Introduction
Employers are often faced with difficult questions about what laws apply to them and their employees. In many cases it can be difficult to answer what should be a straightforward question. For example, recent changes to the Workplace Relations Act 1996 (Cth) (WR Act) by the amending laws that introduced the new national industrial relations system (commonly referred to as Work Choices) have led to questions being raised about whether the new system applies to an employer and if so, to what extent. While the High Court has upheld the legality of the new federal system, it has not decided to whom and to what extent that system applies.
Some helpful guidance on those points has been provided by the recent decision of the full Federal Court of Australia (Tristar Steering and Suspension & Anor v Industrial Relations Commission of New South Wales & Anor), which held:
- the federal system applies to employers who are constitutional corporations, and
- the Industrial Relations Act 1996 (NSW) (State Act), to the extent that it is inconsistent with the Workplace Relations Act (Cth) (WR Act), does not apply to constitutional corporations that are employers.
Background
Briefly, the relevant facts are that in February 2007, the NSW Minister of Industrial Relations referred a matter to the NSW Industrial Relations Commission (State Commission) under the State Act, requiring the State Commission to enquire into and report to the Minister on what was described as a dispute between Tristar and its employees about the availability of work at the company’s operations and whether the employees were entitled to redundancy or termination payments. Essentially, as part of a long-running dispute, the employees and their unions argued that their jobs were redundant and they should receive those payments. Tristar, for its part, argued that the employees’ positions were not redundant and no redundancy payments were due.
Tristar commenced Federal Court proceedings to challenge the jurisdiction of the State Commission to conduct the enquiry under the State Act. They argued that the WR Act overrode the State Act as a result of section 109 of the Constitution and therefore the State Commission had no power to conduct the enquiry referred to it by the Minister.
Relevant law
Section 109 of the Constitution provides that:
"When a law of the State is inconsistent with the law of the Commonwealth, the latter shall prevail and the former shall, to the extent of the inconsistency, be invalid”
Apart from section 109 of the Constitution, the relevant provisions considered by the Federal Court were:
- subsection 16(1) of the WR Act, which provides:
"(1) This Act is intended to apply to the exclusion of all the following laws of a State or Territory insofar as they would otherwise apply in relation to an employee or an employer.
(a) a State or Territory industrial law;
(b) a law that applies to employment generally and applies to leave other than long service leave.”
(subsections 16(2), (3) and (4) of the WR Act exempt a number of subject matters from the operation of subsection 16(1). None of the exemptions are relevant for the purposes of this case), and
- section 146 of the State Act, under which the Minister referred the Tristar matter to the State Commission. Section 146 provides, in relation to the State Commission:
(1) The Commission has the following functions:
(a) setting remuneration and other conditions of employment;
(b) resolving industrial disputes;
(c) hearing and determining other industrial matters;
(d) enquiring into, and reporting on, any industrial or other matter referred to by the Minister;
(e) functions conferred on it by this or any other Act or law…”
Decision
In short, the full Federal Court held:
- section 16 of the WR Act is intended to cover the field of legislative activity in relation to an employee or employer where the employer is covered by the WR Act, including where the employer is a constitutional corporation
- Tristar is a constitutional corporation
- the reference to "in relation to” in section 16 of the WR Act is to be given a broad interpretation, covering not only actual regulation of specific rights and obligations but also anything done by or under a State or Territory industrial law
- the State Act is invalid to the extent that it would otherwise apply in relation to constitutional corporations who are employers under the WR Act
- section 146 of the State Act does not allow the State Commission to perform any function in relation to such an employer or its employees, and
- the Minister’s reference to the State Commission was ineffective to give the State Commission power to conduct an enquiry in relation to Tristar or its employees.
Accordingly, the Full Federal Court made a declaration restraining the State Commission from conducting any further proceedings and granted a permanent injunction to that effect.
Lessons for employers
The key message for employers is that it is essential they determine their legal status and whether they are covered by the new federal industrial relations system.
If they are, State and Territory industrial laws will have limited application to them and to their employees, subject to the terms of section 16 of the WR Act. Understanding your legal position is a must for all employers, especially those in industries in which unions are pursuing campaigns designed to encourage employers to continue to operate according to State or Territory industrial laws. While there may be compelling commercial or practical reasons for doing so, employers need to be very careful to ensure that they comply with their legal obligations. Expert advice should be sought before employers commit to an industrial strategy that may jeopardise compliance with the WR Act and expose them to significant legal penalties.
