Estoppel and Waiver in the Enforcement of Industrial Awards
17 The rights conferred and the obligations imposed upon persons and organisations bound by industrial awards are statutory in origin. In the case of awards under the Industrial Relations Act 1988, as with its predecessor The Conciliation and Arbitration Act 1904 and its successor by amendment The Workplace Relations Act 1996, the awards are not themselves laws of the Commonwealth. But, once made, their provisions are given the force of laws of the Commonwealth by the terms of the Act --Ex parte McLean (1930) 43 CLR 472 at 479. It is the Act itself which renders an award made by the Commission binding on parties to the relevant industrial dispute and other organisations and persons specified in the Act (s 149 Industrial Relations Act 1988 and s 149 Workplace Relations Act 1996).
18 The nature of the relationship between awards and contracts of employment has been much agitated - de Meyrick, The Interaction of Awards and Contracts (1995) 8 AJLL 1 and the cases and articles there cited. But the present law is plain. The award is independent of contract. It is neither incorporated by statute nor by implication into the contract of employment - Byrne v Australian Airlines Ltd (1995) 185 CLR 410. Nor can those bound by an award contract out of it - Josephson v Walker (1914) 18 CLR 691 at 700 (Isaacs J) approved in Byrne at 421. That is not to say that a contract may not be made which confers benefits upon an employee over and above those conferred by the award - Byrne at 421. Nor does it prevent parties from expressly agreeing to incorporate the terms of an award into their contract of employment thus providing remedies over and above those provided by statute - True v Amalgamated Collieries of WA Ltd [1940] AC 537 adopted in Byrne at 420 and 444.
19 Up until the enactment of the Workplace Relations Act 1996, an honest and common but erroneous assumption of parties to an award as to the nature of the rights it confers and obligations it imposes has been seen to have little effect against its statutory force. Griffiths CJ in Josephson v Walker put it thus at 696:
"The obligation created by [the award] does not depend upon any agreement of the parties express or implied and may arise without their knowledge. If by the award it is determined that journeymen plumbers shall receive not less than a certain rate of wages, each journeyman plumber is entitled to those wages, and although the employer and the employee have gone on for a long time the one paying and the other receiving what each honestly believes to be the proper rate of wages, nevertheless if it is afterward found that the wages paid are less than those fixed by the award, the right of the employee to receive the wages so fixed has accrued."
It is possible to perceive in that passage some of the matters which might be relied upon today to found an estoppel.
20 The inability to contract out of an award by virtue of its statutory operation militates against the proposition that parties may be estopped from enforcing its provisions or may waive its benefits in a way that is legally enforceable. The effect of the statutory provisions which give awards their binding force are at least as powerful against the common law and equitable principles of estoppel and waiver as they are against the common law of contract. There is nothing novel in the general proposition that statutes which preclude contracting out of the rights and obligations they confer will defeat the application of estoppel and waiver to like effect - Beckford Nominees Pty Ltd v Shell Co of Australia Ltd (1986) 73 ALR 373 at 378 (Pincus J).
21 The application of principles of estoppel and waiver to the enforcement of statutory rights depends upon their consistency with the terms and purpose of the statute creating the rights - Spencer, Bower and Turner, The Law Relating to Estoppel by Representation 3rd Edition, Butterworths (1977) at par 142. The general principle is that the availability of contractual variations, estoppel or waiver of a statutory right depends upon whether it is a private right only, or has also a public character in the sense that the general welfare of the community, or the interests of the class of persons whom it is the object of the law to protect, require it to be upheld against those common law and equitable doctrines. That principle is reflected in the judgment in Commonwealth v Verwayen (1990) 170 CLR 394 at 456 per Dawson J, with whose analysis of the law and facts Deane J generally agreed, and at 486 per Gaudron J. Mason CJ, although dissenting in the result in that case for reasons not relevant to the present point, acknowledged that some statutory rights are capable of being extinguished by the person for whose benefit they have been conferred. Some rights however could be conferred for reasons of public policy so as to preclude contracting out or abandonment by the individual concerned (404). At 405 his Honour said:
"On the footing that the right to plead the statute as a defence is a right conferred by statute, the respondent's contention that the right is capable of waiver hinges on the scope and policy of the particular statute…The issue is not whether the relevant provisions are beneficial to the public, but whether they are "dictated by public policy" and enacted "not for the benefit of any individuals or body of individuals, but for considerations of state". Although in one sense all statutes give effect to some public policy…the critical question is whether the benefit is personal or private or whether it rests upon public policy of expediency…".
His Honour concluded in that case, consistently with the position taken by the other Justices, that it was possible to contract out of a statutory provision imposing a time bar or to deprive it of effect by other means such as waiver (406). Consistently with that conclusion the considerations that would preclude parties from contracting out of a statutory right would also preclude its effective barring or extinguishment by operation of estoppels based upon representations or extinguishment by waiver.
22 At least up until the amendment of the Industrial Relations Act 1988 by the Workplace Relations and Other Legislation Amendment Act 1996 (WROLA Act), there was a well established line of judicial authority in relation to industrial awards inimical to the notion of contracting out of award obligations and, a fortiori, the invocation of principles of estoppel or waiver in relation to them. The underlying philosophy goes back to the beginnings of industrial law in Australia. It is exemplified in Duncan v Ellis (1916) 21 CLR 379. That case concerned a prosecution brought under the Factories and Shops Act 1915 (Vic) against an employer who had paid his employee less than the minimum rate applicable by statutory determination in the belief induced by his employee that he was younger than the age which would have entitled him to that rate. It was not a defence that the employer reasonably believed what his employee had said. The primary object of the Act was "the benefit of the public" in the sense that it was an Act "not merely for regulating certain trade matters but, generally speaking, one of social reform - an Act for improving the condition of wage earners and others, not only for their sake but for the public betterment which will ensue from these provisions", per Barton J at 382. Isaacs J at 385 identified as the fundamental notion of the Act:
"…the inability of employees to bargain effectively for themselves as to their surroundings and their remuneration, and therefore, in order to protect them as a class and carry out the professed object of the enactment, the Legislature have found themselves compelled to lay down a rigid rule, precluding inquiry as to accident, or inadvertence, or negligence, or other person's acts, except where it has expressly or by necessary intendment introduced those factors…"
Although estoppel was not raised in Duncan, it was relied upon in similar circumstances in Walsh v Commercial Travellers Association of Victoria (1940) VLR 259. An adult who had obtained employment by fraudulently misrepresenting that he was 19 and had been paid the rate of wages payable to persons of that age, sued his employer to recover the difference between such rate and the Wages Board Rate prescribed for adults. He was held by the Full Court to be entitled to succeed despite his own fraud. Neither estoppel nor a counterclaim for deceit could avail the defendant. The relationship between the inability to contract out of the obligations and the inapplicability of estoppel was made clear by Mann CJ at 263:
"It would destroy in a large measure the operation of the statute to allow a plea of estoppel where the statement relied upon constituted the means employed to bring about a contract of employment although the contract itself can afford no defence."
See also at 268 per Gavan Duffy J. Walsh was followed in Kidd v Savage River Mines (1984) 6 FCR 398 by Gray J dealing with an award made under the Conciliation and Arbitration Act 1904. His Honour said at 409:
"It is a sound principle that statutory rights should not be defeated by estoppel, especially statutory rights created for the benefit of the public or a section of the public. The rights given by the Award in the present case are of such a nature. They have statutory force by virtue of the terms of the Act. The obligations laid down by the Award are absolute, and prevail against any contract to the contrary, as did the provisions of the statute considered by the Full Court in Walsh's case. In my view a claim under an Award cannot be defeated by estoppel."
And dealing with the Industrial Relations Act 1988 in Jackson and Wilson v Monadelphous Engineering Associates Pty Ltd (unrep IRCA 17.10.97), Moore J, sitting in the Industrial Relations Court of Australia, after referring to Byrne and authorities concerning awards under State law, said that:
"If an employee cannot agree to forego rights conferred by an award or Division 3, then it is unlikely an estoppel precluding their enforcement can arise from the conduct of an employee." (at 59)
His Honour noted the changed statement of objects of the Industrial Relations Act 1988 introduced by the Industrial Relations Reform Act 1993, and observed:
"While the principal object of the Act remained the prevention and settlement of industrial disputes, the above paragraphs [s 3(b) and (c)] disclosed maintaining wages and working conditions by the protective mechanism of awards and fair bargaining as an aspect of the purpose."
He thought however that different considerations might arise in relation to the Workplace Relations Act 1996 with its greater emphasis on workplace based and individual agreements.
23 The breaches of the award alleged in the complaints all took place between June 1993 and June 1995. The right to take proceedings for penalties in respect of all of these breaches had accrued pursuant to s 178 of the Industrial Relations Act 1988 and prior to the passage of the WROLA Act. Although the WROLA Act provided for pre-existing awards to be of no effect in respect of anything other than "allowable matters" after an interim period of eighteen months, there is nothing which would displace the operation of s 8(d) of the Acts Interpretation Act 1901 (Cth) relating to the continuance of accrued causes of action. As I observed in Horsman v Commissioner of Main Roads (unrep 14/9/98 French J WG 111 of 1997):
"There is no express intention to be found in s 44 of the Workplace Relations and Other Legislation Amendment Act 1996 (Cth) that the new penalty for a breach of s 178 should apply to offences committed before the commencement of the Workplace Relations and Other Legislation Amendment Act 1996. The relevant amending provision is simply in these terms:
"Subparagraph 178(4)(a)(ii) - omit $1,000" substitute "$10,000 for a body corporate or $2,000 in other cases.""
The penalty provision as it stood prior to the WROLA Act 1996 continued to apply in relation to breaches of award which occurred prior to the amendment. In my opinion therefore the proceedings were in truth brought under s 178 of the Industrial Relations Act 1988 as it stood in June 1995. The questions of estoppel and waiver raised in this case fall to be considered by reference to the state of the statute as it stood at the time the alleged breaches were committed.
24 The effect of the restatement of statutory purpose in the Workplace Relations Act 1996 on the ability of parties to contract out of awards and consequently on the application of doctrines of estoppel and waiver does not therefore arise. On the face of it though it does seem that, notwithstanding the emphasis of that Act on agreements rather than awards, awards are maintained as a "safety net" specifying minimum conditions on certain matters including rates of pay. The provisions of the Act under which they are made are likely therefore to be construed so as to continue to render ineffective attempts to contract out for lesser than minimum conditions. In any event the provisions of the Industrial Relations Act at the time of the breaches found to have occurred in the present case were of the same character as those which had preceded it and, for the reasons explained by Moore J in Monadelphous, precluded contracting out and the application of the doctrines of estoppel and waiver. Those doctrines being inapplicable, grounds 1 and 2 of the appeal must fail.
25 Nothing that I have said in relation to the question of contracting out of award provisions or the availability of the defences of estoppel or waiver in relation to their enforcement should be taken as extending to the special case of agreements to compromise or settle disputes about the application or construction of awards or like instruments. Nor can it be taken as stating any principle affecting agreements involving the selection of dispute resolution mechanisms in such cases. I say this to distinguish, as inapplicable to the present case, the decision of the Full Court in Horsman v Commissioner of Main Road [1999] FCA 1733 which was cited in argument. The appellant in that case alleged that he had been unfairly dismissed from his employment by the Commissioner of Main Roads. He was found to have agreed, in advance of an arbitration by a Commissioner of the Australian Industrial Relations Commission, to abide by the Commissioner's recommendations. He had engendered in the employer an assumption that he would abide by those recommendations and the employer had acted accordingly. That process having yielded a result which did not satisfy him, he was held estopped from bringing proceedings for unfair dismissal in the Federal Court. No question appears to have been raised about the availability of the doctrine of estoppel in the way that it has been raised in this case. In any event, the area of compromise agreements and agreed mechanisms for resolution of disputes involving awards requires specific consideration as and when cases arise in which questions of contracting out and the availability of estoppel or waiver defences are in issue.