Company is party to dispute because of substantial interest

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Company is party to dispute because of substantial interest

HRLink Issue No: 83/00 A decision of the Full Bench of the Australian Industrial Relations Commission has confirmed an earlier decision of Munro J, who held that dependent upon the circumstances and facts of the matter, a company that contracts out some of its functions may be a party to an industrial dispute.

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HRLink Issue No: 83/00

A decision of the Full Bench of the Australian Industrial Relations Commission has confirmed an earlier decision of Munro J, who held that dependent upon the circumstances and facts of the matter, a company that contracts out some of its functions may be a party to an industrial dispute.

To be within the scope of the dispute such a company, must have a substantial interest in respect of the employees of the principal contractor. In Automative, Food, Metals, Engineering, Printing and Kindred Industries Union & Ors v Qantas & Anor, Print S7345, [2000] 724 IRCommA, (26 June 2000), the Full Bench held that the nature of the dispute was one that related to the employment relationship, and that the demands sought did not broaden the Commission's jurisdiction. The decision also confirmed the involvement of Qantas as a third party to the dispute, by virtue of its substantial interest, which in turn was manifested in the continued provision of stable work to the principal contractor.

The first instance decision, which was reported in HR Link 45/2000, found that Qantas was a party to a dispute, even though it was not the employer. The three unions affected by the decision subsequently appealed. The scope of the appeal proceedings was to examine the application for leave to appeal and the merits of the appeal concurrently.

 Background

In November 1999, Qantas indicated that it had contracted out engineering and maintenance work to Forstaff. In a meeting with the AMWU on 9 December 1999, Qantas claimed that the option of contracting out work to Forstaff was a commercial decision to ensure that the work remained in Australia, and was not necessarily a transmission of business from Qantas to Forstaff. On 14 December 1999, Qantas and Forstaff served a log of claims upon the unions. The log demanded that the conditions of employment and rates of pay applicable to Forstaff employees engaged to perform engineering and maintenance work for Qantas, be solely governed by awards, certified agreements or employment contracts to which Forstaff was a named party. In this regard no Qantas award or agreement would apply. On 24 December 1999, Qantas and Forstaff lodged notifications of the existence of an industrial dispute, pursuant to s99 of the Workplace Relations Act 1996. Munro J's subsequent decision held that that a genuine industrial dispute existed in which Qantas as a non-employer had the capacity to not only be a party but also be able to generate the dispute.

 Grounds of appeal

The unions argued that leave to appeal ought to be granted on the basis of three grounds: 

  1. The Qantas and Forstaff demands were not genuine, but were rather contrivances to avoid the consequences of Federal Court proceedings commenced by the unions. 

  2. The nature of the orders sought by the employers, are orders that would override the operation of s170MB of the Workplace Relations Act 1996, it was contended that such orders cannot properly form the subject matter of an industrial dispute. 

  3. Qantas could not be a party to an industrial dispute of the type that had been found. 

The Full Bench dealt with each of the three grounds of appeal separately.

 Genuineness of demands

The originator of a dispute must genuinely seek what is being demanded, the demand cannot and must not be for an ulterior purpose. In this instance, the unions claimed that the demands sought were for ulterior purposes. It was submitted that from Forstaff's perspective, the demand allowed Forstaff to bypass the transmission of business provisions of the  Workplace Relations Act 1996, and not be bound to the existing Qantas awards and agreements. 

The Full Bench was satisfied that the conclusion reached by Munro J was right, and that the claim for a general observance of existing terms and conditions at the Avalon site, constituted a genuine claim. The fact that in proceedings since Munro J's decision claims were pursued in the Federal Court, this did not authorise the Commission on appeal to depart from examining the correctness of Munro J's finding on the basis of the material before Munro J. 

Operation of s170MB

Section 170MB of the Workplace Relations Act 1996 provides that successors, transmittees or assignees of a business or part of a business, are bound by the existing certified agreements to the extent that they relate to the whole or part of the business. The unions contended that the demand sought by Qantas and Forstaff, was a demand that sought to override s170MB. Such a claim, it was submitted, cannot properly be the subject matter of an industrial dispute. In other words, the subject of an industrial dispute cannot be the provision of an order that offends the principal Act. Therefore, it was submitted by the unions that the effect of the demand by Qantas and Forstaff, when properly analysed, is a demand that the unions consent to the making of an exceptional matters award that has the effect of avoiding s170MB of the Act. It was the submission of the unions that such a demand would not relate to the relationship between employer and employees. 

The demand by Forstaff and Qantas was concerned with the unions agreeing to abide by the awards, agreements or contracts to which Forstaff were a party. In this regard, the Full Bench disagreed with the union submission, holding that the character and nature of the demand was such that it clearly related to the terms and conditions of employment. As such, the demand or order sought did not purport to give the Commission any additional jurisdiction. The second ground of the union appeal was accordingly rejected as it lacked substance. 

The intervention of Qantas as a party to the dispute

The final ground relied upon by the unions was the claim that Qantas could not be a party to an industrial dispute as an industrial dispute must be about matters pertaining to the relationship of employers and employees. Qantas was no longer the employer. In the first instance decision, Munro J held that Qantas was within the scope of the dispute by virtue of the fact that it had a substantial interest in respect of the employees of Forstaff. That interest was the continued provision of stable work to Forstaff by Qantas. 

The Full Bench concurred with his Honour, finding that Qantas was in an industrial relationship with the unions, in relation to the conditions of employment of the its former employees who would working for its principal contractor. The validity of the claim, (that engineering and maintenance employees have the conditions of employment solely governed by awards, certified agreements or employment contracts to which Forstaff was a named party), was not addressed by the Full Bench, nor was the validity of any order that may be made in settlement of the dispute. Rather, the Full Bench sought to establish that the claim was capable of giving rise to an industrial dispute and that Qantas could be party to the dispute. In this regard the Full Bench concurred with the decision and reasoning of Munro J. The appeal was accordingly dismissed.

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