CHAPTER 7
Changes to Registered Organisations
Introduction
7.1 The existing industrial relations legislation provides mechanisms
to balance the public interest in the orderly conduct of industrial
affairs, the protection of individuals and the desire to limit, as much
as is possible, the interference of the state in the internal affairs
of industrial parties. These goals are as important today as they were
when the first conciliation and arbitration Act was passed in 1904.
7.2 Protection for individuals has been provided for by the recognition
and encouragement of organisations, which individuals were free to join,
and which were recognised and resourced so as to enable the representation
of members' interests. Given that the interests of the members of such
organisations extended to the wages and conditions of non-members, these
organisations were capable of being parties to awards which provided
for fair and appropriate wages and conditions for all employees in the
industry with which the union was associated regardless of membership.
7.3 To ensure the viability of such organisations to allow them to
undertake their representative functions, the system provided a number
of protections including exclusive membership coverage, and the ability
to access preference.
7.4 The balance for this recognition was, however, the requirement
to be accountable to its members and act in a way consistent with the
need for orderly industrial relationships. Thus the price for registration
was to regulate the rules of associations to ensure membership accountability,
such as the requirement for elections, the requirement for proper accounting
and the requirement that the unions rules not be oppressive, unreasonable
or unjust (section 196(a)). Similarly, registration and recognition
were used to impose some order on the industrial parties by reducing
the prospect of destructive demarcation disputes and discouraging behaviour
inconsistent with the public interest. There is a symmetry of providing
a premium on the registration of organisations where that recognition
is a means by which the public interest can be preserved.
7.5 Having struck this balance, the system leaves it to the industrial
parties to conduct their affairs within these parameters.
The Government's Proposals
7.6 The Workplace Relations Bill will substantially alter the way this
balance is struck. The provisions most relevant include:
- the encouragement of the creation of small single enterprise unions;
- the abolition of 'conveniently belong' restrictions on registration;
- the amendment of section 118A to give greater priority to employers'
interests in determining representational rights;
- disamalgamation of unions;
- changes to rights of entry; and
- abolition on union `preference'. [1]
7.7 For the most part, employer groups welcomed the changes that the
Bill will make to the role of registered organisations. They claim that
trade unions have frequently used their powers to impede or obstruct the
actions of business enterprises, and they see the curtailment of unwarranted
union activities as necessary and long over-due. As stated by ACCI, the
legislation is an attempt to `bring some balance into a labour relations
system which has hitherto been heavily weighted in favour of trade unions'.
[2] This would be so particularly for
small businesses which may be confronted with having to negotiate against
the power of large unions.
7.8 The particular provisions which were suggested would assist business
were:
- removal of monopoly union rights through the establishment of AWAs
and a non-union stream of CAs;
- changes to the structure of registered organisations to allow for
enterprise branches and disamalgamation, and provision for `freedom
of association';
- restrictions of the rights of entry of union officials to curtail
unwelcome intrusion in the workplace;
- retention of the power of the Australian Industrial Relations Commission
to resolve demarcation disputes that are damaging to employers; and
- strict controls on industrial action and prohibition during the
time that an agreement is in force.
7.9 In general, the unions expressed concern about these changes and
there concerns are set out below.
Conveniently Belong and section 118A
7.10 For an association of employees to be registered under the Act,
or for a registered organisation to extend its membership coverage,
the organisation must demonstrate that there is no other (registered)
organisation to which the members could conveniently belong [paragraph
189(1)(j) and section 204]. This reduces the opportunity for organisations
which compete for the same coverage as unions that are already registered.
7.11 The Workplace Relations Bill repeals the 'conveniently belong'
requirement.
7.12 The Government argues that this is consistent with their view
of freedom of association. In their pre-election policy the Government
indicated that its principle of freedom of association meant 'the choice
to be in a union, the choice of which union and the choice not to be
in a union'. In its submission, the Department of Industrial Relations
put the position thus:
The repeal of the 'conveniently belong' requirement for registration
… is designed to enable the operation of a greater variety of employer
and employee organisations, to provide for greater choice and to encourage
greater competition in the provision of services to members. [3]
7.13 Integral to this argument is the view that these provisions give
unions a privileged position and that they should be exposed to the
rigours of competition.
7.14 The Government's position is supported by some employer organisations
such as the ACCI:
The archaic 'conveniently belong' rule, under which the first union
registered with coverage can prevent any new union being registered
which covers the same category of employees, will be repealed.
[Under the Bill], unions are treated essentially as service providers,
there to provide a service to employee members on request, rather than
as institutions entitled to monopoly rights imposed by law. [4]
7.15 Despite this strong position, the Government has maintained general
powers to award a particular union industrial exclusive coverage of
a particular class or group of employees (or to order that a union does
not have such coverage). The Commission may only make such orders where
there is a demarcation dispute and it is satisfied that the conduct
of one of the unions is preventing the performance of work or is harming
the business of an employer or such consequences having ceased, are
likely to recur or are imminent (proposed Subsection 118A(1A)). The
matters which the Commission must consider (in deciding whether or not
to make such an order) have been significantly amended to include:
- the wishes of the employees affected;
- the effect of the order on the operations (including operating costs,
work practices, efficiency and productivity) of an employer who is
a party to the dispute; and
- the consequences of not making an order for any employer, employees
or organisation involved in the dispute.
7.16 The union movement for its part (except for the SWUA [5]),
indicated considerable opposition to the removal of the 'conveniently
belong' rule. The ACTU noted in its submission that the `conveniently
belong' rule had assisted unions to achieve viability and, more importantly,
to lessen demarcation disputes. It argued that these provisions have served
the public interest and the interests of industrial parties including
employers and employer organisations.
7.17 The unions pointed to an apparent inconsistency between removing
'conveniently belong' provision on the grounds of ensuring freedom of
association and maintening the power under section 118A to grant exclusive
coverage for a union or unions because of difficulties associated with
the exercise of this freedom of association. Thus for instance the Shearers
and Rural Workers Union noted:
It is our submission that it is inconsistent to, on the one hand provide
for the sanctioning of recognised competition between organisations
and Freedom of Choice of membership and on the other to provide mechanisms
with the Act that allow an avenue for disgruntled organisations that
individuals do not want to join to have the ability to run to the Commission
to hinder those individuals from joining the organisation of their choice.
[6]
7.18 In fact, the unions argued that the ability of employers to influence
union membership through this mechanism was fundamentally at odds with
the freedom of association principle. They said that the combination of
the removal of `conveniently belong' provisions and the promotion of disamalgamation
may encourage the establishment of many small unions. The ultimate outcome,
as argued by the ACTU, will be that `employers will be in a position to
encourage the registration of one or more enterprise unions in the workplace,
and then seek, through section 118A, the removal of the representational
rights of the union with traditional coverage'. [7]
7.19 While some employer groups supported the Government's proposals,
some saw that problems may arise as a result of the removal of the 'conveniently
belong' provision and the registration of enterprise branches.
7.20 As argued by Mr David Steel of the South Australian Employers
Chamber of Commerce and Industry:
Frankly, the removal of the conveniently belong rule gives rise to
concerns not only for unions but for all organisations which service
the business community and the employer community as well. [8]
7.21 Some employers also envisaged problems arising if the number of
unions proliferated beyond a manageable number: As stated by Mr Gerry
Pels, Manager, Industrial and Employee Relations, Victorian Automobile
Chamber of Commerce (VACC):
I emphasise that we are not anxious to see a proliferation of either
employer bodies or indeed unions out around the countryside drumming
up business. We do not think that is in the interest of either employees
or employers. [9]
7.22 Mr Mark Carter, National Director of the Australian Road Transport
industries Organisation, argued against these provisions and asserted
that the recent process of amalgamations had benefited industry:
In terms of the proposed changes to section 118A, again the ARTIO position
is that we simply do not support the proposed changes. We believe that
it has been a very important process to downsize the number of unions
within this country. Due credit should be given to the roles of the
ACTU and the responsibility of the trade unions generally in achieving
that process with the minimum amount of industrial disputation. [10]
Certainly, I find it absolutely ludicrous that a Liberal Government
-- which spent the last 20 years complaining about the number of unions
in this country, the number of demarcation disputes in this country
and the economic costs and political power plays that go on between
unions -- now suddenly supports the creation of small unions, branches
of unions rather than consolidating them into industry unions. It is
against the employers interest simply to have people competing to represent
one another. It is a simple matter of fact. You are going against the
clock in terms of the stated rationale of benefits, including the reduction
of the number of workplace disputes. [11]
7.23 Similarly, Mr Roger Boland, Director of Industrial Relations with
the Metal Trades Industry Association, stated:
Senator Allison: … are all of your members optimistic
about the necessity to deal with multiple unions at the workplace
in this respect?
Mr Boland: They are certainly not optimistic. There are concerns
throughout the industry having been through the amalgamation process
and learned to deal with large unions and established satisfactory relationships
with them, to see that change to the extent that you can have enterprise
based unions. As and Bs set themselves up in competition with the existing
unions. There is obviously some concern amongst the larger organisations
in particular that that will lead to fragmentation and it will make
it more difficult to achieve and maintain harmonious workplace relations,
so it is a concern, Senator.' [12]
7.24 And Mr Nickolas Geronimos, Western Australian Council of Retail
Associations stated:
Mr Geronimos: We see savings, because dealing with a myriad
of small business people in dealing with a single industry union or
a few industry unions, and the suggested changes of a myriad of unions
coming into the industry has sent some fairly strong alarm bells ringing
throughout the sector. It is bad enough getting the sales reps out of
the shops, let alone having a queue of union representatives trying
to talk to your staff. [13]
Senator Mackay: Could you see a scenario under this proposed
bill whereby you might have five people in a small business each represented
by a different union, theoretically, and each nominating that union
to assist with the negotiation of the AWA and the employer is potentially
negotiating with five or six different organisations and individual
AWAs.
Mr Geronimos: That is the worst scenario, and I think we have
to underline that. There is a potential for it to happen and we would
like to see that avoided as far as is practically possible.
7.25 Other employers suggested that deleterious effects of competition
for members among unions may result from these proposals. For instance,
Mr Kevin Redfern, Deputy Executive Director of VACC commented:
We are concerned about seeing a plethora of pirates springing up out
there claiming or purporting to represent employees; claiming to be
able to get magical results in agreements, and the like, that ultimately
will be in nobody's interests. [14]
7.26 The Metal Trades Industry Association, whilst accepting that the
abolition of the conveniently belong rule might theoretically lead to
greater competition between unions, suggested that the more likely outcome
(at least in the short term) was that existing unions would seek to
expand their existing coverage into new areas:
This activity will be quite disruptive for employers, especially where
they have established cooperative relationships with a union which have
produced gains for both employers and employees. [15]
7.27 Some employers expressed concern about the link between the conveniently
belong rule and the viability of organisations to represent the interests
of their members. Thus Mr Redfern made the point that:
We have raised this with the Minister. We have indicated that we have
a preference for seeing the conveniently belong rule remain on the basis
that we want to continue to be able to adequately represent our membership.
The Minister has given us an indication that there would be no erosion
-- I think that was picked up by Senator Crane -- in terms of the maintenance
of rights of representation. The thrust of our submission is that, while
we accept with some reservations the repeal of conveniently belong,
we do not want to see our representational rights eroded in any way,
shape or form. [16]
7.28 While these comments are raised in the context of employer organisations
they have equal application to employee organisations.
Conclusion
7.29 The majority of the Committee recognises that recognition rules
for unions represent a balancing of the often competing interests of
ensuring appropriate representation for employees and providing for
the orderly conduct of industrial relations. We do not accept that best
means of ensuring appropriate representation is to provide open slather
choice but then have it overridden when it provides some difficulties
for employers in the form of demarcation disputes. It seems incongruous
that the Government creates the problems of demarcation disputes only
to retain section 118A to solve them. The proper balance depends on
the relative needs associated with providing choice and the need to
avoid the adverse effects of competition. In our view, the existing
system represents a better balance of these issues than the Government's
proposals. In coming to this view, the following considerations have
been taken into account.
7.30 Firstly, there is little, if any, evidence to suggest that the
present arrangements have prevented access to appropriately constituted
and organised unions. It has been pointed out in evidence to the Committee
that the conveniently belong rule has been applied in a way that seeks
to ensure the viability of an organisation that can adequately and appropriately
represent the interests of employees. Thus Creighton and Stewart note:
The convenience in question has been interpreted as that of the members
of the applicant association, rather than of the system itself or the
industrial relations community generally. Accordingly, the question
is not merely whether another organisation exists whose eligibility
rules substantially covers the applicant's members; rather it is a matter
of determining whether there is an organisation that can provide 'adequate'
representation. Overlapping eligibility has been tolerated, for instance,
where the applicant covers workers whose trade or industry has a distinctive
identity, or who perform supervisory or managerial functions or who
have a history of political or industrial disagreement with the views
or actions of the objecting organisation. [17]
7.31 Secondly, to the extent that this rule provides 'protection' in
some sense to an existing organisation, this is not a reason in itself
to remove that protection. The suggestion that this rule provides a
'privilege' to a special class ignores the fact that often legislative
protection is provided to groups or organisations where this provides
a public interest. Thus, companies, for instance, are sheltered from
being responsible for debts beyond the value of the shares issued. The
'privilege' of limited liability exists because there is a public interest
in the encouragement of investment capital that results from capping
such liability. The question is not therefore one of unjustified privilege
but rather public interest; in this case, the public interest of avoiding
the adverse consequences of excessive union competition.
7.32 On this point, the evidence is quite strong. There are considerable
harmful effects of such competition. As is indicated above, this extends
beyond actual demarcation disputes. The problem associated with dealing
with a multiplicity of unions is clearly a considerable one for employers
and for the broader public interest in ensuring orderly industrial relations.
7.33 The recognition that comes from 'conveniently belong' is part
of the reason why the legislation heavily regulates the internal affairs
of these organisations. If there is to be restricted choice in relation
to the viability of unions, there is a public interest in ensuring that
there are sufficient accountability requirements to ensure that the
special position is not abused.
7.34 The majority of the Committee therefore recommends that this
proposal (the repeal of paragraph 189(1)(j) and subsection 204(4)) should
not be implemented.
7.35 The Australian Democrats Member of the Committee supports these
conclusions and recommendations but has made additional recommendations
in his Supplementary Report.
7.36 The Government members of the Committee disagree with the conclusion
and oppose the recommendation.
Enterprise Unions
7.37 The Bill encourages the registration of small enterprise unions.
This will be the effect of provisions that:
- remove the requirement that a registered organisation be capable
of creating an interstate industrial dispute;
- remove the requirement that the organisation be industry based;
- reduce the minimum number of members from 100 to 20; and
- double the limit of annual income (from $10,000 to $20,000) which
entitles an organisation to certain relief from accounting requirements.
7.38 The Government's rationale for this approach is 'so that registered
unions can allow members in enterprises, or geographical parts of enterprises,
to form enterprise branches with autonomy in matters which affect only
the interests of the members at that enterprise or part of an enterprise'.
[18]
7.39 According to the ACTU, these moves appear to be designed to encourage
the formation of many small, poorly resourced, enterprise-based unions,
the viability of which will be highly questionable. [19]
This view was supported in a number of submissions which suggested that
this was not a desirable outcome either from the employees' or the employers'
point of view. [20]
7.40 Thus for instance, The Honourable J M Riordan AO (a former Senior
Deputy President of the AIRC) highlighted the beneficial role that professional,
well-organised unions play in exercising a moderating influence on the
demands of members. A role that could be lost in smaller, enterprise
based unions with inexperienced, under-resourced negotiators.
Experienced industrial relation practitioners all know of situations
where some groups of employees have had ambitious claims or expectations
which may not have been economically or commercially feasible at the
time. In such circumstances it has usually fallen to the official of
the union to explain that the claims they were pursuing were not realistically
feasible. In such situations, it would not be unusual for the official
concerned to be subjected to severe criticism and abuse by some elements
of the union membership concerned. But the responsibility of the official
will usually be sufficient to ensure persistence with the courage to
speak the truth no matter how unpalatable that may be. [21]
7.41 The possible effect of these provisions on business was also raised
by the Victorian Automobile Chamber of Commerce when Mr Kevin Redfern,
the Deputy Executive Director, said:
I have to say that as a general thrust we are not terribly enthusiastic
about the concept of those subsets of unions. We take the view that
in organisations like ours, unions ought to be representative of their
members' viewpoints. They ought to be composed of people who have a
common interest and the system ought to be driven by the members rather
than by the organisation. I an not sure that, when looking at those
subsets and enterprise organisations, this is necessarily going to be
the case. [22]
7.42 In addition, it was suggested by the Finance Sector Union that the
proposal to reduce registration requirements for unions could lead to
the creation of unions which are effectively dominated by the employer.
In evidence, the Union described how Metway Bank in Queensland sought
to exclude the Australian Bank Employees Union (now a part of the FSU)
and the Federated Clerks Union (now the Australian Services Union) by
encouraging the development of a separate enterprise based staff association
with which the Bank would negotiate over terms and conditions of employment.
[23]. A ballot of employees voted in
favour of the staff association. However, when the ballot was challenged,
the AIRC found that 'the main ingredients of the campaign to gain support
for the staff association had been secrecy, surprise and denigration of
the [ABEU] union'. [24]
7.43 In conclusion, Deputy President Macbean of the AIRC, found that
the Metway Bank staff association had showed 'an appalling lack of competence
in approaching the task of properly representing the interests of members
to management on an issue of fundamental importance, namely the wages
of members'. [25]
7.44 In addition, to these concerns, the evidence suggests that the
constitutionality of these provisions is open to question. This is discussed
in Chapter 10.
Conclusions
7.45 The Government's proposals on this issue are based on the premise
that the present registration requirements prevent, in some unspecified
way, a form of collective organisation that may provide for superior
results (for members) than that provided by existing union structures.
Given that the Government has not indicated what specific benefits it
expects will result from these changes, the manifest problems which
have been identified lead the majority of the Committee to seriously
question their inclusion.
7.46 In relation to a minimum number of members required for registration,
the Government seems to accept that there is a need for some minimum
level. It fails, however, to demonstrate why the present limit is a
problem and how the reduction to 20 will overcome that. If the argument
is that is that small enterprise unions are better able to represent
their members, there are serious flaws in the reasoning. Firstly, there
is no evidence that a union that is exclusively centred on one enterprise
can, assuming it is adequately funded, better represent the interests
of members than existing structures. There has not been any evidence
presented to the majority of the Committee claiming this.
7.47 More importantly however, the minium number of members is crucial
to ensuring a viable financial base of an organisation. The ACTU estimates
that a membership of 20 will, on present trends, represent an annual
income of approximately $4000. It is impossible to believe that an organisation
with that level of resources would be able to meet its statutory reporting
and accounting requirements, let alone undertake any activities representing
the industrial interests of members. The majority of the Committee heard
no evidence of an optimal number of members which would reasonably ensure
an adequate resource base to allow it to undertake its functions. However,
every indication is that it should be a higher rather than a lower minium.
Given this, the majority of the Committee recommends that the proposed
reduction in this minimum membership requirement be rejected. The
extent to which the existing minimum of 100 provides a sufficient base,
should be the subject of further investigation.
7.48 The lifting of the income limit for exemption from certain accounting
requirements is clearly a recognition of the difficulties that small
organisations (which could gain registration under the proposals) will
have in meeting the existing accountability requirements. Given the
importance of ensuring that all registered organisations properly account
to their members, it seems disproportionate to displace such a fundamental
protection just to facilitate the registration of such organisations.
7.49 Removing of the requirement that a registered organisation be
capable of creating an interstate industrial dispute is clearly to allow
enterprises which operate solely within one State to establish their
own Federally registered unions. In addition to the general concerns
about enterprise unions, this proposal presents the majority of the
Committee with two difficulties.
7.50 Firstly, there is no explanation as to why there should be a class
of registered organisation which can not be a party to a Federal award
or represent its members in award proceedings as a matter of right.
7.51 Secondly, the removal of this requirement represents a major incursion
of Federal regulation in an area usually the preserve of State jurisdictions.
All State jurisdictions regulate the activities of State unions by either
registration or recognition requirements. Currently, such associations
of employees can only avoid these State requirements and seek Federal
registration where they are capable of creating an interstate industrial
dispute. The effect of these provisions is to effectively allow any
organisation to seek Federal registration and lift itself out of the
State system. Without any national interest at stake, there is no justification
for this. If a union only operates within a State, there seems no reason
why it should not be regulated by that State's provisions.
7.52 Thirdly, as the evidence demonstrated there is at least some doubt
about the constitutional validity of the registration of such an organisation
given that the registration provision have been held to be incidental
to the constitutional power allowing for the prevention and settlement
of an interstate industrial disputes by conciliation and arbitration.
7.53 As a result of these concerns, the majority of the Committee
recommends that the requirement that an organisation be capable of creating
an interstate industrial dispute to obtain Federal registration be retained.
7.54 The Australian Democrats Member of the Committee supports these
conclusions and recommendations but has made additional recommendations
in his Supplementary Report.
7.55 Government members of the Committee disagree with all of the
above conclusions and oppose the recommendations.
Autonomous Enterprise Branches
7.56 The Workplace Relations Bill requires the rules of any registered
organisation to provide for the establishment of enterprise branches,
and their autonomy (proposed section 201A). Division 6A provides for
their establishment on the application of a certain number of members
in an enterprise, following a successful ballot.
7.57 The Government's rationale for this proposal is to allow a greater
degree of choice for employees in the selection of a registered organisation
to represent them.
7.58 Two principal concerns about these provisions were expressed in
evidence to the Committee. Firstly, some witnesses argued that these
provisions represented an unwarranted intrusion into the internal affairs
of trade unions. Secondly, it was said that the provisions were complex
and ambiguous.
7.59 For example, Mr Joseph Ludwig, Senior Industrial Officer of the
Australian Workers Union of Employees, stated in evidence to the Committee:
.
… this union is concerned that there is a lack of detailed information
with respect to how the union branches would operate … The impact
of this, in our submission, is far-reaching as it has the potential
to allow for the establishment of independent branches which could bind
the parent union, both financially and industrially, to outcomes inconsistent
with the parent objectives and cause uncertainty with parties seeking
to negotiate with the union. [26]
7.60 The submission from the Law Council of Australia was particularly
critical of this aspect of the Bill:
The Bill does not adequately address the meaning of 'autonomy'; the
relationship between enterprise and State branches and the degrees of
autonomy guaranteed to each (eg. an enterprise branch may have more
autonomy within the organisation that the State branch within whose
area it operates); the liability of the organisation (including liability
to cancellation of registration) for the unauthorised acts of an enterprise
branch acting within its area of autonomy or the situation of funds
held in the name of the enterprise branch after dissolution of the branch
or of the organisation itself. [27]
7.61 The Council also suggested that the extent of 'autonomy' guaranteed
to branches should not be a matter left to regulations (as proposed in
section 201A(b)). [28]
7.62 The Metal Trades Industry Association (MTIA) questioned the need
for autonomous enterprise branches, arguing that the provisions were more
likely to encourage renegade groups to organise themselves into legitimate
bodies, fragment existing employee organisations at the enterprise which
might be working quite effectively, and make harmonious working relations
more difficult to achieve [29]. On this
point there was an exchange between Mr Boland of the MTIA and Senator
Mackay:
Senator Mackay: Under this legislation, what do you believe
would prohibit, for example, the formation of an Olympic workers association
or an Olympic employees association which, with the tight time constraints
relating to the time line for the Olympics, could actually impose
and negotiate for its members very high wage and conditions outside
of the industry standard, or without cognisance or guidance of the
industry standard?
Mr Boland: I think that that is a very reasonable and legitimate
scenario … the last thing we would want to see is a revival of
the BLF and its policies whether it be in the form of a new union
or autonomous enterprise branches of the existing CFMEU … History
speaks for itself here. They were disruptive to the point of anarchic
and that is not something we would like to see on the eve of the Olympic
games in Sydney in the year 2000.
Senator Mackay: So… you are concerned about this particular
aspect of the bill in relation to freedom of association.
Conclusions
7.63 Like the other proposed amendments to registered organisations,
the requirement for autonomous enterprise branches is based on the proposition
that the decision-making structures of existing registered organisations
arbitrarily impose decisions on their members at an enterprise rather
than allowing members to make their own decisions on matters which affect
their enterprise . Again this argument is flawed.
7.64 In the existing Act, there are elaborate provisions that require
the rules of an organisation to ensure proper elections, regular and
proper financial reporting, and provide for a fair and appropriate representation
of individuals within its decision-making structures. There has been
little evidence suggesting that these provisions do not provide fair
and adequate representation. In particular, there was very little that
suggested that decision making didn't appropriately take account of
the views of members at individual workplaces. Where unions do not act
on the concerns of members at the grass roots, there is an obvious solution
- members use their democratic rights to elect officials and delegates
who will do so.
7.65 There are a number of other difficulties with the proposals. We
agree with the criticisms that the provisions lack clarity. Many questions
about the operation of these provisions remain unanswered. In particular,
the effect that the `autonomy' requirement will have on the relationship
between the autonomous branch and other constituent units of the union
is unclear. This question is vital for the resolution of such issues
as financial accountability, participation in wider organisational decision
making and the autonomous branch members' entitlements to services provided
by the rest of the union.
7.66 In addition, the proposal ignores the important interaction between
union members on site and other parts of the organisation. The need
to account to a wider membership than simply that at one work site may
provide a mechanism for broader considerations of isses. Such interactions
force a more complete perspective than simply what is happening at an
individual enterprise. This means that actions that may affect other
sites or areas are taken into account when decisions are made. It also
ensures that issues of concern to all workers in an industry (such as
occupational health and safety) are not treated in an ad hoc or inconsistent
manner.
7.67 The majority of the Committee finds great merit in the argument
by the MTIA that autonomous enterprise branches may provide a haven
for renegade groups to organise themselves into legitimate groups. We
are concerned that one consequence may be an increase in industrial
disputation, particularly in areas where renegade groups have substantial
bargaining power because of the strategic position of the employees
that they represent.
7.68 Of particular concern, given the above, is that the proposal fails
to appreciate the way the existing arrangements provide for accountability.
Corporate personality (for unions) means that there is an single entity
which can be held to account for actions (of all the members and officials)
taken in its name. Many of the provisions of the Act either make the
organisation accountable in the form of fines or penalties or by the
ability to withdraw registration. The effect of these provisions is
that the union, as an entity, is accountable for actions taken through
the decision making processes of the union.
7.69 At best, the Government's proposals undermine the effectiveness
of this accountability. More likely however, the proposals make the
scheme of the Act unworkable. Guaranteeing 'autonomy' to a constituent
unit of the organisation means that that part of the organisation should
only be held liable for its actions. This is, however, inconsistent
with the single corporate personality of the organisation. The constituent
unit (the enterprise branch) does not hold any assets that can be attached;
it does not have registration that can be removed. Responsibility for
the actions of an autonomous enterprise branch cannot lie with the rest
of the union which cannot control those actions. By divorcing responsibility/control
from the entity, it becomes impossible to hold the entity liable for
actions taken by the autonomous branch. As a result, these arrangements
could become havens for the taking of action for which there is no accountability.
This is clearly contrary to the public interest.
7.70 The majority of the Committee therefore recommends that this
proposal (proposed Division 6A of Part XI) should not be implemented.
7.71 The Government members of the Committee disagree with the conclusion
and oppose the recommendation.
Disamalgamation
7.72 The Workplace Relations and Other Legislation Amendment Bill
1996 allows for the disamalgamation of certain federally registered
unions into their pre-amalgamation constituent parts or, into branches
of the pre-amalgamation constituent parts.
7.73 The Government's rationale for this is that it: 'recognises that
amalgamations occurred after 1991 in the context of pressured circumstances'.
[31] The unions disagreed with this
claim.
7.74 The ACTU is opposed to the provisions contained in the Bill for
disamalgamation and argued in evidence to the Committee that because of
the complexities of the process of disamalgamation, such action will most
likely result in protracted and expensive litigation, the costs of which
will be borne by members for little benefit. [32]
7.75 The Queensland Branch of the Australian Workers Union (AWU) suggested
that if disamalgamation were to occur, then it should require a vote of
all members as was the case for amalgamation in the first place. [33]
7.76 The Australian Road Transport Industries Organisation did not support
the proposal to disamalgamate unions. It believes that amalgamation has
been an important process, and the downsizing of unions in recent years
has been a credit to the Australian Council of Trade Unions. [34]
7.77 Where a disamalgamation is approved, the Court must make orders
apportioning the assets and liabilities of the amalgamated organisation
between the new parts. [35] Lawyers
for Industrial Justice question how a court is to fairly apportion the
assets where only a small number of members of the constituent part participate
in the vote:
For example, assume 30 per cent of the members in question vote and
the vote is narrowly won. Does a court, in this situation, give the
newly registered organisation all the assets of the constituent part
as at the date of the original amalgamation or does it take into account
the apparent lack of interest [by the majority of those members] in
the withdrawal from the amalgamation and apportion a far smaller share
of the assets. [36]
Conclusions
7.78 The majority of the Committee considers that there was not a great
deal of evidence given on this issue.
7.79 The Government's rationale for this proposal is unconvincing.
Perhaps the only organisations that could have been 'pressured' into
an amalgamation were the 'small organisations' that otherwise faced
deregistration prior to amendments to the Industrial Relations Act made
in 1995. Yet the Government's proposals go significantly further than
this.
7.80 While the majority of the Committee does not oppose the disamalgamation
of organisations in the circumstances outlined by the Government (subject
to one issue discussed below), it does question some of the important
detail on disamalgamation contained in the Bill.
7.81 Firstly, the voting arrangements that applied to amalgamation
under the Act should also apply to a disamalgamation proposal. This
has a number of implications.
7.82 The majority of the Committee queries why all those who have an
interest in the disamalgamation are not entitled to participate in the
plebiscite proposal? Given that a disamalgamation will affect both the
members of the disamalgamating constituent unit and the remaining members
of the union, there is a strong argument that all members of the amalgamated
union should be able to vote.
7.83 Secondly, given that, for an amalgamation to have occurred, at
least 25% of all members of both unions must have voted and more than
50% of those votes had to be in favour (except where a 'community of
interest' was found to exist), the majority of the Committee queries
why this should not also be the case with a disamalgamation.
7.84 Finally, and very importantly, the majority of the Committee has
firmly concluded that unions should not be able to disamalgamate beyond
their pre-existing constituent unions. This means that the majority
of the Committee opposes the proposals that allow for a break up of
a pre-amalgamation union into its constituent State branches. The Government's
rationale relates only to amalgamations resulting for the legislative
changes in 1991. As a result, these provisions are inconsistent with
the Government's stated intention. Any provision going further than
this, the majority of the Committee believes, should be rejected.
7.85 The majority of the Committee therefore recommends that the
disamalgamation proposals (proposed Division 7A of Part IX) should be
implemented, except for the proposal to permit unions to disamalgamate
beyond their pre-amalgamation constituent unions.
7.86 The Government members of the Committee disagree with the conclusion
and oppose the recommendation.
Encouragement Of Collective Organisations and Preference
7.87 The Government's stated policy position is to encourage freedom
of association. In the legislation this is effected by:
- provisions which outlaw arrangements relating to compulsory unionism
(otherwise known as closed shops);
- provisions which remove any institutional encouragement of the development
of registered organisations;
- provisions that remove the power of the Commission to make orders
of preference and which make agreements providing for preference unenforceable;
and
- provisions which prohibit discrimination on the basis of union membership
or non union membership.
7.88 The Bill proposes to amend the principal object of the Act be
removing references to:
- encouraging the organisation of representative bodies of employers
and employees and their registration under this Act;
- encouraging and facilitating the development of organisations, particularly
by reducing the number of organisations in an industry or enterprise.
7.89 The Commission, in exercising its functions, will therefore no
longer be required to have regard to these matters.
7.90 In relation to Freedom of Association, in addition to the above
initiatives, various offences are created which are designed to 'ensure
that employers, employees and independent contractors are free to join
industrial associations of their choice or not to join industrial associations'
(see Schedule 16). A variety of remedies are available from the Federal
Court for contravention of the Division; including a monetary penalty
of not more that $10,000 for bodies corporate and $2,000 for individuals;
an order of reinstatement or re-engagement; an order requiring the payment
of such amount as the Court thinks necessary; and injunctions to stop
conduct (proposed section 298U). Proposed section 298V reverses the
onus of proof in relation to an allegation that conduct was or is being
carried out for a particular reason or with a particular intent. Thus,
the presumption is that the conduct was carried out for the alleged
reason or intent unless the person accused proves otherwise.
7.91 In relation to closed shops, the AIRC does not have the power
to order compulsory unionism. Any informal arrangements of that nature
exist outside the formal industrial relations system. The effect of
the provisions is to outlaw such informal arrangements by imposing large
monetary penalties on anyone who discriminates against a person because
of their refusal to join a trade union.
7.92 Whether or not these provisions will have the actual effect of
outlawing informal closed shop arrangements is not clear. Roger Boland,
Industrial Relations Director with the MTIA, while supporting the removal
of the provisions in principle, stated that:
If legislation is introduced outlawing preference in closed shops,
I suggest in the submission that that will not have an immediate impact
in the sense that employers will not seek, certainly in the short term,
to end their closed shop arrangements. Whether it creates disruption
later on because an individual employee decides that now they do not
have to belong to a particular union, they then set out to challenge
that and that leads to problems, remains to be seen. [37]
7.93 In relation to preference, employer groups welcomed the abolition
of `preference' and `closed shop' arrangements. ACCI argued that `preference'
is not consistent with the concept of `merit' in employment decisions
and is a form of discrimination on grounds other than merit. [38]
7.94 In response, the ACTU noted in its submission to the Committee that
the repeal of preference provisions in the Act `will disturb long standing
arrangements in relation to membership and will have substantial consequences'.
[39] It will place employers in the
position of having to decide whether to honour previous proven arrangements,
or to abide by the new prohibitions; a choice potentially between a serious
industrial dispute or penalties for not complying with the new Act. Further,
in relation to the ACCI issue of merit, the ACTU made the point that most
preference provisions were subject to 'the all other things being equal'
qualification. The effect of this is that only when the candidates are
equal in all other respects will preference operate.
7.95 The ACTU noted that the new arrangements are more likely to affect
less militant unions which rely on preference arrangements and may result
in a reduction in their membership. It predicts that ultimately the repeal
of preference arrangement will result in an increased level of industrial
disputation. [40]
7.96 The Health Services Union of Australia noted that preference clauses
have usually been inserted into awards following proven cases of employers
discriminating against union members, and that it never has been a simple
matter to convince the Commission to insert such clauses. Because there
has always been good reason for their inclusion, they should be allowed
to continue to operate. [41]
7.97 The Honourable J M Riordan AO reinforced this principle stating
that awards of preference have never been made without good and careful
reasons being given and that the Commission has been cautious in its approach
to the award of preference making it clear that every application is to
be decided on its merits. [42] In the
mining industry, `preference' serves as a strong support mechanism which
protects the integrity of the whole mining community. For example, if
a mine is exhausted then employees have preference in re-employment thus
keeping workers within their own community. [43]
7.98 In noting that the Bill seeks to remove preference clauses and closed
shop provisions, the Shop Distributive and Allied Employees' Association
(SDA) suggested that where an employer and a union agree to encourage
union membership amongst employees, this should be possible. The SDA noted
that this possibility had been excluded by the Bill and that there was
no rationale as to why that sort of a clause should not be permitted if
all parties endorse such an inclusion. [44]
7.99 The MTIA, although in principle supporting the removal of the
power to award preference clauses, also seemed to agree that, where
such clauses are the result of genuine agreements between employees,
their union and the employer, they should be able to come to such an
agreement.
Senator Allison: But you would not support the maintenance
of those preferences clauses by agreement?
Mr Boland (MTIA): Given my -- in principle-- support for removing
them, it follows that it is not appropriate. I will not go so far as
to say that. If there is an opportunity for employers and employees
to agree that a particular union should have coverage on a particular
project or a particular undertaking, I have some difficulty saying 'You
shouldn't be entitled to make that agreement'. [45]
Conclusions
7.100 The industrial relations system in Australia encourages the collective
arbitration of disputes and development of organisations of employees
and employers. This is the context within which the provisions encouraging
the development of registered organisations, including preference operate.
This is not so much a repudiation of the rights of the individual but
is rather a judgment that the best way to protect the rights of all
employees is to provide for strong and viable registered organisations.
7.101 There are a number of ways in which the needs of individuals
are taken into account in relation to this framework.
7.102 Firstly, Mitchell, in a study of preference clauses, has described
what may be termed a 'system-oriented' approach to the insertion of preference
clauses by the Commission in recent years. This recognises that the system
has a need for effective unions and that preference should therefore be
granted only to those unions which need it. [46]
Thus preference is power usually awarded where collective arrangements
have or are breaking down.
7.103 Secondly, Subsection 122(3) provides that, notwithstanding an
award of preference, an employer is not required to give preference
to a unionist over a person who holds a 'conscientious objector' certificate
under section 267 of the Industrial Relations Act.
7.104 It is important to understand that the 'principle' of freedom of
association as described in the Bill is not identical with the ILO's standards
of freedom of association. As Creighton and Stewart note: 'It is clear
the these standards neither condone nor condemn union security arrangements,
including closed shop or preference'. [47]
7.105 The Labor members of the Committee therefore recommends that
the proposal prohibiting preference arrangements (proposed section 94)
should not be implemented, and that preference arrangements should be
permitted where the parties agree that there should be a preference
arrangement or where the Commission determines that a preference arrangement
is appropriate.
7.106 The Australian Democrats member of the Committee disagrees
with these conclusions and recommendations and makes additional recommendations
in his Supplementary Report.
7.107 The Government members of the Committee disagree with the
conclusion and oppose the recommendation.
Footnotes
[1] Submission No. 1017, Overview p. 3, ACTU.
[2] Submission No. 905, p. 4, ACCI.
[3] Submission No. 1016, p.164, DIR.
[4] Submission No 905, pp. 49-50, ACCI.
[5] The SRWU has not sought Federal registration
presumably because of the existence of the AWU's coverage.
[6] Submission No. 1311, p. 4, Shearers and
Rural Workers Union.
[7] Submission No. 1017, p. 35, Australian
Council of Trade Unions.
[8] Evidence, p. E 1734.
[9] Evidence, p. E 143.
[10] Evidence, p. E 773.
[11] Evidence, p. E 779.
[12] Evidence, p E 789.
[13] Evidence, p. E 1393.
[14] Evidence, p. E 147.
[15] Submission No. 1157, p. 11, Metal Trades
Industry Association.
[16] Evidence, p. E 152.
[17] Creighton, B. and Stewart A, Labour
Law - An Introduction, The Federation Press, 1994 p. 229.
[18] Submission No. 1016, p. 11, Department
of Industrial Relations.
[19] Submission No. 1017, p. 36, ACTU.
[20] See for example, Submission No. 1341,
p. 29, The Honourable J.M. Riordan AO.
[21] Submission No. 1341, p. 29, The Honourable
J.M. Riordan AO.
[22] Evidence, p. E 151.
[23] Submission No. 1245, p.9, Finance Sector
Union.
[24] Submission No. 1245, p. 9, Finance Sector
Union.
[25] Decision - Clerical Officers (Administrative
Services) Interim Award 1987, 1991, 10 CAR 517 at p. 552 cited in Submission
No. 1245 at p.9.
[26] Evidence, p. E1154.
[27] Submission No. 1293, p. 2, Law Council
of Australia.
[28] Submission No. 1293, p. 2, Law Council
of Australia.
[29] Submission No. 1157, p. 11, Metal Trades
Industry Association.
[30] Evidence p. E786.
[31] 'The Reform of Workplace Relations'
Legislation Guide May 1996, paragraph 4.14. Appended to Submission No.
1016, Department of Industrial Relations.
[32] Submission No. 1017, p. 38, ACTU.
[33] Submission No. 1139, p. 28, Australian
Workers Union, Queensland Branch.
[34] Evidence, p. E 773.
[35] See proposed section 253ZP (Schedule
15 - Registered Organisations).
[36] Submission No. 914, p. 46, Lawyers for
Industrial Justice.
[37] Evidence p. E. 787.
[38] Submission No. 905, p.50, ACCI.
[39] Submission No. 1017, p. 46, ACTU.
[40] Submission No. 1017, p. 42-48, ACTU.
[41] Submission No. 866, p.12, Health Services
Union of Australia.
[42] Submission No. 1341, p. 34, The Hon.
J.M. Riordan AO.
[43] Evidence, p. E 909.
[44] Submission No. 367, pp. 45-47, SDA.
[45] Evidence, p. E 787.
[46] Mitchell, R.J., The Rise and Fall
of the Preference Power: The Practice of the Federal Commission, 1070-1987,
1 Australian Journal of Labour Law 224.
[47] Creighton, B. and Stewart A, Labour
Law - An Introduction, The Federation Press, 1994, p. 249.