NON-UNION MEMBERS BOUND BY INDUSTRIAL INSTRUMENT

Cases

NON-UNION MEMBERS BOUND BY INDUSTRIAL INSTRUMENT

A certified agreement made under Division 2 of Part VIB of the federal Workplace Relations Act 1996binds non-consenting employees who are not members of a union.

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A certified agreement made under Division 2 of Part VIB of the federal Workplace Relations Act 1996binds non-consenting employees who are not members of a union. Such an agreement does not necessarily terminate an employee's contract of employment, rather it creates rights and obligation which are statutory in nature and which operate in addition to the rights and obligations under the contract of employment. The other significant outcomes of the decision of the Full Federal Court in Quickenden v Commissioner O'Connor & Ors, [2001] FCA 303(23 March 2001), were that a University was held to be a financial and trading corporation, and that the certification of an agreement was held not to be an acquisition of or erosion of property on other than just terms.

Background

Quickenden, a Senior Lecturer at the University of Western Australia, challenged the validity of a certified agreement entered into by the university and the National Tertiary Education Industry Union (the union). The agreement was made under Div 2 of Pt VIB of the Workplace Relations Act 1996. Even though the employee was not a member of the union he was nonetheless bound by the agreement. Division 2 of Part VIB of the federal Act provides for certified agreements between an employer and employees or an employer and relevant unions on the basis that the employer is a 'constitutional' corporation. These are often referred to as Div 2 agreements. As a result of Constitutional limitations Div 2 agreements are supported by the 'corporations' power.

The employee's challenge commenced in the High Court by way of a motion for orders nisi for prerogative relief against the Australian Industrial Relations Commission, (the agreement was certified by the Commission). The High Court remitted the matter to the Federal Court, where Lee J dismissed the motion. It is against that decision that the employee appealed to the Full Court of the Federal Court.

First instance decision of Lee J

His Honour commenced by considering whether the University was a constitutional corporation. In the circumstances of this case, that question equated to whether the University was a trading or financial corporation. To this end, his Honour examined University annual reports, which revealed that the University had engaged in activities that could properly be characterised as trading.

His Honour went on to consider whether the University was also a financial corporation. His Honour inferred that considerable administrative services were devoted to investment activities undertaken by the University. Therefore, financial activities were more than just an incidental role and the University it was held could also be described as a financial corporation in the constitutional sense.

Finally, Lee J considered the issue relating to the acquisition of property on just terms. Section 51(xxxi) of the Constitutionallows federal parliament to legislate to acquire property on just terms for any purpose for which the parliament has powers to legislate. The Senior Lecturer argued that his contract of employment was 'property' and that the agreement detracted from that property so much that the acquisition of the property could be said to have been affected, on other than just terms, by the operation of the Act. Lee J held that a law with respect to the acquisition of property must be able to be fairly characterised as such a law. Division 2 agreements were made under a law affecting the rights of trading and financial corporations. There may be incidental acquisition of property, but it is not a law concerning the acquisition of property.

Appeal

The issues on appeal concerned: 

  • the scope of the Commonwealth to make laws with respect to trading or financial corporations [s51(xx) of the Constitution];

  • whether the University was a trading or financial corporation to which those laws applied; and

  • the certification of the agreement contravened the guarantee under s51(xxxi) of the Constitutionby effecting the compulsory acquisition, upon other than just terms, of the employee's property, that being, his contractual rights.

The Full Court delivered two judgements. Black CJ and French J delivered a joint judgement, that in essence covered the same grounds as the judgement of Carr J.

Power of Cth to make laws with respect to trading or financial corporations

Division 2 of Pt VIB of the Workplace Relations Act 1996deals specifically with agreements involving constitutional corporations. The Full Court perceived this to be not a law of general application but one specifically directed to the subject matter of the power. Its provisions give binding effect to agreements made between such corporations and organisations of employees where the Commission certified such an agreement. In this regard it was held that the provisions of Div 2 Pt VIB were a valid exercise of power.

Trading or financial corporation

The employee claimed that the University's traditional role was to undertake educational and research activities—activities that were not within the conventional concept of 'trading'. On the other hand, the University cited an array of activities in which it engaged including the buying, selling and renting of property and investing. It was submitted that University income from investments accounted for just under 17 per cent of total operating revenue.

In the minority judgement of Carr J it was noted that the conclusion that a corporation is a trading corporation may be made, once it is found that trading is a substantial and not merely a peripheral activity of the corporation. This conclusion could be drawn notwithstanding that trading was not the University's primary purpose. In this instance it was held that the trading activities of the University amounted to around 17 per cent of the total operating revenues of the University, and that this represented a substantial part of the operation of the University. The Full Court was satisfied that these activities were substantial enough to constitute the University as a trading and financial corporation.

Acquisition of property on just terms

The Senior Lecturer also contended that in the alternative if the University was held to be a constitutional corporation then the certification of the agreement infringed the constitutional guarantee of s51(xxxi). Section 51(xxxi) of the Constitutionallows federal parliament to legislate to acquire property on just terms for any purpose for which the parliament has powers to legislate. The employee argued that the agreement replaced and overrode his pre-existing contractual common law rights. These rights, it was argued, were a form of property and were entirely displaced or at least eroded by the certified agreement on other than just terms.

The majority of the Full Court commenced consideration of this matter by firstly examining the content of the employee's contract with the University. The initial contract between the employee and the University provided that the employee would be subject to the University Act, Statutes and Regulations of the University and to any general directions issued from time to time by the Senate to staff.

In this vein, the Senate in late 1988 amended the Tenure Regulations to provide that the conditions and procedures under which the employment of academics could be suspended or terminated would be those determined from time to time by award or registered agreements under the appropriate Industrial Relations legislation. 

According to Carr J, the amendment to the Tenure Regulations did not provide that the employee's employment was to be subject to the terms of any award or agreement. Rather, his Honour held that it provided that the conditions and procedures under which a staff member's employment could be suspended or terminated should be those determined by an award or registered agreement pertaining to the employee's employment under the appropriate legislation.

The Federal Court held that while the certified agreement bound the employee by force of law, it did not terminate or completely over-ride his contract of employment. Rather, it created rights and obligations that were statutory in character and could operate in addition to the rights and obligation under the contract of employment. Only in the case of inconsistencies did the statutory rights and obligations over-ride the contract of employment. 

There was nothing in the agreement that expressly set aside or displaced the terms of common law rights. In this regard the Federal Court held that there had been no acquisition of property, and that the certified agreement and the Workplace Relations Act 1996, under which the agreement was made, were not laws to which s51(xxxi) applied.

The Federal Court dismissed the employee's appeal and awarded costs against him.

  

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