The dust settles on Electrolux? The employment relationship and protected industrial action?

In our September 2004 bulletin we reported on the High Court of Australia's decision in Electrolux Home Products Pty Ltd v Australian Workers Union [2004] HCA 40. That decision clarified the scope of matters that could be included in a federal certified agreement and be capable of supporting protected industrial action.

But the decision created uncertainty for employers, unions and employees and required further judicial consideration. If industrial action is unprotected then the unions and members can be sued by the employer for striking over matters that could not be included in a federal certified agreement.

In this bulletin we summarise the fall out of the Electrolux decision and examine recent decisions of the Australian Industrial Relations Commission and the Federal Court.

A refresher on Electrolux

To quickly recap, the High Court in Electrolux decided:

• All provisions in a federal certified agreement must pertain to the relationship between an employer and employee for the agreement to be capable of certification; and

• Industrial action will only be protected when the action relates to the advancement of claims that can be included in a federal certified agreement.

The decision created uncertainty as to what matters then pertain to the employment relationship and whether, through no fault of any of the parties, any industrial action taken was protected. If the industrial action was not protected, parties are potentially liable to damages.

The quick fix

Since Electrolux, Parliament passed the Workplace Relations Amendment (Agreement Validation) Act 2004 which provided that all agreements certified on or before 2 September 2004 (when the Electrolux decision was handed down) are valid. But parties currently negotiating an agreement still have to come to terms with Electrolux.

Westfarmers

On 23 December 2004 the Federal Court in Westfarmers Premier Coal Limited v The Automotive Food Metals Engineering, Printing and Kindred Industries Union (No 2) [2004] FCA 1737, examined whether industrial action taken by unions was protected under the Workplace Relations Act 1996.

The industrial action taken by the unions was in support of a number of claims including claims for restricting the use of contractors, right for union members to be paid to attend union meetings, right of entry to the workplace, restricted ability to implement redundancies and trade union leave.

After reviewing those clauses, the Federal Court held that trade union leave pertained to the employment relationship, as it is a leave provision like, jury leave, military leave, parental leave and so on. The redundancy clause also pertained to the relationship. But the clauses restricting the use of contractors and for union members to be paid for attending union meetings did not pertain to the employment relationship.

The industrial action taken by the unions was therefore unprotected.

La Trobe, Schefenacker and Murray Bridge

On 18 March 2005, the Full Bench of the Australian Industrial Relations Commission handed down its long awaited decisions in La Trobe, Schefenacker and Murray Bridge (see print PR956575). In those matters, the Commission considered clauses such as, salary packaging, payroll deductions, shop steward leave and employment of labour hire staff.

Importantly, the Commission distilled some principles in considering whether a federal certified agreement is capable of certification:

• The Commission can only certify an agreement that pertains to the employment relationship;

• Each discrete, substantive and significant matter in the certified agreement must pertain to the employment relationship;

• For the matter to pertain to the employment 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 certified agreement may contain machinery, incidental or ancillary provisions; and

• When determining whether a clause pertains to the employment relationship regard must be had to the words in the clause in the context of the agreement as a whole.

Not surprisingly, the Commission found that the salary packaging provisions pertain to the employment relationship as they governed the remuneration employers pay to its employees. So did a clause relating to shop steward leave, as it provided for paid leave and the purpose of the leave was not a basis to reject the clause.

But a clause relating to the deduction of union dues, consistent with long standing authority, did not pertain.

The clause relating to employees of labour hire agencies was found to pertain to the employment relationship, despite the clause seeking to restrict the use of labour hire employees and encouraging the employer to require the labour hire employees to be paid the same wage rate. The Commission accepted that employees have a legitimate interest in the engagement of labour hire employees and the effect such engagements have on their employment.

Conclusion

The decisions provide valuable guidance to employers and employees about whether a matter pertains to the employment relationship and if contained in a federal certified agreement are capable of approval under the Workplace Relations Act 1996.

But each individual clause in a certified agreement needs to be considered on its own merits. In Murray Bridge a right of entry clause survived challenge but in Schefenacker the right of entry clause was invalid.

Usually clauses in a certified agreement only deal with employment matters. But when in doubt it is better to seek advice rather than have the agreement rejected by the Commission.