Just this week certification of an enterprise agreement for the Franklins supermarket chain was held up by the Australian Industrial Relations Commission because a clause in the agreement did not relate to an employment matter.
This certification delay, until clauses were removed, was the first and most immediate flow-on from a High Court ruling of late last week, the implications of which are far reaching. The High Court's so called Electrolux decision ruled that a clause in an enterprise agreement is not valid if the clause does not relate to an employment relationship and consequently the entire agreement is invalid.
The Electrolux case involves a long series of court battles starting in the AIRC several years ago where the white goods manufacturer objected to having a clause inserted in its enterprise agreement that required it to force non-union employees to pay fees to unions.
Outwardly the case looked like backdoor compulsory unionism, but the Australian Industry Group, on behalf of Electrolux, took the issue through to the High Court asking one simple question: does industrial relations law extend beyond direct employee-employer relationships to wider economic and social matters?
It's a question that cuts to the heart of how Australia conducts business and manages its economy. Unions argue that non-unionist benefit from union negotiations and so should pay "bargaining agent" fees for the negotiation services.
But the broader social issue is whether someone can be forced to pay for services of a provider they don't wish to use. Trade practices law makes such third line forcing illegal.
The AIG argued a technical issue before the courts that federal industrial relations legislation only relates to matters directly between the employee and employer. So that would mean for example, that bargaining agent fees are separate commercial matters between unions and employees.
The High Court decision is that a union-employee fee is not a matter between employees and employers and so bargaining agents' fees cannot be included in enterprise agreements.
The implications go way beyond bargaining agents' fees because over the last decade unions have inserted into enterprise agreements all sorts of items covering managerial and other matters. These include for example prohibitions on businesses using casuals, labour hire, AWA's, and giving union dominated work committees control over rostering, safety procedures and even mobile phone usage.
My "Capacity to Manage Index" measured these items discovering that under enterprise agreements there has been systemic reduction in managerial capacity to manage, particularly in food and auto manufacturing and commercial construction.
And this reduction in capacity to manage has come as a direct result of the union movement's decade long strategy of extending industrial relations jurisdiction into managerial and often social and political areas.
The High Court decision appears to undo all this.
But NSW unions claim the High Court ruling can be ignored in NSW. The Electrical Trades Union has filed an application in the NSW Industrial Relations Commission to have a bargaining agent's fee inserted into an award for the electrical distribution company, Country Energy.
The ETU reasons that the definitional scope of the NSW industrial relations act covers "industrial matters" which is different to federal legislation which covers "employment relationships".
To the lay person it looks like semantic trickery. But according to lawyers the definitional twist gives the NSW IRC almost unlimited ability to extend its powers to rule over commercial issues. The NSW IRC has done this aggressively for some time.
A sharp divide now emerges. Superior courts appear to be telling industrial relations courts to stick to employment issues and that managerial and commercial matters belong in other legal domains.
The Howard government has long fought to keep the industrial relations system to its accepted role of employee protections. The AIRC however has supported unions in extending jurisdiction to commercial and managerial issues. The High Court has said, "Enough!"
The federal opposition has lauded the NSW model as a vision of its policy intent. How far they would apply this model and just where they would draw the line between employment and commercial law is unexplained.
The implications for how Australians do business are significant but unclear. The distinctions on many levels are now stark.
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