurrers on this footing.

The inconsistency issue presented by this case is important for two reasons. First, its resolution is a matter of moment to employers and employees bound by the relevant awards. Secondly, as issues of inconsistency between State statutes affecting termination of employment and reinstatement on the one hand and Commonwealth statutes or awards regulating employment and its termination on the other hand frequently arise, the reasons on which the decision in this case is based will have an impact beyond the case itself.

For the purposes of s. 109 of the Constitution the doctrine of inconsistency has, to a significant extent, been expounded by this Court in the context of conflicts or supposed conflicts between federal awards on the one hand and State laws or awards on the other. It was in this very context that Isaacs J. first formulated the "covering the field" test (Clyde Engineering Co. Ltd. v. Cowburn [14] ), a test which was later taken up and elaborated by Dixon J. in Ex parte McLean [15] , and Stock Motor Ploughs Ltd. v. Forsyth [16] ; see also Victoria v. The Commonwealth (The "Kakariki") [17] . Dixon J. pointed out in Stock Motor Ploughs that inconsistency will result if a State law varies, impairs of detracts from the operation of a law of the Commonwealth and that if the Commonwealth law is on its true construction intended to be a complete statement of the law governing a particular matter or relation then for a State law to affect the same matter or relation is regarded as a detraction from the full operation of the Commonwealth law.

(1926) 37 C.L.R. 466, at p. 489. 2. (1930) 43 C.L.R. 472, at p. 483. 3. (1932) 48 C.L.R. 128, at p. 136. 4. (1937) 58 C.L.R. 618, at p. 630.

Because it has been thought that an award made pursuant to the Conciliation and Arbitration Act 1904 Cth, as amended, ("the Act") is not a law of the Commonwealth within the meaning of s. 109, inconsistency between an award and a State law must be reduced to inconsistency between the State law and the provision in the Act authorizing the making of the award so as to constitute it an exhaustive and exclusive regulation of the relevant subject-matter (T. A. Robinson & Sons Pty. Ltd. v. Haylor [18] ). In this respect s. 65 of the Act (s. 30 of the Act of 1904) is of paramount importance for it is the expression of the statutory intention that the arbitrator's exercise of power is to operate to the exclusion of any State law. Unfortunately s. 65, like s. 109, is couched in terms which purport to invalidate an inconsistent State law, rather than in terms of a declaration that the award is to have an exclusive operation. Moreover, its language goes beyond the language of s. 109. This has resulted in some speculation as to its validity (see Collins v. Charles Marshall Pty. Ltd. [19] ). This speculation may be put to one side because it has been accepted in the cases to which we have referred and in Ansett Transport Industries (Operations) Pty. Ltd. v. Wardley [20] , that s. 65 is to be regarded as evincing a statutory intention that an award made pursuant to the Act is to operate to the exclusion of any State law. So much is made evident by the inclusion in s. 65 of the words not found in s. 109 which relate to the operation of a State law which "deals with a matter dealt with in" an award.

(1957) 97 C.L.R. 177, at p. 182. 2. (1955) 92 C.L.R. 529, at pp. 548-549. 3. (1980) 142 C.L.R. 237, at pp. 260-261, 277-280.

The critical question then is: What is the conduct or matter with which the relevant awards deal? For the effect of s. 65 is to make the provisions of the awards exclusive in relation to that conduct or matter and thus to make it inconsistent for the law of a State to govern what is dealt with by the awards. The section contradicts the hypothesis that the award provisions are intended to operate side by side with the provisions of a State law dealing with that conduct or matter.

There are powerful reasons which support the approach which finds expression in s. 65. General industry awards have steadily become more comprehensive in their reach, regulating in a detailed fashion the terms and conditions of employment. It is not uncommon now to find in a general industry award clauses setting out in detail rights and obligations of the parties under the contract of employment, particularly in relation to termination of employment. Moreover, an award is the final product of the complex process of conciliation and arbitration set in train by the service of a log of claims and its non-acceptance. It is a settlement, intended to be enduring, of the terms and conditions which are to govern the industrial relations of employers and employees in the industry to which the award relates. In this situation it is natural and convenient that the award should be regarded to the exclusion of State law, as expressing the relations of the parties governing the matters with which it deals. It would undermine the settlement embodied in the award if its provisions were to be disturbed by the operation of State law on matters with which it deals.

Of course it is inevitable that there are some matters with which a comprehensive general industry award fails to deal, either because the parties are content to accept the application of State law, e.g., workers' compensation, or because it has been considered that an award cannot validly deal with the matter, e.g., superannuation and pension benefits (Reg. v. Hamilton Knight; Ex parte Commonwealth Steamship Owners Association [21] , a decision which may require reconsideration in the future). The more difficult questions of inconsistency occur in this area. We shall return to it shortly.

It may appear from the terms and nature of an award, or from the subject-matter with which it deals, that, notwithstanding that it contains provisions dealing with a particular matter, it is not intended to deal with that matter to the excusion of any other law. At first glance there might seem to be a problem in accommodating such an award to the language of s. 65. But in such a case it will be found that the award fails to deal with the particular conduct or matter which is regulated by the State statute. In this respect it is important to note that an award which apparently regulates an entire subject-matter may leave some small area of it untouched. This area may then become the relevant field capable of regulation by State law. An award which provides for the terms and conditions of employment and termination on notice but not dismissal for misconduct fails to deal with dismissal for misconduct and leaves that particular matter or conduct to be regulated by State law (Reg. v. Clarkson; Ex parte General Motors-Holden's Pty. Ltd. [22] ).

A problem of another kind arises when an award reserves leave to apply with respect to a specific matter not otherwise dealt with in the award, as does cl. 16 of the Professional Scientists Award. Does the award relevantly deal with the matter? The answer must be in the affirmative, unless it emerges on an examination of the award that the matter is intended to be subject to State law pending the inclusion of some provision dealing with the matter specified.

In order to decide whether an award deals with a particular matter and thereby excludes State law it may be necessary to look beyond the actual terms of the award to the log of claims on which it is based. In the nature of things the content of an award is influenced by the ambit of the dispute which arises from non-acceptance of the log. In some cases, of which Clarkson [23] is an illustration, the log asserts a claim which is additional to rights and benefits bestowed on employees by the general law. In others the log asserts a claim in derogation of rights and obligations arising under the general law.

The difficult case, as we indicated earlier, is that of an award apparently complete on its face and a subsequent State statute which confers new rights on employees in the sense that the new rights have not previously been accorded generally by industrial awards or contracts of employment. It might be said that the Court should not be too ready to conclude that the new statutory rights are consistent with the award because this may disturb the settlement effected by the award. Such an approach is not acceptable, however, for the reason that it disregards the fact that awards are framed to operate in the context of general law, both State and federal. The correct approach in such a case is that the award fails to deal with the matter provided for by the statute, unless the award exhibits an intention that there is to be no benefit of that kind or, alternatively, that the benefits for which it provides are to be a complete and exclusive statement of the employee's entitlement in the relevant area. Such an intention cannot be ascribed lightly to an award. It will not often transpire that the class of benefits provided by the statute was demanded by the log of claims or otherwise made part of the industrial dispute settled by the award.

In this respect we need to keep steadily in mind the limited nature of the Commonwealth Parliament's legislative power under s. 51(xxxv). The consequence is that to attribute to an award an intention to exclude benefits for which it makes no provision may be to prevent any Australian legislature from making provision for them in the case of parties bound by the relevant award, unless in a particular case another head of Commonwealth power is available.

It therefore comes as no surprise to find that, in general, statutory rights of the kind mentioned have been treated as standing outside the matters or relations dealt with by awards, unless specific provision is made with respect to them. This is because the subject-matter of the new statutory rights has not been within the purview of the award. The matter was not within contemplation when the award was made or when the dispute arose. Haylor and Collins are illustrations of this kind. In each it was decided that there was no conflict between an award which did not provide for long service leave and a State statute which did so provide.

Wardley was another such case. It was an example of a State law which dealt with a topic not dealt with by the Airline Pilots Agreement 1978, which was certified by the Flight Crew Officers' Industrial Tribunal under s. 28 of the Act. This was the basis of three of the majority judgments. Stephen J. said [24] :

In the context of this Agreement it may be said of the topic of discrimination that, in the words of this Court in Collins v. Charles Marshall Pty. Ltd. , it "simply is not a subject within the purview of the award". Murphy J. [25] and Wilson J. [26] expressed similar views. 1. (1980) 142 C.L.R., at p. 251. 2. (1980) 142 C.L.R., at p. 267. 3. (1980) 142 C.L.R., at pp. 288-289.

It is with these observations in mind that we turn to the Metal Industry Award 1971. It is a general industry award. Clause 6 deals in a comprehensive fashion with the "Contract of Employment". It draws a distinction between weekly employment and casual employment, making appropriate provision for each. It deals at length with "Termination of employment", making provision for termination on notice and dismissal for misconduct, including the rights of an employee to wages in consequence of termination or dismissal. The award contains special provisions relating to termination of employment by a person on maternity leave and it prohibits termination of employment on the ground of pregnancy or absence on maternity leave (cl. 24a). Other sub-clauses of cl. 6 deal with standing down of employees, absence from duty, abandonment of employment, prohibition of bans, limitations or restrictions on the performance of work, and time keeping in relation to late comers.

The State Act does not attempt to regulate the contract of employment. But it does affect the exercise by an employer of his right to terminate the employment. Section 7(1) makes it an offence to terminate the employment unless at least seven days' notice is given to the Registrar before (a) notice of termination to the employee, or (b) termination where that is effected without notice to the employee. Section 7(1) does not apply to termination for misconduct or termination of casual employment (s. 7(5)), but it seems that casual employment in a federal award is not casual employment for the purpose of the State Act, unless the regulations make it so (s. 7(6)). Where a s. 7 notice is not served on the Registrar, the employer is obliged to serve on him within seven days of termination or notice of termination, as the case may be, a written notice giving particulars of the reasons for termination (s. 8(1)). Failure to comply is an offence which, like breach of s. 7(1), attracts a penalty of five thousand dollars.

The effect of s. 7 is to derogate from the effective exercise of the rights which an employee has by virtue of cl. 6 of the award to termination by a week's notice or by the payment of a week's wages. It makes it impossible for the employer to exercise his entitlement under the award to terminate without notice or give notice to terminate, as the case may be, the employment at any time. The practical impact of s. 7 is to bring about a suspension of the exercise of the employer's right to terminate, or give notice to terminate, the employment at any time. The operation of s. 7 alongside cll. 6 and 24a could only be sustained if these clauses, properly understood, are not a complete statement of the rights of the parties with respect to termination of employment and contemplate the possibility that the rights which they confer or recognize might in some circumstances be effectively supplemented by State law.

It would perhaps be a mistake to read cll. 6 and 24a as enunciating rules intended to operate exclusively in unforeseen situations, such as national or civil emergency. However, subject to this qualification, the award has the appearance both in form and substance of being a complete statement of the rights of the parties with respect to termination of employment in the ordinary course of affairs. The State Act is not expressed to have the character of emergency legislation. It applies to employment generally; it is not aimed at employment in industries which have been drastically affected by the recent economic slump. The benefits and the exercise of the jurisdiction for which it makes provision and the duties which it imposes are in no way limited by reference to time or circumstance. In these circumstances the provisions of the award governing termination of employment amount to a relevantly complete statement of the parties' rights with respect to that matter and the terms of s. 7 of the State Act would derogate from the operation of the award. The section is therefore inconsistent with the award.

Sections 7 and 8 are designed to open the way to the exercise by the Industrial Commission of the juridiction conferred by s. 14. The exercise of this jurisdiction is hinged on the making of a report by the Registrar under s. 11. He is bound to make a report after receiving a notice under s. 7 (s. 11(1)) and he may make a report where he is of opinion that the employer may have failed to comply with the Act or that a notice under s. 8 may contain inadequate, false or misleading particulars (s. 11(3)).

Section 14 enables the Commission to make a wide variety of orders, including orders for severance pay, the payment of gratuities and superannuation benefits, payments by way of compenation for lost superannuation benefits and preference for employment in the event that the employer should require additional staff within a specified period (s. 14(1)). However, the section does not authorize an order requiring the appointment or reinstatement of an employee to a position, except where the employer is ordered to give preference for employment (s. 14(8)).

The benefits which would be provided to employees by the making of these orders are all consequential upon the employer's exercise of his right to terminate the employment, a right which is recognized, if not conferred, by the award. But because they are benefits of a kind for which the award itself makes no provision it is contended that they are not inconsistent with the award.

If s. 14 stood on its own the question would arise whether the benefits for which the Award provides on termination of employment are intended to be the only benefits provided for the employee on termination of employment. However, s. 14 is linked to the earlier provisions in the Act, notably ss. 7 and 8. As we have found s. 7 to be inconsistent with the award, it becomes unnecessary to give separate consideration to s. 14.

Apart from that which relates to the professional scientists, the provisions of the other awards concerning termination of employment cannot be relevantly distinguished from the Metal Industry Award 1971. The State Act is therefore inconsistent with them.

Clauses 14 and 16 of the Professional Scientist Award do not make provision respecting the contract of employment and termination of employment in the same detail as is found in cll. 6 and 24a of the earlier Award. Nevertheless, cl. 14 requires that the employee be advised in writing of certain terms of his employment, including "the period of notice governing his employment". And cl. 16 reserves leave to the association to apply with respect to a minimum of one month's notice of termination and a formal written warning prior to dismissal on the basis of unsatisfactory performance. The consequence is that the award deals with termination, including termination on notice. And we are unable to glean from cl. 16 or the other provisions of the award any indication of intention that termination of employment is to be governed by some such statute as the State Act pending the inclusion in the award of a provision pursuant to cl. 16. On the contrary, cll. 14 and 16 proceed on the footing that employment may be terminated in accordance with the contractual notice, subject only to action under cl. 16. Accordingly, the State Act is inconsistent with the Professional Scientists Award.

The case was argued on the basis that the Employment Protection Act 1982 N.S.W. ("the State Act") applies to workers whose engagement is governed by federal awards, in particular five Metal Industry Awards (the Metal Industry Award 1971; the Metal Industry Award 1971 - Pt II - Draughtsmen, Production Planners and Technical Officers; the Metal Industry Award 1971 - Pt III - Professional Engineers; the Metal Industry Award 1976 - Pt IV - Professional Scientists and the Metal Industry - Pt V - Foremen and Supervisors Award 1978). Although the State Act is presumed to be valid, in its application to those employed under the federal awards it is clearly inconsistent with the federal award provisions. By requiring an employer to give prior notice of any intention to terminate an employee's services and by conferring jurisdiction on the Industrial Commission of New South Wales to make orders about such termination (see ss. 7 and 14) the State Act derogates from the award provisions relating to engagement and termination of services. For example s. 7 of the State Act effectively suspends the employer's right to terminate under cll. 6 and 24a of the Metal Industry Award 1971. To the extent of that inconsistency the State Act is, according to the somewhat artificial doctrine, inconsistent with the Conciliation and Arbitration Act 1904 Cth, particularly s. 65, and therefore invalid by operation of s. 109 of the Constitution. Alternatively the Acts Interpretation Act 1897 N.S.W., s. 14A which requires that State Acts be read and construed to the full extent of, but not so as to exceed, the legislative power of the State, operates to achieve the same result.

Various tests of inconsistency have been evolved by this Court (see Tammelo, The Tests of Inconsistency Between Commonwealth and State Laws, Australian Law Journal, vol. 30 (1957), p. 496; Murray-Jones, The Tests for Inconsistency under Section 109 of the Constitution, Federal Law Review, vol. 10 (1979), p. 25; Rumble, The Nature of Inconsistency under Section 109 of the Constitution, Federal Law Review, vol. 11 (1980), p. 40). Many of them, such as the "covering the field" test (see Clyde Engineering Co. Ltd. v. Cowburn [27] , per Isaacs J.; Ex parte McLean [28] ; Stock Motor Ploughs Ltd. v. Forsyth [29] ; Victoria v. The Commonwealth (the "Kakariki") [30] ; Wenn v. Attorney-General (Victoria) [31] ; O'Sullivan v. Noarlunga Meat Ltd. [32] ) have been taken from the constitutional law of the United States (see Erie Railroad Co. v. New York [33] ; Hines v. Davidowitz [34] ; Rice v. Santa Fe Elevator Corp. [35] ; Pennsylvania v. Nelson [36] ; Florida Lime and Avocado Growers v. Paul [37] ; Tribe, American Constitutional Law (1978), p. 384). These tests do not assist in the resolution of this case, in which the inconsistency is manifest.

(1926) 37 C.L.R. 466, at p. 489. 2. (1930) 43 C.L.R. 472, at p. 483. 3. (1932) 48 C.L.R. 128, at p. 136. 4. (1937) 58 C.L.R. 618, at p. 630. 5. (1948) 77 C.L.R. 84. 6. (1954) 92 C.L.R. 565. 7. (1914) 233 U.S. 671, at p. 683 [58 Law. Ed. 1149, at p. 1154.]. 8. (1941) 312 U.S. 52, at p. 67 [85 Law. Ed. 581, at p. 587.]. 9. (1947) 331 U.S. 218, at pp. 230-231. 10. (1956) 350 U.S. 497, at p. 504 [100 Law. Ed. 640, at p. 653.]. 11. (1963) 373 U.S. 132, at p. 142 [10 Law. Ed. (2d) 248, at p. 256.].

At a glance

Court

Decision date

Before

Source

Judgment (110 paragraphs)

Parties