Yeserday’s High Court decision in Electrolux Home Products Pty Ltd v Australian Workers’ Union rejected the inclusion in an enterprise bargain of provisions imposing the fees of “bargaining agents” on non-unionists. The report in today’s Australian newspaper summarises its effect reasonably well.
Despite AWU claims to the contrary, the High Court’s decision mostly just represents a reinstatement of the traditional longstanding approach to federal industrial awards. As Justice McHugh explained:
This Court has consistently held that the rejection of demands of an academic, political, social or managerial nature does not create a dispute about matters pertaining to the relationship between employer and employee1. Neither does the rejection of a demand that the employer act as a financial agent for employees in their dealings with the union. The cases emphasise that “matters pertaining” to the relations of employers and employees must pertain to the relation of employees as such and employers as such, that is, employees in their capacity as employees, and employers in their capacity as employers. The Court has not followed statements in earlier cases – … that an industrial dispute arises whenever employers refuse union demands to do something that is within the power of the employers to concede and carry out.
The AWU had argued (successfully before the Full Federal Court) that the specific wording of the Howard government’s Workplace Relations Act somehow made a difference to this longstanding approach. Only Kirby J, in customary solo dissent, accepted the union’s argument.
I have a degree of sympathy with the moral principle 9though not the legal reasoning) of the union’s argument, namely that it’s unfair for non-union members to get a “free ride” by receiving the benefits of awards and agreements negotiated by unions on behalf of their members, where the members pay union fees but non-members don’t. It’s a dilemma that manifests itself in ongoing declining union membership: why join a union and pay the union fees if you’re going to get the benefits anyway?
However, there are strong countervailing arguments. One of them is that the individualised Australian Workplace Agreements system makes unions partially redundant anyway, with non-union members now able to negotiate individual agreements while mostly retaining at least a fair degree of protection from exploitation by more powerful employers. Why then should non-union members contribute to union coffers? They haven’t asked the union to negotiate on their behalf and they have no need of the benefits the union brings. They’re perfectly able to secure satisfactory working terms and conditions for themselves.
An even more compelling argument is the fundamental right of freedom of association. Permitting mandatory bargaining agent’s fees to be inserted into awards is simply imposing compulsory union membership by the back door. Freedom of association is a core democratic value entrenched in most Bills of Rights, and recognised in the International Covenant on Civil and Political Rights, to which Australia is a signatory. The right to join an association logically must include the right not to do so.
That having been said, I would certainly have no problem with an incoming Labor government amending the Workplace Relations Act (if necessary) to allow for enterprise bargains whose benefits were available only to union members in the enterprise/s concerned.
The other aspect of the High Court’s decision is that it closes the door (for the moment at least) on unions using the industrial relations system to force employers to agree to provisions having little or nothing to do with the employer-employee relationship, and everything to do with pursuit of the union bosses’ broader political ambitions. CFMEU national secretary John Maitland was quite upfront about that in the wake of the High Court’s decision, saying “We ought to be able to talk about anything from childcare to the environment.”
It’s a view most Australians don’t hold. We think that general (non-workplace) social and political issues are for governments to decide and be accountable for, and we don’t want them being imposed through the backdoor by powerful union bosses strong-arming employers into implementing a social and political agenda about which the rest of us have no say. With unions now covering only around 23% of the workforce and static or falling, few things could be more iniquitous or less democratic.
Yesterday’s High Court decision makes the possible election of a Labor government somewhat less frightening for business. Labor intends weakening the secondary boycott provisions of the Trade Practices Act (sections 45D and E) by removing them from the jurisdiction of civil courts and placing them under the purview of the Australian Industrial Relations Commission. Given the AIRC’s traditional conciliatory role, lack of broad power to award damages and costs, and fairly weak powers in general, that will almost certainly lead to a substantial increase in broad-based industrial action, with uninvolved workplaces and unions striking in sympathy and pushing the secondary boycott envelope to its limits. However, at least yesterday’s High Court decision should ensure that secondary boycotts will be about core industrial relations issues, and not about whether an award should contain a ban on employers using paper made from old-growth forests (or whatever other aspect of the mung beanies’ agenda).
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I am wary to enter a debate which deals with labour law (or any type of law for that matter) but this issue of non-union members getting a free ride has been something that has bothered since the Kennett years (here in Victoria).
Maybe I am ‘personalising’ my argument, but I felt pretty angry when while working in the Victorian public service, as the Kennett government was slash and burning everywhere, the Union and many members stuck their neck out to save jobs and conditions. Non-members meekly accepted any deals that the public-service hating Kennett was dishing out. The Union spent thousands of dollars in legal fees to go to the High Court and get Victorian public servants on a Federal award (thus getting back leave loading, and holidays in lieu and collective agreements that were eliminated under Kennett). A colleague of mine who was particularly anti-union was chortling at anyone happy as larry that ge was getting his leave load back. When I pointed out that this was because of Union’s membership fees payed the lawyers, and he should join he said: “why should I? Everything the Union mebers get I get as well”.
But I see merit that if an non union member would not care either way (whether he gets the benefits of an Union win or not) than he/she should not pay.
Maybe Ken’s suggestion that: I would certainly have no problem with an incoming Labor government amending the Workplace Relations Act (if necessary) to allow for enterprise bargains whose benefits were available only to union members in the enterprise/s concerned. could be the answer.
That having been said, I would certainly have no problem with an incoming Labor government amending the Workplace Relations Act (if necessary) to allow for enterprise bargains whose benefits were available only to union members in the enterprise/s concerned.
I have great difficulty with this concept.
If worker A and worker B perform the same tasks for the same employer, then both should be remunerated in the same way.
Back in 1948 Australia signed up for the Universal Declaration of Human Rights.
Article 23(2) says:
Everyone, without any discrimination, has the right to equal pay for equal work
Following the line of reasoning that only unionists are to get the benefits that unions assert to have fought to obtain and preserve, then logically, only current or ex-military should enjoy the rights that the armed forces have fought to preserve.
No rights for the draft dodger, consciencious objecter, or anti-war protester.
“That having been said, I would certainly have no problem with an incoming Labor government amending the Workplace Relations Act (if necessary) to allow for enterprise bargains whose benefits were available only to union members in the enterprise/s concerned.”
That’s fine with me. Those who want to join a union, can, and get the benefits therefrom. Those who don’t want to join can forego the benefits of joining can see what kind of bargain they can strike all by themselves.
Methinks if non-union workers were denied the chance to free ride, by making them fend for themselves, they might decide that joining a union isn’t such a bad idea after all.
In the scenario where only union members are covered by the union negociated agreement, what would there be to stop an employer offering better conditions to those who had not joined the union? Effectively the employer playing a game of ‘work to rule’, and ‘loss leading’ to undermine unions?
With union membership 23% and falling, this could be a very useful tactic in some enterprises.
Way back when the IR system in Australia was being developped, it was decided that awards would apply to all employees, so that employers would not be able to discriminate between union and non-union employees.
“what would there be to stop an employer offering better conditions to those who had not joined the union?”
Well, to begin with, it would cost them more. If I was an employer, and my unionised workers were costing me less than my non-unionised workers, I’d want my workers to be unionised.
But that’s not all that likely. The reason employers resist unionisation of workplaces is because unions deliver higher wages and better conditions, or at least they should. Any union that can’t deliver a better collective outcome for its members than they could get with individual bargaining, has no reason to exist.
Does the expression “loss leading” mean nothing to you?
Peggy Sue, in my experience and observation, “loss leading” nearly all of the time means “losses leading to more losses”.
I presume what you have in mind is something like: the cunning employer entices his naive employees to leave the union with the promise of more money. They leave, and then, Whammo! the cunning employer, bastard that he is, cuts their pay to less than what they would have got as union members.
This is, not, IMO, likely to happen. For the workers, at least under Australian law, could and would rejoin the union, get their lost pay back, never trust the employer again, and probably become extremely militant. This would be the employer’s nightmare scenario. No employer in his right mind would risk it.
“Back in 1948 Australia signed up for the Universal Declaration of Human Rights.
Article 23(2) says:
Everyone, without any discrimination, has the right to equal pay for equal work”..
is fascinating. So individual contracts violate the UDHR?
Or are jobs covered by Unions inherently those in which people do perform the same work as each other, and non-Union “professional” jobs unique and not comparable?
Dave Richardo,
In the mining game at least, it is the non- unionised workers that are better payed (by a large amount). The companys are willing to pay these extra wages as it means flexibility and continuous production.
I’m pleased with this decision, and I think a fair and sensible change would be to allow Union bargaining wins to be tied to Union membership.
Now on the question of freedom of association, Ken, does this mean you support Voluntary Student Unionism?
Ken, I think we need to sort out what the term “freedom of association” means in the context of Autralian industrial law. The legacy of the award system lives on – if one looks at the Workplace Relations Act, an employer cannot offer an AWA with different condition (at least as an initial bargaining position) to an employee doing the same duties as another. In the US, union members can and do enjoy better conditions than non-union members. I haven’t yet had a chance to look at the High Court’s reasoning on this matter (I will at some point because I’m teaching a postgrad course on IR this semester) but it seems to me just that if we have headed down the path that we have, non-union members should lump the choice they have made and not gain the benefits of union negotiated conditions (which is not a reality given the historical legacies of our system) and if they can’t, there is a serious free rider problem occurring given the cost and time unions put into enterprise bargaining, and I therefore think it’s appropriate that they pay a fee. Supporters of the notion of freedom of association , I think, ought to take their position to the logical conclusion that a certified agreement between an employer and a union ought not to bind employees who are not members of the union and they ought to be left up to the vicissitudes of the market and their chances at striking an individual agreement. Otherwise, if they’re going to benefit from the work of the union, if we live in an individualistic society, they ought to pay.
Ken, I don’t follow your reasoning here. You’re arguing against the union position on the merits, and others have responded on this basis.
But the court’s decision wasn’t on the merits – it was a claim that the status of the union was not a matter ” pertaining to the relationship between employer and employee”, and therefore not a legitimate subject for enterprise bargaining. This seems to me nonsensical.
If compulsory unionism, union-busting and so on aren’t matters pertaining to the relationship between employers and employees, what are they?
John
I commented on issues such as compulsory unionism and inclusion of broader social provisions in awards because those topics flow naturally from the decision in a social and political sense. That’s what I do with legal posts. I don’t just write a case note; I try to put the decision in its political and social context and include my own opinion about that context in the hope of provoking discussion.
You’re quite correct, however, that the Court’s reasoning eschews such discussion, and simply decides the question on the narrow, formal basis that provisions relating to a bargaining agent’s fees don’t pertain directly to the employer-employee relationship, and hence can’t be the subject of an award. Employer-employee matters are conceptualised as ones pertaining to wages and conditions of the employment itself, whereas the relationship between the union and whatever people it contracts with to undertake award bargaining is an entirely separate relationship (in a strictly formal, legal sense). To do a reduction ad absurdum, it would also be unlawful to include a provision that employees must contribute from their wages to the cost of the union secretary’s ironing lady or home pool cleaning service. Those are maters pertaining to the legal relationship between extraneous parties (i.e. the union and its agent, or the union secretary and his ironing lady etc), and not to the employer-employee relationship as such.
Clearly this is a narrow, formalist position. It would have been entirely possible to reason that matters relating to bargaining agents were “incidental” to the employer-employee relationship. It would also have been possible to argue (as Kirby did) that on a proper interpretation the Act did not evince an intention to confine the scope of enterprise bargains to matters rleating only to wages and conditions as such. Kirby argues that the traditional narrow interpretation flowed from the fact that older IR legislation was based solely on the conciliation and arbitration power (Constitution section 51(xxxv), whereas the current legislation was expressly based also on the corporations power and external affairs power (because of various ILO agreements), thus removing any constitutional necessity to adopt a narrow interpetation.
Clearly Kirby’s arguments are cogent and could have been adopted had the rest of the Justices wished to do so. As Kirby observed:
I accept, focussing solely on the text of the Act read narrowly, that this is an arguable construction. The fact that the primary judge accepted it[196], and that others in this Court now have done so, shows that it is one way of looking at the statutory language. By the time contested questions of statutory construction reach this Court, it is rare indeed, if ever, that one can say that only one interpretation is arguable[197]. Differences of interpretation suggest, or demonstrate, differing starting points or values that influence the decision-maker, consciously or unconsciously. A reading of earlier decisions of this Court concerned with award provisions for deductions of union dues from employment salaries appears at first blush to lend support to the proposition advanced by Electrolux: R v Portus; Ex parte ANZ Banking Group Ltd[198] and Re Alcan Australia Ltd; Ex parte Federation of Industrial, Manufacturing and Engineering Employees[199]. However, this case is yet another illustration of the danger of reading judicial observations out of context. It demonstrates the need, in matters of statutory construction and characterisation, to focus on the language used by the Parliament, not the language used by judges in other contexts.
No doubt there were inarticulate premises involved in the other Justices taking a narrower view and adopting the traditional approach when a broader interpetation would have been supportable. But that will always be the case.
And one suspects the inarticulate premises for choosing the narrower over the broad approach include the social and political considerations discussed in my post. They probably also included the fact that Parliament had in any event passed amending legislation in 2003 making it clear that bargaining agents’ fees could NOT be the subject of an award/enterprise bargain.
Two things flow from that:
(1) It means that Kirby’s learned musings about Parliament’s intentions and adopting a “purposive” approach are fictional – Parliament has made it perfectly clear that its intention was precisely the opposite of what Kirby ruled i.e. bargaining agents’ fees can’t be cvered. Reaching a different view depends on looking at the legislative text in a blinkered way, and elucidating it by reference only to the aspects of the legislative history that suit Kirby’s purposes (rather than those of parliament).
(2) Because bargaining agents’ fees had in any event been expressly ruled out by Parliament (though not retrospectively), the only real ongoing effect of AWU success was that other sorts of provision not directly relating to the narrow employer-employee relationship/wages, terms and condition (e.g non-use of recycled paper by the enterprise, or whatever) would have remained possible subjects for union industrial demands.
One suspects that the majority weren’t attracted to facilitating either of those outcomes.
Not meaning to be a broken record, Ken, but as you know this is a matter of close personal interest.
Do you support Voluntary Student Unionism?
Jacques
Yes, I have the same attitude to student unionism as to every other apsect of unionism. I used to have doubts back in the days when CDU’s Student Union ran all the cafeteria facitlities etc, and sold good food at a lower price than the current commercial operator. As with the union bargaining agent issue, I then sympathised to an extent with the argument that students should pay for facilities they enjoyed and used, rather than bludging on other students who chose to join the union and pay the fee.
However, now that the Student Union doesn’t ptovide those facilities, it ought to be a simple matter to confine Union activities to members only, and leave those who choose not to join to make their own arrangements. Please note that I hope you don’t use my personal opinion on this question as part of any Liberal Club propaganda. I’m generally fairly careful not to say things on the blog that are immediately controversial about university issues. You’ve been quite insistent, however, and I don’t want to be seen as evasive or hypocritical. But I also don’t want to be used as a tool of student politicians.
I’m not going to try and use you as some kind of tool, Ken: I’ve long since learnt not to meddle in the affairs of Professors, for they are subtle and quick to fail.
I just wanted to see if you were applying the principle consistently. Because I’d have had a go at you otherwise :)