Industrial Relations Society of WA

Introduction and Overview

I was happy to accept the invitation of the WA Industrial Relations Society to deliver a paper¹ on the WA Industrial Appeal Court's recent decision in RGC Mineral Sands Ltd v CMETSWU² , in which the Court confirmed that the WA Industrial Relations Commission has the jurisdiction to deal with union applications for what have or will come to be called "choice clauses" in awards or orders. The intended effect of these clauses is to overturn the "no workplace agreement, no start" policies increasingly prevalent among employers.

I am familiar with the RGC case, having appeared for the Unions before the Full Bench and again, with Carmel McLure QC, as junior counsel on the final appeal. We were instructed by Derek Schapper, who had conceived and brought the union's original application.

In my view, the RGC decision is of considerable legal significance, both in its treatment of the Pepler line of cases dealing with the jurisdiction and powers of the State Commission and in its delineation of the boundary between the Commission's jurisdiction on the one hand and the workplace agreements regime on the other. The Court's reasons require some legal analysis in this paper because it is my impression, as someone who has practised in the State Commission for some time, that the RGC decision may be a sign that the pendulum is beginning to swing back. It may come to be seen as the beginning of a trend on the Court towards a broader and, I will argue, a more literal interpretation of the jurisdiction and powers conferred on the Commission by its Act. This is after numerous decisions since the mid-'80's in which the Industrial Appeal Court has consistently adopted a narrow, restrictive view of the Commission's jurisdiction which, in my respectful view, had had the cumulative effect of reading down the plain words of the Act.

So I'll be dealing with the case's legal significance.

Of course, it's the hope of the union movement that the case will also be of direct and practical industrial significance. It should lead to the introduction of a mechanism -the choice clause - by which the erosion by attrition of the award workforce into workplace agreements can be reversed. By granting applications for choice clauses, the Commission will be empowering potential employees so that where, at the point of employment, they are offered a workplace agreement, they are also guaranteed the choice of an employment contract outside the workplace agreements regime. Such a clause has the potential, in some contexts, to amount to a do-it-yourself no-disadvantage test.

When discussing the likely practical implications of the RGC decision, I will refer to the ALHMWU's application currently before the Commission in Court Session, for such a choice clause in the contract cleaning industry award³ . I'll preview some of the arguments that are expected to be put as to the merits or otherwise of that application in that industry.

In that context, I will also have the chance to refer to the practical importance in this area of a recent August decision of the Federal Court, in MUA v Burnie Port Corporation Pty Ltd⁴ which indicates the protection already afforded to potential employees by Section 298K of the Workplace Relations Act 1996 (C'th).

In this pre-election climate, I will end with some brief comments on the recently released State ALP industrial relations directions statement, and will consider what if any of the matters raised in this paper will still be relevant if a Labor Government is elected and sets about re-modelling WA's industrial relations architecture according to its own blueprint.

In other words the systems were set up to sit alongside each other and to compete, but the government was confident that its Workplace Agreements system would naturally prevail because it was the best - A case of survival of the fittest. The model of a fair contest with the participants choosing between the systems on their merits was reinforced by the provision of safeguards within the Act that more or less effectively offered protection to award employees who wanted to retain their awards⁸. Award employees were reassured that they could not legally be forced into the workplace agreements stream.

The government had, however, taken the sensible precaution of rigging the contest by building into the rules a competitive advantage for the workplace agreements regime that would ensure that it prevailed over time. The fix was in. I hope you'll forgive me a nostalgic digression. Soon after the Government tabled the bills in 1993, The firm at which I was a solicitor was instructed by the then Trades and Labor Council (now Unions WA) to brief eminent industrial barristers for an opinion on the gaps in the legislative safeguards which supposedly guaranteed choice to employees.

The TLC was keen that the credibility of the opinion be accepted by the media and by the public. Unfortunately, we have to accept that the media, and perhaps the public, does not always accept that a barrister's professional legal opinion is impartial regardless of that barrister's usual client base or perceived political views and history, if any. I therefore went first to Harry Dixon, Robe River's counsel of choice, on the premise that if Robe River's barrister were seen to agree with the TLC's position, it would put the matter beyond doubt! Unfortunately, he was unable to take the brief, due to a conflict. We then settled on what was seen as a balanced team of Ian Viner QC and Rene Le Miere. Their formal opinion, which received the desired publicity, confirmed that the proposed legislation "does not protect prospective employees who wish to be employed pursuant to an award rather than a workplace agreement in circumstances where the prospective employer requires that they enter into a workplace agreement as a precursor to employment".

Minister Kierath's response was to dispute the opinion. Indeed, he went on, under parliamentary privilege, to gratuitously impugn the professionalism of both barristers while he was about it. He also claimed that Crown Law advice existed to the contrary⁹.

The Minister with the conduct of the legislation in the Upper House, Hon Peter Foss, in answer to a question without notice, assured the House that "an employee who threatens not to employ a prospective employee unless that employee enters into a workplace agreement is guilty of an offence"¹⁰

In my respectful view, the Court strained in its decision to find a limitation on the Commission's power. In particular, Justice Rowland developed a new "employment relationship" doctrine as to what was an "industrial matter" which was not, in my view and with due respect to his Honour, readily sustainable given the literal breadth of that term's definition in the Act. Justice Owen most succinctly stated this doctrine in the later decision of Kounis Metal Industries Pty Ltd v TWU, in which he says:

"In my view, the judgments in Pepler suggest that the decision rests upon a point of principle, namely, that jurisdiction depends on the present or future existence of the employer/employee relationship. Unless, at the time when the application is made, the relationship actually exists, or is expected to come into existence in the future, or did exist and is to be restored, the key element of an "industrial matter" is missing...¹⁷"

While the Pepler decision has been radically reinterpreted by the RGC decision, and the "employment relationship" doctrine has been politely but effectively repudiated¹⁸, the Pepler decision has still not been overturned. It may be destined to remain as a historical anomaly. In my view it was, with respect, wrongly decided.

Specialist industrial tribunals, and currently the Western Australian Industrial Relations Commission, have, since 1900, been invested by Parliament with an extraordinarily broad jurisdiction. If one looks at the legislation¹⁹, it appears that, once the Commission has before it an industrial matter, it has unlimited power to deal with it. The definition of "industrial matter" is extraordinarily broad - "any matter affecting or relating to the work, privileges, rights, or duties of employers or employees in any industry or of any employer or employee therein...(my emphasis)".

The Commission's brief is to prevent and resolve industrial disputes²⁰. Parliament has simply given it the powers to get the job done. That they are extraordinarily broad is not surprising given the breadth of potential matters that might give rise to a dispute. They routinely involve interference with the existing common law rights and obligations of the parties. The Commission's powers, though broad, are to be exercised by reference to identified criteria, including equity, good conscience and the substantial merits of the case²¹.

If parliament comes to the view that the manner in which the Commission was exercising its jurisdiction in an area is undesirable - e.g. giving preference to unions or giving excessively large awards of compensation for unfair dismissal, then it can legislate to curb the Commission's jurisdiction or power in that respect. It has done so in those areas²².

Unfortunately, by finding a limitation on the Commission's jurisdiction that was, in my view, not indicated by the Act, and by attempting to construct a rationale for that limitation, the Court has created an ongoing area of controversy, which continues to generate appeal cases to the Industrial Appeal Court to this day. This litigation arises out of the perceived inconsistency between the mutating, judicially created "Pepler doctrine" on the one hand, and the plain words of the statute on the other.

The doctrine has thus spread from cases of compensation for unfair dismissal²³ into the areas of redundancy payments²⁴, denied contractual benefits²⁵, and an application for orders restraining legal proceedings against a former employee for work-related negligence²⁶. Ironically, instead of having to curb any excesses of the Commission, Parliament has found it necessary to intervene to restore many of these powers of the Commission disallowed by the Court²⁷.

Then he looks at some pre-Pepler decisions, and notes that "these decisions correctly focus attention on the terms of the definition of industrial matter and illustrate something of the breadth of the true scope of the general introductory words".

He then considered the Pepler line of decisions. He regarded Justice Owen's statement of the "employment relationship" doctrine as qualified by the unanimous decision in the Nappy Happy case, and notes that "once again, in the Nappy Happy case, the attention of the members of the Court focussed directly on the express words of the definition, to which effect was given".

As I've observed, in my view the practical effect of the RGC decision is that the "employment relationship doctrine" is now dead. Instead, Justice Parker offers a new doctrine I will call the doctrine of "remoteness".

"The point of the Pepler line of cases may ... be a concern to draw the line between those matters such as reinstatement which are to be accepted as sufficiently directly related to [the relevant jurisdictional fact e.g. in that case] a dismissal so as to be within the jurisdiction of the Commission, and those other matters which are insufficiently closely related to the jurisdictional fact of dismissal so that they are beyond the power of the Commission to deal with them. Necessarily, questions such as this involve fine and difficult distinctions. Views may differ as to their appropriate resolution... as is evident from the discussion of this issue in the reasons in the Happy Nappy Hire case. In the Pepler decision that line may be seen to have been drawn to exclude a claim for compensation for loss of income for a period following a dismissal in circumstances where it was the decision of the Commission that the employment should not be reinstated. ... ²⁹"

This new rationale will be a new tool with which the Court can draw lines limiting the jurisdiction of the Commission on a case-by-case basis. While it has the disadvantage of offering little predictive value to litigants, it at least gives the Court more flexibility than was available under the old "employment relationship doctrine". Throughout his reasons, with which Justice Kennedy agreed, Justice Parker implicitly disavows the use of the blunt instrument of jurisdiction to give effect to policy considerations. For example, he referred to the proposition that decisions as to the mode of recruitment of an employer, or as to whom should be preferred for employment by an employer should not be industrial matters, but concludes that:

"While decisions as to employment may be critical to management, ... that is a reason for caution by an Industrial Tribunal in the exercise of its jurisdiction (perhaps even extreme caution), but it is not a justification for construing the words of the definition to exclude such matters (His Honour's emphasis).³⁰"

Turning to apply the new tests to the application in the RGC case, Justice Parker says:

"... the matter sought to be raised is the policy of WSL, which was confirmed in evidence before the Commission, that in filling its existing vacancies in the industry..., it would only employ persons who agree to enter into a workplace agreement. By committing itself to this policy WSL refuses, and has indicated it will continue to refuse, to employ in the vacancies it is offering persons who comprise an identifiable class, i.e. those who wish to be employed pursuant to the award that would apply if no workplace agreement is entered into. There is no existing contract of employment between WSL and any of the prospective employees who have been offered employment, but employment was clearly in immediate contemplation. ... (I)t seems to me that it would be open to the Commission to conclude that the application raised a matter within the definition of an "industrial matter" being, or relating to, a refusal by WSL to employ in the industry that class of persons. The Commission was persuadedagainst this essentially because of the view it took of the effect of the Pepler line of cases. For the reasons given earlier, in my respectful view the Commission fell into error of law in so doing ³¹."

Justice Parker is thus satisfied that the facts fall within paragraph (c) of the definition. He had earlier recognised that such scenarios would also fall within the general words of the definition:

"The refusal, as a matter of policy, of an employer to employ a class of persons, such as members of a union, or to give preference over others to one class of persons, would appear to "relate to" a "refusal to employ" and so be within the ambit of the notion in par (c) of a "refusal to employ" a class of persons in an industry. In turn this would appear to "affect or relate to" the "rights of an employer" to determine the type qualities and qualifications of employees which the employer employed in its industry (my emphasis)³².

...in some situations at least, decisions by an employer as to whom to employ or not to employ in an industry relate to the mutual roles of employers and employees as such in the industry. In such situations clearly there would be no need to resort to par (c) to find an industrial matter, the general introductory words of the definition would suffice³³."

In the RGC case, therefore, there were two "jurisdictional facts" upon which the new doctrine of remoteness can operate - the "refusal to employ" and, more generally, the rights of an employer i.e. its right to determine the attributes of its employees. Justice Parker foreshadows that the remoteness doctrine may limit the Commission's capacity to grant the full relief sought in the ambitious RGC application. While disavowing any intention to state a concluded view, he observes that:

"...at first blush most of the proposed clauses of the amendment could be seen to be pursuing industrial matters and objectives other than the refusal to employ"³⁴.

He does not consider whether the proposed clauses were sufficiently directly related to the other relevant jurisdictional fact, i.e. the rights of employers in the industry. Given that their objective is the curbing of those rights, the direct relationship would appear to exist.

As for Justice Parker's second step, dealing with the boundary between the jurisdiction of the Commission and the Workplace Relations Act, he found that it alldepends on whether the workplace agreement is "in force"³⁵. Right up to the point at which a workplace agreement is made, if it is made, the participants remain "employer" and "prospective employee" respectively for the purposes of the Industrial Relations Act, so that the Commission retains jurisdiction to deal with the negotiations³⁶.

So, the outcome of the decision of the majority in the RGC case can be summed up as follows:

1. The present or future existence of an employment relationship is not a jurisdictional fact required by the definition of industrial matter.
2. Any limitations in the Commission's power imposed by the Pepler line of cases can be explained by the new doctrine of remoteness.
3. "No workplace agreement, no start" policies amount to "a refusal to employ a class of persons" and, more generally, claims to curtail such policies "relate to the rights and privileges of employers" in their capacity as employers, so that such matters are, on both counts, "industrial matters" grounding jurisdiction under the Act.
4. The Commission can deal with industrial matters affecting employers and prospective employees right up to the point at which a workplace agreement comes into force.
5. The Court has re-emphasised that when considering the jurisdiction of the Commission, its attention must primarily focus upon the terms of the definition of "industrial matter" in the Act, rather than statements of the Court in earlier decisions in other factual contexts.