Paid rates awards: question on constitutional validity

Cases

Paid rates awards: question on constitutional validity

While the Federal Government has sought to intervene in proceedings before the Australian Industrial Relations Commission regarding an airline industry dispute involving an attempt by unions to roll over the terms of an expired enterprise agreement into a paid rates award, a serious challenge has emerged as to the constitutional validity of one area of the Commission’s jurisdiction to make a paid rates award in settlement of a dispute.

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While the Federal Government has sought to intervene in proceedings before the Australian Industrial Relations Commission regarding an airline industry dispute involving an attempt by unions to roll over the terms of an expired enterprise agreement into a paid rates award, a serious challenge has emerged as to the constitutional validity of one area of the Commission’s jurisdiction to make a paid rates award in settlement of a dispute.

An application for prerogative relief against the Commission by the State of Victoria in relation to a paid rates award made under s170PP(3) of the Industrial Relations Act 1988(C’th) (the "Act") is to be determined by the Industrial Relations Court of Australia. The application was remitted to the Court for determination by the High Court on 2 February 1996.

Background

Section 170PO of the Actempowers the Commission, in certain circumstances, to suspend or terminate a ‘bargaining period’ initiated for the purpose of negotiating a certified agreement. Where a bargaining period initiated by a union is terminated because industrial action is being taken which is threatening "to endanger the life, the personal safety or health, or the welfare, of the population or of part of it or to cause significant damage to the Australian economy or an important part of it", s170PP(2) (Industrial Relations Act 1988) requires the Commission to immediately begin to exercise its powers to settle the industrial dispute.

If the Commission proposes to make a new award covering, or to vary an existing award so as to cover, employees whose terms and conditions of employment were the subject of the industrial dispute, s170PP(3) (Industrial Relations Act 1988) requires the Commission to make the new award as a paid rates award or to vary the award so that it will be a paid rates award.

An award was made by the Commission under s170PP(3) of the Industrial Relations Act 1988binding the State of Victoria.

Constitutional Issues to be Determined

The State of Victoria’s application raises two constitutional issues:

The Federal Parliament may make laws with respect to conciliation and arbitration for the prevention and settlement of industrial disputes. There are statements by the High Court to the effect that a law purporting to direct the Commission to settle a particular industrial dispute by way of a rule, formula or principle is not a law with respect to conciliation and arbitration. The State of Victoria contends that s170PP(3) is invalid because it directs the Commission to settle an industrial dispute by such a principle or formula.

Secondly, the State of Victoria contends that the Commission cannot be empowered to make a paid rates award binding upon a State (the High Court has determined that minimum rates awards of the Commission may be made binding upon a State). This argument is based upon an implied limitation in the Commonwealth Constitutionrelating to the extent to which laws made by the Commonwealth may bind the States. A Full Bench of the Commission has previously rejected this argument.

Comment

In September 1995, the Industrial Relations Court of Australia upheld the constitutional validity of s170UB and s170UC of the Actin considering an application for prerogative relief by Comalco Aluminium (Bell Bay) Limited in relation to the making of an interim paid rates award by the Commission.

Those provisions also impose a duty on the Commission to make a paid rates award in certain circumstances. Comalco raised the argument referred to above; that the provisions purported to direct the Commission to settle a dispute by way of a principle or formula.

That argument failed because s170UB and s170UC (Industrial Relations Act 1988) do not require the Commission to make a paid rates award if it is satisfied that to do so would be against the public interest. It is this qualification on the duty imposed on the Commission to make a paid rates award that made s170UB and s170UC constitutionally valid. Importantly, the Court noted that if the "provisions were unqualified, Parliament would have transgressed the principles [established by the High Court]" and the "two sections would be invalid".

Whether or not s170PP(3) represents an unqualified direction imposed on the Commission as to how industrial disputes are to be settled may be the primary legal issue to be determined by the Industrial Relations Court of Australia in the upcoming case.

 

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