Non-consenting yet still bound

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Non-consenting yet still bound

In a matter remitted to it from the High Court, the Federal Court, in Quickenden v O'Connor (includes corrigendum dated 10 September 1999) [1999] FCA 1257 (10 September 1999), has upheld the ability of certified agreements made under Division 2 of Part VIB of the federal Workplace Relations Act 1996 to bind non-consenting employees who are not members of a union.

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In a matter remitted to it from the High Court, the Federal Court, in Quickenden v O'Connor (includes corrigendum dated 10 September 1999) [1999] FCA 1257 (10 September 1999), has upheld the ability of certified agreements made under Division 2of Part VIBof the federal Workplace Relations Act 1996to bind non-consenting employees who are not members of a union. The other significant outcome of this decision is that a University was held to be a financial and trading corporation.

Background

Quickenden, an employee of the University of Western Australia, objected to the terms of a certified agreement entered into by the university and the National Tertiary Education Industry Union (NTEIU). He particularly objected to a term of the agreement, which introduced performance reviews to be conducted every three years. He was not a member of the NTEIU.

The agreement was approved by a valid majority of employees and certified by the AIRC. Division 2of Part VIBof the federal Workplace Relations Act 1996provides for certified agreements between an employer and employees or an employer and relevant unions on the basis that the employer is a 'constitutional' corporation. These are often referred to as Division 2 agreements. The legislation also allows for agreements between an employer and a relevant union on the basis that the agreement is in settlement of an interstate industrial dispute, these are Division 3 agreements.

The differences between the two types of agreements arise from Constitutional limitations. Division 2 agreements are supported by the 'corporations' power in the Constitutionand Division 3 agreements are supported by the 'conciliation and arbitration' power. A Division 2 agreement is binding on all relevant employees whereas a Division 3 agreement is only binding on employees who are members of the union(s) party to the agreement. The university's agreement was made under Division 2.

Quickenden intervened in the AIRC certification proceedings arguing that the agreement created conditions of employment, which were not in his contract of employment. The agreement was certified. He also sought an injunction from the High Court which was declined.

In the Federal Court Quickenden submitted that:

  • the Act's Division 2 provisions cannot be made under the corporations power;
  • if they can, the university is not a trading corporation; and
  • if the Actmakes the agreement binding on him it is acquisition of property on unjust terms.
The Corporations Power

Lee J followed Re Dinigan: Ex parte Wagner (1995) 183 CLR 323in which the High Court examined the corporations power to determine whether it could support sections in the (then) federal Industrial Relations Act 1988concerning unfair contracts. He identified the principle in Dinigan-

"...there must be a sufficient or necessary connection between the law made under the corporations power and a constitutional corporation in that the law fixes upon events or circumstances that impact upon, or have significance for, such a corporation by, at least, affecting the activities, functions, relationships or business of the corporation."

His Honour found that Division 2 had wider purposes than the prevention and settlement of interstate industrial disputes (the conciliation and arbitration power) and was validly made under the corporations power. In the case of s170M, which makes a Division 2 agreement binding on all relevant employees, Lee J found that it delivered a benefit to a corporation in that it provides 'assurance' to the corporation that '...it will be able to impose on all relevant employees ...adherence to the agreement ...notwithstanding that the "valid majority" may be a small minority...'

A Trading Corporation

The range of corporations which the courts identify as 'trading' or 'financial' corporations, has expanded as a result of the commercialisation of activities. Football clubs, hospitals and the Red Cross have all been determined to be trading corporations. If trading activities (the essence of which is buying and selling goods and services) were a 'substantial' part, or 'sufficiently significant portion' of a corporation's activities it could be described as trading. Whether a particular corporation's activities are sufficient to be described, as 'trading' is very much a matter of fact and degree.

An examination of the university's annual report led Lee J to conclude that it was a trading corporation. Although not raised by Quickenden, Lee J also found the university was a financial corporation.

Acquisition of Property on Just Terms

Section 51(xxxi) of the Constitutionallows federal parliament to legislate to acquire property on just terms for any purpose for which the parliament has powers to legislate. Quickenden argued that his contract of employment was 'property' and that the agreement detracted from that property so much that the acquisition of the property could be said to have been effected by the operation of the Act.

An examination of the contract showed that it was subject to the university's tenure rules and that they provided for their variation by an agreement which was registered. Lee J found the rules contemplated variation by a certified agreement. Also, a law with respect to the acquisition of property must be able to be fairly characterised as such a law. Division 2 agreements are made under a law affecting the rights of trading and financial corporations. There may be incidental acquisition of property, but it is not a law concerning the acquisition of property.

 
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