Issue 25 March 2005

EMPLOYMENT BRIEFLY

Full Bench clarifies application of Electrolux

UNION FEE PAYROLL DEDUCTIONS NOT TO BE INCLUDED IN FEDERAL CERTIFIED AGREEMENTS

On 18 March 2005 the Full Bench of the Australian Industrial Relations Commission (‘AIRC’) handed its detailed appeal decisions in relation to the Schefenacker, the Murray Bridge and the La Trobe University certified agreements (‘the three certified agreements’) (PR956575).

The appeal decisions have clarified the AIRC’s application of the High Court’s decision in Electrolux Home Products Pty Ltd v Australian Workers’ Union [2004] 40 (2 September 2004) (‘Electrolux’).

Background

Sections 170LI and 170LL of the Workplace Relations Act 1996 (‘WRA’) effectively require that certified agreements must ‘pertain’ to the relationship between employers and employees.

How this requirement was applied by the AIRC changed when the High Court handed down its Electrolux decision in September 2004. The AIRC tightened up its approach. An increased number of certified agreements fell over at certification. The basis was that they did not meet what quickly became referred to as the ‘Electrolux Principles’, i.e. it was said they did not ‘pertain’ to the relationship between employers and employees.

In particular, the AIRC had initially declined to certify the three certified agreements on the basis they collectively contained clauses relating to:

  • Salary sacrificing and salary packaging;
  • Payroll deductions of trade union fees;
  • Trade union right of entry;
  • Employees of labour hire agencies;
  • Shop steward training leave;
  • Union officials and shop stewards; and
  • Recognition of worksite representatives.

The parties to the three certified agreements appealed to the Full Bench of the AIRC. These appeals lead to the 18 March 2005 appeal decisions.

Full Bench 18 March 2005 appeal findings and reasoning

The Full Bench found that all of the provisions under scrutiny except a trade union fee payroll deduction clause and a broadly drafted right of entry clause pertained to the relationship between employers and employees.

As a general approach, the Full Bench said that:

 

‘[w]hen dealing with applications to certify agreements pursuant to Division 2 of Part VIB of the Act, the following considerations are relevant:

The Commission has no jurisdiction to certify an agreement made pursuant to sections 170LJ, 170LK or 170LL unless the agreement answers the description in section 170LI(1).

To answer that description each discrete, substantive and significant provision must be about a matter that pertains to the relationship between the particular employer, in its capacity as employer, and its employees.

For a matter to pertain to the requisite relationship it must be connected with the relationship between the employer in its capacity as an employer, and its employees, in their capacity as employees, in a way which is direct and not merely consequential.

The agreement may also contain:

Machinery provisions – indexes, tables of contents and the like;

 

Provisions that are incidental or ancillary to a matter that pertains to the relationship;

Provisions that do not pertain to the relationship but they are so trivial they can be disregarded – some aspirational provisions which do not impose any enforceable legal obligations on a party to the agreement might fall into this category.

When examining a provision to see whether it pertains in the relevant sense, regard must be had to the words of the clause in the context of the agreement as a whole and to any relevant evidence.

The mere fact that a clause confers some rights on a union does not, of itself, lead to the conclusion that the clause does not pertain.’

Full Bench’s 18 March 2005 orders

The Full Bench had previously certified the La Trobe University certified agreement at the appeal hearing in December 2004. It reiterated that certification on 18 March 2005.

The Schefenacker certified agreement contained the trade union membership fee payroll deduction and the broad right of entry provisions. These remained impediments to the certification of that agreement. The Full Bench remitted the Schefenacker application back to the AIRC. It now seems inevitable that this certified agreement will not be certified in its current form.

The Full Bench quashed the AIRC’s original decision in relation to the Murray Bridge certified agreement. The Full Bench found that the Murray Bridge certified agreement contains no Electrolux “unfriendly” provisions. On that basis, the Full Bench remitted the application back to the AIRC. The formal certification of the Murray Bridge certified agreement should be confirmed shortly.

Implications for employers

  • Every certified agreement application will be assessed on its own particular facts and every provision must still pertain to or be ancillary to the relationship between the employer and its employees.
  • Trade union membership fee payroll deduction clauses and broadly drafted right of entry provisions will be impediments to certification.
  • It remains dubious whether a certified agreement may provide for paid time for employees while they attend to trade union activities outside of rostered hours.
  • Salary packaging, salary sacrificing and other payroll deductions now have a good chance of not impeding certification.
  • Provisions that deal with the employees of labour hire agencies being offered permanent employment, and provisions requiring the employer to instruct their labour hire agencies to increase their workers’ salaries in line with the certified agreement, can now be considered in certified agreements.
  • Restrictions in relation to union officials and representatives have been relaxed.

For further information about issues covered in this article, please contact our Employment Team, Ian Colgrave, Sathish Dasan, Cecilia White or Michael Foley on 8210 1200.

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