Employment Law the Need for Unions - Assignment Example

Employment Law – the Need for Unions According to Peter Reith, his view against unions is based upon the fact that “there is too often resort to industrial action as the way to fix up problems instead of sitting down and talking between employers and employees.1 He also is of the view that the role once undertaken by unions has been overtaken by events that have made their role statutory as provided through the Parliament. The existence of a union means the danger of employees being forced to join a Union and allow the Union to negotiate on their behalf, even if they do not wish to join the Union2. Hence, it could hinder the process of interaction between individual employees and an employer and it might interfere with an individual employee’s wishes and freedom to negotiate terms of employment with an employer. The notion of unions also goes against the notion of the employment contract being a free will contractual arrangement between the parties, reflecting their individual wishes and the freedom to negotiate terms according tot hose express wishes. However, despite the above advantages that may be cited, I do not agree with Peter Reith’s views on the redundancy of unions in a modern global economy. I believe that unions should still be included as participants, largely to prevent exploitation and unfairness towards individual workers. Employers can designate workers as independent contractors and thereby escape payment of many of the benefits that may be accruing to employees. Employees cannot individually fight their employers in an industrial dispute. As pointed out by O’Connor J, “if the judicial power of the commonwealth is to be effectively exercised by way of conciliation and arbitration in the settlement of industrial disputes, it must be by bringing it to bear on representative bodies standing for groups of workmen….” 3 The observations made by O’Connor indicate that unions are necessary to redress the inherent power imbalance that exists between employer and employee. Moreover, in order to effectively adjudicate an industrial dispute, there must be a representative body that can defend and put forth the interests of the works. Since there is greater strength in a collective approach, the workers are likely to be benefited by unions. In today’s global age, where the urge for profits is overpowering, employers are tempted to exploit individual workers to a greater degree unless there is a representative body to watch out for their interests. Individual employees may not find it easy to ensure that employers meet their obligations, while the collective strength of a Union and the influence that it can wield is likely to be more effective in ensuring that employees do not short change their employees. Therefore, I would conclude that the need for unions is actually enhanced in a global economy where there may be greater chances of exploitation of individual workers. 2. The law of formation of contracts may be said to be the same as the law for formation of any other type of contract, because it is governed by the same principles (a) offer (b) acceptance (c) consideration and (d) intention to be legally bound4. A contractual arrangement may exist when a formal employment agreement is drawn up between the parties or even when there is an informal oral agreement between the parties regarding work. Under the laissez faire principles of contract, courts will not interfere in a contractual arrangement even if it is somewhat unfair because the underlying assumption is that the parties have accepted such conditions of their own free will, even if they are somewhat unfair to one of the parties. This was also the case in Doyle v Secure Parking Pty ltd5, where an employee chose to accept unfair terms rather than seek alternative employment. Another aspect governing an employment contract that makes it similar to other contracts is the payment of consideration – some “right, interest, profit or benefit” 6accruing to both parties. A valid contract will exist only when there has been payment of consideration, i.e, when an amount is agreed upon as remuneration for the employee’s services. As a result, workers performing services out of charitable motivations without receiving consideration for their work will not be deemed to have entered into a valid employment contract7. Hence the law of formation of a contract for employment must adhere to the requirements for the general formation of contracts. However in some instances, a contract of employment has been held to exist, even where a charitable or religious service was being performed, for example in the case of Ermogenous v the Greek orthodox Community of SA Inc8. In this case, it was held that the bishop was performing a contract of service for which he was entitled to claim unpaid service leave. In some case, the existence of an employment contract may be inferred from the conduct of the parties.9 However, just as in the case of formation of normal contracts, one of the essential requirements for the existence of a contract is that there must be an offer and that offer must be accepted, or in other words, there must be an agreement reached between both the parties and the contract must be bilateral. For example in the case of Dietrick v Dare10 a handicapped person was employed on a trial basis, however when he was injured during the trial, the Court did not require the employer to pay compensation because the nature of the contract was still a unilateral one. 3. In holding an employer responsible for the wrongful conduct of his employees, there are only certain instances where this may be justified. For example, when an employee enters into a contract with a third party which gives to a claim for wrongful actions, the employee cannot be held responsible since he has entered into the contract on behalf of the employer, through the authority that has been directly handed over to him by the employer11. In such a case, where an employee may also be acting on instruction from his employer, he cannot be held liable for any wrongful action and it may be justifiable to hold the employer rather than the employee, responsible for the tortuous action. When an employer has authorized or ratified the tortuous conduct, then it is only fair if the employer is held liable for such conduct and not allowed to engage in such actions because he can pass on the blame to the employee. However, where an employee deliberately misrepresents the degree of his authority and fraudulently claims to act on behalf of his employer, then it must be the employee who must be held liable rather than the employer, as has also been held by the Courts12. When employers are made to bear the costs for the tortuous actions of their employees on an unconditional basis, then this would create financial hardships for an employer and may rightly be a cost impediment to creating employment in Australia. For example, an employer is held to be vicariously liable for any tortuous action arising out of the conduct of his employees, if such torts are committed during the course of employment.13 Such a liability will fall upon an employer even if he is not directly responsible for the tortuous action and is not personally at fault and despite the fact that he may have taken the utmost precautions against such conduct. For example, in the case of Summers v Soloman14, the employer was held vicariously liable when a former employee bought jewelry purportedly in the name of his employer, whose manager he had been. Although the employee disappeared with the jewelry, the employer was held vicariously liable and had to make good the cost of the jewelry. While it may be argued that employers are in a better financial position to compensate wrongs and the introduction of vicarious liability will introduce greater vigilance in the workplace, there may also be a negative effect. Since employers have to bear such a high liability, they will be reluctant to hire new employees or to hand over greater responsibilities to them for fear of falling prey to vicarious liability and this may in the long run, adversely affect employment in Australia. Therefore employees must be held legally responsible for their own behavior. 4. The powers of the Commonwealth have been restricted because when the Australian States agreed to form a federation of States, they were reluctant to hand over too much power to the Commonwealth governing body. Therefore, certain limited areas were set out where the Commonwealth Government was allowed to enact legislation and these areas were set out while framing the Constitution of Australia. Due to such restrictions, the Commonwealth Government has been placed in a position where in framing any kind of legislative policy, it must always determine first, whether or not the Constitution permits the formulation of legislative policy in that area. Section 51 of the Constitution sets out the legislative powers of the Commonwealth in respect to industrial disputes, but section 51(35) specifically restricts this legislative power to “conciliation and arbitration for the prevention and settlement of industrial disputes extending beyond the limits of any one state.” Therefore, this delineates a specific area where the Commonwealth is empowered to legislate. However this area does not include the powers for the Commonwealth to pass any direct legislation on the subject of industrial dispute, neither can it legislate upon the establishment of minimum employment conditions or regulation of work conditions of employees within Australia. These are areas that have been removed from the purview of the Commonwealth Government and have not been included within the Constitution as areas that the Commonwealth Government can legislate upon. As a result, the powers of the Commonwealth Government to legislate are to be strictly reserved to the areas concerning prevention of disputes and their settlement and even these areas have further restrictions – the Commonwealth can only legislate in those instances where the matter under dispute extends beyond the boundaries of one single state, as specified under Section 51(35). Moreover, the Constitution also restricts the role of the Commonwealth Government to pass legislation regarding arbitration and conciliation, therefore the question of choices in dealing with disputes or framing legislation in regard to the employment conditions that give rise to disputes also falls outside the purview of legislative powers allowed to the Commonwealth Government. The requirement of interstatedness means that the Government cannot legislate upon minimum employment standards, therefore it can never really take a leading role in the area of industrial relations or have any significant impact upon employment and industrial law. Australian Workplace Agreements also displace certain Commonwealth laws, further limiting the legislative role of the Commonwealth. 5. Litigation involved in the case of Patrick Stevedores Operation no: 2 Pty Ltd and Others v Maritime Union of Australia15 mainly revolved around two significant provisions of the WRA. The first was the Greenfield clauses of the WRA, as set out under Section 329. Under these clauses, new employees can be hired on the basis of individual employee contracts in the form of Australian Workplace Agreements. However, although the Act allows for the hire of a large number of employees as individual contractors, there is no provision whereby employees can be made redundant on a large scale. The provisions of the legislation therefore led the Corrigan Corporation to cut down the employee force of four of its sub divisions by contracting them out as labor hire companies to provide labor requirements of the Patrick Stevedores Company, utilizing the facility under the Greenfield clauses of the WRA to hire employees under AWA’s. In this way, the Company was able to indirectly achieve its goal of dismissal of employees on the basis of mass redundancies, which is not allowed under the Act, because they stipulated the condition that a failure to deliver the labor would result in a cancellation of the labor contract. This was one of the aspects that led to the dispute, because it allowed the Company to cancel the labor employment contract when there was a strike, leaving the employees with no recourse to negotiation to improve their terms of employment. Another aspect of the WRA that was at issue in the Stevedores case was the issue of overtime being subject to negotiations between the employer and employees. According to the Act, awards were not to include overtime, since the WRA does not allow for payments to employees who are involved in strikes and bans including bans on overtime work16. However, the MUA workers wanted to make overtime one of the terms that were to be subject to negotiation between the employer and the employees. The MUA did not want this issue of be removed from the negotiation table but to be left as an issue that could be brought to the bargaining table, for inclusion of overtime provisions as certified agreements17. From the MUA point of view, this was the only way in which overtime could be regulated and work restructured such that overtime itself was limited, however since this provision is not allowed in the AWA’s, it was viewed from the managerial standpoint as being an intrusion on the rights of managers to exercise their own discretion as far as these issues were concerned. The significance of these issues in the dispute was that the goals of the freedom of association included in the WRA were violated by the employer, through the process of restructuring which was a conspiracy to achieve the goal of mass redundancy. 6. It cannot be said that obligations placed upon employers through anti-discrimination and health and safety laws interferes unduly with the employer’s right to select the best person qualified for a particular position. The general principle behind employment law is that an employer is free to choose whomsoever he wants to perform the work that he wants to have completed.18 It is only when hiring controls are imposed by third parties such as Unions for example, that there may be a negative impact because the Union may require an employer to hire only Union members despite the availability of more qualified non union members. However, the anti discrimination and other measures introduced through affirmative action laws are not negative in their approach, they do not place conditions upon an employer as to whom he may or may not employ. The thrust of the law is to encourage employers to be more equitable in their hiring choices and to allow scope for employment of women, minorities and disabled persons so that their rights are not compromised. These laws function in a positive manner by requiring employers to identify if any restrictive practices exist within their firms that may prevent the advancement of the non dominant groups mentioned above, and if they do, to eliminate such barriers so that these groups can advance. By requiring employers to maintain a certain degree of representation of the minorities in their workforce19, the Government is providing positive encouragement to employers to select on occasion, members of the disadvantaged groups and to provide opportunities for them to advance. By allowing for the inclusion of more members from the disadvantaged groups, the spirit of non discrimination is sought to be encouraged. Therefore it is a positive rather than a negative approach. Secondly, it must also be noted that there is little interference with the employer’s rights to choose the person most suitable because the legislation has not bene provided with teeth, that will enable prosecution for violation. This is a reflection of the fact that the traditional systems of merit selection still prevail, since minorities have little recourse under the law in terms of actual compensation for any discrimination or other violations that may occur. The ambivalence demonstrated by the Government in strictly enforcing the provisions of affirmative action laws and requiring employers to comply itself indicates that “affirmative action seemingly cannot win…”20 Therefore there is little question of any interference with the rights of employers, rather the rights of the minority sections of the population needs to be upheld further through punitive action on employers who violate affirmative action laws. 7. This quote is significant because the Stevedores case was one that involved a long term objective of introducing AWAs and ensuring that employees dealt directly with the employer rather than through Unions that were third parties. However, the means by which this was achieved was questionable since the end point effect was that of achieving mass redundancies which is unacceptable. In entering into contracts that expressly stipulated the provision for cancellation through non provision of labor services, Stevedores was essentially placing itself in the strong position of rendering issues such as overtime and working conditions non negotiable. While the spirit of the law seeks to ensure that an employment contract between an employer and an employee is one that is reached on a free will basis between the parties without the interference of any third parties, this cannot mean that an unjust outcome can be condoned. In its decision therefore, the Court has highlighted the fact that it can only adjudicate legal issues that are relevant to a particular case, such as the Stevedores case, where the issues involved the AWAs and overtime provisions. However, no overall prescription can be provided by the Courts to deal with the social, economic or political ramifications of employment laws. The freedom to contract underlies the AWAs and therefore the Stevedore case raises the legal issues of the freedom of the employer to offer employment on terms that are acceptable to him and for employees to accept those terms only if they are agreeable. Such agreements cannot however address issued of basic equity or fairness of these contracts since they have been entered into on the basis of free will of the parties. Similarly, the provisions of the Australian Workplace relations Act of 1996 have been formulated to enforce the freedom of individual employee-employer contracting. The AWAs seek to protect the rights of the employees through a variety of measures to safeguard their interests. However, while these provisions can be applied to the legal issues arising in individual cases, it is impossible to arrive at a consensus on the wider ramifications of employment issues. It is not possible for the Commonwealth to formulate any minimum employment standards either, since this could conceivably interfere with the rights of employers and employees to select the terms of employment to suit themselves on a mutually agreeable basis. Therefore, the views expressed by Wilcox, Van Doussa and Finklestein highlights the fact that the adjudication of the law can only be concerned with the legal issues that arise and with the interpretation of the law as applied to those specific issues. It cannot however, serve as a means to mend social ills or enforce a view in regard to waterfront issues or other social and political issues that may arise, which are the subject of varied opinions and ideas. Employment law must be geared towards ensuring that the free will of the parties as expressed in their contracts is enforced, it cannot impose a particular social, economic or political view upon anyone. 8. The employment at will doctrine supports the idea that employers should be free to dismiss their employees whenever they choose.21 This would be ideal for employers, however it would not protect the rights of employees who could be dismissed without justifiable cause. Employment contracts may be terminated with the consent of the employee or when the contractual term has come to an end. However, the Workplace Relations Act of 1996 states that an employee’s employment must not be terminated without (a) adequate notice and (b) payment of compensation, unless the employee is guilty of serious misconduct.22 The need to allow for a notice period and to pay compensation if the employee is being asked to leave before the expiry of the contractual period means that it becomes difficult to dismiss any employee quickly and an employer is often forced to retract such a dismissal23, rather they are forced to retain the employees for the notice period and also to pay the necessary awards that place further hardships upon the employers. A dismissal will only be held to be lawful if the amount of notice that is specified in the contract is actually paid to the employee.24 Furthermore, it is also not the employer’s prerogative to determine such period of notice, since this has been set out by section 611 of the WRA that sets out how and on what basis the period of notice is to be calculated. Even in instances where an employee may be guilty of misconduct or breach of terms of employment contract, the onus of establishing that such a breach has occurred rests upon an employer.25 While in some instances a contract may be terminated by mutual agreement26 and in such cases there will be no need to adhere to all the requirements of notice etc, in most instances a termination of contract by mutual consent, which facilitates the process of dismissal for the employer, may not result. The employer will then be obliged to substantiate the grounds for dismissal with evidence that may come to light in regard to the employee’s conduct which will justify the dismissal.27 In providing such justification for the employee’s dismissal, the employer cannot rely upon any breaches of duty that he anticipates will happen in the future.28 Moreover, the employee must also be given an opportunity for defense against the allegations that are being made29.Therefore, this places a burden on the employer, since he is obliged to provide acceptable proof to support a dismissal and an employee cannot therefore be fired easily. Therefore, while section 661 (1) (c) of the WRA upholds the right of the employer to summarily dismiss an employee, in actual practice it becomes much harder to carry it out for the reasons detailed above. Hence it appears that employees indeed are provided with too many rights under the WRA. 9. The 1993 federal provisions against unfair dismissal included stricter provisions as compared to the changes that were made in 1996 and the earlier provisions were more in line with the unfair dismissal provisions available in NSW. According to the 1993 provisions, there had to be a valid reason for dismissal and the onus of proving that just cause for dismissal existed lay upon the employer. However an employee could not be dismissed without being provided with the opportunity to defend himself/herself against the allegations being made. The 1993 provisions therefore rested upon two criteria which were that (a) there had to be a valid reason for the dismissal and (b) procedural fairness was required. These were the principles that were also upheld in the case of Re Loty v Australian Workers Union30 and were adopted into the laws of the state of New South Wales. However, the 1996 unfair dismissal laws upheld a different principle, which was the “fair go all round principle”.31 Under this principle, the employer is provided a greater say in the question of whether or not a dismissal is unfair. This was largely due to the input from ministers such as Peter Reith who have argued that as a result of strict unfair dismissal laws, small businesses are prevented from employing more workers32. He also argued that more jobs would be created if unfair dismissal laws were made less stringent. As a result, the fair go all round principle was introduced to ensure that unfair dismissal claims allowed for equal input from both the employer and employee. However, in actual practice, it cannot be argued that there is much difference in the unfair dismissal laws at the deferral and State levels. Voll has examined many case studies and has pointed out that in a procedural sense, the federal and NSW unfair dismissal claims are similar.33 Employees do not generally file unfair dismissal suits, since it is generally too expensive for the average employee. From the employer point of view, especially for small businesses, there is little awareness of the legal ramifications of unfair dismissal. Lastly, both at the federal and state levels, unfair dismissal claims appear to favor the employers rather than the employees. Hence, it appears that unfair dismissal laws are substantially the same at federal and state levels and appear to favor the employers rather than employees. 10. As laid out by the ILO Committee, the right of workers to strike is vital in order to enable them to secure better working conditions and terms of employment for themselves. Under international law, the right of workers to strike is enshrined within Article 8 (1) (d) of the International Covenant on Economic, Social and Cultural Rights 1996. As pointed out by Kahn-Fruend and Hepple34 the right to strike is essential to maintain a balance between capital and labor and to ensure that employees have adequate bargaining power, given the traditionally strong position of the employer. In the words of Griffen35 a strike is a right to “engage in temporary stoppage of work”. Strikes may be outwardly demonstrated in the form of (a) work bans – where workers may refuse to perform certain kinds of work (b) boycotts – refusing to deal in certain goods (c) go slow – which is the adoption of a non cooperative attitude (d) work to rule – which means a ban on overtime activities and strict adherence to contractual terms and (e) picketing – where employees gather at the entrance of their workplace and shout slogans, pressing for their point of view. Additionally, strikes may also be expressed as industrial sabotage or the occupation of the workplace. However, the right to strike is not a given in Australia, where it has been established that there is no general right to strike36, despite the existing provisions in international law. If any provision of international law is to become part and parcel of domestic law in Australia, then it must first be enacted into a statute, however the aforesaid Article 8 has not been made a part of Australian domestic law and therefore no right to strike exists. However, the provisions of the Workplace Relations Act37 do allow to some extent for the notion of strike by the workers, but these are to be executed only within strictly defined parameters and a strike may be legal in limited instances of industrial disputes where the rights of workers are to be secured. Therefore the right to strike is limited. Moreover, despite the fact that strikes are geared towards securing better working conditions for employees, there is a public perception in Australia that is also reinforced by the media, that strikes in general are harmful and entail considerable cost to the nation38. The right to strike as enshrined in the WRA is still subject to common law principles that ultimately make strikes illegal. Read More