FEDERAL COURT OF AUSTRALIA

Electrolux Home Products Pty Ltd v Australian Workers Union

[2001] FCA 1600

INDUSTRIAL LAW – whether industrial action to support or advance union claims in respect of a proposed certified agreement was protected action – whether union claims against an employer to protect and secure employee entitlements, access of shop stewards to the employer’s communication facilities, and a bargaining agent’s fee payable by non-union members, are claims pertaining to the relationship of the employer and its employees, as such - whether industrial action in support of claims that include a claim that does not pertain to that employment relationship is not protected action

Workplace Relations Act 1996 (Cth) Div 2 of Pt VIB ss 170LI, 170ML, 170MO, 170MT and 170NC(2)

Industrial Relations Act 1988 (Cth) s 170MD

Quickenden v O’Connor [2001] FCA 303 - cited

Re Alcan Australia Ltd; Ex parte Federation of Industrial Manufacturing and Engineering Employees (1994) 181 CLR 96 - considered

Re Manufacturing Grocers’ Employees Federation of Australia; Ex parte Australian Chamber of Manufactures (1986) 160 CLR 341 - considered

Re The Amalgamated Metal Workers Union of Australia; Ex parte Shell Co. of Australia Ltd (1992) 174 CLR 345 - considered

R v Portus; Ex parte Australia and New Zealand Banking Group Limited (1972) 127 CLR 353 - considered

Re Finance Sector Union of Australia; Ex parte Financial Clinic (Vic) Pty Ltd (1993) 178 CLR 352 - considered

Mettoy Pension Trustees Ltd v Evans (1990) 1 WLR 1587 - cited

Lock v Westpac Banking Corporation (1991) 25 NSWLR 593 – cited

In re Pauling’s Settlement Trusts [1964] 1 Ch 303 - cited

Re Baden’s Deed Trusts [1971] AC 424 - cited

Transfield Pty Ltd v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union (C 2001/4495) – disapproved

Transfield Pty Ltd v Automotive Food, Metals, Engineering, Printing and Kindred Industries Union [2001] FCA 1533 - cited

Metal Trades Employers Association v Amalgamated Engineering Union (1935) 54 CLR 387 - cited

Accurate Factory Maintenance Labour Hire Enterprise Agreement 2000-2003 (C2001/1224) – cited

Construction, Forestry, Mining and Energy Union v Australian Industrial Relations Commission (2001) 178 ALR 61 - cited

ELETROLUX HOME PRODUCTS PTY LTD v AUSTRALIAN WORKERS UNION AND OTHERS - S157 OF 2001

JUDGE:          MERKEL J

DATE:            14 NOVEMBER 2001

PLACE:          SYDNEY (HEARD IN ADELAIDE)

THE COURT ORDERS THAT:

1.      Within seven days the parties file an agreed form of declaratory relief that gives effect to these reasons for judgment and, in the event of agreement not being reached, the parties are to file the form of declaratory relief they each regard as appropriate and any submissions that are relevant to that matter.

2.      In the event that the applicant proposes to apply for any other relief it is to file its submissions in respect of that relief within 7 days and the respondents are to file their submissions in response within 7 days of receiving the applicant’s submissions.

3.      Adjourn the further hearing of the matter sine die.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

REASONS FOR JUDGMENT

Introduction

1                     Between April and September 2001 the applicant (“Electrolux”) and the first, second and third respondents (“the unions”) conducted negotiations in relation to a new certified agreement concerning the terms and conditions of employment of employees at a number of Electrolux’s manufacturing facilities throughout Australia.  It was proposed that the agreement be certified under s 170LT of the Workplace Relations Act 1996 (Cth) (“the Act”) on the basis that it met the requirements of Div 2 of Pt VIB of the Act.

2                     During September 2001, pursuant to notices issued under s 170MO of the Act, the unions threatened and purported to take protected industrial action under the Act in support of their claims in respect of the proposed agreement.  Electrolux contended that the unions’ industrial action was in support of, inter alia, claims that did not pertain to the relationship of employer and employee.  Accordingly, so it was said, as such claims could not be included as terms of a certified agreement under Div 2 of Pt VIB of the Act, action taken in support of the claims was not action which was capable of being protected action under the Act.  Electrolux then claimed that, as the industrial action threatened and taken by the unions was not protected action under the Act, it did not attract the immunity from legal action conferred on protected action under ss 170MT and 170NC(2) of the Act.

3                     Electrolux seeks declaratory relief that the action threatened and taken by the unions was not protected action and it also seeks injunctions restraining the unions from taking any further action pursuant to the notices they issued.  Electrolux has also applied for the imposition of penalties on the ground that, as the action was not protected action under the Act, the unions’ actions were made with the intent to coerce Electrolux to make a new certified agreement in breach of s 170NC(1).

4                     The matter proceeded to a final hearing on agreed facts, although the parties reserved their right to refer to evidence filed by them in so far as that evidence was not inconsistent with the agreed facts.  The claims pursued by the unions are not identical but it was common ground that any differences in their formulation were not material to the resolution of the issues between the parties.

The agreed facts

1.      The unions are organisations registered under the Act and are parties to the Metal Engineering and Associated Industries Award 1998 (“the Award”), an award of the Australian Industrial Relations Commission (“the Commission”), and the Email National Manufacturing Agreement 1999 (“the Agreement”), an agreement certified by the Commission.

2.      Electrolux is a manufacturing company producing white goods for the domestic and international markets under the brand names Westinghouse, Simpson, Chef, and Kelvinator.  It has manufacturing facilities in a number of locations and is a respondent bound by the Award and a party to the Agreement.  The unions have members employed in various classifications at Electrolux’s manufacturing facilities.

3.      The Agreement had a nominal expiry date of 30 June 2001, but continues to operate pursuant to the Act.

4.      The unions issued notices initiating bargaining periods pursuant to s 170MI of the Act.  In accordance with s 170MJ(c) the notices stated that the matters that were proposed to be dealt with by the certified agreement included shop stewards access rights, employee entitlements and bargaining agents’ fees.  Those claims were expressed as follows:

·        [r]ight of entry and Shop Stewards rights including the provision such as reasonable access for Shop Stewards to email, internet, facsimile, photocopying facilities and confidential interviews with new employees;…

·        [m]onthly payments to a trust fund approved by the AMWU – AWU - CEPU for:

(a)     the protection of workers’ entitlements; and

(b)     allowing for benefits to be portable across your…industry…;

·        [a] provision that ensures that in the event of a transmission of business…[the employer or the successor thereto]…pay into a trust fund approved by the AMWU – AWU – CEPU enough money to cover all affected employees’ accrued entitlements;…

·        payment of a bargaining agent’s fee.”

5.      Between April and September 2001 the parties conducted negotiations for a new certified agreement.  The negotiations concerned the following union claims:

“(a)     Whether negotiations and any agreement would be national in nature, that is to say covering all of Electrolux’s operations in South Australia and New South Wales, or whether negotiations would be conducted and agreements entered on a site by site basis;

(b)              The Unions’ need for a common expiry date on any agreement or agreements;

(c)               The closure of the Brunswick Chef site and the possible outsourcing by Electrolux of part of its operations ‘off shore’;

(d)              The Unions’ claims for arrangements to protect employee entitlements, particularly in the context of insolvency, including the claim for Electrolux to become party to the Manusafe Scheme and claims for alternatives;

(e)               The claim by Unions that there should be no Australian Workplace Agreements;

(f)                Superannuation and the Union’s claim for paid meetings for Fund Managers to explain the proposal for transfer from the Email Superannuation Fund to the Electrolux Superannuation Fund, or Superannuation Fund of Australia;

(g)              The claim by the company that if claims being pursued were granted this would force the company to go out of business;

(h)              Redundancy and redundancy payments;

(i)                Consultative arrangements at workplaces;

(j)                Bargaining fees and the Unions’ claim that the employer should advise new employees that an Agents’ fee of $500.00 is payable to the Union by non-Union members to the Unions to reflect the service obtained by those non-members from the Unions in negotiating agreements, and that those employees should pay the amount and that the employer should provide a direct debit facility for the payments;

(k)              The contract labour arrangements;

(l)                Workers’ compensation makeup payments;

(m)            Provision for shop stewards and delegates;

(n)              Right of entry and Shop Stewards’ rights including the provisions such as reasonable access for Shop Stewards to email, internet, facsimile, photocopying facilities and confidential interviews with new employees;

(o)              Arrangements for salary sacrifice;

(p)              Wage increases;

(q)              Inclusion of ‘spare parts and detailing distribution’ as part of the subject of negotiation;

(r)               Parity of payments as between sites and classifications in South Australia;

(s)               The withdrawal of all Federal Court applications which had been initiated by Electrolux;

(t)                Improvements in leave and allowances already provided for in the Agreement, and set out in the model agreement;

(u)              The use of casuals;

(v)              Training and classifications;

(w)             Occupational health and safety;

(x)              Facilities, protective clothing and equipment;

(y)               Dispute settlement procedures;

(z)               Income protection.”

6.      During the negotiations officials of the unions produced a draft proposed national agreement to be used as the basis for further negotiations (“the proposed agreement”).  The proposed agreement set out in detail the unions’ claims referred to in paras 4 and 5(d), (j) and (n) above for employee entitlements, a bargaining agent’s fee and shop stewards access to Electrolux’s facilities.

(a)        Employee entitlements

“10.0   WAGES

10.1.       Employees who are bound by this agreement shall be paid a minimum wage increase of 6% per annum throughout the life of this agreement.

            Any existing over award payments will continue to be paid unless specifically stated otherwise by this agreement.

10.2.       In addition to 10.1, Electrolux Home Products agrees, to provide for the protection and portability of employees long service entitlements, by contributing the equivalent of 1.5% of an employee’s weekly wage into Manusafe.  Payment of long service leave entitlements during the life of this agreement, will be in accordance with clause 13 of this agreement.

10.3.       In addition to the wage increases prescribed in 10.1 and 10.2, Electrolux Home Products agrees to pay $50.00 per week per employee into Manusafe towards an employee’s severance fund, subject to sub clause 10.3.1, which will be payable to each employee from the fund, upon termination of employment for any reason,.

10.3.1.  Electrolux Home Products employer will pay the severance pay contribution per week on a pro rata daily basis.  A minimum of four hours worked in one day will constitute one day for the purpose of this sub clause.

10.3.2.  Payment from the Severance fund to an employee will be in accordance with clause 14, of this agreement.”

11.0     MANUSAFE BENEFIT TRUST FUND

11.1     It is agreed that Electrolux Home Products will sign Schedule A (Deed of Adherence) of the Manusafe trust deed which is attached at Appendix 2 of this agreement and upon signing this agreement, and if the trustees approve the application, the company will become bound by the terms and conditions of the Manusafe trust deed.

11.2     Nothing in this sub clause will affect an employees rights to the various leave entitlements that he/she is entitled to under this agreement or the relevant award.

11.3     The total contribution to the fund per month for each employee covered by this agreement will be paid in accordance with the amounts specified in Appendix 1 to this agreement.

11.4     Contributions must continue while the employee is absent on paid annual leave, sick leave, long service leave, public holidays, jury service, bereavement leave or other paid leave.  An employer need not make contributions in respect of any absence from work without pay.

11.5     If Electrolux Home Products is declared bankrupt or goes into liquidation the employee will be entitled to:

11.5.1  receive a cash payment from the Manusafe fund, in accordance with the Manusafe Trust Deed, of all entitlements that have accrued in the employee’s individual fund account; or

11.5.2  leave the accrued entitlements in the employee’s individual Manusafe account and take them with him/her to the next employer.

12.0         MANUSAFE AND TRANSMISSION OF BUSINESS

12.1     It is agreed that in the event that a transmission of business is to occur as defined in clause 4.4.2 of the Award and in order to protect employees accrued entitlements in the event of the transmittee being declared bankrupt or going into liquidation or voluntary administration, that the transmittor will pay employees accrued entitlements into Manusafe, prior to the transmission occurring.

…

13.0         LONG SERVICE LEAVE AND MANUSAFE

13.1     The employer will be liable to pay any long service leave entitlement that has accrued up to the date of certification of this agreement and which actualises during the life of this agreement.

13.2         The contributions that are paid into Manusafe in accordance with clause 10.2, may be recovered by the employer from Manusafe, in the event that the entitlement accrued under the duration of this agreement, actualises during the life of this agreement.  Under these circumstances the employer will pay the entitlement when it is taken and will be reimbursed from the individual employee’s Manusafe long service leave account.

13.3         Where an entitlement to long service leave does not actualise during the life of this agreement and an employee leaves before the qualifying period of five years, the contributions that have accrued up to the date of termination of employment with Electrolux Home Products employer, will remain in Manusafe and the employee will take the accrued funds with him/her to the next employer.  The employee may access the accrued entitlement after five years from the date of choosing to leave the accrued entitlement in Manusafe.

14.0         SEVERANCE PAY AND MANUSAFE

14.1     Electrolux Home Products agrees to pay $50.00 per week, per employee covered by this agreement into the Manusafe Fund, towards providing for Severance benefits upon termination of employer with Electrolux Home Products.  The severance entitlement will be include that provided for in clause 16.2 of this agreement.

14.2         When an employee leaves his/her employment leaves his/her employment, for any reason, with Electrolux Home Products employer, the employee will be entitled to access the funds accrued in Manusafe on his/her behalf or leave the funds in Manusafe and take it with him/her to the next employer.

…

15.0         LONG SERVICE LEAVE

15.1     Long service leave shall accumulate at the rate of 13 weeks for every ten years of service and pro-rata thereafter.  Long service leave shall be available after five years service on a pro-rata basis.

15.2          The terms of the Metal, Engineering and Associated Industries Award 1998 – Part IV shall apply, except for the quantum and accumulation rate of leave as prescribed herein.

15.3          Pro-rata Long Service Leave payments will be paid after 5 years.”

The Manusafe Trust Deed provided for the trustee of the fund to maintain member’s accounts showing the amount paid in respect of the member’s entitlements.  Under the Deed each employer is to pay a specified amount by way of contribution to the employee member’s entitlements.  The Deed provided that:

“Subject always to the terms of any relevant Industrial Agreement and any applicable law, if the Trustee in its absolute discretion considers that a Member is entitled to Employee Entitlements, the Trustee may pay the Benefit (or appropriate portion thereof) directly to the Member or the Member’s Beneficiary.”

The Deed provided for the forfeiture of amounts credited to a member’s account in certain circumstances, such as bankruptcy or mental disability.

The Deed provided for the Trustee to have power to re-imburse to an employer the amount paid by the employer directly to an employee in respect of the employee’s entitlements.  It also provided that:

“The Trustee may in its absolute discretion decide how and when to exercise its powers.”

The trustee of the Manusafe Benefit Trust Deed was to be a company which had 50 ordinary shares divided into 25 A class shares known as union member shares and 25 B class shares known as employer shares.  Each class of shares was to carry the same rights and privileges and was to rank pari passu in all respects.

(b)        Bargaining agent’s fee

“46.0   BARGAINING AGENTS’ FEE

46.1         The company shall advise all employees prior to commencing work for the company that a ‘Bargaining Agents’ fee of $500.00 per annum is payable to the union.

46.2         The relevant employee to which this clause shall apply shall pay the ‘Bargaining Agents fee’ to the union in advance on a pro rata basis for any time which the employee is employed by the company.  By arrangement with the union this can be done in quarterly instalments throughout the year.

46.3         The employer will, at the request of the employee to whom this clause applies, provide a direct debit facility to pay the bargaining agents fee to the union.”

Notwithstanding the form in which the claim is expressed in the proposed agreement, the agreed facts and the evidence filed by the parties revealed that the bargaining agent’s fee was being claimed by the unions to be payable only by employees who were not union members to reflect the service obtained by those non-members from the unions in negotiating agreements under the Act.

(c)    Shop stewards access

Clause 23 of the proposed agreement provided for employees who were appointed as shop stewards to be entitled to have adequate facilities in relation to matters affecting employees whom they represent.  Clause 23.3 made provision for shop stewards to have access to a number of facilities at Electrolux’s workplaces to discharge their duties and responsibilities.  The right of access challenged by Electrolux was set out in cl 23.3.7:

“23.3.7      The right of a shop steward and particularly a convenor or secretary of a combined union shop committee to have easy access to:

·        A telephone;

·        A word-processor, typewriter, or secretarial support;

·        Access to personal computers (PC), CD ROM and E-mail and the Internet at the workplace, and for employer-sponsored access to email and the Internet at home (such as through leasing arrangements) with the privacy of such access to be guaranteed and include the right to create a website;

·        A lockable cabinet to keep union records, circulars, receipt books etc.;

·        A photocopier and facsimile machine;

·        A meeting room (as opposed to a meal room);

·        Lockable notice boards displayed in prominent positions under the control of the shop steward which are solely for authorised union notices;

Plus any other reasonable facilities as required for shop stewards to discharge their responsibilities and duties.”

7.      In September 2001, during the bargaining period and after the unions had authorised industrial action under the Act, the unions issued separate notices to Electrolux that they intended to organise and engage in industrial action that was “protected action” under s 170ML of the Act.  Electrolux and the unions were in dispute over a significant number of the unions’ claims which had been the subject of negotiations, including the claims for employee entitlements, the bargaining agent’s fee and shop stewards access rights.

8.      The unions propounded their claims for employee entitlements by claiming that Electrolux agree to participate in the Manusafe scheme.  The unions, however, were prepared to negotiate about an alternative scheme providing substantially the same benefits and using substantially the same mechanisms as those provided for by Manusafe.  The unions’ negotiating position was that Manusafe was not non-negotiable and that alternative forms would be considered which protected employee entitlements.  Electrolux had made it clear in the course of negotiations that it would not negotiate about Manusafe or any other similar scheme, and would not negotiate about the bargaining agent’s fee in any form.

5                     Although the parties did not agree on the facts relating to the unions’ negotiating position during September 2001 in relation to the agent’s bargaining fee and shop stewards access rights, the evidence was that the unions were pursuing those claims in much the same way as they were pursuing the employee entitlements claim; that is the unions were prepared to negotiate with Electrolux about the details of the claims.

The Act

6                     The certified agreement proposed by the unions was an agreement under Div 2 of Pt VIB of the Act.  Section 170L states that the object of Pt VIB is to facilitate the making, and certifying by the Commission, of certain agreements, particularly at the level of a single business or part of a single business.

7                     Div 2 of Pt VIB is concerned with employers who are constitutional corporations or the Commonwealth.  The operation of Div 2 is primarily based on the Corporations power in s 51(xx) of the Constitution and, accordingly, is not confined by the limitations contained in s 51(xxxv) of the Constitution which provides for the exercise of federal legislative power in relation to conciliation and arbitration for the prevention and settlement of industrial disputes extending beyond the limits of any one State: see Quickenden v O’Connor [2001] FCA 303 at [39], [40] and [114].

8                     Section 170LI provides that, for an application to be made to the Commission for a certified agreement under Div 2 of Pt VIB:

“…there must be an agreement, in writing, about matters pertaining to the relationship between:

(a)               an employer who is a constitutional corporation or the Commonwealth; and

(b)               all persons who, at any time when the agreement is in operation, are employed in a single business, or a part of a single business, of the employer and whose employment is subject to the agreement.”

9                     Section 170LT provides for the certification of an agreement by the Commission.

10                  The negotiation process for a certified agreement under Pt VIB is provided for in Div 8 of Pt VIB.  Section 170MI provides for an employer, an organisation of employees, or an employee who wants to negotiate an agreement, inter alia under Div 2, to initiate a bargaining period for negotiating the proposed agreement.  Section 170MJ provides that the notice of intention to initiate a bargaining period is to be accompanied by particulars, inter alia, of:

“(c)     the matters that the initiating party proposes should be dealt with by the agreement.”

11                  Section 170ML provides for industrial action against an employer by an organisation of employees, referred to as “protected action”, to be taken during the bargaining period for the purpose of:

“supporting or advancing claims made in respect of the proposed agreement.”

12                  Section 170MO provides that industrial action is not protected action unless the requirements set out in the section are met.  Section 170MT immunises protected action from legal action.  The section provides that, subject to certain limited exceptions which are not presently relevant, no action lies under any law (whether written or unwritten) in respect of industrial action that is protected action.  Section 170NC, inter alia, provides that save for protected action, a person must not take or threaten action with intent to coerce another person to agree or not to agree to making or varying an agreement under Div 2.

13                  It was common ground that the industrial action taken by the unions was for the purpose of supporting and advancing claims in respect of the proposed agreement.  The issue between the parties was whether the proposed agreement satisfied the requirements of s 170LI and was therefore capable of being certified.  In particular, the parties were in agreement that the outcome of the present application depended upon whether the proposed agreement was about matters pertaining to the requisite employment relationship.

The Contentions

14                  The issues in dispute between the parties are whether:

·        the employee entitlements, the shop stewards access, and the agent’s bargaining fee claims pertain to the relationship of employer and employee;

·        every term of, or every matter the subject of, an agreement that is proposed to be certified under ss 170LI and 170LT must pertain to the relationship between Electrolux as employer and its employees as employees.

15                  Electrolux contends that industrial action taken by the unions to support or advance the employee entitlements, agent’s bargaining fee, and the shop stewards access claims was not action in respect of claims that were capable of being the subject of a certified agreement as they did not pertain to the relationship of Electrolux and its employees as required by ss 170LI and 170ML.  Electrolux’s contention is based on the premise that if any term of, or matter provided for in, the proposed agreement does not pertain to that relationship the agreement cannot be certified under Div 2 of Pt VIB and no protected action can be taken to support or advance claims in respect of that agreement.

16                  Accordingly, so it is contended, the action taken breached s 170NC and was subject to the enforcement and penalty provisions in Div 10 of Pt VIB.  Under s 170NF penalties may be imposed for a contravention of s 170NC.  The Court may also grant an injunction under s 170NG requiring a person not to contravene, or to cease contravening, inter alia, s 170NC.

17                  The unions contend that:

·        the requirements of s 170ML were met as the industrial action threatened and taken was for the purpose of supporting and advancing claims in respect of the proposed agreement;

·        the requirements of s 170LI were met as the proposed agreement was in writing, and was “about” matters pertaining to the relationship between Electrolux and its employees.

18                  The unions emphasise that the requirement under s 170LI is that the “agreement” be about “matters” pertaining to the relationship of employer and employee.  Thus, it is contended that an agreement can be characterised as being “about” such matters notwithstanding that one or more terms of, or matters dealt with in, the agreement may not fall within that description.  The unions claim that Electrolux’s submissions fail to recognise the significant change to the preceding industrial relations scheme made in Div 2 of Pt VIB which, as explained above, is primarily based on the Corporations power in s 51(xx) of the Constitution rather than on the conciliation and arbitration power in s 51(xxxv) of the Constitution.  Section 170LI was contrasted with its statutory predecessor, s 170MD of the Industrial Relations Act 1988 (Cth) (which was based on the conciliation and arbitration power), which provided that the Commission must refuse to certify an agreement if it thinks that any term is one the Commission would not have power to include in an award.  Effectively, the requirement meant, inter alia, that all of the terms of a certified agreement must pertain to the relationship of employers and employees, as such.

19                  However, the unions submitted that, in any event, the substance or critical aspects of the workers entitlements, bargaining agent’s fee and shop stewards access claims pertain to the relationship between Electrolux and its employees.

The Unions’ claims

20                  Although the wording of s 170LI differs in significant respects from its statutory predecessors the section has retained the substantive requirement that the agreement to be certified is to be about matters “pertaining to the relationship” between an employer and persons employed in the employer’s business.  The relationship is between the employer, as such, and the persons employed, as such: see Re Alcan Australia Ltd; Ex parte Federation of Industrial Manufacturing and Engineering Employees (1994) 181 CLR 96 (“Alcan”) at 105-107.  In that regard in Re Manufacturing Grocers’ Employees Federation of Australia; Ex parte Australian Chamber of Manufactures (1986) 160 CLR 341 (“Manufacturing Grocers’”) at 353 the Court observed that the words “pertaining to” mean belonging to or within the sphere of the requisite relationship and that the matters in question “must be connected with the relationship between an employer in his capacity as an employer and an employee in his capacity as an employee in a way which is direct and not merely consequential”.

21                  The initial issue is whether the claims the unions were supporting or advancing by their industrial action, if acceded to, were in respect of matters that were capable of being included in an agreement that is to be certified under s 170LT.  The general approach to be adopted in determining the characterisation of an industrial claim is to look at the substance of the demand and to identify the aspect that is central to the claim, or a critical part of it, having regard to the context in which the claim is made: see Re The Amalgamated Metal Workers Union of Australia; Ex parte Shell Co. of Australia Ltd (1992) 174 CLR 345 (“Shell”) at 358-359.  The claim is not to be construed as if it were a document creating legal rights and obligations: see Shell at 359.  Finally, a claim can be properly characterised as pertaining to the relationship of an employer and its employees notwithstanding that parts of a claim that are machinery provisions giving effect to the claim (see Shell at 359), or ancillary aspects of it (see R v Portus; Ex parte Australia and New Zealand Banking Group Ltd (1972) 127 CLR 353 (“Portus”) at 372), may not pertain to that relationship.  If a claim pertains to the requisite relationship in accordance with the above principles it is because it is in respect of a matter that pertains to that relationship.

22                  The employee entitlements claim is expressed to be a claim by the unions for payment to employees, as part of their remuneration for service, of amounts that will secure and protect their severance pay, long service and other leave entitlements, notwithstanding that the right to payment of the entitlements is contingent and has not yet crystallised.  As the entitlements are not payable until some time in the future the claim for payment to be to a trustee seeks to ensure that the employee entitlements will be paid to the worker on the right to payment crystallising.  The claim for payment on account of the entitlements, which protects and enables portability of the entitlements, is analogous to the claims of unions for employers to participate in a superannuation scheme by payment of superannuation contributions to a trustee of a particular superannuation trust fund pending the superannuation entitlement becoming payable to the employee, for example on retirement.  Such a claim is in respect of a matter pertaining to the relationship of employers and employees: see Manufacturing Grocers’ at 356 and Re Finance Sector Union of Australia; Ex parte Financial Clinic (Vic) Pty Ltd (1993) 178 CLR 352 at 360-361.

23                  It did not appear to be in dispute that, for reasons similar to those that led to superannuation claims being held to pertain to the requisite relationship, a claim for payment as part of an employee’s remuneration of the employee’s accruing entitlements to a trustee to be held on trust for the employee pending the entitlement becoming an accrued entitlement, would also pertain to that relationship.  Electrolux’s contention, however, is that the unions’ employee entitlements claim goes further and therefore does not pertain to the requisite relationship.

24                  Electrolux contended that the claim was for payment to the trustee of a particular scheme, namely the Manusafe scheme, which confers an unfettered discretion on the trustee as to whether payment of an accrued entitlement is to be made.  Accordingly, it is said that the payment of contributions is for the benefit of the trust, which is one step away from the employment relationship, and therefore falls outside the requisite relationship.

25                  A difficulty with Electrolux’s contention is that it focuses on the detailed terms of the claim rather than on the subject matter with which it is concerned.  As is made clear from ss 170LI, 170MJ and 170ML the legislature has drawn a distinction between the matters that may be the subject of a certified agreement and the claims that may be made and pursued in respect of those matters.  Another difficulty with Electrolux’s contention on this issue is that it is construing the claim, which was put forward as the “basis for further negotiations”, as if it was already a term of the agreement.  Nonetheless, if the claim was for an unfettered discretion to be conferred on the trustee, there would be substance in the contention put forward by Electrolux.

26                  The discretion to refuse payment is expressed in the draft agreement to be subject to the relevant industrial agreement, which confers an entitlement on the employee to receive payment of the accrued entitlements that are to be paid by the employer to a trustee pending the entitlements of the employee becoming unconditional.  Prima facie, the trustee would therefore not have a discretion to refuse payment in circumstances where the amount is payable under the relevant industrial agreement.

27                  Further, employees who become members of Manusafe do not do so as volunteers but rather, do so as employees part of whose remuneration for service is paid to a trustee for the purpose of being repaid to the employee upon the employee’s entitlements accruing to the employee.  As was stated by Warner J in Mettoy (at 1610), analogous employee pension rights:

“…have contractual and commercial origins.  They are derived from the contracts of employment of the members.  The benefits provided under the scheme have been earned by the service of the members under those contracts and, where the scheme is contributory, pro tanto by their contributions.”

28                  The correct approach to construing a Deed established to secure such rights is “practical and purposive, rather than detached and literal” having regard to the matrix of fact, including the purpose of the Deed: see Mettoy Pension Trustees Ltd v Evans (1990) 1 WLR 1587 at 1610 and Lock v Westpac Banking Corporation (1991) 25 NSWLR 593 at 602.  A practical and purposive construction of the Manusafe deed would be one which construes the ambit of the trustee’s discretions by reference to the Deed’s object of securing payment of employees’ entitlements by enabling payment to the employee when the entitlement to payment becomes unconditional.

29                  Also, a trustee’s discretionary powers must be exercised with due consideration for the purpose for which they were conferred and not capriciously or with some other benefit in view: see In re Pauling’s Settlement Trusts [1964] 1 Ch 303 at 333.  It has been held that the discretion of a trustee of an employees’ benefit fund is a fettered one.  In Re Baden’s Deed Trusts [1971] AC 424 at 449 Lord Wilberforce stated:

“It would be a complete misdescription of [the trustee’s] position to say that, if what he has is a power unaccompanied by an imperative trust to distribute, he cannot be controlled by the court unless he exercised it capriciously, or outside the field permitted by the trust.”

30                  When the above matters are taken into account I do not accept that the trustee has an unfettered discretion under the Manusafe deed to refuse to pay an entitlement where it is of the view that the entitlement has become an accrued entitlement.  In such circumstances, assuming the availability of funds, it is difficult to envisage a valid ground for a trustee to refuse to pay the amount due.

31                  Electrolux has relied upon the unions’ power to control or influence the conduct of the trustee.  In Finance Sector Union the Court did not accept that a claim for payment of a superannuation contribution to a particular fund administered by a trustee effectively controlled by the unions took the claim outside the requisite relationship.

32                  Electrolux also contends that the unions’ claim fails to require re-imbursement or payment of amounts paid by an employer in the event that a particular employee’s entitlements do not become payable to that employee.  The difficulty, among others, with Electrolux’s contention is that it is based on what is not claimed, rather than on what is claimed.  The substance and the central or critical aspect of the unions’ claim is payment to a trustee by an employer, as part of an employee’s remuneration, of the employee’s accruing entitlements, to protect those entitlements by ensuring they are paid to the employee when payable irrespective of the employer’s subsequent financial capacity to make the payment at that time.  If an employer pays the accrued entitlement (eg for long service leave) provision is made for the amount paid to be re-imbursed to the employer.  While the provision appears to confer a discretion as to re-imbursement, in a practical sense it is difficult to envisage an employer making the requisite payment without ensuring it is entitled to be re-imbursed for that payment.  In any event, as I explained above, a trustee does not have a discretion to capriciously or arbitrarily exercise its powers.  The circumstances in which a trustee could lawfully refuse to re-imburse an employer who paid the employee’s entitlement directly to an employee would be limited.

33                  More generally, Electrolux contended that the discretionary provisions to which I have referred, the entitlement of the trustee to earn interest on contributions, and provisions for the forfeiture of amounts credited to a member (eg if the employee dies) show that the payments are primarily for the benefit of the trust fund rather than employees.  For the reasons set out above I do not accept that submission in respect of the trustee’s discretionary powers.  Although the Manusafe Deed does not expressly deal with reimbursement where there is a forfeiture, it is far from clear, as is assumed by Electrolux, that reimbursement is precluded by the Deed.  For example, it is possible that a resulting or constructive trust in favour of the employer may arise in the event that the trust created for the benefit of an employee fails because the ultimate entitlement cannot become payable to the employee.  The precise legal relationship that might be created, as a result of the employee entitlement claim being acceded to, would have to be determined in the light of the terms of any final agreement.

34                  In my view, the substance of the employee entitlement claim, the central and critical aspects of it, and its subject matter, relate to payments by the employers, as such, for the benefit of the employees, as such. The payments relate to particular aspects of the remuneration to be received by employees for service to their employer (that is, employee entitlements in respect of severance pay and leave) and belong to and are within the sphere of the relationship between Electrolux and its employees, as such.  In so far as there may be some circumstances where amounts paid on account can accrue to the benefit of the trust fund, and interest earned on payments made by the employer is to be paid to the trustee for its services, such provisions are ancillary or incidental aspects of the matter to which the claim relates and do not alter the substantive characterisation of that matter.

35                  In Transfield Pty Ltd v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union (C 2001/4495) (“the Transfield Commission decision”) Justice Munro concluded (at [72]) that a union claim against an employer to make monthly contributions to the Manusafe Trust Fund for the protection of workers’ entitlements was not a matter pertaining to the employment relationship.  His Honour (at [65]) accepted that a claim on an employer to accept a duty, or to grant an employee a right, that assures or makes more effective the payment in due course of an entitlement to accrued benefits related to service as an employee as they fall due, is a matter belonging within the employment relationship.  However, his Honour (at [70]-[72]) found that certain special features of Manusafe took it outside that relationship.  The features include use of investment income on contributions for the benefit of the trust rather than employees, the general discretions conferred on the trustee that leave in doubt the right to payment of entitlements, uncertainty as to portability, the investment objectives of the trust, and other matters that his Honour suggested contributed to “the hybrid character of the Manusafe Fund”.  His Honour contrasted the clear and explicit duties and legal framework in respect of employee superannuation entitlements which he said, unlike the Manusafe Fund, enjoyed a legislative and systematic supporting infrastructure.

36                  In Transfield Pty Ltd v Automotive Food, Metals, Engineering, Printing and Kindred Industries Union [2001] FCA 1533 Justice Moore at [12], in the context of the principles concerning the grant of interlocutory relief, considered that the Transfield Commission decision in respect of the legal issue before the Commission was “arguably correct”.  The present case requires determination of that issue in a final, rather than an interlocutory, context.  In that context I have some difficulty with the approach taken in the Transfield Commission decision.  As explained above, and also later in these reasons, I do not accept that the issue of characterisation of a matter that is the subject of a claim is to be approached by a detailed consideration of the machinery or ancillary aspects of the claim.  I also do not accept that the trustee’s discretions or the “hybrid” character of the scheme are as Munro J saw them. While there are plainly aspects of the scheme that require clarification, the claim in the present case is not for implementation without such clarification.  Further, if it matters, the claim in the present matter, unlike the claim in the Transfield Commission decision (as explained by Munro J), is expressly stated to be a claim for payment as part of an employee’s remuneration (see cl 10.2).

37                  I would emphasise that my decision should not be taken to indicate a view as to the appropriateness of the unions pursuing their employee entitlements claim in its present form.  The criticisms made by Electrolux and by Munro J in the Transfield Commission decision of the Manusafe scheme in its present form have some substance.  Plainly, the so-called “discretionary” aspects of the trustee’s powers in relation to paying employee entitlements and employer re-imbursement require clarification, as does the detail of the manner in which those entitlements are to be portable.  However, that clarification concerns machinery and ancillary aspects of the claim which I have decided do not have the consequence in the present case of resulting in the proper characterisation of the matter that is the subject of the claim not being a claim for payment of employer contributions for the benefit of employees to secure and protect the payment of the employees’ entitlements.  For the reasons set out above such a claim pertains to the employment relationship.

38                  The shop stewards access claim is an ancillary aspect of the unions’ claim for shop stewards to represent employees at Electrolux’s workplaces.  Electrolux does not contend that the other claims in respect of shop stewards, which themselves are incidents of the wider log of claims, do not pertain to the relationship between it and its employees.  Rather, it contends that the right of access to its communication facilities goes too far.  I do not accept that contention.  The claim for access to the facilities is merely a machinery or ancillary provision for the purpose of better enabling employees appointed as shop stewards to discharge their responsibilities and duties to employees, which is a function Electrolux does not contend is outside the requisite relationship.  When regard is had to the context in which the claim is made, it is my view that it pertains to the requisite relationship.

39                  I have dealt with Electrolux’s contentions in respect of the employee entitlement and shop stewards access claims on the basis argued by Electrolux, that is that the claims are to be characterised essentially by reference to the unions’ formulation of those claims in the draft agreement proffered by them.  On that basis Electrolux construed the unions’ claims as if the draft agreement expressed the precise legal relationship and obligations the unions were seeking to create.  There is substance in the unions’ criticism of that approach on the ground that, in the present context, it is impermissible to examine in detail each term of the draft agreement as if it were already a provision of an award about to be made or an agreement about to be certified.  That is particularly so where the draft agreement is proffered as “the basis for further negotiations” and the context in which the claims were being advanced in September 2001 included the unions’ stated preparedness to negotiate on the detail of the claims.  It is unnecessary for me to further consider the unions’ criticisms in view of the conclusions that I have reached as to the proper characterisation of the matters the subject of the claims.

40                  The bargaining agent’s fee stands in a different position.  On the evidence before me the unions’ claim requires that, prior to commencing employment with Electrolux, Electrolux advise all employees who are not, or do not become, union members that they are required to pay to the union a bargaining agent’s fee of $500 per annum and that the employer, at the request of the employee, is to provide a direct debit facility to pay the bargaining agent’s fee to the union.  The claim, implicitly if not explicitly, is that Electrolux is to act as the union’s agent in entering into a contract with new employees which requires the employees, who are not union members, to employ the unions as their bargaining agent to reflect the unions’ service in negotiating agreements with Electrolux under the Act.

41                  The relationship between the employer and the employee that would be created were the claim acceded to is, essentially, one of agency; Electrolux is to contract with its employees on behalf of the relevant union, as its agent.  The agency so created is for the benefit of the union, rather than for the benefit of the employee upon whom the contractual liability is to be involuntarily imposed.  The resulting involuntary “bargaining” agency is, as a matter of substance, if not form, a “no free ride for non-unionists” claim, rather than one by which the union is undertaking its traditional role of representing the interests of union members in respect of the terms of employment of employees.  Although the claim was argued as if it were a claim for future services, it may also be characterised as a claim for payment for the unions’ services in securing the new employee’s terms and conditions of employment in the proposed certified agreement, notwithstanding that the new employee will only have commenced employment after the date of the agreement.  In that regard, it is relevant to note that the proposed draft agreement is to remain in force until 31 March 2003 (cl 7.0) and, in the meantime, no extra claims are to be pursued by the unions in relation to matters dealt with by the agreement except where consistent with the agreement or national wage case decisions (cl 47.0).  Thus, payments claimed for bargaining “services” prior to re-negotiation of a new agreement would appear to relate, primarily, to bargaining services rendered prior to the non-union member having commenced employment.

42                  The other aspect of the claim, the bargaining fee debit facility, is analogous to a demand by unions that an employer pay its employees’ union dues by making deductions and payments from salary due and payable to employees in accordance with authorities provided by them.  Such a claim has been held to not be within the requisite employment relationship.  In Portus, Menzies J observed (at 360) that such a claim:

“[involved] the same critical question, namely, whether the imposition upon an employer of an obligation to make deductions and payments from salary in accordance with the authority of the employee to whom the salary has become due and payable affects the industrial relationship of employers and employees.  The identity of the payee does not seem to me to be significant in determining the character of such a dispute, unless, of course, the payment relates to an incident of the employment such as a deduction for and payment to a superannuation fund.  In my opinion, the relationship that would be affected by such an obligation is a financial relationship of debtor and creditor arising from the earning of salary, not the industrial relationship in which the salary has been earned and has become payable.  What is sought, in reality, is to make the employer the financial agent of the employee for the benefit of the association.”

43                  Walsh J observed (at 365) that the benefit of offering an employee the payment facility was “not a benefit or privilege of a kind which has any relevant connexion with the relationship of employer and employee”.  His Honour also observed (at 369) that recognising the importance of the functions of unions “does not warrant a conclusion that anything that serves to benefit one of them and to give it additional strength, by increasing its financial stability or otherwise, is to be regarded as an industrial matter within the meaning of the Act”.  Stephen J observed (at 372):

“If, in the existing circumstances of employment, it was demanded of the employer that it accept back from employees a part of the remuneration paid, retain it for a period of time and then pay it over to a third party, the association, such a demand would be seeking to create a new, distinct relationship between the employer and its employees, having no connexion with the pre-existing employer-employee relationship.  The fact that the present demand is made to operate at a slightly earlier stage, before salary is in fact paid over to employees, thereby obviating one step in the imaginary demand I have postulated, that of the acceptance of money back from employees, does not appear to me to convert a transaction foreign to the relationship of employer and employee into one which pertains to that relationship.”

44                  Portus was applied by the High Court in Alcan.  In Alcan the High Court confirmed that a demand in respect of payment of union dues did not pertain to the relationship between employers and employees as such.

45                  Although the payment of the bargaining agent’s fee purports to relate to the unions’ bargaining activities for employees, I do not see that as relating to an “incident of the employment” any more than payment of union dues for a union representing its members at the workplace relates to an incident of employment (see Menzies J in Portus at 360).  The involuntary aspect of the claim confirms that, in pursuing the claim, the unions are acting in their own interest and not that of their members or of non-union employees: cf Alcan at 104.  Further, although a union claim that relates to services provided by a union to non-members might fall within the requisite employment relationship there are difficulties with such a claim: see Financial Sector Union at 361-363.  Even if the unions’ contention that the claim that payment of the fee by the employer providing a direct debit facility can form the subject matter of an industrial dispute were to be accepted, as was held in Alcan (see Alcan 103-104), that does not assist in making it one that pertains to the requisite employment relationship.  I would add that, although I have treated the claim as one relating to employees who are non-members I would have arrived at the same conclusion had the claim applied to all employees.  For the reasons explained above neither claim would pertain to the requisite relationship.

46                  Further, it is to be recalled that a primary basis for unions being able to serve a log of claims for minimum wage rates in relation to the terms of employment of non-unionists was the unions’ role in protecting the terms and conditions of employment of their union members: see Metal Trades Employers Association v Amalgamated Engineering Union (1935) 54 CLR 387 at 403, 418 and 442.  It is not suggested that the bargaining services to be provided by the unions in the present case are other than the services that are provided to their members to protect their terms and conditions of employment.  The claim by a union for the imposition on a non-member of a fee for the bargaining services, provided by the unions acting in the interests of the members they are representing, is confirmatory of the view that they are acting in their own interests in making and pursuing that claim.

47                  In concluding that the bargaining agent’s fee claim does not pertain to the requisite relationship it has not been necessary to consider whether the claim contravenes the freedom of association provisions in Pt XA of the Act: see ss 298K(1)(c) and (e) and 298L(1)(b) and whether, as a consequence, an agreement with such a term cannot be certified: see s 170LU(2A).  Unlike the matter recently considered by the Commission in Accurate Factory Maintenance Labour Hire Enterprise Agreement 2000-2003 (C2001/1224), in the present case the claim being pursued by the unions, notwithstanding its form in the draft agreement, is for payment of the fee by non-union members.  There are substantial difficulties about the involuntary and discriminatory aspects of such a claim.  However, as those matters were not the subject of argument in the present case I say nothing further about them other than that I doubt that those difficulties can be overcome by altering the form of the claim, or by phrasing it so as to appear non-discriminatory, when it is plain that, if acceded to, the claim is intended to operate in a discriminatory manner against non-union employees.  In that regard I note s 298K is concerned with the reason for an employer’s conduct, which is a question of fact.

48                  I have concluded that the employee entitlements and the shop stewards access claims pertain to the relationship of employer and employee but, for the reasons set out above, the bargaining agent’s fee claim does not.  The issue therefore is whether, in the context of ss 170LI and 170ML, the agreement proposed by the unions is not a proposed agreement about matters pertaining to the requisite relationship because one of the claims relates to a matter that does not pertain to the relationship.

Section 170LI

49                  As explained above s 170LI requires the agreement to be “about” matters pertaining to the requisite relationship.  The significance of the change in the statutory definition from the requirement that an industrial dispute be “as to” matters pertaining to the relationship between employers and employees to being an industrial dispute “about” such matters was considered in Shell by Mason CJ, Deane, Toohey and Gaudron JJ at 357:

“As has been seen, the present definition of ‘industrial dispute’ is satisfied if there is a dispute ‘about [a] matter…pertaining to the relationship between employers and employees’.  And that is satisfied by a less direct relationship than might be necessary in the case of requirement that a dispute be as to an industrial matter.”

The question is whether the industrial action being pursued as protected action by the unions in September 2001 was for the purpose of supporting or advancing claims made in respect of an agreement about matters pertaining to the requisite employment relationship.  The requirement that the agreement be “about” the requisite matters enables the statutory requirement to be satisfied by a less direct relationship than might have been necessary previously.  Further, Div 2 of Pt VIB relies on the corporations, rather than the conciliation and arbitration, power and the legislature has departed from its previous formulation that required that each of the terms of the agreement be as to the requisite relationship.

50                  Section 170LI does not require that all of the terms of the proposed agreement must pertain to the requisite relationship.  As explained above, s 170LI requires that the agreement be characterised as one that is about matters pertaining to the relationship.  If a term of the agreement does not pertain to that relationship it does not follow that the agreement is not about matters pertaining to the relationship.  For example, the term may be ancillary or incidental to, or a machinery provision relating to, a matter pertaining to the employment relationship.  Thus, an agreement may be about the requisite matters notwithstanding that some of its terms may not, strictly, be about such matters.  However, if the term relates to a subject matter that does not pertain to the requisite relationship then the agreement might not be an agreement about the requisite matters.  Of course, to the extent the agreement is not about the requisite matters it may have effect according to the general law but, if it does not meet the requirements of ss 170LI and 170LT, it cannot be certified and have effect as an award: see Construction, Forestry, Mining and Energy Union v Australian Industrial Relations Commission (2001) 178 ALR 61 at [33]-[35].

51                  If one of the substantive matters provided for in the agreement is not within the required description and that matter is discrete and significant then the proposed agreement may properly be characterised as about matters that are within the relationship and a matter that is not.  While it is arguable that s 170LI only requires that the agreement in question be characterised as one that is “substantially” or “primarily” about the requisite matters it would be inappropriate to add those words absent a clear legislative purpose in favour of that construction: see Saraswati v The Queen (1991) 172 CLR 1 at 22 per McHugh J.

52                  I doubt that the legislature intended that protected action was able to be taken to advance or support claims in respect of a substantive, discrete, and significant matter that does not pertain to the requisite relationship, or that an agreement about such a matter is to be capable of certification.  It is not to the point that the offending matter is only one of many matters dealt with in the agreement.  More importantly, however, I am not able to discern any legislative purpose that a certified agreement can include a substantive, discrete, and significant matter that does not pertain to the requisite relationship.

53                  The claim by the unions for payment of a bargaining agent’s fee is substantive, discrete and significant (ie, in the sense that it is substantial).  The evidence of the parties shows that it was treated by them as such.  The industrial action pursued by the unions in September 2001 was for the purpose of advancing claims that included that claim.  It follows that that action was pursued for the purpose of supporting or advancing claims made in respect of an agreement about matters that did, and a substantive, discrete, and substantial matter that did not, pertain to the requisite relationship.  Accordingly, the agreement proposed by the unions is not an agreement about matters pertaining to the requisite employment relationship.

54                  My decision in the present case is on the basis that the claim in question relates to a substantive, discrete, and significant matter that does not pertain to the employment relationship.  While I entertain some doubt as to whether a proper characterisation of an agreement for the purposes of s 170LI involves questions of degree, I leave for another case the question of whether a claim in respect of a matter that does not pertain to the employment relationship, but is not of significance, may be included in a certified agreement.

Conclusion

55                  The industrial action taken in September 2001 by the unions, pursuant to the notices issued under s 170MO, was action for the purpose of supporting or advancing claims made in respect of a proposed agreement that was not an agreement about matters that pertained to the relationship between Electrolux and its employees, as such.  Consequently, the industrial action was not protected action under the Act.

56                  Electrolux is entitled to declaratory relief that gives effect to my conclusions.  I propose to give directions for the parties to file submissions about the form of that declaratory relief and about whether, in all the circumstances, any other relief is appropriate or necessary.

Associate:

Dated:              14 November 2001