Bhp decision - injunction preserved

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Bhp decision - injunction preserved

As reported in HR Link 45/2000the Full Court of the Federal Court (Black CJ, Beaumont and Ryan JJ) has preserved an injunction preventing BHP Iron Ore Pty Ltd (BHPIO) from offering, entering into, formalising or registering individual contracts with any of its employees.

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As reported in HR Link 45/2000the Full Court of the Federal Court (Black CJ, Beaumont and Ryan JJ) has preserved an injunction preventing BHP Iron Ore Pty Ltd (BHPIO) from offering, entering into, formalising or registering individual contracts with any of its employees. The Full Court decision in BHP Iron Ore Pty Ltd v Australian Workers' Union [2000] FCA 430 (7 April 2000)removed two of the three pillars of the case that was successfully argued by the unions before Gray J at first instance (HR Link 11/2000). Nonetheless, the Full Court determined that the injunction should be preserved on the grounds that a serious question existed as to whether BHPIO had induced employees to cease being union members.

Background

In granting an interlocutory injunction ordering BHPIO to cease offering, entering into, formalising or registering individual contracts with any employees, Gray J at first instance found that a serious question arose whether BHPIO had engaged in unlawful conduct in three areas. They were: 

  1. An alleged contravention of s298K;
  2. An alleged contravention of s298M; and
  3. An alleged breach of employment contracts.

On appeal the Full Court found that a serious question only existed in relation to the issue of whether, by offering individual contracts, BHPIO had contravened s298M.

Contravention of s298K

Section 298Kprohibits employers injuring an employee or altering the position of an employee to the employee's prejudice.

According to the unions, the company injured certain employees when it made a general offer of improved terms and conditions, subject to them signing individual workplace agreements. BHPIO is said to have injured those employees who did not accept the individual agreements, because the company failed to extend to them the improved remuneration and conditions afforded those who signed the individual agreements.

The Full Court noted that the only undisputed act of BHPIO was that it offered each employee improved remuneration and conditions that were embodied in an individual workplace agreement. The relative change or injury that resulted was brought about by the acceptance by some employees and the rejection by others of an offer that was indiscriminately made to all employees. The Full Court did not consider that the undisputed facts pointed to the contravention by BHPIO of s298K. The Full Court indicated that a prosecution made under s298Krequired evidence of "active discrimination" in the manner of singling out individuals for less beneficial treatment than afforded others.

Breach of the contracts of employment

At first instance, Gray J considered that it was arguable that the terms of the award were expressly incorporated into the contract of employment of each award employee. Gray J based this conclusion upon the existence of a document that was given to employees when their employment commenced. The document provided that the conditions of employment were "as prescribed by the award". Gray J also determined that it was arguable that one of the terms of the award prohibited BHPIO from entering (with any award employee) into contracts of employment that would be inconsistent with the award. The Full Court held his Honour's approach in this regard to be incorrect. In particular, the Full Court considered that the document given to employees on the commencement of employment could not be evidence of an intention by the employer and individual employees to create contracts of employment that incorporated the terms of the award.

Contravention of s298M

Section 298Mof the Workplace Relations Act 1996provides that an employer must not induce an employee to stop being a member of an industrial association.

Conduct that leads or moves, by persuasion or influence, an employee to stop being a member of a union may contravene s298M. In the first instance proceedings, the unions did not argue that BHPIO's inducement was constituted by threats or promises. Also, the unions did not seek to establish that BHPIO intended to discourage union membership. Instead, it was claimed that employees had been induced to leave their unions because BHPIO's refusal to negotiate collectively had a tendancy to make union membership less attractive to employees. Gray J determined that this allegation supported the unions' application that there was an arguable case that BHPIO's conduct contravened s298M

The Full Court appears to disagree with Gray J's decision that the intent of the employer is not relevant to the determination of whether a breach of s298Mhas occurred. The Full Bench indicated that evidence of the employer's intent will, in most cases, be necessary to establish a breach of s298M. Nonetheless, the Full Court supported the view that certain kinds of conduct by an employer which discourages union membership might constitute an unlawful inducement to resign from a union, even though there is no evidence that the employer "intended" this result. The Full Court quoted from the decision of Stewart J in American Ship Building v Labor Board, 380 US 300 (1965), where it was held that:

...there are some practices which are inherently so prejudicial to union interests and so devoid of significant economic justification that no specific evidence of intent to discourage union membership or other anti-union animus is required. In some cases, it may be that the employer's conduct carries with it an inference of unlawful intention so compelling that it is justifiable to disbelieve the employer's protestations of innocent purpose.

Whilst disagreeing with the primary Judge's approach to the interpretation of s298M, the Full Court nonetheless considered that on its own construction of the provision, the union's allegations against BHPIO raised an arguable case that a contravention of s298Mhad occurred.

Comment

There may be arrangements which do not involve direct discrimination against unions, but which involve a breach of s298Min that they both lack a legitimate business purpose and have a capacity to discourage union membership.

It remains to be determined in the trial of this matter, whether the BHPIO's offers of individual agreements under the Workplace Agreements Act 1993(WA) constituted a breach of s298M. It would appear highly likely, however, that unions will seek to rely upon the Full Court's decision to obtain interim injunctions against employers engaging non-union bargaining, including making offers of Australian Workplace Agreements or s170LKcertified agreements.

 
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