High Court of Australia|1993-07-01|Before: Mason CJ

Re Finance Sector Union of Australia Ex Parte Financial Clinic (Vic) Pty Ltd [1993] HCA 34; (1993) 178 CLR 352 (1 July 1993)

EX PARTE FINANCIAL CLINIC (VIC) PTY LTD AND OTHERS [1993] HCA 34; (1993) 178 CLR 352

MASON CJ(1), BRENNAN(2), DEANE(1), DAWSON(2), TOOHEY(1), GAUDRON(1) AND McHUGH(2) JJ

Discharge the order nisi for a writ of certiorari with respect to the finding of dispute made by Nolan C. on 23 December 1986.

Make absolute the order nisi for a writ of certiorari with respect to the finding of dispute made by Frawley C. on 4 July 1989 in so far as it affects non-members of the Australian Insurance Employees' Union or the Finance Sector Union of Australia.

Make absolute the order nisi for a writ of prohibition and a writ of certiorari with respect to the Insurance Industry Superannuation (Third) Award 1988 in so far as it requires superannuation contributions to be paid to Insuper Ltd. in respect of employees who were not members of the Australian Insurance Employees' Union or are not now members of the Finance Sector Union of Australia.

MASON C.J, DEANE, TOOHEY AND GAUDRON JJ This is the return of an order nisi for certiorari with respect to dispute findings made by the Australian Industrial Relations Commission ("the Commission") or its predecessor, the Australian Conciliation and Arbitration Commission ("the Arbitration Commission"), and for prohibition and certiorari with respect to an order of the Commission made in November 1990 ("the 1990 variation") varying an award of the Arbitration Commission, known as the Insurance Industry Superannuation (Third) Award 1988 ("the Award").

2. The dispute findings were based on superannuation claims served on various employers by the Australian Insurance Employees' Union ("the AIEU") in August 1986 and in January 1989 ("the 1986 claim" and "the 1989 claim", respectively). So far as is presently relevant, the 1986 claim required employers to pay a specified superannuation contribution "to each of (their) employees" and provided that the contribution should be "to an Insurance Industry Union Superannuation Scheme (to become) operative from 1 January 1987". The 1989 claim was part of a general log of claims dealing with salaries and conditions for all employees, "whether members of the (AIEU) or not". It was a claim for the payment of specified contributions to "a superannuation scheme nominated by the (AIEU)". It is common ground that the Award was originally made in settlement or in part settlement of the 1986 claim and that the 1990 variation was founded on the 1989 claim.

3. Originally, the Award bound "participating employer(s)" ((1) The Award defined "participating employer(s)" as employers who had been admitted by the Trustee of the Fund as "participating employer member(s)") to pay superannuation contributions to Insuper Ltd. ("Insuper"), the Trustee of the Insurance Industry Superannuation Fund ("the Fund"), in respect of "employees eligible to be members of the (AIEU), whether members ... or not", but only if the employees were members of the Fund. At that stage and for some time thereafter, the Fund's Trust Deed required individual employees to make an application to become members of the Fund. The prosecutors, or their predecessors in business, became respondents to the Award as a result of variations made in 1989. However, it seems that none was a "participating employer" and that none of their employees was a member of the Fund.

4. The Fund was established by employers who were members of the Insurance Employers Industrial Association ("the Employers Association") and the AIEU as a jointly controlled industry superannuation scheme. Insuper, the Trustee, is a company limited by guarantee and, initially, was jointly controlled by the Employers Association and the AIEU. The Finance Sector Union of Australia ("the FSU"), which was formed by the amalgamation of the AIEU with other organizations of employees, has since taken over from the AIEU. It is common ground that the Fund was nominated by the AIEU as the superannuation scheme to which contributions should be made for the purposes of complying with the 1989 claim.

5. Some months before the 1990 variation, the Trust Deed was amended so that payment could be made to the Fund by any employer in the insurance industry and payment by an employer in respect of an employee was deemed to be an application by that employee to become a member of the Fund. The effect of the 1990 variation, if valid, in combination with the amendments to the Trust Deed is to require all employers named as respondents to the Award, including the prosecutors, to make specified contributions to Insuper in respect of each of their employees, whether members of the FSU or otherwise. It is common ground that, although the prosecutors' employees were eligible to be members of the AIEU and, later, the FSU, most, if not all, are not and have not been members of either organization.

6. The prosecutors challenge the validity of the Award as varied in 1990 and the antecedent dispute findings in two respects. Their first and main challenge is concerned with the requirement that contributions be paid to Insuper, thus specifying the Fund as the superannuation scheme to which contributions are to be made. The specification or identification of a particular superannuation scheme, it is said, is not a matter "pertaining to the relationship between employers and employees" as required by the definition of "industrial dispute" in s.4(1) of the Industrial Relations Act 1988 (Cth) ("the Act") ((2) Section 4(1) of the Act defines "industrial dispute" to mean, relevantly:

"(a) an industrial dispute (including a threatened,

the specification of a particular superannuation scheme, it is said, they could not and did not give rise to an industrial dispute. It follows, according to the argument, that the Award, as varied in 1990, is invalid in so far as it requires contributions to be paid to Insuper. The second challenge is confined to the requirement that contributions be paid to the Fund or, more accurately, to Insuper as Trustee of the Fund in respect of employees who are not members of the FSU.

7. We agree with Brennan, Dawson and McHugh JJ, for the reasons that they give, that there may be an industrial dispute between employees and employers, or, between an organization of employees and employers, as to the identity of the particular superannuation scheme to which employers should contribute on behalf of their employees. However, in our view, a dispute of that kind will not ordinarily arise at the instance of some employees or an organization of employees with respect to the contributions to be made on behalf of or, to use the terms of the Award, "in respect of" other employees who are not members of the organization concerned.

8. It was held in Metal Trades Employers Association v. Amalgamated Engineering Union ("the Metal Trades Case") ((3) [1935] HCA 79; (1935) 54 CLR 387.) that the wages and conditions on which employees who are not members of a union are or may be employed may be the subject of an industrial dispute between a trade union and employers, or between a trade union and an organization of employers. The principle on which that decision rests was stated by Dixon J in R. v. Commonwealth Court of Conciliation and Arbitration; Ex parte Kirsch ((4) [1938] HCA 41; (1938) 60 CLR 507, at p 537) as being "that the interest which an organization of employees possesses in the establishment or maintenance of industrial conditions for its members gives a foundation for an attempt on its part to prevent employers employing anyone on less favourable terms". That statement was accepted as authoritative by the Court in R. v. Kelly; Ex parte State of Victoria ((5) [1950] HCA 7; (1950) 81 CLR 64, at p 82. See also Reg. v. Graziers' Association of N.S.W.; Ex parte Australian Workers' Union [1956] HCA 31; (1956) 96 CLR 317, per Dixon CJ, McTiernan and Kitto JJ at p 326; Reg. v. Moore; Ex parte Graham [1977] HCA 20; (1977) 138 CLR 164, per Gibbs J at 176; Reg. v. Cohen; Ex parte Attorney-General (Q.) [1981] HCA 66; (1981) 157 CLR 331, per Gibbs CJ at p 337, per Wilson J at p 347).

9. It is now common for trade unions to make demands on employers with respect to the wages and conditions of members and non-members alike. And since the Metal Trades Case, awards have regularly been made in settlement of claims of that kind in terms which bind employers in respect of all employees, whether or not members of the union party to the award in question.

10. It is of some significance that, in recent times, the matters involved in industrial disputes have tended, in practice, to take on a broader aspect. It is sufficient to refer to Re Manufacturing Grocers' Employees Federation of Australia; Ex parte Australian Chamber of Manufactures ("Manufacturing Grocers") ((6) [1986] HCA 23; (1986) 160 CLR 341) and Re Amalgamated Metal Workers Union; Ex parte Shell Co. of Australia Ltd. ((7) [1992] HCA 38; (1992) 174 CLR 345). In the first of those cases, the Court held that "entitlement to participate in a superannuation scheme and the means by which that scheme is to be funded are matters which pertain to the relations of employers and employees" ((8) (1986) 160 CLR, at p 356) and, thus, were capable of being the subject of an industrial dispute as defined in the Conciliation and Arbitration Act 1904 (Cth) ("the Arbitration Act"). In the second case, it was said that "the general question of superannuation entitlements is a matter which may form the subject of an industrial dispute" ((9) (1992) 174 CLR, per Mason CJ, Deane, Toohey and Gaudron JJ at p 356) as defined in the Act, that definition being in slightly different terms from those used in the Arbitration Act. Nothing presently turns on that difference.

11. The decision in the Metal Trades Case was confined to claims by trade unions involving the terms and conditions on which non-members were to be employed. If a proposed award is to be confined to wages and conditions as they affect individual employees, albeit that they may be expressed to apply generally, there is no reason why a claim by a trade union to the effect that non-members should only be employed on terms which equate with those which apply to its members should not result in an award which is expressed to bind employers in respect of all employees, whether or not members of the union concerned. But different considerations arise if the proposed award is to deal with a matter that extends beyond wages and conditions as they affect individual employees.

12. The 1986 and the 1989 claims have an aspect that extends beyond the wages and conditions of individual employees in that the claims were, in essence, claims for a single industry superannuation fund. It is common ground that the claims were intended to and were understood to have that character. If a claim does travel beyond wages and conditions as they apply to individual employees, it is necessary to enquire whether it pertains "to the relationship between employers and employees" as required by s.4(1) of the Act. In the case of demands by a trade union, and because the position of non-members is different from that of employees who are members of the union concerned, it may be that that relationship will be involved in the demand in so far as it affects employees who are members of the union but not as it affects non-members.

13. It is well settled that a trade union claims on behalf of its members, both present and future ((10) Burwood Cinema Ltd. v. Australian Theatrical and Amusement Employees' Association [1925] HCA 7; (1925) 35 CLR 528, per Isaacs J at p 538, per Starke J at p 548. See also the Metal Trades Case (1935) 54 CLR, per Latham CJ at p 404, per Rich and Evatt JJ at p 418, per Dixon J at p 431; Reg. v. Graziers' Association of N.S.W.; Ex parte Australian Workers' Union (1956) 96 CLR, per Dixon CJ, McTiernan and Kitto JJ at p 323). But it does not claim on behalf of persons who are not and never become its members ((11) Reg. v. Graziers' Association of N.S.W.; Ex parte Australian Workers' Union (1956) 96 CLR, per Dixon CJ, McTiernan and Kitto JJ at p 323). The consequences of this are well established. Because they are not parties to the antecedent dispute, an award made in settlement of the claim does not, of itself, impose duties or confer rights on non-members ((12) The Metal Trades Case (1935) 54 CLR, per Latham CJ at pp 405-406, per Dixon J at pp 436-437, per McTiernan J at p 443. And, see R. v. Kelly; Ex parte State of Victoria (1950) 81 CLR, at p 82; Reg. v. Graziers' Association of N.S.W.; Ex parte Australian Workers' Union (1956) 96 CLR, per Dixon CJ, McTiernan and Kitto JJ at p 324; Blackley v. Devondale Cream (Vic.) Pty. Ltd. (1968) 117 CLR 253, per Kitto J at pp 264-267; Reg. v. Moore; Ex parte N.S.W. Public Service Professional Officers' Association (1984) 154 CLR 1, per Deane J at p 14. Note, however, that s.178(5)(ca)(i) of the Act provides that a person "whose employment is, or at the time of breach was, subject to (an) award" may institute proceedings with respect to the breach of that award, and, under s.179(1) a person to whom "an employer is required by an award ... to pay an amount" may sue for the recovery of that amount in the Federal Court of Australia or any other court of competent jurisdiction.); it only creates legal relations between the persons who are parties to the dispute and to the award ((13) The Metal Trades Case (1935) 54 CLR, per Latham CJ at pp 403, 405-406, per Rich and Evatt JJ at p 422. And, see Amalgamated Engineering Union v. Alderdice Pty. Ltd.; In re Metropolitan Gas Co. [1928] HCA 38; (1928) 41 CLR 402, per Isaacs J at p 420; R. v. Kelly; Ex parte State of Victoria (1950) 81 CLR, at p 82.). Thus, non-members are neither parties to nor bound by an award ((14) See the Metal Trades Case (1935) 54 CLR, per Latham CJ at p 405.), even if it is expressed, as in this case, to bind the union and employers in respect of employees, whether or not members of the union concerned.

14. It is true, as was contended on behalf of the FSU, that the Award as varied in 1990 does not, itself, confer rights or impose obligations on employees who are not its members. They may choose whether or not to claim entitlement to participate in the Fund as a result of payments made in respect of them by their employers. Unless they make a claim, they are under no obligation in relation to the Fund and any obligation that does arise in the event of a claim being made results from the claim, not the Award. However, the fact that the Award neither confers rights nor imposes obligations on non-members is merely the consequence of its being an award which extends to employees who are not members of the union concerned in the dispute. It is not the criterion of its validity.

15. As earlier indicated, the critical consideration is whether a claim that contributions in respect of non-members be made to Insuper is a claim with respect to a matter "pertaining to the relationship between employers and employees" as required by s.4(1) of the Act. In this regard, the subject-matter of the claim cannot be viewed in isolation from the essential features of an industrial dispute. The position was explained succinctly by Latham CJ in the Metal Trades Case ((15) (1935) 54 CLR, at p 402.):

"A dispute exists only between the disputants.

Generally and naturally it relates to their mutual

industrial relations. But there is no reason why it should

not relate to the industrial relations between one set of

the disputants and third persons."

16. The remarks of Latham CJ make it clear that a dispute must relate to the employer-employee relationship of the employers and employees who are, or are treated as, the parties to the dispute, even though it may also relate to some other or different industrial relationship. And much the same requirement was identified in Manufacturing Grocers. It was said in that case that to constitute an industrial dispute, the subject-matter "must be connected with the relationship between an employer in his capacity as an employer and an employee in his capacity as an employee in a way which is direct and not merely consequential" ((16) (1986) 160 CLR, at p 353. And, see R. v. Kelly; Ex parte State of Victoria (1950) 81 CLR, at pp 84-85; Reg. v. Findlay; Ex parte The Commonwealth Steamship Owners' Association [1953] HCA 81; (1953) 90 CLR 621, per Dixon CJ at pp 629-630; Reg. v. Commonwealth Conciliation and Arbitration Commission; Ex parte Melbourne and Metropolitan Tramways Board [1966] HCA 32; (1966) 115 CLR 443, per Barwick CJ at p 450; Reg. v. Commonwealth Industrial Court Judges; Ex parte Cocks [1968] HCA 86; (1968) 121 CLR 313, per Barwick CJ, Taylor and Owen JJ at p 318, per Menzies J at pp 326-327; Federated Clerks' Union (Aust.) v. Victorian Employers' Federation [1984] HCA 53; (1984) 154 CLR 472, per Mason J at pp 488-489; Re Cram; Ex parte N.S.W. Colliery Proprietors' Association Ltd. [1987] HCA 28; (1987) 163 CLR 117, at p 133; Re Amalgamated Metal Workers Union; Ex parte Shell Co. of Australia Ltd. (1992) 174 CLR, per Mason CJ, Deane, Toohey and Gaudron JJ pp 359-360.).

17. The necessity for the subject-matter of an industrial dispute to pertain to the employer-employee relationship of the employers and employees who are parties to the dispute or, in the case of a dispute involving a trade union or an organization of employers, of the employers and employees who are treated as parties to the dispute, when taken in conjunction with the statement of principle that underlies the Metal Trades Case, reveals the nature of those claims by a trade union with respect to non-members that give rise to an industrial dispute. As already indicated, a trade union does not claim on behalf of employees who are not and do not become its members. Rather, as appears from the necessity for a matter to pertain to the employer-employee relationship of the parties to a dispute, it may only claim in respect of those employees. More precisely, it may only claim in respect of their employment or non-employment.

18. The principle that underlies the Metal Trades Case also makes it clear that if a union wishes to claim in respect of the employment of non-members, it may do so only with respect to their position as employees relative to the position of those employees who are members of the union. This means that the claims that may be made are not completely at large. They cannot extend to matters which are irrelevant to the position of non-members relative to union members. Matters of that kind do not pertain to the industrial relationship of the parties to the dispute and, thus, cannot be the subject of an industrial dispute.

19. A trade union certainly has an industrial interest in ensuring that non-members receive the same level of employment benefits as employees who are its members. Thus, if members are to receive the benefit of superannuation contributions, it has an industrial interest in ensuring that non-members also receive superannuation contributions in the same amount or at the same level, and a claim to that effect is one that may give rise to an industrial dispute.

20. Moreover, a trade union has a legitimate interest, by reason of its being a trade union, in the establishment and maintenance of superannuation schemes for the benefit of its members. That interest extends to the establishment of a single industry scheme to which all its members may belong. It also extends to ensuring the viability of any scheme with which it is associated.

21. Notwithstanding that the legitimate interests of a trade union with respect to superannuation are wide-ranging, its industrial interests do not, in our view, extend to specifying the identity of the fund to which superannuation contributions are to be made on behalf of employees who are not and never become its members, where the specification emanates from nothing more than a desire to bring about a situation in which there is a single industry superannuation scheme.

22. The identity of the fund to which superannuation contributions are to be made on behalf of employees who are not members of a union, standing alone, is not a matter that bears in any way on their employment position relative to that of union members. There may be circumstances where it would, particularly if contributions were made in respect of non-members to a fund under the rules of which money may be invested in or lent to the employer or in which the employer has a beneficial interest. In a case of that kind, if contributions on behalf of union members were paid to a fund with different rules, non-members would be employed on terms and conditions less favourable to them and less onerous to the employer than those applying to union members. A case of that kind would be covered by the comment of Dixon J earlier referred to ((17) See fn.(4)). However, there is no suggestion that there is anything of that nature involved in this case. The only matter that was pointed to as the basis for the claims made was the desire of the AIEU that there should be a single superannuation scheme for the insurance industry.

23. Special circumstances aside, where an employer and non-member employees are agreed upon the identity of the superannuation fund to which the superannuation contributions in respect of non-members should be paid, a trade union will have no relevant industrial interest in preventing effect being given to their agreement. As already indicated, the broader aspirations of the union may well extend to a preference for one superannuation fund over another or, indeed, to the establishment of a superannuation fund by itself, alone or in association with an employer or employers. However, such broader aspirations will not, of themselves, suffice to make either a demand that an employer cease to pay superannuation contributions on behalf of non-member employees to the superannuation fund selected by agreement between them or a demand that the employees pay superannuation contributions to some other fund the subject of an industrial dispute between the union and that employer. The reason why that is so is that, in the absence of some special circumstance such as that given in the examples above, the identity of the fund to which contributions in respect of non-member employees are paid does not bear a sufficient relationship to the terms and conditions of employment of employees who are, or become, union members.

24. The 1986 claim was not expressed to be made in respect of employees who were not members of the AIEU. We would read it as confined to the superannuation entitlements of those employees who were or became members of that union or, later, the FSU. The order nisi for certiorari with respect to that claim should be discharged.

25. The 1989 claim certainly extended to employees who were not members of the AIEU. So far as it allowed for the nomination of the scheme to which superannuation contributions should be made in respect of non-members, the demand was made only by reason of a desire by the AIEU to bring about a situation in which there was one superannuation scheme for the insurance industry. As already indicated, that does not involve any question of the employment position of members of that union or, later, the FSU, relative to non-members. Thus, to that extent, it did not give rise to an industrial dispute and the order nisi for certiorari should be made absolute with respect to the finding based on the 1989 claim in so far as it affects non-members.

26. Slightly different questions arise with respect to the 1990 variation. There is no difficulty in reading the 1989 claim as though the specification of the superannuation scheme to which contributions should be made for the benefit of non-members were excised from it. On that basis, the claim can and should be treated as a claim that all employees, whether or not members of the AIEU, should receive the same superannuation benefits, in the sense that employers should contribute the same level of ordinary time earnings for each. However, it is not difficult to appreciate that, if an award is to be made in settlement of a claim of that kind, it may be necessary either to define the type of scheme or, perhaps, to provide some method of selecting a scheme so that the employer's obligation can be identified with some certainty.

27. There are two difficulties in the way of treating the 1990 variation, so far as it affects employees who are not members of the FSU, as an award made in settlement of a dispute concerned only with the level of superannuation contributions. The first is that the course of proceedings in the Commission makes it clear that the variation took the form it did, so far as it applies to non-members, because of that aspect of the 1989 claim which involved there being but one superannuation scheme for all employees. As a simple matter of fact, it is not possible to view the variation, so far as it affects non-members, as having been made in settlement of a more limited dispute as to the level of superannuation contributions to be made on their behalf.

28. The other difficulty with the 1990 variation is of a different kind. It is well settled that the award-making power of the Commission is not confined by the precise terms of the claim made, but extends to provisions that are "relevant", "reasonably incidental" or "appropriate" to the matter claimed or to provisions that have a "rational or natural tendency to dispose of the question at issue" ((18) R. v. Commonwealth Court of Conciliation and Arbitration; Ex parte Kirsch (1938) 60 CLR, per Dixon J at p 538; Reg. v. Galvin; Ex parte Amalgamated Engineering Union, Australian Section [1952] HCA 29; (1952) 86 CLR 34, per Dixon CJ, Webb, Fullagar and Kitto JJ at p 40; Reg. v. Holmes; Ex parte Victorian Employers' Federation [1980] HCA 37; (1980) 145 CLR 68, per Mason J at p 76; Reg. v. Ludeke; Ex parte Queensland Electricity Commission [1985] HCA 55; (1985) 159 CLR 178, at p 183; Re Federated Storemen and Packers Union of Australia; Ex parte Wooldumpers (Vic.) Ltd. [1989] HCA 10; (1989) 166 CLR 311, per Mason CJ at p 317, per Gaudron J at p 334; Re Boyne Smelters Ltd.; Ex parte Federation of Industrial Manufacturing and Engineering Employees of Australia [1992] HCA 26; (1993) 67 ALJR 449, per Brennan, Deane, Toohey and Gaudron JJ at p 451; [1993] HCA 75; 112 ALR 359, at p 362; Re Printing and Kindred Industries Union; Ex parte Vista Paper Products Pty. Limited, unreported, High Court of Australia, 3 June 1993, per Gaudron J at p 12.). However, just as the matters that may be the subject of an industrial dispute are confined by considerations which go to the essential features of a dispute, the matters which are to be properly regarded as "relevant", "reasonably incidental" or "appropriate" are necessarily confined by the essential features of arbitral power.

29. The Commission is not possessed of general regulatory power ((19) See Re State Public Services Federation; Ex parte Attorney-General for the State of Western Australia, unreported, High Court of Australia, 3 June 1993, per Mason CJ, Deane and Gaudron JJ at pp 5-6; Re Finance Sector Union of Australia; Ex parte Illaton Pty. Ltd., unreported, High Court of Australia, 3 June 1993, per Brennan J at p 1.). Its arbitral power is confined by and is to be exercised by reference to the dispute with which it is concerned. Although by its awards the Commission regulates the terms and conditions of employment, it does so only in the sense that it provides as to them in the context of and by reference to the dispute with which it is concerned. And although the question of what is "relevant", "reasonably incidental" or "appropriate" may often be no more than a question of degree, the fact that the Commission is not possessed of general regulatory power will, in some cases, serve to indicate that the particular provision in question has travelled beyond the award-making power.

30. The case was conducted on the basis that the Fund was specified by the Commission as the scheme to which contributions were to be made for the reason that it had been established as the industry scheme and had been nominated by the AIEU as the scheme to which all contributions should be made pursuant to its 1989 claim. It was also conducted on the basis that there were other reputable schemes and that neither the prosecutors nor their employees who were not members of the FSU wished to participate in the Fund, preferring that contributions should be made to another scheme.

31. Given the bases on which the case was conducted, the 1990 variation takes on the appearance of an attempt at general regulation of superannuation for the insurance industry or, at least, that part of the industry represented by those employers who are respondent to or bound by the Award. That is of no consequence so far as the Award relates to members of the AIEU or, later, the FSU for, so far as it concerns them, the dispute is of a different character from that part that bears on the superannuation entitlements of non-members. However, and to the extent that the Award applies to non-members, its regulatory aspect is decisive. It indicates that, in its application to them, the Award cannot be viewed as "relevant", "reasonably incidental" or "appropriate" or as having a "rational or natural tendency" to settle that limited part of the dispute concerned with the level of superannuation contributions to be made on their behalf.

32. The order nisi for prohibition and certiorari should be made absolute with respect to the Award in so far as it requires superannuation contributions to be paid to Insuper in respect of employees who were not members of the AIEU or are not now members of the FSU.

BRENNAN, DAWSON AND McHUGH JJ The prosecutors are employers in the insurance industry. The second respondent is a union which covers employees in that industry. It was formed upon the amalgamation of several unions, one of which was the Australian Insurance Employees' Union ("the AIEU"). Each of the prosecutors employs fewer than twenty persons and a significant number of their employees are not members of the union. By an order varying an award to which the prosecutors are respondents, the Australian Industrial Relations Commission required them as employers to contribute to an insurance industry superannuation fund in respect of all employees who are eligible to be members of the union. The prosecutors contend that the order was beyond the powers of the Commission, which for present purposes are relevantly confined to the prevention and settlement of industrial disputes by conciliation and arbitration. They say that the union demand for an order of the kind made was not about a matter pertaining to the relationship between employers and employees and was incapable of giving rise to an industrial dispute. Some further background is necessary.

2. In Re Manufacturing Grocers' Employees Federation of Australia; Ex parte Australian Chamber of Manufactures ((20) [1986] HCA 23; (1986) 160 CLR 341.) this Court held that a demand for the payment during the currency of an award of employer contributions to a superannuation scheme was about an industrial matter and capable of being the subject of an industrial dispute within the meaning of the Conciliation and Arbitration Act 1904 (Cth). The Court in that case observed that the claims in question were formulated in broad terms and that it was not possible "to speak of superannuation benefits otherwise than as a general conception without reference to the particular characteristics of any specific scheme" ((21) ibid, at p 354). The Court also said that ((22) ibid):

"(I)f any order is eventually made by the Commission, then

depending upon the form which it takes, there may be

available some arguable basis for attack upon the same or

similar grounds as those now relied upon by the prosecutors.

The way in which the claims are put does not reveal that

the Commission is to have any direct function in the

supervision or control of the superannuation schemes to

which contributions are to be made, but the contemplation

of such a possibility at least raises some of the questions

considered in Hamilton Knight ((23) [1952] HCA 38; (1952) 86 CLR 283),

although answers could be provided only in the light of specific

circumstances."

The reference to Hamilton Knight was principally a reference to the limited duration of an award under the legislation in contrast to the unlimited duration of a superannuation scheme.

3. Following the decision in Manufacturing Grocers, the Australian Conciliation and Arbitration Commission, in its decision in the National Wage Case of June 1986 ((24) (1986) 301 CAR 611), laid down certain national wage-fixing guidelines and formulated as one of them a superannuation principle that agreements might be certified or consent awards be made providing for employer contributions to approved superannuation schemes for employees provided that those agreements or consent awards met certain requirements including the requirement that they did not involve the equivalent of a wage increase in excess of 3% of ordinary time earnings of employees and the requirement that they were in accordance with the Commonwealth's Operational Standards for Occupational Superannuation Funds ((25) ibid, at p 644).

4. On or about 29 August 1986, the AIEU served a letter of demand dated 31 July 1986 upon a number of employers claiming in respect of each of their employees a superannuation contribution equivalent to 3% of ordinary time earnings. The claim continued:

"The contribution will be to an Insurance Industry Union

Superannuation Scheme operative from 1 January 1987. The

granting of this claim will in no way affect employer

obligations in respect of any existing superannuation

arrangements. The Scheme will be in accordance with the

Commonwealth's Operational Standards for Occupational

Superannuation Funds."

On 23 December 1986 the Commission found that an industrial dispute existed and that the matters in dispute were those set out in the letter of demand dated 31 July 1986.

5. On 6 August 1987 the Insurance Industry Superannuation Fund was established by the execution of a trust deed by a company, Insuper Ltd., which became the trustee under the trust deed. Insuper Ltd. is a company limited by guarantee, the control of which is divided equally between employees' representatives and employers' representatives. The sponsors of the Insurance Industry Superannuation Fund were the AIEU and the Insurance Employers Industrial Association, the latter being an unregistered organization which represented a number of employers in the insurance industry.

6. On 12 April 1988 an award, the Insurance Industry Superannuation (Third) Award 1988, was made in part settlement of the dispute which had been found to exist. The award required each employer which had been admitted by the trustee of the Insurance Industry Superannuation Fund as a participating employer member to contribute the amounts specified in the award to the trustee of the fund in respect of each of its employees who was a member of the fund. At that time the rules of the Insurance Industry Superannuation Fund required employees seeking membership of the fund to apply for and be admitted as members.

7. A further letter of demand dated 25 January 1989 was served upon a number of employers (including the prosecutors) and on 1 November 1990 the award was varied on the application of the AIEU. The variation required each of the employer respondents to the award to contribute the amounts previously specified in the award to the trustee of the Insurance Industry Superannuation Fund in respect of each of their employees. The variation eliminated the previous reference to membership of the fund by employers and employees. On 18 May 1991 the trust deed and rules of the fund were amended to provide that application for membership of the fund might be made by an employee or an employer on behalf of an employee provided that "payment of a contribution in respect of an Employee who is eligible to become a Member of the Plan shall be deemed to constitute an application for membership". The combined effect of the variation of the award and the amendment of the trust deed and rules is that the prosecutors, as respondents to the award, are obliged to make superannuation contributions in respect of their employees to the Insurance Industry Superannuation Scheme.

8. The Occupational Superannuation Standards Regulations made pursuant to the Occupational Superannuation Standards Act 1987 (Cth) came into force in 1987, although some provisions of these Regulations operated retrospectively. The Regulations embody the Commonwealth's Operational Standards for Occupational Superannuation Funds. Compliance with the Regulations carries with it considerable taxation advantages for a superannuation fund. By reg.13 the trustees of private sector funds established on or after 16 December 1985 and having 200 or more members must, generally speaking, comprise equal numbers of member representatives and employer representatives. However, under reg.15 a fund established on or after 16 December 1985 and having fewer than 200 members may have one or more trustees appointed by agreement between the members of the fund (or an organization representing their interests) and the employer (or an organization representing its interests). There are 854 employer respondents to the award in question of whom 92% employ fewer than 200 people. Some of the respondents to the award had established superannuation funds for their employees and wish to continue contributing to those funds rather than to an industry fund.

9. Under s.90 of the Industrial Relations Act 1988 (Cth) the Commission is required in the performance of its functions to take into account the public interest and, for that purpose, to have regard to the objects of the Act and the state of the national economy and the likely effects on the national economy of any proposed award or order with special reference to likely effects on the level of employment and on inflation. From successive National Wage Cases it is apparent that, following the decision in Manufacturing Grocers, the introduction of occupational superannuation as a wage equivalent by means of awards was part of a policy in the formation of which the Commission had regard to matters which went beyond individual disputes leading to particular awards.

10. For example, in the National Wage Case of June 1986, the Commission had regard to submissions made by the Australian Council of Trade Unions ("the ACTU") regarding such matters as the trend towards an ageing of the population including the workforce, the trend towards earlier retirement and the projected increase in the dependency on age pensions which could result in an explosion of age pension costs. The Commission also took into account an ACTU submission that the introduction of occupational superannuation as a wage equivalent would involve a shift from consumption to savings which was consistent with the requirements of lower interest rates in the current economic circumstances. The arguments of the ACTU were supported by the Commonwealth, which added the submission that a claim for a 3% wage equivalent in the form of occupational superannuation benefits could be granted without exacerbating inflation or unemployment. It was against this background that the Commission enunciated the superannuation principle which we have referred to above.

11. In the National Wage Case of December 1986 ((26) (1986) 303 CAR 883), the Commission expressed concern about disputation which had taken place in relation to superannuation and noted that, in particular, the disputation had involved the choice of the schemes into which payments were to be made and the related question of trustees. In the National Wage Case of March 1987 ((27) (1987) 17 IR 65), the ACTU argued that the Commission should express preference for multi-employer or industry-wide superannuation funds because it was desirable to encourage uniformity within and across industries, because portability and preservation of benefits to retirement age were enhanced by such funds and because administration, investment and insurance could most efficiently be managed on a bulk basis. The Commonwealth indicated that it favoured multi-employer funds that were jointly controlled by equal numbers of representatives of unions and employers rather than union or employer-controlled or based funds. The Commission noted that the issue was a vexed one which could not be allowed to continue and intimated that, as a last resort, it would arbitrate as to the appropriate fund in particular cases. It made three comments. The first comment was that any fund which complied with the Commonwealth's Operational Standards for Occupational Superannuation Funds and which had received the appropriate preliminary listing for taxation purposes could be determined as an appropriate fund by the Commission. The second comment was that it seemed reasonable that no employer should be forced to make contributions for its employees to a multiplicity of superannuation funds. The third comment was that, given the mobility of labour, multi-employer funds controlled jointly by employers and unions might be preferable to individual funds and more likely to fulfil the basic purpose of superannuation for the majority of employees in particular situations.

12. The prosecutors submit that the demand which was the basis of the variation of the award on 1 November 1990 related to:

(1) the legal relationship between the trustee of the fund into

which the superannuation payments were to be made and the

employee as beneficiary under the trust, that relationship

being constituted by the legal rights and obligations set

out in the trust deed; and

(2) the control and identity of the trustee of the fund into

which superannuation payments were to be made.

The prosecutors submit that the legal relationship between the trustee and the employee, depending as it does upon the trust deed, is something independent of, apart from, and consequential upon the relationship between employer and employee and, therefore, does not pertain to that relationship. The prosecutors also submit that the control and identity of the trustee is concerned with economic, political and industrial power and the relationship of employer and employee organizations and not with the industrial relationship of employer and employee.

13. "Industrial dispute" is relevantly defined by the Industrial Relations Act to mean "an industrial dispute ... that is about matters pertaining to the relationship between employers and employees". The jurisdiction of the Commission is confined by this definition, even if the phrase "industrial disputes" in s.51(xxxv) of the Constitution may have a wider connotation. In Manufacturing Grocers the Court was concerned with the definition of "industrial dispute" in the predecessor of the Industrial Relations Act, namely, the Conciliation and Arbitration Act. Section 4(1) of the Conciliation and Arbitration Act defined "industrial dispute" as a "dispute ... as to industrial matters" and defined "industrial matters" generally as meaning "all matters pertaining to the relations of employers and employees". It does not seem to us that for present purposes any distinction is to be drawn between the earlier definition and the present definition.

14. The first way in which the prosecutors put their case seizes upon the fact that here the demand is much more elaborate than that made in Manufacturing Grocers, the authority of that decision being confined to a general demand for a payment by the employer by way of superannuation to a trust fund. But the fact that the demand in this case is more elaborate, in that it identifies the recipient of the demand as a particular trustee who will hold the moneys received on specified trusts, cannot conceivably lead to a result which differs from that in Manufacturing Grocers on the footing that the demand there pertained to the employment relationship and the demand here does not. Central to the decision in that case was the proposition that the payment of superannuation premiums by the employer to a trust fund was an aspect of the terms and conditions of employment. But the payment of superannuation premiums by employers does not occur in a vacuum. On the contrary, the identification of the trustee or trustees to whom those payments are to be made and the trusts upon which they are to be received may be an important aspect of a dispute between employers and employees.

15. Both employer and employee have an interest in selecting a fund that will be honestly and competently administered and will achieve economies of scale so that the level of benefits contemplated will be secured to the employee and so as to minimize the possibility that, at some later stage, a demand may be made upon the employer for additional contributions to make up any shortfall in the provision of the benefits initially contemplated. Thus, a demand which identifies the payee to whom the superannuation premiums are to be paid is capable of generating a dispute pertaining to the employment relationship.

16. With respect to the second way in which the prosecutors put the case, it is relevant that in Manufacturing Grocers the Court observed ((28) (1986) 160 CLR, at p 357):

"As the decision in Reg. v. Portus; Ex parte AN.Z. Banking

Group Ltd. ((29) [1972] HCA 57; (1972) 127 CLR 353) shows, the identity of the

payee is ordinarily not of significance in determining whether

payments made by an employer to a person other than his

employee constitute an industrial matter. But the opposite

is the case where the payments are to a superannuation fund,

because the character of the payee and the capacity in

which he receives the payments provides the very connexion

with the relationship between the employer and employee

which is necessary if those payments are to be an industrial

matter. Because the payments are to a superannuation fund,

they form, to use the words of Menzies J, an incident of

the employment. Nor can it be said that the payments

contemplated by the claims in the present case will be made

by the employer as the agent for the employee. There is no

reason why those payments should be seen in any other way

than as contributions by an employer to a fund for the

benefit of an employee. No doubt the payments represent

money earned in an industrial relationship, but they do not

represent money to which an employee is himself presently

entitled. They must be regarded as having been made to the

fund by the employer in his capacity as employer and not as

an agent acting on behalf of an employee."

17. Having regard to that passage, which was central to the reasoning in Manufacturing Grocers, we do not think that it can be said that a dispute about the choice of superannuation fund to which an employer is to be required to make contributions for the benefit of its employees is not a dispute about an industrial matter. The making of the payments has been held to be an industrial matter. The payments are, as was held in Manufacturing Grocers ((30) (1986) 160 CLR, at p 355), an aspect of the terms and conditions of employment. For that reason a dispute about employer contributions to a superannuation fund is a dispute about an industrial matter. It is a dispute about a matter pertaining to the relationship between employers and employees. The payments cannot be made without the identification of the recipient, that is to say, without the identification of the superannuation fund to which the payments are to be made, and if there is a dispute about the identity of that fund then in our opinion the dispute is as much about an industrial matter as a dispute about the making of the payments themselves. The prosecutors argue that a superannuation fund might be sufficiently identified if the Commission were to specify its essential characteristics without specifying a particular fund, leaving it to the parties to make the actual choice. In some cases that may be both possible and desirable. But the parties may be unable to agree and, in any event, the Commission may, in the settlement of the industrial dispute, deem it preferable to take a different course and specify a particular fund.

18. The prosecutors submit that there can be no industrial dispute generated by non-compliance with a union demand for the payment to a particular superannuation fund of superannuation premiums paid in respect of employees who are not members of the union. The ability of a union demand to give rise to an industrial dispute with respect to the terms and conditions of employment of non-unionists is undoubted for the reason given by Latham CJ in Metal Trades Employers Association v. Amalgamated Engineering Union ("the Metal Trades Case") ((31) [1935] HCA 79; (1936) 54 CLR 387, at pp 402-403.):

"There does not appear to be any reason in principle for

denying that the terms upon which non-unionists may be

employed may be as much the subject matter of an industrial

dispute as the question whether non-unionists shall be

employed at all.

Unionists may be concerned and apprehensive with respect

to any matters which may affect the terms upon which their

employers can afford to employ them. If other employers are

at liberty to employ non-unionists at lower rates of wages,

the competitive efficiency of employers employing unionists

may be seriously prejudiced, and the continued employment

of the unionists may be jeopardized. Employers of unionists

may take the same view."

The principle on which the decision in the Metal Trades Case rests was said by Dixon J in R. v. Commonwealth Court of Conciliation and Arbitration; Ex parte Kirsch ((32) [1938] HCA 41; (1938) 60 CLR 507, at p 537) to be this:

"(T)he interest which an organization of employees possesses

in the establishment or maintenance of industrial conditions

for its members gives a foundation for an attempt on

its part to prevent employers employing anyone on less

favourable terms." ((33) Followed in Reg. v. Cohen; Ex parte

Attorney-General (Q) [1981] HCA 66; (1981) 157 CLR 331, at pp 336-337,

347-348.)

If the principle is that a union demand for standard terms and conditions can give rise to an industrial dispute because the absence of standard terms and conditions might otherwise prejudice the employment of unionists, the possibility of such prejudice marks a limit of the subject-matter of an industrial dispute which can be generated by non-compliance with a union demand. Does the absence of a prescription of the fund to which superannuation premiums are to be paid create a real possibility of such prejudice?

19. An employer may have a commercial incentive to have its employees' superannuation premiums paid into a particular fund. The employer may stand to benefit from the investment of the fund. Or the employer may receive some other advantage, not necessarily a direct advantage, from procuring the payment of premiums to a particular fund. The existence, or possible existence, of such an incentive or advantage to the employer carries with it a possibility of prejudice to union members employed or seeking employment. By prescribing a fund as the fund to which all superannuation premiums are to be paid for the benefit of employees in an industry, a source of discrimination against union members is removed.

20. There being a dispute before the Commission about an industrial matter - and there is no contest that there was a dispute about the identity of the fund into which payments were to be made - the Commission was entitled to approach the settlement of that dispute with a number of matters in mind. There were some matters of a general character which were clearly relevant, such as the portability of benefits, the advantages and disadvantages of uniformity and the ease of implementation of a proposed scheme. But the Commission's consideration was not confined to matters such as these. It was required by s.90 to take into account the public interest as well as the interests of the disputing parties. It was, therefore, entitled to have regard to the control of a proposed trustee and to conclude that an industry fund was generally preferable because control was equally divided between employers and employees. Even if the question of control had a relevance beyond the dispute in question, it nevertheless had a direct bearing upon the settlement of that dispute.

21. Under s.150 of the Industrial Relations Act an award of the Commission is, subject to the Act, final and conclusive and may not be challenged in any court. But that section will not validate an award unless it is made bona fide and is reasonably capable of being seen as made for the prevention or settlement of an industrial dispute: that is unless the award can be seen as an honest attempt to deal with a subject-matter confided to the Commission ((34) See R. v. Murray; Ex parte Proctor [1949] HCA 10; (1949) 77 CLR 387, at p 400; Reg. v. Coldham; Ex parte Australian Workers' Union [1983] HCA 35; (1983) 153 CLR 415, at pp 418-419, 420-423; O'Toole v. Charles David Pty. Ltd. [1991] HCA 14; (1990) 171 CLR 232, at pp 249-250, 286, 304-305.). The primary restriction upon the award-making power of the Commission is the requirement that it be exercised in the prevention or settlement of an industrial dispute within the meaning of the Act. Accordingly, there is always the question of the existence of an industrial dispute. And if, even in the context of an industrial dispute, the Commission were to use its award-making power for a purpose which could not be said to be the prevention or settlement of an industrial dispute, then the award may lack bona fides or otherwise on its face may be seen to be beyond power. The constraints upon the Commission are real, but they do not confine the Commission in the matters which it can take into account in making an award, provided it is acting bona fide in the prevention or settlement of an industrial dispute.

22. The prosecutors also argue that the award as varied imposes obligations upon employees who are not members of the union and who are, therefore, not parties to the dispute. Although an award may require an employer to extend the benefits of the award obtained by a union to employees who are not members of the union, it cannot impose obligations upon those employees themselves because they are not parties to the relevant dispute ((35) See Metal Trades Employers Association v. Amalgamated Engineering Union (1935) 54 CLR, at pp 405, 422, 436-437, 443; Reg. v. Cohen; Ex parte Attorney-General (Q.) (1981) 157 CLR, at pp 336-337). The obligations said to be imposed upon all employees of the respondent employers in this case are those imposed by the trust deed of the Insurance Industry Superannuation Fund. Since the employers are obliged under the award to make payments in respect of their employees to the fund and since, under the trust deed as amended, the making of a contribution in respect of an employee who is not a member is deemed to constitute an application for membership of the fund, it is said that the effect of the award is to impose obligations on the employees under the trust deed. The short answer to this submission is that the trust deed imposes no obligations; it merely confers benefits of which employee members can avail themselves if they wish to do so. The trust deed requires every applicant for membership and every member to give to the trustee such information and to produce such documents and other evidence as the trustee may reasonably require. Whether an employee meets that requirement is entirely voluntary, although failure to do so may result in the trustee refusing to accept any contributions in respect of that employee. But the trust deed imposes no obligations upon an employee made a member against his or her will nor is the employee obliged to accept the benefits conferred.

23. For these reasons, it is our view that the award as varied was validly made and the order nisi should be discharged.

Conciliation and Arbitration Act 1904(Cth)

Superannuation Standards Act 1987

Re Finance Sector Union of Australia Ex Parte Financial Clinic (Vic) Pty Ltd [1993] HCA 34; (1993) 178 CLR 352 (1 July 1993)

At a glance

Court

Decision date

Before

Source

Judgment (76 paragraphs)

Re Finance Sector Union of Australia Ex Parte Financial Clinic (Vic) Pty Ltd [1993] HCA 34; (1993) 178 CLR 352 (1 July 1993)

Legislation Cited (3)

Cases Cited (30)