FEDERAL COURT OF AUSTRALIA

Pacific National (ACT) Pty Limited v Australian Rail, Tram & Bus Industry Union [2005] FCA 1383

INDUSTRIAL RELATIONS – negotiations for proposed enterprise agreement – notices of intention to take industrial action – application for interlocutory orders restraining the respondent from proceeding with industrial action – balance of convenience in favour of the granting of interlocutory relief – whether there is a serious question to be tried – meaning of “protected action” – proposed enterprise agreement must entirely pertain to the relationship between employer and employees – whether clause making a range of unspecified local agreements and customs applicable to the proposed enterprise agreement pertains to the employer/employee relationship – whether clause relating to the employment of contract labour or labour hire agency employees pertains to the employer/employee relationship

Workplace Relations Act 1996 (Cth) ss 127, 170LI, 170ML, 170NC

Electrolux Home Products Pty Ltd v Australian Workers’ Union (2004) 209 ALR 116 followed

Federated Clerks’ Union of Australia v Victorian Employers’ Federation (1984) 154 CLR 472 applied

Finance Sector Union of Australia v Commonwealth Bank of Australia [2005] FCA 796 referred to

Re Rural City of Murray Bridge Nursing Employees, ANF (Aged Care) – Enterprise Agreement 2004, PR952449, 29 October 2004 discussed

Wesfarmers Premier Coal Ltd v Automotive Food, Metals, Engineering, Printing and Kindred Industries Union (No. 2) (2004) 138 IR 362 discussed

R v Commonwealth Industrial Court Judges; Ex parte Cocks (1968) 121 CLR 313 cited

R v Moore; Ex-parte Federated Miscellaneous Workers Union of Australia (1978) 140 CLR 470 cited

PACIFIC NATIONAL (ACT) PTY LIMITED (ACN 052 134 362) AND PACIFIC NATIONAL (NSW) PTY LIMITED (ACN 099 150 688) v AUSTRALIAN RAIL, TRAM & BUS INDUSTRY UNION

NSD 1613 OF 2005

TAMBERLIN J

SYDNEY

27 SEPTEMBER 2005

THE COURT ORDERS THAT:

1.         The Orders made on 21 September 2005 are continued, subject to Order 2 below.

2.         Order 6 of the Orders made on 21 September 2005 is varied to read as follows:

6.      The Respondents shall before 3 pm on 22 September 2005:

(a)      discontinue and withdraw all authorisation and advice for the taking of industrial action or any stoppage of work between 6 am on 23 September 2005 and 6 am on 28 September 2005;

(b)      advise their members whose employment is subject to the certified agreement:

(1)         of the making of these orders,

(2)         that they should not take industrial action between 6 am on 23 September 2005 and 6 am on 28 September 2005; and

(3)         that they should attend for their rostered shifts between 6 am on 23 September 2005 and 6 am on 28 September 2005;

         by the following means:

(1)         notice on official RTBU letterhead to be posted on notice boards at the premises of the Applicants so far as practicable; and

(2)         email or telephone notification to all delegates so far as practicable.

3.         Costs are reserved.

4.         The parties have liberty to apply on one hours notice.

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

REASONS FOR JUDGMENT

1                     On Wednesday 21 September 2005, I granted an ex parte application for orders restraining the Union from proceeding with foreshadowed industrial action and reserved liberty to apply.  The matter was of considerable urgency because the strike action was due to commence on early Friday morning.

2                     On Thursday morning, the Union applied to vacate the orders.  At the conclusion of the hearing, I made orders that confirmed, with some variations, the orders previously made ex parte.  I indicated that I would give my reasons shortly thereafter and these are those reasons.

3                     On the evidence, and it is not submitted to the contrary, it is apparent that if the industrial action proceeds there will be widespread harmful consequences to institutions, suppliers, shippers and businesses engaged in the transport industry throughout Australia.  In these circumstances, if a finding is made that there is a serious question to be tried, the weight of the evidence on the question of balance of convenience overwhelmingly favours the grant of relief.  No countervailing evidence of hardship to the Union members was presented.

4                     Therefore, the issue in this case is whether there is a serious question to be tried.

BACKGROUND

5                     The applicants conduct the business of national rail-based freight transportation and that business operates as one integrated enterprise throughout Australia.  The details of their operations are contained in an affidavit by Mr Pilley sworn on 21 September 2005 and filed in Court on 21 September 2005 by the applicants.  Mr Pilley is the Human Resources Manager for each applicant.

6                     The employment of all operational and operational services employees of the applicants is subject to an Enterprise Agreement certified by the Australian Industrial Relations Commission on 27 February 2004.  The respondent is one of the parties to that agreement.

7                     The nominal expiry date of the 2004 Enterprise Agreement was 30 June 2005 and, in anticipation of this, enterprise bargaining negotiations for a certified agreement to replace the 2004 Enterprise Agreement were commenced on 30 March 2005.  The applicants have been served with a notice of initiation of bargaining period by each of the other parties to the 2004 Enterprise Agreement including the respondent.  The negotiations are ongoing but there have been a number of negotiation meetings in relation to the Union’s Proposed Enterprise Agreement, which was given to the applicants on 24 August 2005.  The purpose of the Proposed Enterprise Agreement is to replace the 2004 Enterprise Agreement.

8                     On 12 and 13 August 2005, employees of the applicants, who are also members of the Union, took industrial action in the form of a refusal to attend for work.  Prior to that industrial action, the applicants urged the employees not to participate in the industrial action as it believed the industrial action was not “protected”.  This is a legal term that appears in the legislation to which I will refer below.

9                     Between 14 and 16 September 2005, the Union engaged in industrial action in the form of increased use of sick leave coupled with a refusal by employees to work overtime to cover shifts that were vacated due to the sick leave.  To seek relief from this industrial action, on 15 September 2005, the applicants applied to the Commission for an order under s 127 of the Workplace Relations Act 1996 (Cth).  The matter was then conciliated and adjourned.  After that, the above industrial action ceased, however, as from 17 September 2005, there was industrial action taken by maintenance employees in the form of a “go slow”, a refusal to work overtime and a refusal to work with and induct contractors.

10                  On 19 September 2005, the applicant received notices of intention to take industrial action from the Union, which stated that the industrial action would occur between 6:00 am on Friday 23 September 2005 and 6:00 am on Saturday 24 September 2005.  The proposed action was a stoppage of work by all employees of the applicants, with the exception of those rostered to work hook and pull services for passenger trains.

11                  There is detailed evidence before me as to the significant disruption and harmful consequences if the industrial action proceeds.

THE LAW

12                  Section 170NC(1) of the Actis invoked by the applicants.  This section is headed  “Coercion of persons to make, vary or terminate certified agreements etc.” and relevantly provides that a person must not threaten to take industrial action with intent to coerce another person to agree to make an industrial agreement.  The provision does not apply to an action that is a “protected action” (s 170NC(2)).  The reference to a protected action is to action taken during the bargaining period by a negotiating party for the purpose of advancing claims made in respect of the proposed agreement (s 170ML).  A negotiating party is entitled to engage in industrial action in that period for that purpose.  For the action to be protected, the proposed agreement must be in writing and must be about matters pertaining to the relationship between employer and employee as such: see: s 170LI.  The question, more precisely formulated, which arises in this case, is whether the terms of the proposed agreement in the course of negotiation can be described as pertaining to the relationship between employer and employee.

13                  The words “pertaining to the relationship between employer and employee” are words of wide import and it will often be difficult to delineate the boundary between provisions that fall within the description and those that do not.  The area is at the interface, a grey area, in which reasonable minds may well differ as to the outcome.

14                  The relevant law as to whether a proposed agreement pertains to the employer-employee relationship is referred to in Electrolux Home Products Pty Ltd v Australian Workers’ Union (2004) 209 ALR 116.  In that case, the High Court, by majority, decided that a claim by a trade union that an employer deduct a “bargaining agent’s fee” from the wages of future employees and pay it to the union was not a matter which “pertained” to the relationship between the employer and persons employed in the employer’s business as required by s 170LI.  The Court also held that for an agreement to pertain to the employment relationship it must be wholly about such matters, so that, if an agreement contained one or more provisions about matters extraneous to that relationship, it could not be characterised as an agreement within s 170LI of the Act.  Chief Justice Gleeson observed at [17]:

“… all the terms of an agreement ordinarily constitute part of the consideration flowing from one side or the other, and there is no way of knowing whether, or what, the parties would have agreed about the other terms if one term were excluded from the legal operation of the agreement.  The argument appears to amount to the proposition that, if an agreement is mainly about the matters referred to in s 170LI, then the fact that it is partly about other matters as well is immaterial. …there is no support, either in the text, or in the scheme of Part VIB, for a conclusion that an agreement that is, in part, about matters other than the matters referred to in s 170LI may be a certified agreement.”

15                  In Federated Clerks’ Union of Australia v Victorian Employers’ Federation (1984) 154 CLR 472, the Court had to consider the terms of an award relating to “technological change”.  The clause required an employer investigating the feasibility of technological change to notify the union that the investigation was being undertaken, to inform the union of changes being considered and to consult with it during the investigation.  If the employer decided to implement technological change, it was required to notify the union and consult with it about the change and its likely effects.  The information provided to the union was required to include technical data that would allow evaluation of the likely effects of the proposed change together with the source of such information.

16                  In the course of their judgments, their Honours drew a distinction between the concept of management or managerial decisions, such as the business policy decision to consider and adopt technological change, which could not properly be reviewed by industrial tribunals, and requirements concerning the industrial relationship, such as those directed to lessen the impact on employees of the implementation of technological change.  Their Honours concluded, by majority, that the award, on a proper analysis, dealt with “industrial matters”.  At 492, Mason J said, after referring to the possible effects of technological change, such as the termination of employment, elimination or diminution of job opportunities and adverse effects on promotion opportunities, job tenure and the use of skills:

“It is well known that these are the consequences of technological change upon the employment of employees and that these consequences and the apprehension of them is a continuing and important cause of industrial disputation and disruption.

In these circumstances the provisions relating to both stages, feasibility study and decision to implement, are in my view ‘industrial matters’ on the footing that award provisions requiring consultation with respect to the introduction of technological change constitute an ‘industrial matter’…”  (Emphasis added)

PRESENT APPLICATION

17                  The applicants say that the proposed action is not protected because there are two provisions in the Union’s Proposed Enterprise Agreement that do not pertain to the relationship between employer and employee.  These are cls 7 and 16.

18                  Clause 7 is in the following terms:

“7.       Application

7.1       This agreement shall prevail over any awards or certified agreements which bind Pacific National (to the extent that those awards or certified agreements are inconsistent with this Agreement.

7.2       Where local agreements, customs or practices or other arrangements have been reached at a location or locations, these will continue to apply.  Where the parties to these agreements propose to alter such, they will give each of the other parties and affected employees reasonable notice of their intention to alter these arrangements and commence consultations in accordance with clause *** of this agreement.”

19                  The applicants say that this provision does not relate to the employer/employee relationship, or cannot be said to relate to the employer/employee relationship, because it makes applicable a whole range of local agreements, customs, and practices or arrangements which are unspecified in relation to a myriad of locations.  Therefore, having regard to the vagueness and indeterminacy of the description of these unspecified agreements, cl 7 cannot be said to pertain to the employer/employee relationship.  The applicants submit that there may be one or more provisions in the unspecified agreements that are invalidated, for example, by the decision in Electrolux.  Accordingly, this non-pertaining reference to the continuance of local agreements must infect the whole of the Proposed Enterprise Agreement, with the consequence that, as a whole, the Proposed Enterprise Agreement cannot be said to pertain to the employee/employer relationship as such.

20                  In this case, I do not have to decide whether the submission will succeed but only whether it raises a serious question for consideration at trial.  The Union submits that there is no possibility of invalidity because it would be a simple matter to annex to the Proposed Enterprise Agreement all the local agreements that are intended to continue in operation.  It is a matter of particularisation or a matter of mechanics.  This would resolve any doubt.  However, that course is not suggested as part of the Proposed Enterprise Agreement as presently framed.

21                  The authorities indicate that the expression “serious question to be tried” incorporates concepts such as whether there is a sufficiently strong arguable case to warrant the matter forming a basis for relief, whether the argument is open or fanciful, and whether the intervention of the Court could be justified as raised on the facts and law before the Court.

22                  In Finance Sector Union of Australia v Commonwealth Bank of Australia [2005] FCA 796 at [74]-[80], Merkel J considered a provision in a proposed agreement which provided that, during the operation of the agreement, the employer and an employee may enter into an individual contract of employment which may exclude the operation of the principal agreement, so that, where such a contract was made, it would prevail over the terms of the principal agreement to the extent of any inconsistency.  After considering the relevant provisions of the Act, his Honour concluded at [80]:

“In my view, subject to a probable exception in respect of facilitative provisions, it is an implicit requirement of the statutory provisions to which I have referred that the agreement being certified contain all of the terms that are to have effect as a result of the certification.  That construction gives effect to the purpose of the relevant provisions, is reasonably open and should be adopted.” (Emphasis added)

23                  Counsel for the Union argues that this assertion is incorrect and is distinguishable from the present case.  However, I am persuaded that the conclusion of Merkel J and the reasons given provide a sufficient basis for the submission of the applicants in the present case and therefore the threshold criterion of raising a serious question for trial is satisfied.

24                  The second provision of the proposed agreement that the applicants say does not pertain to the employer/employee relationship is cl 16, which relates to the use of contract labour and labour hire agencies.

25                  Clause 16 relevantly provides:

“16.1   Contract labour or labour hire agency employees shall not be used to displace full time employees or their positions, but as supplementary labour to cover peak demand, unplanned or extended leave, special programs, projects, identified skill shortages or wherever reasonably required by the needs of the business.”

26                  There are other provisions in cl 16 which impose a requirement of consultation where the employer proposes to contract out work currently performed by its own employees and there are also provisions to the effect that in using contract labour it is not the employer’s intention to put in place arrangements where the employees of a contract or a labour hire agency receive less favourable terms and conditions.  There is also a reference to understandings between the parties and a description of the circumstances in which the labour is to be regarded as “supplementary” to the employer’s workforce.  A further provision is that it is not the intention of the clause to restrict the employer’s right to engage labour from contractors and labour hire agencies.

27                  On the basis of a recent decision of the Australian Industrial Relations Commission in Re Rural City of Murray Bridge Nursing Employees, ANF (Aged Care) – Enterprise Agreement 2004, PR952449, 29 October 2004, at [71]-[83], the Union submits that there is reasoning to warrant the conclusion that there is no room for a serious question as to whether cl 16 of the Proposed Enterprise Agreement relates to the employment relationship as such.  The Commission there decided that a clause requiring that the agreed maximum level of employees of labour hire agencies would be 20% of total weekly paid employees, pertained to the employer/employee relationship.  The applicants submit that this decision is wrong, that it is distinguishable, and that, in any event, the reasoning of the Commission does not place the present submission beyond reasonable argument.

28                  In Murray Bridge, the relevant clause stated that the employer and unions confirm a commitment to permanent direct employment but recognise that labour flexibility is an ongoing requirement to achieve job security and productivity requirements.  Clause 17.2 provided that the agreed maximum level of employees of labour hire agencies will be 20% of the total weekly paid employees.  If the percentage exceeds 20%, then the employer must consult with the shop stewards as to the reasons why the additional labour hire agency employees are required.

29                  In the present case, cl 16.1 prohibits contract labour or labour hire agency employees to displace full time employees but permits them as supplementary labour.  This clause is different in substance to that considered in Murray Bridge because it prohibits displacement of existing employees whereas the clause in Murray Bridge did not.  Rather, the clause in Murray Bridge recognised a right to employ contract labour but only up to 20% of the total weekly paid employees.  The decision in Murray Bridge is therefore distinguishable and by no means dictates the outcome of the present case or puts the submission of the applicants beyond reasonable argument.

30                  It should be noted that, in Murray Bridge at [78], the Commission, after referring to the authorities, admitted to “some difficulty in characterising this provision, comprised as it is as of a series of sub-clauses with a number of legal effects”.  The Commission agreed that was a question of degree.  The Commission continued at [78]:

“On the one hand, it may be accepted that Schefenacker’s employees have a legitimate interest in the engagement of labour hire employees because of the effect of such engagement on their own employment.  For that reason it may be that the engagement of labour hire employees is a matter pertaining to the relationship between Schefenacker and its own employees.  On the other hand, the extent to which the agreement can regulate the contractual relationship between Schefenacker and labour hire agencies, yet still pertain to the relevant relationship, is obviously a question of degree.”

31                  As a matter of construction, in the present circumstances, there is a reasonable argument that a requirement that contract labour may only be “supplementary” labour and used in limited circumstances, is a matter which pertains more to a management decision than to the relationship between employer and employee as such.  Insofar as Murray Bridge indicates a contrary view, it should be noted that the Commission had difficulty in characterising the provision and stated that the determination of the characterisation involved a question of degree, thereby implying that reasonable minds may well differ as to the conclusion to be reached.  It does not provide a sufficient basis for a conclusion that the characterisation question is not seriously arguable in the present case.

32                  In Wesfarmers Premier Coal Ltd v Automotive Food, Metals, Engineering, Printing and Kindred Industries Union (No. 2) (2004) 138 IR 362, French J decided that a clause in a proposed agreement imposing restrictions or qualifications on the use by the employer of independent contractors was a matter which did not pertain to the relationship between employer and employee in their capacities as such within the principles set out in Electrolux.  His Honour cited and applied the decisions of the High Court in R v Commonwealth Industrial Court Judges; Ex parte Cocks (1968) 121 CLR 313 and R v Moore; Ex-parte Federated Miscellaneous Workers Union of Australia (1978) 140 CLR 470. 

33                  Having regard to the above, it is evident that the law is not clear in this area.  Nor is the applicants’ case beyond reasonable argument.  In my opinion, reasonable arguments can be presented on either side in this grey area, which requires application of the principles endorsed in Electrolux.

34                  On the limited material presently before me, I am inclined to find that the correct conclusion is that advanced for the applicants, however, the question is by no means free from doubt.

35                  I am persuaded that the case advanced for the applicants raises a serious question that warrants the matter proceeding to trial.

36                  These are the reasons for which I granted the relief and made the orders.

Associate:

Dated:              27 September 2005