FEDERAL COURT OF AUSTRALIA
Finance Sector Union v Commonwealth Bank of Australia [2000] FCA 1372
INDUSTRIAL RELATIONS – Australian workplace agreements – employer offering agreements – whether injury to employees or alteration of their position to their prejudice – whether employer intended to coerce employees to agree to making an agreement – whether employer made a false or misleading statement with the intention of persuading employees to make an agreement – freedom of association – whether employer induced employees to stop being members of industrial association
PRACTICE AND PROCEDURE – interlocutory injunction – exercise of discretion – factors to take into account
WORDS AND PHRASES – “induce”, “coerce”
Workplace Relations Act 1996 (Cth): Pt VID, ss 170NC, 170WG, 298K, 298M
American Cyanamid Co v Ethicon Ltd [1975] AC 396 applied
Associated Newspapers Ltd v Wilson [1995] 2 AC 454 referred to
Australian Workers’ Union v BHP Iron Ore Pty Ltd (2000) 96 IR 422 referred to
Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618 cited
BHP Iron Ore Pty Ltd v Australian Workers’ Union (2000) 171 ALR 680 applied
Davids Distribution Pty Ltd v National Union of Workers (1999) 91 FCR 463 cited
Ford Motor Co Limited v Amalgamated Union of Engineering and Foundry Workers [1969] 2 QB 303 cited
Health Services Union of Australia v Tasmania (1996) 73 IR 140 cited
Jumbunna Coal Mine NL v Victorian Coal Miners’ Association (1908) 6 CLR 309 cited
Maritime Union of Australia v Burnie Port Corporation Pty Ltd [2000] FCA 1189 followed
Maritime Union of Australia v Geraldton Port Authority (1999) 93 FCR 34 applied
FINANCE SECTOR UNION v COMMONWEALTH BANK OF AUSTRALIA
V 716 of 2000
FINKELSTEIN J
MELBOURNE
28 SEPTEMBER 2000
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IN THE FEDERAL COURT OF AUSTRALIA |
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BETWEEN: |
FINANCE SECTOR UNION Applicant
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AND: |
COMMONWEALTH BANK OF AUSTRALIA Respondent
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DATE OF ORDER: |
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WHERE MADE: |
UPON the applicant by its counsel giving the usual undertaking as to damages THE COURT ORDERS THAT:
1. Until the hearing and determination of this application, or further order, the respondent, by itself, its servants and agents, be restrained from:
(a) offering an Australian workplace agreement to any of its employees;
(b) entering into an Australian workplace agreement with any of its employees;
(c) taking any step to make, formalise, file or seek approval from the Employment Advocate of an Australian workplace agreement with any of its employees.
2. The costs of this application be reserved.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules
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IN THE FEDERAL COURT OF AUSTRALIA |
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BETWEEN: |
Applicant
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AND: |
COMMONWEALTH BANK OF AUSTRALIA Respondent
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JUDGE: |
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DATE: |
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PLACE: |
REASONS FOR JUDGMENT
1 For most of this century it has been an accepted feature of federal industrial law that disputes concerning terms and conditions of employment, including the physical conditions in which an employee is required to work, the engagement or non‑engagement or termination or suspension of employment, the allocation of work, matters of discipline and the like, are in the main resolved by awards arbitrated by an independent body, now the Australian Industrial Relations Commission, or by agreements, certified to have effect as awards. Awards and certified agreements can relate to a section of a workforce or cover all employees in an organisation. Commonly, awards bind more than one employer; certified agreements may do so, but less frequently.
2 Awards and certified agreements could not be the product of individual negotiation between an individual employee and an individual employer. Nor was it anticipated that they would be the product of such negotiation. By the time of federation, trade unions were well established and unions understood the need to cooperate with employers. W G Spence, who was responsible for the establishment of the Amalgamated Miners’ Association and the Australian Shearers’ Union told the Intercolonial Trade Union Congress of 1884 that unions “all recognised the usefulness of capital, and all present…desired to work amicably with the employers of labour”. Not only were employees organising through unions, but employers were also grouping together. These organisations resolved industrial disputes through what came to be known as “collective bargaining”. But there was a problem. At common law, a collective agreement is not legally enforceable: Ford Motor Co Limited v Amalgamated Union of Engineering and Foundry Workers [1969] 2 QB 303. Legislation was required. As early as 1904, with the enactment of the Commonwealth Conciliation and Arbitration Act 1904 (see now the Workplace Relations Act 1996 (Cth)), provision was made for awards and certified agreements as well as for the regulation of associations of employees and employers so that they could engage in collective bargaining, because it was plain that the arbitration or conciliation of industrial disputes could not take place with individual disputants: Jumbunna Coal Mine NL v Victorian Coal Miners’ Association (1908) 6 CLR 309 at 334. Further, in recognition of the fact that individual employees had little or no ability to bargain reasonable terms and conditions of employment, the Commonwealth legislation had as one of its objects, and made provision for, freedom of association, that is, freedom for employees and employers alike to join industrial associations to protect and promote their respective interests.
3 In 1996 an important change was made to the previously existing regime. For the first time in Commonwealth legislation, specific statutory recognition was given to individual employment contracts: see the amendments made by the Workplace Relations and Other Legislation Amendment Act 1996 (Cth). Such a contract is known as an Australian workplace agreement, or AWA: see Pt VID of the Workplace Relations Act. Individual employment contracts are justified on various bases. The most generous view holds that such arrangements promote a high level of trust and coincidence of purpose between employer and employee. It is said that those employment contracts encourage individual responsibility for quality and performance and develop employees who are organisationally committed and encouraged to pursue not only their own interests but also those of their employer. At an economic level, individual contracts are seen as an efficient method of organising a workforce. The principal advantage for the employee is said to be increased flexibility. It is argued that collective bargaining produces a rigid pay and grading structure whereas individual contracts permit individual performance-based wages. From the point of view of many employers, unions are seen as backward-looking and inefficient with attitudes that do not keep pace with an ever-changing marketplace, and who act as a break on economic prosperity. On the other hand, unions regard individual contracts as an attack on the union movement with one of their main objects being the elimination of union involvement in the relations between employer and employee. Whatever be the merits of these competing views, which are not matters for a court to resolve, when individual employment contracts have taken hold in a workplace, one consequence has been a significant decline in union membership, with a corresponding diminution in union power. At least this has been the experience in England and New Zealand where individual employment contracts have had a longer history than in Australia: see generally S Deery and R Mitchell, Employment Relations – Individualisation and Union Exclusion (1999).
4 This case is another instance of litigation that has resulted from the introduction of Australian workplace agreements into a particular enterprise. The questions at issue arise from the manner in which those agreements have been brought into the workplace. The applicant is a union whose members are employed in the banking and insurance industry. The respondent, once a statutory corporation but now a public company, is one of the major banks in the country. It has more than 28,000 employees, two thirds of whom are members of the union. The members are mostly clerical employees, earning a base pay of $27,080. A significant proportion of them are employed on a part‑time basis.
5 Presently, the bank and the union are parties to the Commonwealth Bank of Australia Employees’ Award 1999 and three agreements the result of collective bargaining, that were certified under the Workplace Relations Act in April 1998. The parties refer to the agreements as the 1998 enterprise bargaining agreements. The nominal expiry date of the certified agreements was 2 April 2000, but by reason of s 170LX(2) they remain in effect until replaced by other agreements or awards.
6 Between 1997 and the present, approximately 5,000 bank employees entered into Australian workplace agreements. How this came about will be mentioned later. Most of these employees are on the management side. This case is not concerned with them. On 1 September 2000, the bank began to make offers to enter into Australian workplace agreements to most of its remaining employees. To date, more than 20,000 employees have received an offer. Only a small proportion of the bank’s workforce, perhaps 3,000 or 4,000, appear not to have received such an offer. It is the making of the offers that has brought about this litigation. The union claims that by making the offers, the bank has contravened the Workplace Relations Act in various respects. It also alleges that the manner in which the offers have been made contravenes the Workplace Relations Act in other respects. I will explain the nature of these claims later. First I will say something about the application that is presently before me.
7 The union seeks an interlocutory order, pending trial, that the bank be restrained from offering an Australian workplace agreement to any of its employees, from entering into an Australian workplace agreement with any of its employees and from taking any step to make, formalise, file or seek approval from the Employment Advocate of an Australian workplace agreement with any of its employees. (Under the Workplace Relations Act an Australian workplace agreement does not have effect until it is approved by the Employment Advocate.) The question that I must resolve is whether the union should be granted that relief, a claim which is hotly contested by the bank.
8 Each side has filed affidavits setting out the facts upon which they rely. As well, many documents have been tendered. There is much that separates the parties. They are apart on many matters of principle, including what are the applicable principles of law that I should apply in determining the interlocutory application. On the other hand, at least at this stage of the proceeding, there is little dispute about the facts. Even if there were, it would not be appropriate to resolve any contested issues of fact, and this for a number of reasons. Neither the union nor the bank has put forward all of the evidence upon which it intends to rely at the trial. For one thing, there has been no time to undertake that task. For another, this being an interlocutory application, there is no need to do so. I intend, as far as possible, to base my decision on the uncontroverted facts. When there is a need to rely on contested facts, I will identify those facts and explain why I adopt one version over another.
9 It would not be possible to appreciate the legal issues which arise without some understanding of the facts that lie behind them. It is appropriate then to turn to those facts. Time does not permit a complete rehearsal of the evidence. In any event, for present purposes it is necessary to do no more than explain the facts in broad outline.
10 For decades, conditions of employment for the bank’s employees were the subject of agreements arrived at directly between the bank and the predecessor of the applicant, the United Bank Officers’ Association. The relationship between the predecessor union and the bank was harmonious and industrial relations were stable and cooperative. No doubt one explanation is that the bank was owned by the government, and profit was not the principal factor driving labour relations.
11 This situation was bound to change when the government transferred ownership of the bank to the private sector and it became fully listed on the Stock Exchange in 1996. Mr Matthews, a Deputy General Manager with the bank, said quite candidly that with listing “it was necessary for the bank to seek internal change in order to meet competitive pressures”. By that, Mr Matthews meant that the bank was required to take a harder line with regard to union demands for better working conditions, in order to keep down the bank’s operating costs. In the current jargon, the bank was keeping its eye on “the bottom line” far more than it had in the past. The greater the efficiencies the bank could generate, the better its share price would perform.
12 With listing there was a change in the relationship between the bank and the union. Mr Matthews explained the bank’s position. It was the bank’s view that the union was resistant to changes that the bank felt it should make to be competitive. The union was frustrating the bank’s efforts in that regard.
13 The deterioration in the relationship between the bank and the union can be seen from the following episodes. For many years there had been regular consultations and discussions between the two organisations on a variety of issues. These discussions ceased altogether in 1997. In the past the bank was willing to deduct union dues from employees’ wages and pay those dues to the union. In late 1996 or early 1997 the bank refused to make those deductions, except for staff who had signed an authority in that regard. This forced the union to enter into direct debit payment arrangements with its members.
14 The bank also took steps to make it more difficult for the union to gain access to the workplace for union purposes. Union officials were no longer permitted to meet employees in their lunchroom and employees were forbidden to use bank facilities such as photocopiers to circulate union information and telephones to arrange union business.
15 None of these changes were improper in any sense. The bank did not breach any statute, nor did it contravene the provisions of any industrial agreement in the actions that it took. But the bank’s conduct was clear evidence, if evidence was required, that the past close cooperation with the union had come to an end. The bank was signalling to the union that future relations would now be very different.
16 The first sign of a substantial change followed shortly after these incidents. In mid-1997 the union and the bank began negotiating new enterprise bargaining agreements, being the agreements that came to be known as the 1998 enterprise bargaining agreements. During the negotiations, the bank informed the union it had offered Australian workplace agreements to employees in its International Banking Division. Most employees in that division took up the offer. Two months later the bank extended the offer of Australian workplace agreements to its managers and refused to negotiate award-based arrangements for those employees.
17 The bank insisted that the enterprise bargaining agreements should contain a provision permitting the bank to offer Australian workplace agreements to employees and that the terms of those agreements would prevail over any term of the enterprise bargaining agreements. The bank took the position that, unless such a provision was inserted, it would not enter into an enterprise bargaining agreement. The bank did indicate, however, that it was insisting upon the right to offer Australian workplace agreements not for the purpose of making such offers to most of its employees, but so that those agreements could be offered to select groups, especially those employed in non‑traditional banking areas. When the 1998 enterprise bargaining agreements were finally made, they did contain a provision which satisfied the bank’s requirements.
18 Mr Riordan, the National Assistant Secretary of the union, was involved in the negotiations for the new enterprise bargaining agreements, as was Mr Matthews. Mr Riordan attributes to Mr Matthews a statement, which Mr Matthews does not deny having made, namely that “[i]n the medium or long‑term future there will be no role for the FSU at the CBA.” With the benefit of hindsight, this was an ominous statement indeed.
19 At the beginning of this year negotiations began for new enterprise bargaining agreements to replace the 1998 agreements. In the early stage of the negotiations Mr Matthews wrote to Mr Riordan explaining the bank’s position regarding the new agreements. The letter, which is dated 6 March 2000, contains the following paragraph:
“Consistent with the Bank’s rights under the Workplace Relations Act 1996 and the 1998 EBA, we will continue to offer AWAs to employees where this meets business needs.”
I take this to mean that when the letter was written it was not the bank’s intention to offer Australian workplace agreements to the whole of its workforce. If that had been the bank’s intention the paragraph would have been worded differently.
20 In the period between 6 March 2000 and 11 August 2000 there were many meetings between representatives of the union and the bank in an effort to reach agreement on the terms of the new enterprise bargaining agreements. There may have been as many as fifty meetings during this period. The details of the negotiations appear in the evidence of Mr Riordan and Mr Matthews. For the purposes of this application I need only note the following important aspects of the negotiations. Initially, the union, on behalf of employees, sought an increase in wages of 6.5% per annum and improved performance pay arrangements. On 6 March the bank said it would agree to a 2% pay increase for most staff as well as enhanced pay arrangements. On 24 July 2000 the bank increased its offer to a 3% pay increase in the first year and a 3.5% increase in the second year with revised and improved performance pay arrangements. On 8 August the union requested a 4% pay increase in the first year and a 4.5% increase in the second year. This offer was unacceptable to the bank. Mr Matthews wrote to Mr Riordan on 11 August stating in effect that the bank would not improve the offer which it had made on 24 July 2000. One passage in the letter reads:
“Our revised proposal is as far as we can responsibly go and you need to understand that there will be no increase in the offer. The Bank’s negotiating team has diligently tried to reach a collective agreement over many months, but it is apparent that the FSU is not prepared to reach agreement on a reasonable offer. Given this, we are now giving serious consideration to other options available to the Bank.”
Mr Matthews did not indicate what those “other options” might be. He went on to describe the current position of the parties as he understood them. The letter concluded with the following two paragraphs:
“The FSU’s rejection of the Bank’s revised proposal and the raft of FSU counter claims appears to offer little realistic hope of reaching agreement in the near future. Nevertheless, the Bank’s revised proposal remains on the table until the end of August and we ask you to reconsider your stance to enable a swift finalisation of the EBA negotiation.
We are confident that the Bank’s position has the support of the majority of staff, notwithstanding the Union’s negative campaign. In these circumstances, the Bank has little option but to now consider how its proposals may be delivered to employees without FSU support or agreement.”
21 A few days later, but importantly before the end of August, Mr Matthews circulated a bulletin to bank staff which contained the following statements:
“The FSU has responded to the Bank’s offer with a raft of claims that offers no hope of reaching an agreement within a reasonable timeframe. In these circumstances, the Bank has little option but to consider how its proposals may be delivered directly to employees without the support or agreement of the FSU.
Please talk to your manager if you would be interested in accepting the Bank’s final offer without the agreement or support of the FSU. If you are interested we will do everything we can to make it happen.”
22 This was followed by a circular to bank staff from Mr Cupper, General Manager, Group Human Resources which announced the “other option” that was available to the bank. The bank would pass onto staff the offer that had been rejected by the union, by means of Australian workplace agreements. Mr Cupper’s circular reads:
“Last week we let you know that we had been unable to reach an agreement with FSU officials on the EBA. We also indicated that we were considering other ways for staff to accept the EBA offer.
I now wish to advise you that interested staff will be able to accept the offer by signing an Australian Workplace Agreement (AWA) on a purely voluntary basis. The Bank’s current and final offer to the Union for a new EBA will remain available should the Union wish to reach agreement.
This is not a decision that we took lightly as it involves issues that need very careful consideration so that we can provide you with an outcome that is fair, provides choice and brings the matter to a quick conclusion.
Over the last fortnight the union leadership has published a considerable amount of emotional material largely with the aim of trying to discredit individual contracts and in particular AWAs.
Senior officials of the FSU are either personally or philosophically opposed to individual contracts claiming that people on contracts are worse off and treated poorly. Over 5,000 Bank employees who have voluntarily accepted individual contracts do not share that view.
Yesterday, the Bank was told by the leadership of the FSU that they would be commencing industrial action next week. This will only cost participating staff more in lost wages and will disrupt customers. It will do nothing to settle the EBA.
Next week you will be provided with more detail on our individual offer and how we can move forward to enable this matter to be finalised in a way that is fair and straightforward so that we can all get on with business.”
23 Australian workplace agreements were sent to the bank’s employees on 1 September. They were despatched under cover of a letter, the terms of which are important because they give rise to one of the claims made by the union. Now, however, I will mention only one paragraph, which provides that the offer of the Australian workplace agreement:
“is open to you for three weeks from the day you receive this letter. Please note that the Workplace Relations Act requires that you consider the AWA for a minimum period of 14 days before deciding to accept it. Please do not sign or return the documentation before a minimum of 14 days has elapsed.” (emphasis in the original)
The proposed agreement is a detailed document of some 37 pages, containing hundreds of terms and conditions. To be fair, a casual examination suggests that most of it is written in plain English so that it will be understood by bank employees provided they are able to read the language. However, some aspects of the agreement may present difficulty. Enclosed with the letter were other documents. There was an information statement about Australian workplace agreements prepared by the Employment Advocate, and a document entitled Explanatory Notes. All in all, the bundle comprises approximately 70 pages.
24 On the day the bank began sending offers of Australian workplace agreements to its employees, Mr Matthews wrote a short letter to the union. It reads:
“I write to you in respect to the Bank’s negotiations regarding the 2000 EBA.
The Bank remains ready and committed to participate in discussions with senior officials of the FSU for the purpose of a collective agreement for its award staff. Contrary to your assertion in your letter of 17 August 2000 the Bank at no time has withdrawn from the negotiations. The Bank’s offer to the FSU which was documented in our letter dated 11 August 2000 remains open for the FSU to accept.
Should the leadership of the FSU wish to entertain discussions on the basis of the Bank’s earlier offer, then please do not hesitate to contact me.”
25 Following receipt of this letter, the union met with the bank. Mr Riordan and Mr Matthews were among the representatives that were present. Mr Riordan has given an account of what occurred, which Mr Matthews does not dispute. This is Mr Riordan’s description:
“John Matthews commenced the meeting by saying that the CBA’s offer was still on the table, and asked if we were there to take it. I advised that the FSU was still looking for an improvement in the CBA’s position, and that the bulk of staff had said the offer was inadequate. There was no negotiation at the meeting. It ended with an understanding that the CBA was proceeding to offer AWAs concurrently in all Business Units. During the meeting John Matthews said “The test is it depends on whether people accept AWAs.””
26 Various public statements made between 25 August and 15 September have been attributed to Mr Matthews, which can be understood as explaining the bank’s attitude to both collective bargaining and the union. These are some of the statements:
On 25 August 2000 in an article appearing in the Australian Financial Review:
“Mr Matthews said it was not a deunionisation strategy, but conceded around 5000 employees already on individual contracts at the bank had a lower proportion of union members than the bank more generally which has about 60% union membership.”
On 30 August 2000 in an article appearing in the Sydney Morning Herald:
“He [Mr Matthews] said the bank wanted to deal directly with its employees without having “a third party involved”.
On 31 August 2000 in an interview broadcast on a Sydney radio station:
“Similarly, they have the same choice as to whether they want to stay on a collective or an individual arrangement. But it has a consequence of moving, well, you know, the consequence may be that some people will leave the union.”
On 31 August 2000 in an article appearing in the Sydney Morning Herald:
“According to Mr Matthews, the Commonwealth Bank wanted to deal directly with employees without interference from a third party but did not want to “take people out of the union”.
However, he said that he did not know what role the union would have for employees once they signed contracts which meant future negotiations would be between an individual worker and a manager.”
On 15 September 2000 in an internet publication called “Workplace Express”:
“We’ve always thought that in the long run we’d end up with everyone on individual arrangements… It’s part of building our one-on-one relationships.”
“The bank had set “progressive targets” for shifting employees off collective arrangements. The bank has had long standing plans to abandon collective employment deals. A May 1999 Power Point presentation about best practice people management which is available on the bank’s website says the employer’s “people vision” envisages the majority of employees on non-collective employment arrangements.”
27 The foregoing is a sufficient outline of the facts to permit a consideration of those causes of action which are said to found the claim for the interlocutory relief that is sought. There is one other cause of action alleged which, if sufficiently made out, would warrant the grant of different relief. I will deal with that claim separately. That cause of action will require further reference to the evidence.
28 The union contends that s 298K proscribes the bank’s conduct in offering Australian workplace agreements in the circumstances in which the offers were made. Section 298K(1) relevantly provides:
“An employer must not, for a prohibited reason, or for reasons that include a prohibited reason, do or threaten to do any of the following:
(a) …;
(b) injure an employee in his or her employment;
(c) alter the position of an employee to the employee’s prejudice;
(d) …;
(e) ….”
Section 298L(1) relevantly provides:
“Conduct referred to in subsection 298K(1) … is for a prohibited reason if it is carried out because the employee …concerned:
(a) is, has been, proposes to become or has at any time proposed to become an officer, delegate or member of an industrial association; or;
…
(h) is entitled to the benefit of an industrial instrument or an order of an industrial body; or
…
(l) in the case of an employee, or an independent contractor, who is a member of an industrial association that is seeking better industrial conditions – is dissatisfied with his or her conditions; or…”
29 The substance of the union’s complaint, at the risk of oversimplification, is as follows. The union plays two critical roles in the relations between the bank and its employees. It is the vehicle through which collective bargaining for the terms and conditions of employment takes place. It supports its members when they have grievances with their employer. For some years it has been the bank’s object to reduce the power and influence of the union. More recently, it has been the bank’s plan that if the union did not accept its July offer for the enterprise bargaining agreements, the bank would take steps to eliminate or reduce or would threaten to eliminate or reduce the capacity of the union to function as it has in the past. This would be achieved by encouraging employees to enter into Australian workplace agreements, because that would cause many of those employees to leave the union. If a sufficient number of members left, that would diminish the power of the union to protect the interests of its remaining members especially relating to their working conditions.
30 This is said to bring about contravention of s 298K because the bank is injuring, or is threatening to injure, many of its employees in their employment (s 298K(1)(b)), or is altering, or is threatening to alter, their position to their prejudice (s 298K(1)(c)), because those employees are members of a union (s 298L(1)(a)), or because they are entitled to the benefit of a certified agreement (s 298L(1)(h)) or because their union is seeking better industrial conditions and they are dissatisfied with their conditions (s 298L(1)(l)).
31 It is necessary to draw attention to s 298V which is concerned with the burden of proof in respect of proceedings brought under the particular Division of the Workplace Relations Act in which s 298K is found. Section 298V provides that where it is alleged that conduct has been carried out for a particular reason or with a particular intent which, if made out, would constitute a contravention of the Workplace Relations Act, it is to be presumed that the conduct was carried out for that reason or with that intent, unless the contrary is proved. This makes it difficult, but not impossible, for a respondent in an interlocutory application, where it is not appropriate to take contested issues of fact to the stage of proof. For competing views on the operation of this section in an interlocutory proceeding, see Davids Distribution Pty Ltd v National Union of Workers (1999) 91 FCR 463.
32 Section 298K is one of the provisions in the Workplace Relations Act which gives effect to freedom of association. It is a provision that assumes some importance in the legislation. Yet, in a number of respects, it has been given a narrow scope of operation. Thus, it has been held that the section is concerned with conduct that is directed to an individual employee, and not to a class or section of the workforce. For example, in Health Services Union of Australia v Tasmania (1996) 73 IR 140, Marshall J found a contravention when a member of a union had been “singled out” for discriminatory treatment. In Maritime Union of Australia v Geraldton Port Authority (1999) 93 FCR 34 Nicholson J adopted the same approach. The view that there must be individual discrimination or injury caused, before there can be a contravention of the section was adopted by the Full Court in BHP Iron Ore Pty Ltd v Australian Workers’ Union (2000) 171 ALR 680. There the Court said (at 689):
“It has to be borne in mind, in construing s 298K, that it proscribes conduct by ‘an employer’ directed to ‘an employee’ or ‘other person’ (emphasis added). That use of the singular suggests that the alleged injury or alteration of position has to be examined in the light of the circumstances of each individual employee. (It is not the point that in the interpretation of statutes, the singular ordinarily includes the plural; here we are concerned with the indications of legislative intention to be discerned from the actual language used.) It is also significant that the conduct struck at by each paragraph of s 298K is expressed by an active verb: ‘dismiss’, ‘injure’, ‘alter the position’, ‘refuse to employ’, and ‘discriminate’. That implies that the proscription is essentially against an intentional act of the employer directed to an individual employee or prospective employee.”
33 The facts of BHP Iron Ore are strikingly similar to the present. The appellant had offered individual contracts to its workforce. They were not Australian workplace agreements under the Workplace Relations Act but similar agreements regulated by the Workplace Agreements Act 1993 (WA). The individual agreements offered improved conditions for BHP Iron Ore employees. The respondent unions alleged that this conduct contravened s 298K. The Full Court held that it did not. After dealing with “the individual” focus of the section, the Full Court continued (at 689-690):
“In the present case, the only undisputed intentional act of BHPIO has been to offer to each employee improved remuneration and conditions to be embodied in an individual workplace agreement. That, of itself, did not change, in either absolute or relative terms, the remuneration or any of the conditions of employment of the employee to whom the offer was made. A change in absolute terms occurred only upon acceptance of the offer and the consequent coming into existence of a new contract of employment. It is true that, after some offers have been accepted by individual employees, a change can be discerned in the remuneration and conditions of employment of those employees, viewed in relation to the remuneration and conditions of employment of those employees who have not accepted the offer. However, the position of each of the latter employees has not been changed to his or her detriment by an intentional act of the employer. The relative change which we have just identified is brought about by the acceptance by some employees, and the rejection by others, of an offer made indiscriminately to all employees.”
Accordingly, the Full Court held that the offer of individual contracts could not result in a contravention of the section. Any injury or disadvantage suffered by employees who remained on awards or certified agreements was not the consequence of the conduct of the appellant, but was the product of the choice taken by employees whether to remain under one contractual regime or another. “It [the prejudice or disadvantage] will not have been brought about by the active, intentional, conduct of the employer which is struck at by s 298K”: BHP Iron Ore at 693. Causation was very narrowly confined.
34 It is difficult to escape the conclusion that, for the reasons given by the Full Court in BHP Iron Ore, the union has not shown a sufficiently strong case to justify the grant of interlocutory relief on the ground that there has been a contravention of s 298K. Although it will not often be appropriate for a judge to express any concluded view on the merits of a case when it is in its interlocutory stage, it seems to me that, having regard to the views that have been taken on the operation of s 298K, it is likely that the union will fail on this branch of its case.
35 Another claim which the union makes is that the bank has contravened s 298M of the Workplace Relations Act. That section provides that an “employer… must not (whether by threats or promises or otherwise) induce an employee … to stop it being an officer or member of an industrial association”. To determine whether this allegation is sufficiently made out (as to which see later), it is necessary first to determine what is meant by the word “induce”. Unfortunately, the authorities are not altogether clear on this issue. In particular, what is uncertain is whether the inducement must be intentional. Before turning to the cases I should mention one thing that is clear. To “induce” an employee to act in a particular way includes an attempt to induce and even a threat to induce: see BHP Iron Ore at 697.
36 To assert that one person has induced another to act is to say that, by words or deeds, the first person has caused the second person to act in a particular way. Put another way, the acts or deeds of the first person constitute a reason for the second person to act in a particular fashion: see generally H L A Hart and T Honoré, Causation in the Law (2nd ed, 1985), esp. ch II. Indeed, those authors say (at p 54) that a person has been induced when a course of action is made “more eligible” than it otherwise would have been or where there is an extra reason for doing the action. Thus, inducement may be obvious, such as by bribes, threats or offers of reward. Or it may be subtle, by manipulation.
37 The issue the answer to which does not emerge clearly from the cases is whether, for inducement to be established, the first person must intend that the second person do the act in question. Criminal lawyers are familiar with statutory phrases such as “knowingly causes or procures” and “knowingly and wilfully causes or procures”. Is intention an aspect of “induce”?
38 In BHP Iron Ore at first instance (sub nom, Australian Workers’ Union v BHP Iron Ore Pty Ltd (2000) 96 IR 422) Gray J held that it was not necessary to establish an intention on the part of the employer to produce the proscribed result. However, the Full Court seems not to have agreed. The Full Court said (at 696):
“Construed in its context as indicated in [58], it appears to us that s 298M will be contravened by conduct that leads or moves, by persuasion or influence, an employee to stop being a member of a union. It further appears to us that it is essentially a question of fact, to be determined by looking at all the circumstances of the case. To this extent, we do not find it helpful to analyse the issue, as the primary judge did, in terms of an absolute prohibition where intention is irrelevant. On the contrary, in resolving the question of fact which we have just identified, the existence of a particular intention may be a significant consideration.”
This is a difficult passage. There can be no doubt that the question of causation (did the employer induce an employee to stop being a member of a union) is one of fact. Of its very nature, such an enquiry cannot raise a question of law. Put differently, to enquire “did X induce Y to commit a theft?” only raises a question of fact. So also does the question “did X induce Y to stop being a member of a union?”, as well as the question “why did Y stop being a member of a union?”. The difficulty arises from the final sentence in the quoted passage where it is said on the factual issue raised “intention may be a significant consideration” (my emphasis). On one view of the matter, either intention is or is not a relevant consideration. If it is to provide assistance in only some cases, what is the character of that class of case? Read in isolation, a possible explanation for what the Full Court had in mind is as follows. Inducement will be established in a case where the consequence of what is alleged to be the inducing conduct is both foreseeable and obvious, namely that it will naturally cause a person to act in a particular way. In such a case there may be no need to enquire into the actual state of mind of the defendant. On the other hand, there will be cases where it is not so clear whether the conduct of the defendant has caused a person to act. It is in that circumstance that the intention of the defendant should be taken into account.
39 One danger with this approach is that it might divert attention away from what should be the real issue in the case. What is to be determined is whether the employer has induced the employee to act in a particular way. This focuses attention on the mind of the allegedly induced person (why did he act) and not on the mind of the defendant (what did he intend to achieve). If intention were left out of consideration, the like conduct would produce a like result.
40 However the matter is not so simple. An examination of other parts of the judgment of the Full Court does suggest that the Full Court was of opinion not that “intention may be a significant consideration” but that it was an indispensable condition of a contravention of s 298M. In its reasons, the Full Court referred to the House of Lords decision in Associated Newspapers Ltd v Wilson [1995] 2 AC 454. That case concerned s 23(1) of the Employment Protection (Consolidation) Act 1978 (UK) which provided:
“Every employee shall have the right not to have action (short of dismissal) taken against him as an individual by his employer for the purpose of – (a) preventing or deterring him from being or seeking to become a member of an independent trade union, or penalising him for doing so; or (b) preventing or deterring him from taking part in the activities of an independent trade union at any appropriate time, or penalising him for doing so; or (c) compelling him to be or become a member of any trade union or of a particular trade union or of one of a number of particular trade unions.”
That provision is very different from s 298M. What is proscribed is conduct undertaken for a particular purpose. So much was recognised by the Full Court. Section 298M, on the other hand, seems to be directed more to conduct than to intention. Nevertheless the Full Court said:
“Although that provision [s 23(1) of the UK statute] was expressly framed in purposive terms, there is, we think, no reason of principle, or of a practical kind, why s 298M should not receive a similar construction particularly having regard to the stated object of Pt XA -–Freedom of Association.”
41 There is a reason in principle why the construction of s 298M should not be determined by reference to s 23(1). The fact that both provisions are concerned with freedom of association says nothing as to construction. The general object of each piece of legislation may be the same, but the method in which they go about achieving that object may be decidedly different. Nevertheless, I read the passage just quoted as a statement by the Full Court that s 298K is a purposive provision. That is to say, “intention” is a necessary element of “inducement”. Accordingly, when it becomes necessary to determine whether one person (an employer) has, by words or deeds, caused or threatened to cause another person (an employee) to act in a particular way (stop being a member of a union), it is necessary to show that the employer intended the employee to act in that way.
42 At this point it is convenient to mention another provision of the Workplace Relations Act which the union contends has been contravened. Section 170NC(1) provides:
“A person must not:
(a) take or threaten to take any industrial action or other action; or
(b) refrain or threaten to refrain from taking any action;
with intent to coerce another person to agree, or not to agree, to:
(c) making, varying or terminating, or extending the nominal expiry date
of, an agreement under Division 2 or 3; or
(d) approving any of the things mentioned in paragraph (c).”
The stalled negotiations were in respect of an agreement under Division 2 or 3.
43 As an aside, it is interesting to note that before a particular act or threat to act can amount to coercion, it is necessary to show that the defendant acted with intent. The Full Court did not contrast s 298M, which makes no express reference to intent, with s 170NC, which does. The contrast is striking.
44 What constitutes coercion? Presumably it is no more than one form of inducement, but a particularly nasty form. A person will coerce another to act in a particular way if the first person brings about that act by force. It is for that reason that a threat will amount to coercion. Coercion will cause a person to act in a way that is, in a sense, non‑voluntary (I do not mean involuntary in the legal sense).
45 As the same underlying facts are said to give rise to a breach of both s 298M and s 170NC, it is appropriate to consider together whether the union has sufficiently made out a case that the bank has contravened those sections. Before dealing with that issue there is one submission that I can dispose of briefly. The bank took the point that the union has no standing to bring a proceeding for a contravention of s 170NC. The argument was based upon a consideration of a number of provisions (especially ss 170VB, 170VZ and 412), the effect of which, so it was said, was that only a party or a prospective party to an agreement under Div 2 or Div 3 could bring the claim. As it turns out, the same argument was considered and rejected by Ryan J in Maritime Union of Australia v Burnie Port Corporation Pty Ltd [2000] FCA 1189. Accordingly I need not consider this matter any further.
46 I turn now to analyse the facts. My object is to determine the relative strength of the union’s claim. Once, the inquiry was to determine whether a plaintiff has demonstrated a prima facie case: Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618. If the plaintiff could show a strong prima facie case then, all other things being equal, he was likely to get his injunction. Conversely, if the plaintiff had not made out a strong prima facie case, the tendency was to refuse an injunction. Of course this analysis is a gross oversimplification. In reality there were many situations in which the plaintiff’s proof of the infringement of his rights was not strong but nevertheless an injunction was granted because to withhold it would cause the plaintiff great harm. That is to say, how strongly the plaintiff needed to establish his case depended upon the nature of the rights he asserted and the consequences likely to flow from the order he sought. Now, since American Cyanamid Co v Ethicon Ltd [1975] AC 396, it is no longer necessary for a plaintiff to establish a strong prima facie case. In American Cyanamid Lord Diplock, who gave the unanimous decision of the House, was critical of what he considered to be undue emphasis on the strength of the plaintiff’s case at the interlocutory stage. He suggested that terms such as “prima facie case” were inappropriate and the court should merely satisfy itself that the plaintiff has a case worthy of trial. He said (at 407): “The court no doubt must be satisfied that the claim is not frivolous or vexatious; in other words, that there is a serious question to be tried.” The reason for this is the obvious difficulty of undertaking a preliminary trial upon affidavit, a task which Lord Diplock said was so fraught with danger and difficulty that it should not to be undertaken at all. That is how I will approach the facts in this case.
47 What do the facts show as to intention: Was there an intention to induce (s 298M)? Was there an intention to coerce (s 170NC)? Mr Matthews denies it was ever the intention of the bank that employees who accepted an Australian workplace agreement should leave the union. He said that the bank did not intend to limit the union’s role in any way. Mr Matthews said that placing pressure on the union to accept the bank’s offer was not a factor that was considered in making the decision to offer Australian workplace agreements to its workforce. Mr Matthews went so far as to suggest that the bank would not be concerned if no new enterprise bargaining agreement was concluded. Mr Matthews explained that all the bank had in mind when making the offers was to pass onto its employees that which had been offered to the union in July, but which the union refused to accept. Can this evidence carry the day?
48 To begin with, there are a number of difficulties in accepting, at face value, what Mr Matthews said was the object of the bank in making the offers. It will be remembered that the bank’s offers remained open for only three weeks. It is very likely that a significant proportion of the workforce would not accept the offers in that period. This would have been evident to the bank when it despatched the offers. Moreover, the bank would be in a very difficult position at the end of the offer period. Then there would be a division among employees with the same grade or classification; there would be those whose terms of employment were governed by the 1998 enterprise bargaining agreements and others who were covered by the Australian workplace agreements. Mr Matthews recognised that this was not a sustainable position. In a slightly different context he described this situation as destabilising.
49 In these circumstances it is appropriate to infer, as I do, that the offer of Australian workplace agreements was not an end in itself. This makes it necessary to decide why the offers were made. On the present state of the evidence, a very likely explanation is that they were made to bring to an end the deadlock in the negotiations.
50 Sooner or later, some agreement had to be reached with the union. So much is no more than a recognition of the reality of the situation. In addition it should not be forgotten that the union was in a position to exert pressure on the bank to increase its offer. On 29 May 2000 the union had given notice of industrial action. On 9 June 2000 it organised a one day strike, which forced the bank to close many of its branches when 9,000 employees went on strike. Further industrial action was threatened and was likely to occur. There would be financial cost to the bank. That is why industrial action often achieves its objects.
51 The question for the bank then was how it could force the union to accept its July offer, remembering that it was of the view that a higher offer was not commercially justified. The bank needed to find a lever to compel the union to act. The union was reasonably aggressive in its negotiations, with the support of its members. So the lever had to be an effective one. The offer of Australian workplace agreements to the bank’s employees was such a lever because it was a real threat to the union, as the bank well knew. The public statements made by Mr Matthews show that he knew that a workforce on individual employment contracts tend to leave their union. He said that it was “a consequence of moving well, you know, the consequence may be that some people will leave the Union.” This was the bank’s own experience with those of its employees who had moved to Australian Workplace agreements since 1997.
52 The bank did lead evidence the purpose of which was to indicate that the union was exaggerating the extent to which employees who signed individual employment contracts would leave. I do not think that there is much in this point. The evidence of Mr Combet, the Secretary of the Australian Council of Trade Unions, indicates that individual employment contracts have led to a collapse in union membership in many areas. This has been the experience in both England and New Zealand. The bank’s evidence does suggest that the loss of membership may not be as great as the union fears. But it does not deny that there will be a significant loss of membership.
53 Further, when viewed in the light of the circumstances that existed, the public statements made by Mr Matthews in August and September, namely that the bank was willing to deal directly with its employees without third party involvement, might be seen as part of a campaign to warn the union of the consequence of its perceived intransigence in the stalled negotiations.
54 Accordingly, on the facts that are presently available, it would be wrong for me to do otherwise than to find a sufficiently arguable case that the bank sought to coerce the union to enter into new enterprise bargaining agreements to replace those whose nominal expiry date had passed. And the means by which the bank hoped to bring this about was to induce its employees to leave the union by offering them Australian workplace agreements. There is then a serious question for trial whether ss 298M and 170NC have been infringed.
55 Should the union be granted the injunction that it seeks? Here I have to balance the relative risks of granting or not granting the remedy. There will be risk to the union if its rights would be so impaired by the time of trial that it will not be able to obtain effective relief. Another way of framing this is to ask whether the union will suffer “irreparable harm”. The harm to the bank must also be considered. It may be that the union will lose its case. Is the harm that the bank will suffer too great if the injunction is granted, bearing in mind that it may well succeed at trial? The problem facing the court was well stated by Lord Diplock in American Cyanamid at 406:
“The object of the interlocutory injunction is to protect the plaintiff against injury by violation of his right for which he could not be adequately compensated in damages recoverable in the action if the uncertainty were to result in his favour at the trial; but the plaintiff’s need for such protection must be weighed against the corresponding need of the defendant to be protected against injury resulting from his having been prevented from exercising his own legal rights for which he could not be adequately compensated under the plaintiff’s undertaking in damages if the uncertainty were resolved in the defendant’s favour at the trial. The court must weigh one need against another and determine where “the balance of convenience” lies.”
56 For the union it is said that it will suffer irreparable harm because if it makes out its case, damages will hardly provide adequate compensation. This seems to be so. If the bank’s conduct is allowed to go unrestrained, and the union does suffer a significant drop in membership as a result, it is difficult to see how the union would be able to recover its position, at least in the short term. Money will hardly be an adequate recompense.
57 The bank points to four factors that bear against the grant of interlocutory relief. First there is the position of those employees who have accepted the offer of an Australian workplace agreement. The bank says that it would be wrong to deny them the benefit of those agreements. The bank is concerned that these employees would leave the bank, and it would be difficult for the bank to replace them. The bank has a good point. I am obliged to take into account the interests of third parties who might be affected by any order that is made. But I think that I cannot place too much weight on this ground. I do not know how many employees have accepted the offer. The bank has this information in its possession but has declined to pass it on. The bank’s silence suggests that the number of employees involved is not likely to be significant. In this state of uncertainty I can discount the effect on third parties.
58 The second factor is the time and expense incurred by the bank in offering more than 20,000 Australian workplace agreements to its staff. There were substantial printing costs, the hiring of additional casual staff and extensive overtime work. More than $400,000 was spent in preparing the offers and more again in their dispatch. However this factor is not really compelling for two reasons. First, if the bank succeeds at trial, much of this expenditure may not be wasted. Second, to the extent that loss is suffered, it will be covered by the union’s undertaking in damages. That is the usual condition of obtaining an interlocutory injunction, and there is no reason why that condition should not be imposed in this case.
59 The third factor is the union’s delay. The bank says that the proceeding should have been brought on more quickly, and the bank has incurred expense in the meantime. Speaking generally, I tend to the view that delay unaccompanied by prejudice is no answer to a claim for interlocutory relief. Here there may be some prejudice, but it is so slight that it may be ignored.
60 The final factor arises out of the bank’s recent acquisition of Colonial Limited. The bank wishes to offer the employees of Colonial a choice between collective agreements and individual employment contracts. At present, those employees are covered by awards and enterprise agreements. I do not see any great problem if that remains the position until this case goes to trial. In any event, their conditions of employment may be better than they would be under Australian workplace agreements, for all I know.
61 In the result, I am quite satisfied that the better course for me to follow is to preserve the current position by granting the injunction sought. This will create a state of affairs in which effective relief can be awarded to either party at the conclusion of the trial.
62 In virtue of these findings, it will suffice if I make only passing reference to the union’s final claim. Section 170WG(2) of the Workplace Relations Act provides:
“A person must not knowingly make a false or misleading statement to another person with the intention of persuading the other person to make, or not to make, an AWA or ancillary document.”
The union contends that this section (note that this is another provision requiring proof of intention) has been breached by the bank. The allegedly false or misleading statements all relate to the benefits available under the Australian workplace agreements. The statements which give rise to the complaint are:
In a letter dated 29 August 2000:
“The decision to offer an AWA is about offering staff choice – choice to accept enhanced remuneration and conditions without any loss of traditional benefits … Under the AWA offer you will retain all of your current benefits that are provided under the award and 1998 certified agreement” [the offer involves] no diminution in conditions and no reduction in benefits.”
In a statement made by bank’s Managing Director on 31 August 2000:
“The structure of that agreement does not threaten other award conditions. So we’re not trying to take anything away.”
In a bulletin dated 7 September 2000:
“[The bank’s offer meant there will be] no change to your current conditions”.
In the covering letter dated 1 September 2000 mailed to members:
“[The Australian workplace agreement is an opportunity for staff] to access the pay rise on offer together with increased performance pay while retaining all existing benefits.”
In the explanatory notes to the offers:
“There will be no diminution of your substantive conditions of employment if you sign the AWA”.
In a document accompanying the offers:
“There is no reduction of benefits under the AWA”.
The general purport of these statements is that employees will be no worse off if they enter into an Australian workplace agreement.
63 The assumption that lies behind the statements is that it is easy to make a comparison between, on the one hand, a typical enterprise bargaining agreement and on the other hand, an individual employment contract. Of course, it is not so easy to make that comparison. There are significant differences between the two types of arrangement. One contains provisions that are not appropriately to be found in the other. The necessarily omitted conditions may be viewed as significant objectively, or they may be significant only in the mind of some employees. For example, enterprise bargaining agreements usually contain provisions that confer rights exercisable only by a union. Both the union and the employees may regard those provisions as being important for employees because the union is there to act in their interests. A statement to these employees that an Australian workplace agreement which contains no such provisions renders them no worse off would be misleading, if not positively false. This is one of the problems with the statements that have been made.
64 Mr Riordan points to various aspects of the Australian workplace agreement which he says involve a reduction of benefits from those that are presently available. The principal areas are: the loss of union representation, the loss of guaranteed classification levels and career structure, the different basis on which performance payments are made, the loss of union involvement in resolving disputes between employees and the bank, the loss of commitment to reviewing staffing levels, the increased discretion on the part of the bank as to leave entitlements, the uncertainty surrounding alternative arrangements for start and finish times, rostered days off, time in lieu and weekend work, the expanded bandwidth of hours of work and reduced entitlement to overtime, the elimination of union or Commission involvement in determining conditions for part-time employees, and the deterioration of rights in respect of termination of employment.
65 I will not go into the detail, but I should record the conclusion that I have reached on this aspect. Mr Riordan’s evidence, and my examination of the relevant documents, convinces me that the union has an arguable claim that employees have been misled by the statements the subject of the complaint. Moreover, it is difficult to see why this conduct is not intentional as is required by s 170WG(2). If it is not intentional in the sense of being deliberate, it at least strikes me as reckless.
66 In these circumstances, if the union were not entitled to the interlocutory relief that I intend to grant, I would have required the bank to provide each employee to whom it had offered an Australian workplace agreement a corrective statement setting out in some detail the differences between the Australian workplace agreement and the 1998 enterprise bargaining agreements, and I would have restrained the bank from taking any steps to finalise an Australian workplace agreement until the employee has had a reasonable opportunity, say fourteen or twenty-one days, to make sense of the information. However, in the view that I have taken, it is not necessary to embark upon this course.
67 Provided the union gives an undertaking in damages, I will restrain the bank from offering an Australian workplace agreement to any of its employees, entering into an Australian workplace agreement with any of its employees and taking any step to make, formalise, file or seek approval from the Employment Advocate of an Australian workplace agreement with any of its employees. The costs of the application will be reserved.
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I certify that the preceding sixty-seven (67) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Finkelstein. |
Associate:
Dated: 28 September 2000
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Counsel for the Applicant: |
Mr J Burnside QC |
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Ms M Richards |
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Solicitor for the Applicant: |
Maurice Blackburn Cashman |
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Counsel for the Respondent: |
Dr C Jessup QC |
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Mr R Goot |
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Solicitor for the Respondent: |
Freehills |
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Date of Hearing: |
22 September 2000 |
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Date of Judgment: |
28 September 2000 |
