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Thursday, 2 December 2004
Page: 34

Senator SHERRY (11:34 AM) —We are now considering the Workplace Relations Amendment (Agreement Validation) Bill 2004. The Labor opposition supports the purpose of the bill in providing certainty for those certified agreements rendered potentially invalid as a result of a decision of the High Court in the Electrolux case. However, the Labor opposition believes the way in which the bill goes about providing that certainty could be improved. Far from resolving issues created by the Electrolux decision, the bill could allow that uncertainty to continue because many clauses of collective agreements are yet to be tested before the full bench of the Australian Industrial Relations Commission or by another authoritative court and may not be tested for some time. The bill also leaves uncertain whether industrial action previously taken in support of certified agreements which contain matters not pertaining to the employment relationship in protected action would thus render those certified agreements not be able to be the subject of further legal action.

The Electrolux decision has been the cause of a great deal of uncertainty in relation to certified agreements. The government's bill does not completely address that uncertainty. For these reasons the opposition will move amendments to the bill which provide for greater certainty. I turn first to the provisions of the bill. The bill amends the Workplace Relations Act 1996 to validate agreements which were certified, approved or varied prior to the decision of the High Court in Electrolux of 2 September 2004. This judgment was based on section 170LI of the Workplace Relations Act, which provides that collective agreements can be certified by the Australian Industrial Relations Commission only if all matters contained in the agreement pertain:

... to the relationship between:

(a) an employer ... 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 which contain provisions that do not pertain to the relationship between an employer and employees may not be valid because the commission did not have power to certify them.

Prior to the Electrolux decision, there were conflicting precedents in the commission and the Federal Court about the nature of this requirement. Some agreements were certified, although they contained matters that may not now meet the test in section 170LI, as subsequently interpreted by the High Court in Electrolux. The bill applies to agreements which were certified, approved or varied on or before 2 September 2004. The bill provides that, where an agreement containing matters that do not pertain to the employment relationship were certified, approved or varied prior to the Electrolux decision, these matters are not to be considered as affecting the validity of the agreement. In effect, the offending provision or provisions will not stand but the balance of the agreement will.

The bill validates, firstly, certain agreements made under division 2 where the employer is the Commonwealth or a constitutional corporation; secondly, certified agreements made under division 3 in relation to an individual dispute or industrial situation; and, thirdly, Australian workplace agreements, AWAs. 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 flaws in its making, certification or approval, this bill will not render it valid. Nor does the bill validate any protected industrial action that was taken in relation to matters not pertaining to the employment relationship. The bill was referred to the Senate Employment, Workplace Relations and Education Legislation Committee. A hearing took place in Melbourne on Thursday, 25 November. The report of the committee was tabled on Monday, 29 November.

The decision of the High Court in Electrolux has created uncertainty in the application of many existing certified agreements. The High Court ruled that an enterprise agreement could only be certified by the commission if all of its provisions related directly to the employment relationship between the particular employer and its employees. If any provision offended that test, the whole agreement is rendered invalid. While the decision itself was largely confined to a particular provision relating to bargaining fees, the decision has much wider ramifications. There has since been considerable speculation and debate as to which provisions commonly included in enterprise agreements might fall foul of those provisions of the Workplace Relations Act that limit the matters that may be so included.

Because many enterprise agreements which have previously been certified by the commission are likely to contain a provision that potentially does not pertain to the employment relationship, many agreements may now be technically invalid. As a matter of general principle and a starting point, employers and employees should be entitled to freely and voluntarily reach agreement on whatever matters they want to, provided it is lawful to do so. That should be able to occur without unnecessary legal hindrance or bureaucratic complexity. Because of this, the capacity post Electrolux for ongoing hairsplitting by courts and tribunals in relation to what might be and what might not be matters pertaining to the employment relationship is an unwelcome development. As for Electrolux, it is imperative that uncertainty caused by the decision be resolved before parliament rises this year. A `do nothing' approach is not a viable option. The real question is: what form of validation should take place?

The government's bill proposes to resolve the uncertainty by retrospectively validating all those parts of certified agreements that pertain to the employment relationship, but only those parts. The problem with the government's bill is that for some time there will remain considerable uncertainty as to which provisions of certified agreements remain valid and which do not. This is because many provisions are yet to be considered authoritatively by the full bench of the Industrial Relations Commission, by the Federal Court or, indeed, even by the High Court. Until each contentious provision is properly and authoritatively considered, it will remain unclear which parts of certified agreements are enforceable. Employers and employees will know that the agreement stands but not necessarily know which clauses are in and which are out. Labor believes that the better approach would be to validate the whole of existing certified agreements, allowing each provision to continue to have effect until the expiry date of the agreement.

Agreements already certified by the commission have been made in good faith between employers and employees. In approving these agreements, employers and employees have agreed on the entirety of their terms. If there is to be any validation—and the arguments in favour of providing certainty in this area are compelling—then parliament should give effect to the whole of the agreements reached voluntarily between the two parties on the basis of the substance that each is considered reasonable and appropriate for their individual circumstances.

The bill also fails to give certainty in relation to the legal status of industrial action taken in support of claims in certified agreements that may subsequently be ruled as not pertaining to the employment relationship. Given the considerable uncertainty in relation to which matters may and may not be included in collective agreements and the serious penalties that apply to lack of unprotected action, it is appropriate that certainty is provided in relation to protected industrial action already taken. Unions and their members who took industrial action in good faith, believing on reasonable grounds that it was protected, should have legal protection from any action which might, however unlikely, subsequently be taken against them. During the committee stage of the legislation, I, on behalf of the Labor Party, will move amendments to provide certainty in relation to protected industrial action that has already been taken.

In conclusion the Labor opposition supports the purposes of the bill in providing certainty for those certified agreements rendered potentially invalid as a result of the decision of the High Court in Electrolux. However, the Labor opposition believes the way the bill goes about providing that certainty contains shortfalls and could be substantially improved. In the event that Labor's amendments, which I will move in committee, are not accepted, Labor will support the bill.