PR929799 Note: An appeal pursuant to s.45 (C2003/1969) was lodged against this decision - refer to Full Bench decision dated 27 August 2003 [ PR935155 ] for result of appeal. PR929799 Download Word Document AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION Workplace Relations Act 1996 s.298Z removal of objectionable provisions from certified agreements Office of the Employment Advocate MECHANCIAL MAINTENANCE SOLUTIONS (MMS) MAINTENANCE, FABRICATION WORKSHOP AND SITE CERTIFIED AGREMEENT 2000/2003 (AG2001/7946) BROWN WOOD PANELS PTY LTD ENTERPRISE AGREEMENT 2000-2002 (AG2002/936) PORT ADELAIDE TIMBER TRUSS PTY LTD ENTERPRISE BARGAINING AGREEMENT 2000-2002 (AG2002/937) WELLAND NO BOLT ENTERPRISE BARGAINING AGREEMENT, 1999 (AG2002/938) Various employees Various industries SENIOR DEPUTY PRESIDENT ACTON MELBOURNE, 3 APRIL 2003 Removal of objectionable provision. DECISION Introduction [1] These matters concern applications by the Employment Advocate under s.298Z of the Workplace Relations Act 1996 (Cth) (the Act) to remove an alleged " objectionable provision " from four certified agreements. The alleged " objectional provision " is similar in three of the certified agreements. [2] Section 298Z of the Act, so far as is relevant, is as follows: " 298Z(3) [Commission must vary agreement] Where, on application by a person mentioned in subsection (4), the Commission is satisfied that a certified agreement contains objectionable provisions, the Commission must vary the agreement so as to remove the objectionable provisions. 298Z(4) [Who may apply] The application may be made by: (a) a person bound by the certified agreement; or (b) an employee whose employment is subject to the certified agreement; or (c) the Employment Advocate. 298Z(5) [Definition of `objectionable provisions'] In this section: objectionable provisions are provisions that: (a) require or permit, or purport to require or permit; or (b) have the effect, or purport to have the effect, of requiring or permitting; any conduct that would contravene this Part, whether or not those provisions would in any case be void because of section 298Y . " [3] Section 298Z is contained within Part XA of the Act. [4] Section 298K(1), which is also contained within Part XA of the Act, is as follows: " 298K(1) [Prohibited reasons for certain conduct by an employer] An employer must not, for a prohibited reason, or for reasons that include a prohibited reason, do or threaten to do any of the following: (a) dismiss an employee; (b) injure an employee in his or her employment; (c) alter the position of an employee to the employee's prejudice; (d) refuse to employ another person; (e) discriminate against another person in the terms or conditions on which the employer offers to employ the other person. " [5] The term " prohibited reason " is defined in s.298L of the Act, which, so far as is relevant, is as follows: " 298L(1) [Interpretation] Conduct referred to in subsection 298K (1) or (2) is for a prohibited reason if it is carried out because the employee, independent contractor or other person concerned: ... (b) is not, or does not propose to become, a member of an industrial association ". Alleged Objectionable Provisions [6] The alleged " objectionable provision " is similar in three of the certified agreements, being the Brown Wood Panels Pty Ltd Enterprise Agreement 2000-2002 (Doc S8841, "the Brown Wood Agreement"), the Port Adelaide Timber Truss Pty Ltd Enterprise Agreement 2000-2002 (Doc S6900, "the Port Adelaide Agreement") and the Welland No Bolt Bargaining Agreement, 1999 (Doc S4747, "the Welland Agreement"). [7] In the Brown Wood Agreement, the alleged " objectional provision " is as follows: " 10.1 Single Union Employee Representative Unit The parties agree that both management and employees employed at the site(s) where this agreement has application shall develop a single union employee representative unit. Management will encourage the development of a single union employee representation unit by offering to each new and existing employee detailed information on membership of the predominant union on site. The company will not challenge the right or ability of the CFMEU to constitutionally cover any employee covered by this agreement. All members of the CFMEU, Forest and Forest Products Division are deemed to be part of and comprise the single union employee representative unit. The employer will encourage all employees to be members of the CFMEU The employer will consider the membership of the CFMEU as a positive factor in any decisions based on merit regarding engagement in employment and in the continuation of employment in relation to termination and redundancy and in election to committees, provided that the employee concerned is capable of and qualified to perform the task or job or is willing to undertake training to become capable or qualified within a prescribed time as agreed between the parties. " [8] In the Port Adelaide Agreement, the alleged " objectionable provision " is as follows: " 9.4 Single Union Employee Representative Unit 9.4.1 The parties agree that both management and employees employed at the site where this agreement has application shall develop a single union employee representative unit. Management will encourage the development of a single union employee representation unit by offering to each new and existing employee detailed information on membership of the predominant union on site. 9.4.2 For the purpose of union membership, identification of any employee not a member of a union for whatever reason shall, for the purpose of identifying the predominant union, shall be deemed to be a member of the CFMEU, Forest and Forest Products Division. The company will not challenge the right or ability of the CFMEU to constitutionally cover any employee covered by this agreement. 9.4.3 All members of the CFMEU, Forest and Forest Products Division are deemed to be part of and comprise the single union employee representative unit. 9.4.4 The employer will encourage all employees to be members of the CFMEU The employer will consider the membership of the CFMEU as a positive factor in any decisions based on merit regarding engagement in employment and in the continuation of employment in relation to termination and redundancy and in election to committees, provided that the employee concerned is capable of and qualified to perform the task or job or is willing to undertake training to become capable or qualified within a prescribed time as agreed between the parties. " [9] In the Welland Agreement, the alleged " objectionable provision " is as follows: " 12. SINGLE UNION EMPLOYEE REPRESENTATION UNIT (a) It is a condition of this Agreement that both management and the employees employed at sites, where this Agreement has application, develop a single union employee representative unit. Management will encourage the development of a single union employee representative unit by offering to each new and existing employee, detailed information on membership of the predominant union on site. (b) For the purpose of any union membership identification any employee not a member of a union for whatever reason shall, for the purpose of identifying the predominant union, be deemed to be a member of the AWU. (c) Preference in employment, redundancy, termination, election to committees shall be given to members of the single union employee unit, provided that the person is capable of any qualified to perform the job or task. " [10] The alleged " objectionable provision " in the fourth certified agreement, being the Mechanical Maintenance Solutions (MMS) Maintenance, Fabrication Workshop and Site Certified Agreement 2001/2003 ( PR905261 , "the MMS Agreement") is as follows: " 27 EMPLOYMENT The Company commits to wherever possible when employing labour, to contact unemployed AMWU or CFMEU members who are suitably qualified, first. " Submissions on the Brown Wood Agreement, the Port Adelaide Agreement and the Welland Agreement [11] In respect of the alleged " objectional provision " in the Brown Wood Agreement, the Port Adelaide Agreement and the Welland Agreement, the Employment Advocate submitted the clauses are an objectionable provision because: · The first part of the representative unit clause is intended to give the Construction, Forestry, Mining and Energy Union (CFMEU) or The Australian' Workers Union (AWU) the exclusive right of representation in respect of all employees, including all union members. The intent and practical effect is to prejudice and deny the ability of employees to represent themselves or, in the case of employees who are members of another union, to be represented by another union. · The first part of the representative unit clause is also concerned with giving the CFMEU or AWU an advantage over other unions and establishing it as the representative of union members on site. · The second part of the representative unit clause, in so far as it concerns the CFMEU, is concerned with and purports to give CFMEU members an advantage over other employees in that it provides that CFMEU membership is a " positive factor " for specified purposes. The treatment of union membership as a positive factor has the effect of giving preference. The provision purports to require and permit the employer to act in accordance with what is, in substance, a preference clause. · The second part of the representative unit clause, in so far as it concerns the AWU, is a preference clause. [12] The Employment Advocate submitted that as the clause in each of the certified agreements is an objectionable provision, the Commission must order that the certified agreements be varied by deleting the clause in its entirety from each of the agreements. [13] The AWU submitted the alleged " objectionable provision " in the Welland Agreement was not objectionable. The CFMEU, in opposing the applications and submissions of the Employment Advocate in respect of the alleged " objectional provisions " in the Brown Wood Agreement and the Port Adelaide Agreement, referred to provisions in the " 2002 Auspine Tarpeena Certified Agreement " ( PR919828 ), an agreement certified by the Commission in mid 2002. Submissions on the MMS Agreement [14] In respect of the alleged "objectionable provision " in the MMS Agreement, the Employment Advocate submitted the clause is an objectionable provision because under the clause the employer is required to contact members of the two unions who are unemployed and to give advice that there is a vacancy and, by necessary implication, to make job offers to the persons contacted. By that process the employer gives preference in employment to members of the Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union (AMWU) and the CFMEU over those who are not union members or who are members of other unions. [15] The clause is intended to operate as a preference clause. The clear intent and practical effect of the clause is to give AMWU and CFMEU members preference over other potential employees. It is a term that is inconsistent with the legislative intent to remove provisions which would have the effect, whether direct or indirect, of giving preference to unionists over non-unionists, or non-unionists over unionists. A preference clause operating on engagement is an objectionable provision because it has the effect of requiring and permitting a refusal to employ a non-union member. Furthermore, the clause purports to operate in a way that would exclude members of other unions. [16] The clause requires that the identified conduct be undertaken and it purports to require and permit the employer to offer employment to a member of the CFMEU or the AMWU in preference to another person. If the conduct were to occur, it would be conduct in breach of Part XA. [17] The Employment Advocate submitted that as the clause is an objectionable provision, the Commission must order that the certified agreement be varied by deleting the clause in its entirety from the agreement. [18] The AMWU submitted the Employment Applicant's s.298Z application should be dismissed. The clause would be an objectionable provision if it required membership or non-membership of an organisation and granted preference in employment. However, the clause does not grant preference in employment to union members. [19] While the Employment Advocate submits the Commission should imply into the clause that the employer is required by it to make job offers to the persons contacted and not to contact or make job offers to persons who are not union members, in doing so the Employment Advocate is seeking to write into the clause words that are not within it. [20] There is no necessity to imply anything into the clause. The clause is not ambiguous and it is not as though without the implication there is nothing required by the clause. [21] The CFMEU supported and adopted the submissions of the AMWU. Conclusion [22] Section 298Z was considered by a Full Bench of the Commission in Australian Collieries Staff Association v Gordonstone Coal Management Pty Ltd [Print Q2167, 22 June 1998 per Munro J, Polites SDP and Hodder C]. [23] In Gordonstone's case, it was claimed clause 25 of the Coal Mining Industry (Supervision and Administration) Interim Consent Award, 1990, Queensland (the Award) breached s.298Z. [24] Clause 25 of the Award was in the following terms: " 25 - REDUCTION OF HANDS (a) When a reduction of hands is decided upon by the management preference in retaining employment shall be given firstly to members of the Association aged sixty years and under in the various class or classes of work according to length of service at the mine, secondly to members of the Association over sixty years of age in the various class or classes of work according to length of service at the mine. (b) If at any time an agreement on the order of a reduction of hands is arrived at between the management and the Association on behalf of its members at the mine such agreement will bind members of the Association notwithstanding that it may be inconsistent with sub-clause(a) hereof. (c) The provisions of the Clause shall be subject to Sections 267 and 320 of the Industrial Relations Act, 1988. " [25] In respect of s.298Z, the Full Bench said: " 20. Section 298Z imposes a duty on the Commission to determine the application by varying the award to remove objectionable provisions. The definition of objectionable provisions in subsection 298Z(5) must be read in conjunction with Part XA. So far as relevant to this matter, we construe our duty as requiring that we remove provisions that require or permit conduct that would result in the dismissal of an employee or discrimination against an employee in the terms on which the employer offers to employ the employee, for the reason that the employee is not a member of an industrial association. 21. The power in the Commission to vary the relevant award is expressed as an obligation `to vary the award so as to remove the objectionable provisions'. The object of section 298Z would appear to be crystallised in the heading given to the section: `Removal of preference clauses from awards and certified agreements'. The relevant Second Reading Speech and Explanatory Memorandum extracts about section 298Z explain it as follows: ` The freedom of association provisions of the Act prohibit discrimination based on membership or non-membership of a union, and render preference clauses void and of no effect. However, some unions still cling to the past and want such clauses included in certified agreements. Leaving aside the futility of such an exercise, there is a real risk that some employers and employees may mistakenly take these void clauses at face value, disadvantaging employees and breaching the Act in the process. It is therefore essential that agreements containing preference clauses are not certified, and for the same reasons, provisions in existing awards and agreements which breach the freedom of association provisions should be removed. Provision is therefore also made for awards and agreements to be varied, on application, to remove void preference clauses. 6.9 Proposed item 6 would insert new section 298Z. The proposed new section would allow the Commission to vary an award or certified agreement to remove certain `objectionable provisions'. An objectionable provision [as defined in proposed subsection 298Z(5)] is any provision that directly or indirectly requires or permits or purports to require or permit any conduct in breach of Part XA of the WR Act whether or not that provision would be void because of the operation of section 298Y. 6.10 Proposed subsection 298Z(1) requires the Commission, on application of certain persons, to vary an award to remove any provisions it is satisfied are objectionable. Proposed subsection (3) is a parallel provision in relation to certified agreements. ' 22. Having regard to the apparent purpose of section 298Z, it is appropriate to construe the duty and associated power to vary awards and agreements in a way that ensures the exercise of the power does not travel beyond its ostensible purpose. That limitation to the purpose of the provision is reflected in the expression of the duty to vary `so as to remove the objectionable provisions'. The word `remove' appears in several contexts in the Act. Its use in section 298Z may be contrasted with the power in section 113 to `set aside an award or any of the terms of an award'; as well as with the power in section 113 (2A) `to remove the discrimination by setting aside, by setting aside the terms of, or varying, the award or agreement'; and with item 51(2) of Schedule 5 of the WROLA Act which was relied upon by Dr Jessup. No conclusive point about the meaning of the word in the context of section 298Z emerges from those contrasts. The ordinary meaning of `remove' appears to us to be expressed in the Shorter Oxford English Dictionary. It may be paraphrased as `to take away, to relieve from some quality or condition especially one of a bad or detrimental kind'. Consistently with that meaning, we construe the duty in section 298Z as requiring that the power to vary be exercised so as to take away, or relieve the award from the objectionable provision. 23. On that construction, and on our view of the purpose of section 298Z, it is appropriate that the Commission should as far as practicable leave intact all provisions of a relevant award or agreement that do not need to be removed because they are objectionable. " [26] In respect of clause 25 of the Award, the Full Bench said: " We consider that subclause 25 imposes a duty on the employer to observe the order of dismissal therein prescribed. That order compels the employer to take into account a relevant employee's membership or non-membership of ACSA. In our view, the provision in subclause 25(a) therefore requires or permits conduct that would result in the dismissal of an employee for the reason that the employee is not a member of an industrial association. Subclause 25(a) is, to that extent at least, an objectionable provision. Accordingly, the Commission is obliged to remove at least that objectionable provision and constituent of subclause 25(a) ... GCM also identified, as an objectionable provision, the function of subclause 25(a) to require conduct that accords to ACSA members a benefit necessarily denied to non-members. We are satisfied that so much of the provision as requires that discriminatory benefit of retention in employment because of membership of ACSA is an objectionable provision. However, that characterisation of the function of subclause 25(a) depends again upon the use of union membership as a determinant moderating the application of the lofo principle. The benefit of protection against dismissal in subclause 25(a) is related to membership of ACSA. Therefore, a second basis for the provision being found to be objectionable is established by reference to the class of conduct prohibited under paragraph 298K(1)(e) of the Act ... In the preceding paragraphs we have identified the relevant objectionable provision with subclause 25(a). In particular we have identified it with the use of ACSA membership as the determinant for a protection against dismissal in a reduction of hands situation. The versions of clause 25 proposed by ACSA include amendments to all three subclauses of clause 25. On the view we have adopted of the objectionable provision in subclause 25(a), there is no basis established in the terms of subclauses 25(b) or (c) which would by itself attract the power in section 298Z. Those parts of the subclause might be removed as part of the objectionable provision. However there is no source of power in section 298Z to renovate them if they do not need to be removed. In our view, it is necessary to determine whether subclause 25(a) can be amended in a way that leaves intact a duty on the employer to observe the `last on, first off' principle, while removing the objectionable constituents of it ... It follows in our view that it is inconsistent with both the arbitral history, and with the main function of subclause 25(a), to characterise that subclause in its entirety as a preference clause. We consider that the union membership preference determinant, that is part of the existing scheme of the provision made in subclause 25(a), although incidental to it, may be removed without setting aside the subclause in its entirety. " [Print Q2167 at paragraphs 31, 33, 37-38, 41] [27] The Full Bench went on to strike the words " firstly to members of the Association aged sixty years and under " and the words " secondly to members of the Association over sixty years of age in the various class or classes of work according to length of service at the mine " from clause 25(a) of the Award. [28] In doing so, the Full Bench commented on the effect of such a variation on the employer's obligations. It said: " 42. It was Dr Jessup's contention, that a consequence of a determination to that effect will be that a new obligation is imposed on the employer. In one sense that objection is sound. However the same may be said of the converse if more than the objectionable provision is removed. Inevitably, the removal of one provision from an award or agreement must often change the effect or operation of associated provisions. In this instance, as the arbitral history demonstrates, the employer has been placed under a duty to observe the last on first off principle upon a reduction of hands. Given the purposes of that obligation as a dispute prevention measure, and the nature of the objectionable provisions, the most appropriate means of removing the objectionable provision is to remove the union preference determinant that is the main constituent of its objectionablity. The variation of subclause 25(a) in that way will, at the same time, remove the discriminatory withholding from non-union members of the benefit of a seniority based protection against dismissal upon a reduction of hands. " [29] In these matters, the relevant clause in the Brown Wood Agreement imposes a duty on the employer to: · Develop a single union employee representative unit comprised of CFMEU members. · Not challenge the right or ability of the CFMEU to constitutionally cover any employee covered by the Brown Wood Agreement. · Encourage all employees to be members of the CFMEU. · Consider CFMEU membership as a positive factor in any merit based decisions on engagement and continuation of employment. [30] In my view, to the extent the clause imposes a duty on the employer to develop a single union employee representative unit comprised of CFMEU members and to consider CFMEU membership as a positive factor in any merit based decisions on engagement and continuation of employment, it requires or permits, or purports to require or permit, or has the effect, or purports to have the effect, of requiring or permitting conduct that would contravene Part XA of the Act. Accordingly, I am satisfied the Brown Wood Agreement contains an objectionable provision. [31] However, clauses or parts of clauses encouraging membership of a union have been found not to be an objectionable provision ( Clout Engineering Pty Ltd v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union , Print Q7710, 22 October 1998 per Munro J). [32] Further, the requirement that the employer not challenge the CFMEU's constitutional coverage of the employees is clearly not an objectional provision. [33] The objectionable provision is the references in the clause imposing the duty to develop a single union employee representative unit comprised of CFMEU members and to consider CFMEU membership as a positive factor in any merit based decisions on engagement and continuation of employment. Without those references in the clause, the Brown Wood Agreement would not contain an objectionable provision. [34] Accordingly, and having regard to s.298Z of the Act, I will vary the Brown Wood Agreement to remove the objectionable provision it contains by deleting all except the following words from clause 10.1 in the certified agreement: " 10.1 Union Representative The company will not challenge the right or ability of the CFMEU to constitutionally cover any employee covered by this agreement. The employer will encourage all employees to be members of the CFMEU ". [35] For similar reasons, I will similarly vary clause 9.4 in the Port Adelaide Agreement and vary the Welland Agreement by deleting all the words in clause 12 of that certified agreement. [36] I will also make corresponding variations to the " Arrangement " or " Index " clause of each of those certified agreements. [37] Such an approach is consistent with that adopted by the Full Bench in Gordonstone's case. [38] It is also consistent with the approach that has been adopted by the Commission in order to make an agreement that contains objectionable provisions certifiable. [39] In Re Domino's Pizza Australia Pty Ltd and Others [Print R6382, 22 July 1999 per Ross VP, Fielding DP and O'Connor C], a Full Bench of the Commission allowed the parties to an agreement that was before the Full Bench for certification to amend a clause in the agreement which was relevantly indistinguishable from a clause in another certified agreement that the Commission had found was an objectionable provision, during the course of the certification hearing. The Full Bench then certified the agreement as amended. [40] In this regard, s.170LV of the Act provides that: " 170LV Other options open to Commission instead of refusing to certify an agreement (1) If, under section 170LT or 170LU , the Commission has grounds to refuse to certify an agreement: (a) the Commission may accept an undertaking from one or more of the persons who made the agreement in relation to the operation of the agreement and, if satisfied that the undertaking meets the Commission's concerns, certify the agreement; and (b) in any case, before refusing to certify the agreement, the Commission must give the persons who made the agreement an opportunity to take any action that may be necessary to make the agreement certifiable. (2) If an undertaking is not complied with, the Commission, after giving the persons who made the agreement an opportunity to be heard, may: (a) order the one or more persons who gave the undertaking to comply with it; or (b) by order, terminate the agreement. (3) If: (a) after doing the things required or permitted by subsection (1), the Commission is still required to refuse to certify the agreement; and (b) it is so required only because it is not satisfied as mentioned in subsection 170LU (1); the Commission may conciliate the industrial dispute or industrial situation concerned with a view to assisting the persons concerned to make the agreement certifiable. " [41] Section 170LU(2A) provides that: " (2A) Despite section 170LT , the Commission must refuse to certify an agreement if the Commission is satisfied that it contains provisions that: (a) require or permit, or purport to require or permit; or (b) have the effect, or purport to have the effect, of requiring or permitting; any conduct that: (c) would contravene Part XA (whether or not the provisions would in any case be void because of section 298Y ); or (d) would, but for section 298C , contravene Part XA. " [42] The objectionable provision in the Brown Wood Agreement and the Port Adelaide Agreement could have been dealt with prior to the certification of the agreements by the Commission requiring an appropriate undertaking from the employers or the necessary amendment of the clause consistent with s.170LV of the Act and the decision of a Full Bench of the Commission in the Domino's Pizza case. [43] Should the parties consider the variations I will make create ambiguity or uncertainty in the certified agreements, they may make application pursuant to s.170MD(6) of the Act. [44] With respect to the MMS Agreement, the relevant clause in the MMS Agreement imposes a duty on the employer to, wherever possible, contact suitably qualified unemployed AMWU or CFMEU members first. It only requires the employer to contact them first. It does not require the employer to employ those unemployed AMWU or CFMEU members. [45] In my view, therefore, the clause does not require or permit, or purport to require or permit, or have the effect, or purport to have the effect, of requiring or permitting conduct that would contravene Part XA of the Act. Accordingly, I am not satisfied the MMS Agreement contains an objectionable provision. The Employment Advocate's s.298Z application in respect of the MMS Agreement is therefore dismissed. BY THE COMMISSION: SENIOR DEPUTY PRESIDENT Printed by authority of the Commonwealth Government Printer <Price code D>