Green light on entitlements action, but a red on bargaining fees

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Green light on entitlements action, but a red on bargaining fees

While employer contributions to a trust fund set up to protect employee entitlements may constitute an industrial matter, the claim for union bargaining agent's fees have been determined by the Federal Court of Australia to not pertain to the relationship of employer and employees.

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Australian Business Ltd  

 

While employer contributions to a trust fund set up to protect employee entitlements may constitute an industrial matter, the claim for union bargaining agent's fees have been determined by the Federal Court of Australia to not pertain to the relationship of employer and employees. 

The decision of Merkel J in Electrolux Home Products Pty Ltd v Australian Workers Union & Ors, [2001] FCA 1600, (14 November 2001) is significant in that the two specific claims  appear to be at the centre of most union demands when negotiating or renegotiating certified agreements with employers. 

BACKGROUND

Pivotal to these proceedings was the renegotiation of a certified agreement. Electrolux, a manufacturing company producing white goods, and three trade unions were all party to the Email National Manufacturing Agreement 1999. That Agreement had a nominal expiry date of 30 June 2001.

Between April and September of 2001, the company and the unions were engaged in negotiations for a new Agreement. In September 2001, pursuant to s170MO of the Workplace Relations Act 1996, the unions gave notice of their intention to take protected industrial action in support of their claims. It was the company's contention that the industrial action would be in support of claims that did not pertain to the relationship of employer and employee.

Accordingly, the company submitted that such claims could not be included as terms of a certified agreement, nor could action taken in support of these claims be capable of being protected industrial action under the Act.

To this end, Electrolux sought declaratory relief from the Federal Court that the industrial action threatened by the unions was not protected action. The company also sought injunctions restraining the unions from taking any further action intended to coerce the company to make a new certified agreement.

The claims that were at the centre of this relief application related to the payment of a bargaining agent's fee and the claim for monthly payments to be made by the company into a trust fund approved by the three unions. Therefore, the issue in dispute between the company and the unions was whether these two specific claims were claims that pertained to the relationship of employer and employee.

It was the company's contention that any industrial action taken by the unions to support or advance the claims for a bargaining agent's fee and employer contributions to a trust fund would be action in respect of claims that were incapable of being the subject of a certified agreement as they did not pertain to the relationship of Electrolux and its employees.

COURT'S CONSIDERATION OF THE TRUST FUND CLAIM

His Honour, Justice Merkel, commenced with a consideration of the employee entitlements claim. This was a claim expressed by the unions for payment to employees, as part of their remuneration for service of amounts that would secure and protect their severance pay, long service and other leave entitlements. 

As the entitlements were not payable until some time in the future, the claim for payment to a trustee sought to ensure that the entitlements would be paid to workers when the right to the entitlements crystallised.

On the one hand the unions submitted that the employee entitlements claim was a claim analogous to past union claims for employers to participate in superannuation schemes by way of superannuation contributions to a trustee of a particular superannuation trust fund, pending the entitlement becoming payable to the employee.

On the other hand, the company contended that the claim was for payment to the trustee of a particular scheme namely that of the Manusafe scheme, which conferred an unfettered discretion on the trustees as to whether the payment of accrued entitlements was to be made.

It was in this regard that the company argued such contributions would be for the benefit of the trust and as such fall outside the employment relationship.

Merkel

J also referred to the decision by Munro J in Transfield Pty Ltd v AMWU, PR908287, (HR Link 102/2001). In that decision, Munro J of the Australian Industrial Relations Commission concluded that a union claim against an employer to make monthly contributions to the Manusafe Trust Fund was not a matter pertaining to the employment relationship.

Munro J found that the broad investment objectives of Manusafe served to detract from the fund's status as an industrial matter pertaining to the relations of an employer and employees.

From the outset, Merkel J indicated that he had difficulty with the approach taken by Munro J in the Transfield decision. It was the view of Merkel J that the legislature had drawn a distinction between the matters that may be the subject of a certified agreement and the claims that may be pursued in respect of those matters.

In this respect, Merkel J was of the view that the central substance and critical aspect of the employee entitlement claim was related to the employer contribution payments made for the benefit of employees. It was in this respect that it was held that the employee entitlement claim was within the sphere of the relationship between Electrolux and its employees.

Merkel J considered the broad investment objectives of a trust fund to be provisions that were ancillary or incidental aspects of the matter to which the employee entitlement claim related. These ancillary aspects according to Merkel J did not alter the substantive characterisation of the employee entitlement claim.

Having found the employee entitlement claim was a matter that related to the relationship between an employer and its employees, Merkel J noted that his decision should not be taken to be the definitive view as to the appropriateness of the union's pursuit of the claim in such a form. His Honour conceded that the criticisms made by Munro J and Electrolux of the Manusafe Scheme were criticisms that had some substance.

COURT'S CONSIDERATION OF THE BARGAINING AGENT'S FEE CLAIM

On the evidence before the Court, the claim by the unions required that prior to commencing employment with Electrolux, the company was to advise all prospective employees who were not and did not become members of any of the unions, that they were required to pay to the relevant union a bargaining agent's fee of $500 per annum.

Furthermore, the claim stipulated that Electrolux at the request of prospective employees was to provide a direct debit facility so as to facilitate the paying of the bargaining agent's fee to the unions.

Merkel

J commenced by observing that implicitly, if not explicitly, the claim was for Electrolux to act as the union's agent in entering into a contract with prospective employees, requiring those employees who were not union members to engage the union as their bargaining agent. It was the view of Merkel J that as it stood the bargaining agent's fee claim would create benefits for the unions rather than for any employee upon whom such a contractual liability would be involuntarily imposed.

Another aspect of the claim that caused concern for his Honour was the fact that the bargaining fee debit facility was analogous to a demand by unions that the company pay employee union dues by making deductions and payments from salaries. Such a claim has in the past been held not be within the requisite employment relationship.

The High Court decision in Re: Alcan Australia Ltd; ex parte Federation of Industrial Manufacturing and Engineering Employees, (1994) 181 CLR 96, confirmed that a demand in respect of payment of union dues did not pertain to the relationship between employers and employees.

Although the payment of bargaining agent's fees purports to relate to the unions' bargaining activities for employees, his Honour did not view this function as one relating to an "incident of the employment". The involuntary aspect of the bargaining agent's fee claim confirmed in his Honour's mind, the fact that the unions were acting in their own interest and not that of their members or of non-union employees.

In concluding that the bargaining agent's fee claim did not pertain to the requisite employment relationship, his Honour was not required to consider whether the claim contravened the freedom of association provisions of the Workplace Relations Act 1996.

CONCLUSIONS

His Honour concluded that the employee entitlements claim pertained to the relationship of employer and employee, however, the claim for a bargaining agent's fee did not. It was an agreed fact that the industrial action pursued by the three unions in September 2001 was for the purpose of advancing claims that included the bargaining agent's fee claim. The Federal Court held that the bargaining agent's fee claim was a substantive, distinct and significant aspect of the log of claims as a whole.

Accordingly, his Honour determined that the agreement proposed by the unions was not an agreement about matters pertaining to the requisite employment relationship. The Federal Court ultimately determined that the industrial action taken in September 2001, by the three unions, was action for the purpose of supporting or advancing a significant claim that was not about matters that pertained to the relationship between Electrolux and its employees.

Consequently, the industrial action was not protected action under the Act. Electrolux was held to be entitled to declaratory relief that gave effect to the conclusions of Merkel J. The company and the unions were directed to file an agreed form of declaratory relief that gave effect to his Honour's decision.

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