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2004
THE PARLIAMENT OF THE COMMONWEALTH OF
AUSTRALIA
SENATE
WORKPLACE
RELATIONS AMENDMENT (AGREEMENT VALIDATION) BILL
2004
EXPLANATORY MEMORANDUM
(Circulated by authority of the Minister for Employment and
Workplace Relations,
the Honourable Kevin Andrews MP)
OUTLINE
The Bill proposes to amend the Workplace Relations Act 1996 (WR Act) to ensure the validity of agreements which were certified, approved or varied under the WR Act prior to the decision of the High Court in Electrolux Home Products Pty Ltd v The Australian Workers' Union and Others [2004] HCA 40 (Electrolux).
On 2 September 2004, the High Court handed down its decision in Electrolux. This judgment was based on section 170LI of the WR Act which provides:
“(1) For an application to be made to the Commission under this
Division, there must be an agreement, in writing, about matters pertaining to
the relationship between:
(a) an employer who is a constitutional
corporation or the Commonwealth; and
(b) all persons who, at any time when the agreement is in operation, are employed in a single business, or a part of a single business, of the employer and whose employment is subject to the agreement.”
The High Court found that for an agreement to be of the nature described in section 170LI it must be wholly about matters pertaining to the relationship between the employer and the employees, in their capacity as employees (other than provisions that are incidental or ancillary to the employment relationship or machinery provisions).
The majority judgments in Electrolux suggest that existing agreements that contain provisions that do not pertain to the relationship between an employer and employees may not be valid because the Australian Industrial Relations Commission (the Commission) did not have jurisdiction to certify them.
Prior to the Electrolux decision, there were conflicting precedents in the Australian Industrial Relations Commission (the Commission) and the Federal Court about the nature of this requirement. Some agreements were certified, although they contained matters that may not have met the test in section 170LI, as subsequently interpreted by the High Court in Electrolux.
This Bill applies to agreements that were certified, approved or varied on or before 2 September 2004. The Bill will provide that where an agreement containing matters that do not pertain to the employment relationship was certified, approved or varied prior to the Electrolux decision, these matters are not to be considered as affecting the validity of the agreement. It places the parties in the position they would have been in had their agreement complied with the Electrolux decision at the time it was certified, approved or varied.
The Bill validates:
• certified agreements made under Division 2 of
Part VIB – where the employer is the Commonwealth or a constitutional
corporation;
• certified agreements made under Division 3 of Part VIB
– in relation to an industrial dispute or industrial
situation; and
• Australian Workplace Agreements (AWAs) made under Part VID.
The Bill will not validate those parts of an agreement that do not pertain to the employment relationship. Nor will the Bill remedy other defects in the certification process. If an agreement is invalid as a result of some other flaw in its making, certification or approval, this Bill will not render it valid.
FINANCIAL IMPACT STATEMENT
The measures in this Bill are budget
neutral.
NOTES ON CLAUSES
Clause 1 – Short
title
1. This is a formal provision specifying the short title of the
Act.
Clause 2 – Commencement
2. This clause specifies
that the Act commences on the day on which it receives the Royal
Assent.
Clause 3 – Schedule(s)
3. This clause
provides that each Act specified in a Schedule to this Act is amended or
repealed as set out in Schedule 1, and that any other item in a Schedule
operates according to its terms.
Workplace Relations Act 1996
Item 1 – After Division 10 of Part VIB
1. This item proposes to insert a new Division 10A to provide for the validation of certified agreements that were certified or varied on or before 2 September 2004 and which could be invalid because the agreement contains matters that do not pertain to the employment relationship.
Proposed section 170NHA – Validation etc. of certain agreements
2. An implication of the Electrolux decision is that a certified agreement may be invalid if it were to contain a single substantive, discrete and significant matter that does not pertain to the employment relationship.
3. Proposed section 170NHA provides that if:
4. an application was made to
certify an agreement;
5. the Commission certified the agreement on or before
2 September 2004;
6. the agreement deals with a matter that is not a
permitted matter; and
7. the application and certification was (but for this section) invalid because the agreement deals with matters that are not permitted matters;
then, the fact that the agreement deals with matters that are not permitted matters does not affect the validity of the application or certification.
8. Proposed section 170NHA works with proposed section 170NHC to validate
agreements made under Division 2 (agreements made with constitutional
corporations) or Division 3 (agreements made about industrial disputes or
situations) of Part VIB. This includes agreements:
9. made in reliance on
subsection 494(2) of the WR Act, which in turn relies on the referral of certain
matters to the Commonwealth by the Commonwealth Powers (Industrial Relations)
Act 1996 of Victoria; and
10. made in Territories or in relation to interstate or overseas trade or
commerce – in reliance on
subsections 5AA(2) or (3) of the WR Act.
11. The effect of proposed section 170NHA is that the validity of an agreement, certified on or before 2 September 2004, is not affected by the fact that the agreement contains matters that are not permitted matters. The provision does not assume the invalidity of such agreements. However, it describes actions taken in relation to such agreements as ‘purported’ because the provision only operates in circumstances where an agreement would not otherwise be valid.
12. The validation only operates to the extent that the agreement deals with permitted matters. Proposed section 170NHC defines permitted matter. Proposed section 170NHA will not validate matters in an agreement that do not pertain to the employment relationship, are not machinery provisions, or are not incidental or ancillary to matters pertaining to the employment relationship.
13. An example of the operation of proposed section 170NHA is an agreement where all provisions pertain to the employment relationship except for a provision requiring all employees to pay a bargaining agents’ fee to a union (a matter stated by the High Court in Electrolux to not pertain to the employment relationship). Proposed section 170NHA would validate the agreement except for the provision requiring the payment of a bargaining agents’ fee.
14. Section 170NHA will not validate the certification of an agreement that may be invalid for other reasons. For example, if a certification was invalid due to a lack of valid majority approval under subsection 170LJ(2), subsection 170LK(1) or subsection 170LR(1) of the WR Act, proposed new section 170NHA will not validate the certification.
Proposed new section 170NHB – Validation etc. of variations of certain agreements
15. An implication of the Electrolux decision is that a certified agreement may be invalid if it was varied to include a substantive, discrete and significant matter that does not pertain to the employment relationship.
16. Proposed section 170NHB provides that if:
17. an agreement was
varied;
18. the Commission approved the variation on or before 2 September
2004;
19. the variation deals with a matter that is not a permitted
matter; and
20. the variation and approval was (but for this section) invalid because the variation deals with matters that are not permitted matters;
then, the fact that the agreement deals with matters that are not permitted matters does not affect the validity of the variation or approval.
21. The validation only operates to the extent that the variation deals with permitted matters.
22. The intended effect, operation and limitations of proposed section 170NHB in relation to variations is the same as for proposed section 170NHA in relation to certifications.
Proposed new section 170NHC – Definitions of permitted matter
23. Proposed section 170NHC will provide a definition for the term permitted matter that appears in proposed sections 170NHA and 170NHB.
24. For the purposes of Division 2, a permitted matter in an agreement or a variation is a matter that pertains to the relationship between an employer and all persons who, at any time when the agreement is in operation, are employed in a single business or part of a single business of the employer and whose employment is subject to the agreement.
25. This reflects the High Court’s decision in Electrolux. The definition does not specifically refer to matters that are machinery provisions or incidental or ancillary to matters pertaining to the employment relationship. This is not necessary because the High Court found that the term “about matters pertaining to the [employment relationship]” includes these matters.
26. For the purposes of Division 3, a permitted matter is a
term of an agreement or a variation to an agreement for:
27. settling or
further settling all or any of the matters that are in
dispute;
28. maintaining a settlement of all or any of the matters that were
in dispute, whether the settlement of the dispute was made by award, certified
agreement or otherwise; or
29. preventing further industrial disputes between the parties to the agreement.
30. For the purposes of Division 3, a permitted matter is also a term of an agreement or variations for preventing the industrial situation to which the parties to the agreement are parties from giving rise to an industrial dispute involving them.
31. Sections 170LO and 170LP in Division 3 do not directly require agreements made under Division 3 to be “about matters pertaining to the [employment relationship].” However, it would appear that the same principle relating to section 170LI would also apply to an agreement made under Division 3 of Part VIB of the WR Act. This is because sections 170LO and 170LP import the definitions of industrial dispute and industrial situation.
32. Subsection 4(1) of the WR Act defines industrial dispute as meaning:
“(a) an industrial dispute (including a threatened, impending or probable industrial dispute):
(i) extending beyond the limits of any one State; and
(ii) that is about matters pertaining to the relationship between employers and employees; or
(b) a situation that is likely to give rise to an industrial dispute of the kind referred to in paragraph (a);
and includes a demarcation dispute (whether or not, in the case of a demarcation dispute involving an organisation or the members of an organisation in that capacity, the dispute extends beyond the limits of any one State);”
33. Subsection 4(1) of the WR Act defines industrial situation as meaning:
“a situation that, if preventive action is not taken, may give rise to:
(a) an industrial dispute of the kind referred to in paragraph (a) of the definition of industrial dispute; or
(b) a demarcation dispute of the kind referred to in that definition.”
34. The High Court in Electrolux applied the jurisprudence relating to the definition of ‘industrial dispute’ in interpreting section 170LI.
Item 2 – After Division 8 of Part VID
35. This item proposes to insert a new Division 8A of Part VIB to provide for the validation of AWAs that were approved or varied on or before 2 September 2004 and which may be invalid as a result of the AWA containing matters that do not pertain to the employment relationship.
Proposed section 170WEA – Validation etc. of certain AWAs
36. Section 170VF allows an employer and an employee to make a written agreement that ‘deals with matters pertaining to the relationship between an employer and employee’. Therefore, it would appear that the requirement for a valid agreement as described in section 170LI of the WR Act would also apply to the requirement in section 170VF for a valid AWA. An implication of the Electrolux decision is that an AWA could be invalid if it contains, or was varied to contain, a substantive, discrete and significant matter that does not pertain to the employment relationship.
37. Proposed section 170WEA provides that if:
38. an AWA was filed with
the Employment Advocate (EA);
39. the EA or Commission approved the AWA on or
before 2 September 2004;
40. the AWA deals with one or more matter that do
not pertain to the employment relationship between an employer and an employee;
and
41. the filing and approval was (but for this section) invalid because the AWA deals with matters that do not pertain to the relationship between an employer and an employee;
then, the fact that the AWA deals with a matters that do not pertain to the employment relationship does not affect the validity of the filing or approval.
42. Proposed section 170WEA works to validate all AWAs including those made in reliance on subsection 495(2) of the WR Act, which in turn relies on the referral of certain matters to the Commonwealth by the Commonwealth Powers (Industrial Relations) Act 1996 of Victoria.
43. The effect of proposed section 170WEA is that the validity of an AWA, approved on or before 2 September 2004, is not affected by the fact that the AWA contains matters that do not pertain to the employment relationship. The provision does not assume the invalidity of such an AWA. However, it describes actions taken in relation to such agreements as ‘purported’ because the provision only operates in circumstances where an agreement would not otherwise be valid.
44. The validation only operates to the extent that the AWA deals with matters pertaining to the employment relationship. That is, proposed section 170WEA will not validate matters in an AWA that do not pertain to the employment relationship, are not machinery provisions or are not incidental or ancillary to matters pertaining to the employment relationship.
45. Section 170WEA will not validate the approval of an agreement that may be invalid for reasons other than that it contains matters that do not pertain to the employment relationship. For example, if an approval was invalid because the employee was not given the AWA the required number of days before signing, proposed new section 170WEA will not validate the approval.
Proposed new section 170WEB – Validation etc. of variation agreements
46. An implication of the Electrolux decision is that an AWA may be invalid if it was varied to include a single substantive, discrete and significant matter that does not pertain to the employment relationship.
47. Proposed section 170WEB provides that if:
48. a variation agreement
was filed with the EA;
49. the EA or the Commission approved the variation
agreement on or before 2 September 2004;
50. the variation agreement deals
with one or more matters that do not pertain to the employment relationship
between an employer and an employee; and
51. the filing and approval was (but for this section) invalid because the variation agreement deals with matters that do not pertain to the employment relationship;
then, the fact that the variation agreement deals with matters that do not pertain to the relationship between the employer and the employee does not affect the validity of the filing or approval.
52. The validation only operates to the extent that the variation agreement deals with matters that pertain to the relationship between the employer and the employee.
53. The intended effect, operation and limitations of proposed section 170WEB in relation to variation agreements is the same as for proposed section 170WEA in relation to filing and approval of AWAs.