Refusal to certify agreement - part of a single business

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Refusal to certify agreement - part of a single business

A series of six non-union negotiated agreements covering different units within the employer’s operation were not certified by the Australian Industrial Relations Commission as each agreement only applied to a part of a single business.

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A series of six non-union negotiated agreements covering different units within the employer’s operation were not certified by the Australian Industrial Relations Commission as each agreement only applied to a part of a single business.

The Full Bench of the Australian Industrial Relations Commission on appeal upheld a decision by Commissioner Smith at first instance refusing to certify six s170LKagreements (Appeal by Council of Holmesglen Institute of TAFE; (Print Q3673, [1998] 898 IRCommA).

Background

There were six agreements to be certified covering six different units within the TAFE Institute. According to s170LU(8) of the federal Workplace Relations Act 1996, the Commission must refuse to certify an agreement if it only applies to a part of a single business unless it can be shown that it is a geographically distinct part of the single business or a distinct operational unit or organisational unit within the business.

The employer submitted that because each of the units were responsible for their own budgets they were therefore distinct operational units. However, the Commission at first instance found that even though each unit had its own budget, it did not have financial autonomy in the expenditure of funds.

Further, s170LU(8) of the Actstates that the Commission must refuse to certify an agreement if it "considers it unfair that the employment of those employees is not subject to the agreement." On this point, the Commission at first instance stated that "having regard to the nature of the work performed by those persons not covered by the agreement and the organisational and operational relationships, it would be unfair on those persons not covered by the agreements for them to be certified."

Full Bench decision

The Full Bench of the Commission on appeal held that "three more or less discrete issues must be determined by the member of the Commission before the duty to refuse certification must be exercised. These issues are contained in s170LU(8) of the Actand are:

  • the agreement applies only to a part of a single business that is nether a geographically distinct part or a distinct operational or organisation unit;
  • the Commission considers that coverage by the agreement of parts of the organisation results in the employment of employees not be being subject to the agreement where it would be reasonable for the employment to be; and
  • the Commission considers it unfair that the employment of those employees is not subject to the agreement.

The Full Bench found that Commissioner Smith -

"...did not frame his decision around, or purport to construe, each element of subsection 170LU(8). Instead he applied a broad approach of attempting to identify factors or characteristics that distinguished the relevant units from the Institute as a whole... We do not consider that Commissioner Smith significantly misdirected himself in determining the issue of whether or not the proposed agreements applied to a distinct operational or organisational unit. In reaching that conclusion, we should not be taken to be endorsing the terms in which Commissioner Smith paraphrased the test of that discrete issue. However, we are satisfied that he did not in substance apply an incorrect principle, and the determination he made on the issue was reasonably open to him on the facts of the case."

Also, the Full Bench found that Smith C failed to make a specific finding in regard to whether the agreement proposed for certification defined the part of the business to which it applied in a way that resulted in the employment of some employees not being covered by the agreement.

Conclusion

In conclusion, the Full Bench stated:

"We have assessed the importance of the matter of the appeal. Our analysis of the decision and the grounds of the appeal discloses that the decision contains one manifest error of omission in application of principle, but otherwise only a minor mis-statement of principle. We do not consider that the errors involved are significant in magnitude, or in overall importance to the decision reached. Moreover, we have been careful to test our own construction of subsection 170LU(8) against the approach adopted by Commissioner Smith. We are not satisfied that his decision was made as a result of any substantial error, or fundamental misconception of the facts. In the circumstances, we are not satisfied that the matter of the appeal is of such importance that it is in the public interest that leave to appeal be granted. Accordingly we refuse leave to appeal."

 

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