INDUSTRIAL RELATIONS PUBLICATIONS OF

THE HON JUSTICE J W SHAW

J W Shaw 'Economic Factors and Wage Fixation Principles: Developments in New South Wales in 1974' (1975) Vol 17, Journal of Industrial Relations, p369

J W Shaw 'Arrangements for the Performance of Work' (1976) Vol 50, Australian Law Journal, p419

J W Shaw 'Reinstatement in Employment: A Note on Developments in the Law' (1977) Vol 19, Journal of

Industrial Relations, p 187

J W Shaw 'Wage Indexation - Has it a Future? Local Government Week April 1981, published by the Local Government Association of New South Wales, p 90

J W Shaw 'Hancock Committee – Some Legal Options' A Paper given to the Industrial Relations Society

of New South Wales (Newcastle Branch), Conference, 27 October 1984

J W Shaw 'Are University Academics Entitled to Natural Justice?' (1985) Vol 28, No 2, Vestes - The Australian Universities' Review, p36

J W Shaw (and S Crawshaw), Guidelines for Superannuation: A Legal Study (Update 1986) (Specialist

Newsletters monograph) (1986)

J W Shaw 'Evidence and Industrial Advocacy' (1986) Vol 28 Journal of Industrial Relations, p274

J W Shaw (and R. McClelland), 'Selective Work Bans: "No Work, No Pay" Revisited' (1986) Vol 2 No 3 Australian Bar Review, p50

J W Shaw 'Why the Lib's Wages Policy Won't Work' Sydney Morning Herald, 27 May 1986

J W Shaw 'Trade Practices Legislation and Industrial Relations: A Case for Reform' (1986) Vol 58, No 2

Australian Quarterly, p 171

J W Shaw 'A Practical Note on the Enforcement of Award and Other Industrial Rights - NSW and Commonwealth (1986) Australian Current Law, p36015

J W Shaw 'Annual Leave Loadings: Where Do They Come From?' (1986) Vol 11 No 5 Legal Service

Bulletin, p238

J W Shaw 'Disputes within universities: the Visitor or the courts?' (1986) Vol 29 No 1 Vestes - The Australian Universities’ Review, p2

J W Shaw 'Industrial Advocacy Before The Australian Conciliation and Arbitration Commission' (1986)

Vol 12, No 3 Industrial Relations Society of New South Wales Newsletter, p4

J W Shaw 'Industrial Relations and the New Right' (1987) Vol 1 No 1 Labor Times, p8

J W Shaw 'The Implications of the Transfer of Sections 45D and 45E of the Trade Practices Act to the Proposed Labour Court' (1987) Vol 12, No 7 Industrial Relations Society of New South Wales Newsletter, p7

J W Shaw 'Whither Industrial Relations in 1988' (1988) Vol 40 No 387 On Service, p6

J W Shaw 'Industrial Relations Review of 1987' (1988) Vol 13, No 5 Industrial Relations Society of New

South Wales Newsletter, p2

J W Shaw 'Interpreting Trade Union Constitutional Rules' (1988) Vol 62 Australian Law Journal, p690 [cited in National Tertiary Education Industry Union v Technisearch Limited (1996) 66 IR 38 Full Bench, Australian Industrial Relations Commission]

J W Shaw 'Whither New South Wales Labor in the 1990s?' (1988) Vol 2 No 2 Labor Times, p 14\

JW Shaw 'Re (Commonwealth) Industrial Relations Bill 1987: Implications for the New South Wales

Industrial Arbitration System' (1987) Memorandum of Advice

J W Shaw (M J Walton and R B. McClelland) 'New Dimensions in the Law Governing Termination of

Employment' (1988) Vol 1, No 3 Australian Journal of Labour Law, p195

J W Shaw 'Reforming Labour Laws Under a Labor Government' (1988) Vol 60, No 3 Australian Quarterly, p331

J W Shaw 'The "New" Powers of The Australian Industrial Relations Commission' (1989) Vol 31, No 1

Journal of Industrial Relations, p82

J W Shaw 'Industrial Relations Blueprint Beyond Simplistic Panacea' Australian Financial Review, 16 March 1989

J W Shaw 'Industrial Relations: A Response to Professor Niland's Green Paper on Industrial Relations in

New South Wales' (1989) Vol 7 No 5 Education p5; also published in (1989) Vol 42 No 1 On Service, p24

J W Shaw 'The Industrial Relations Act 1988 - A New Era for the Resolution of Industrial Conflict?' (1988),

Vol 64, Australia Law Journal, p620; (ed) J W Shaw (with J L Trew and G J McCarry), Federal Industrial Law, Butterworths, 1989

J W Shaw 'Industrial Disputes in the Courts: Restricting Access to Common Law Proceedings' (1989) Vol 6

1, No 1 Australian Quarterly, p75

J W Shaw 'Industrial Law Updates' (1989) No 4 Union Issues, p8; (1989) No 5 Union Issues, p7

J W Shaw (and D. McKenna), 'Recent Legislation: The Essential Services Act 1988 (NSW) (1989) Vol 2, No 2 Australian Journal of Labour Law, p174

J W Shaw 'Mr Murdoch's Industrial Relations' (1989) Vol 61, No 2 Australian Quarterly, p300

J W Shaw (and M J Walton), 'The Niland Report and Labour Law: A Critical Response' (1989) Vol 2, No 2

Australian Journal of Labour Law, p197

J W Shaw (and S. Crawshaw), 'Superannuation Rights and the Totally and Permanently Disabled' (1989) Australian Current Law, p36027

J W Shaw 'On Parties of Resistance and Initiative', The Hummer (publication of Sydney Branch of

Australian Society for Study of Labour History) No 26, Nov-Dec 1989, p3

J W Shaw 'Dismembering the New South Wales Industrial Tribunals' (1990) Vol 71, No 1 Education, p12; also published as 'Fahey's radical tribunal plan' (1990), No 1 The Counsellor

J W Shaw 'Some Comments on the Launching of Federal Industrial Law - Butterworths, 1989' (1990) Vol

15, No 4 Industrial Relations Society of New South Wales Newsletter, p 11

J W Shaw 'The Changing Legal Framework for the Resolution of Industrial Conflict' (1990) January/February Australian Current Law Bulletin, p 12

J W Shaw (and M J Walton), 'Professor Niland and the Interest/Rights Dichotomy in Labour Law' (1990)

Vol 6, No 2 Australian Bar Review, p 117

J W Shaw (ed with M. Easson), Transforming Industrial Relations, 1990, Pluto Press, Sydney

J W Shaw 'Are Radical Changes Needed in the New South Wales Industrial Relations System?' in ed Easson and Shaw Transforming Industrial Relations, 1990, p37

J W Shaw 'Industrial Relations Legislation: Government Won't Accept Amendments', Red Tape,

October-November 1990, page 11

J W Shaw 'Enterprise Bargaining and the Future of Unions' Summer 1990/91, No 7 Union Issues, p11

J W Shaw and K Nomchong, 'A Labor Look at What the Future Holds for us' (1990) No 4 The Counsellor, p4

J W Shaw 'The Industrial Relations Act 1988 - A New Era for the Resolution of Industrial Conflict?' (1990) Vol 64, The Australian Law Journal, p620

J W Shaw 'Transforming Industrial Arbitration In New South Wales' (1990), Vol 62, No 1, Australian

Quarterly, p36

J W Shaw (M. Walton and C. Walton), 'A Decline in Union Membership: Some Ideas for Trade Unions in the 1990s' Labor Movement Strategies for the 21st Century, 1991, Evatt Foundation, Sydney

J W Shaw 'Regulating Employment Relationships - a Consideration of the Pilots' Dispute' (1990) Vol 3, No

2 Corporate and Business Law Journal, University of Adelaide, p 122

J W Shaw 'Greiner's Industrial Relations Hidden Agenda Exposed' Red Tape March-April 1991, p 14

J W Shaw book review of R C McCallum, M J Pittard, G F. Smith's 'Australian Labour Law: Cases and Materials', Butterworths, 1990 in (1991) No 60 Labour History, p134

J W Shaw 'Industrial Relations in Australia - a Labor Perspective' (1991) Vol 68, No 1 Current Affairs

Bulletin, p17

Interview of J W Shaw 'Jeff Shaw: NSW Labor's IR plans' (1991) Winter, No 9 Union Issues, p8

J W Shaw 'Greiner sends the New Right to work' The Australian, 26 September 1991

J W Shaw 'A new path to conflict' Workplace, Summer 1992, p35

J W Shaw book review of Brian Boyd's 'Inside the BLF', Ocean Press, 1991, in Australian Left Review No 136, February 1992, p42

J W Shaw 'Industrial relations on the campus' The Australian Universities’ Review Vol 3 5, 1992, No 1,

p28

J W Shaw 'The Greiner Government's Industrial Relations Laws - An Experiment in Deregulation' Australian Journal of Labour Law Vol 5, No 2 August 1992, p 158

J W Shaw 'On the Question of Political Strikes' Unpublished, 1992

J W Shaw (and E Bishop, S CrawShaw and M J Walton), 'Overcoming Sex Discrimination in Employment

in the Asian and Pacific Region Through Legislation' Labor Management Relations in the Asia-Pacific Region, Centre of Asian Studies, The University of Hong Kong, 1992, p347

J W Shaw 'Sanction and Labour Law in the 1990s', (ed) P Ronfeldt and R McCallum, A New Province for

Legalism: Legal Issues and the Deregulation of Industrial Relations, Australian Centre for Industrial Relations Research and Teaching, 1993, Monograph No 9, p68

J W Shaw 'Japanese Labour Relations - and Ours', Labour Network, August 1993, Evatt Foundation, p2

J W Shaw 'Unfair Dismissals: Recent Developments in the Federal and New South Wales Jurisdictions'

(1993) Vol 35, No 3 Journal of Industrial Relations, p468

J W Shaw 'The Industrial Relations Duty to Bargain in Good Faith', (1993) Vol 4 No 2 Australian Labour Law Reporter, 90-016

J W Shaw 'Reforming the Procedures of Industrial Arbitration in the 1990's' (1996) Vol 22 No 1 Industrial

Relations Society of NSW Newsletter, p7

J W Shaw 'Contracting Out – An Industrial Relations Perspective' Paper given to the AIC Conference “Competitive Tendering and Contracting Out”, 25th February 1994.

J W Shaw (and M J Walton, afterword Hon J J Macken), An Experiment in Deregulation: The 1991

Industrial Laws in New South Wales, Lloyd Ross Forum, 1994

J W Shaw 'The Industrial Relations Court of Australia' (1994) Vol 71, No 2 Current Affairs Bulletin, p 17; J W Shaw 'The Industrial Relations Court of Australia', Employment Security, ed R McCallum, G McCarry and P Ronfeldt, Federation Press, 1994, p 1

J W Shaw (and C G. Walton), 'A Union's Right of Entry to the Workplace' (1994) Vol 36 Journal of

Industrial Relations, p546

J W Shaw 'Consultation the key to Workplace reform' Australian Financial Review, 6 January 1995

J W Shaw (and M J Walton), 'Labour Law in Papua New Guinea: Some Recent Developments' (1995) Vol 8, No 1 Australian Journal of Labour Law, pp80-84

J W Shaw 'A Balanced Industrial Relations Reform Package for New South Wales', (1996) (1996) Vol 38,

No 1 The Journal of Industrial Relations, p57-59

J W Shaw 'Australian Industrial Arbitration Sui Generis: An Ambivalent History' A paper delivered at the Red and Black History Weekend, “Union is Strength”, 3 August 1996

J W Shaw 'The Industrial Relations Act 1996 (NSW): Some Legal Aspects', (1996) Vol 9, No 3 Australian

Journal of Labour Law, pp273-281

J W Shaw 'In Defence of the Collective: New South Wales Industrial Relations in the 21st Century' (1997) Vol 39 Journal of Industrial Relations, p388.

J W Shaw 'The Role of Law in Both Encouraging and Discouraging Labour Organisation Activity' (1997)

No 73, Labour History, p208

J W Shaw 'Labour Law and Labour History' (1998) Vol. 2, No 10, The Hummer, p22.

J W Shaw 'John Garland' (1998) Vol. 2, No 10, The Hummer, p37.

J W Shaw book review of M. and V. Burgmann, 'Green Bans, Red Union', Sydney Morning Herald, 24 October, 1998.

J W Shaw 'Court Victory for PNG Workers', No 15, Workers Online, 28 May 1999

J W Shaw 'Rio Tinto - a radical decision' Australian Industrial Law Update, 29 October, 1999

J W Shaw 'The Public and Private Politics of Industrial Relations' - "Are We In Or Out?", (1999), Vol 10

No 1, The Economic and Labour Relations Review, p149

J W Shaw 'The Retirement of Justice John Cahill, Vice-President of the Industrial Relations Commission of New South Wales' (1999-2000). Vol 3, No 3, The Hummer, p38

J W Shaw 'Some Observations on Trade Union Recognition in Britain and Australia' (2001) Vol 24, No 1,

The University of New South Wales Law Journal, p214

J W Shaw 'New Occupational Health and Safety Act for New South Wales' (2001) Vol 7, No 1, Employment Law Bulletin, p1

J W Shaw 'The Future of Australian Industrial Relations' (2001) Vol 73, No 6, Australian Quarterly, p11

J W Shaw 'Should we centralise labour relations? ', (January - February 2002) Vol 46, No 1-2, Quadrant, p

36

J W Shaw 'Issues in Australian Industrial Law at the Beginning of the New Century' A paper given to the Conference of the New South Wales Road Transport Association, 22 March 2002

J W Shaw 'Our Heritage of Practising Industrial Relations' (2003) Vol 28, Issue 5, Industrial Relations

Society of New South Wales Newsletter, p1

1

Economic Factors and Wage Fixation Principles: Developments in New

South Wales in 1974

J. W. SHAW∗ The inflationary movement of 1974 presented a challenge for the time-honoured principles of wage-fixation

developed by the New South Wales system of industrial relations. An examination of the key wages decisions of the State Industrial Commission shows how recognition of the

concept of “community wide movement in wages” enabled the tribunal to flexibly deal with the new economic reality. However, it also demonstrates the difficulty exposed in the previous approach of segregating “economic” and “work value” factors in the wage assessment process – a difficulty ultimately recognized by the Commission.

EXTERNAL PRESSURES

EXCEPTIONAL SOCIAL or economic conditions place strains on the wage-fixation tribunals. There is no simple chain of causality, but there are discernible external pressures which can have observable consequences for the arbitral process. Just as the judicial process does not, and cannot, operate in isolation from the policy attitudes and values of a society,1 so arbitrators concerned to assess appropriate levels of remuneration for various classes of employees must react to those social and economic events which are of greater than usual significance. In fact, the adjudicator concerned with industrial relations will, by the inherent nature of his task, be more influenced by the economic environment in which he works than will his counterparts in other jurisdictions more remote from the pressures of the market-place. (370) As Sir John Kerr has remarked, the practice of industrial law is "close to the great political and economic struggles in society".2 It is almost trite to remark that the period since January, 1974, has seen levels of inflation in the Australian economy (and levels of wage and salary increases) of a proportion unparalleled in post-war history. In this context, the various income-earning groups will have differential abilities to keep up with the spiral and there will be a marked tendency towards "a redistribution of wealth and of income in a society".3 Professor R. I. Downing has pointed out that the “time lags" involved in the proliferation of inflation-based wage movements adversely affect, inter alia, "weak unions".4 Such major social difficulties confront the various conciliators and arbitrators in their application of the traditional principles of wage fixation, viz., the assessment of proper remuneration on the basis of "work value" or comparative wage justice.

If the tribunals cannot proceed as if immune from the economic forces which surround them, they must either alter the application of pre-existing principles or overthrow the principles themselves. The old constraints can be pragmatically circumvented – expressly or by verbal formulae – or new standards can arise more suited to the changed circumstances. This paper seeks to examine the response of tribunals within the New South Wales system of industrial arbitration to the inflationary conditions of 1974, prior to the implementation of the "indexation" guidelines.5 It is concerned with the reaction of industrial tribunals to wide-spread wage increases, usually described by arbitrators as "economic" movements.6

∗ Solicitor, Sydney, N.S.W. References to those judgments of the Industrial Commission of New South Wales not reported in the Arbitration Reports at the time of writing are given by way of date of decision. The page numbers are those of the original roneoed documents. 1 This is a proposition which is amply supported by many sociological studies of the legal process: see, for example, G. Schubert, "Judicial Policy Making”, in V. Aubert (ed.), Sociology of Law, Penguin, Middlesex, 1969, pp. 213-227 and A. S. Miller and R. F. Howell, "The Myth of Neutrality in Constitutional Adjudication", in L. W. Levy, Judicial Review and the Supreme Court. Harper and Row, New, York, 1967, pp. 198-241. 2 J. Kerr, "Foreword" to H. J. Glasbeek and E. M. Eggleston, Cases and Materials on Industrial Law in Australia, Butterworths, Sydney, 1973, p. vi. 3 0. E. Covick, “Todays Panic Over Inflation”, Australian Quarterly, Vol. 46, No. 2, June, 1974. p. 29. 4 R. I. Downing. “Inflation: Incomes, Prices and Social Policies”, Australian Quarterly, Vol. 46. No. 3. September, 1974, p. 11. 5 These guidelines are, of course, those promulgated by the Australian Conciliation and Arbitration Commission in the National Wage Case, 1975, April 30, 1975, as the “appropriate wage fixing principles” to form part of the integrated “package” proposed by the Commission: see A. J. Boulton, "The National Wage Case 1975, and the ‘Indexation of Wages’”, Australian Law Journal, Vol. 49, No. 6, June. 1975. pp. 283-286. The principles were adopted in their entirely by the Industrial Commission of New South Wales in the State Wage Case. 1975, May 23. 1975. 6 There are difficulties in defining and distinguishing "economic" wage increases with precision. The Federal Commission, in its periodic "economic reviews" has historically enquired as to the capacity of industry to pay. In so doing, it has been necessary to look

(371)

THE PRINCIPLES Judicially determined principles governing the inter-action of “work value” and general economic factors in the arbitration of wage levels have had a complex history in the Industrial Commission of New South Wales.7 However, the authority recognized by the tribunals, between 1967 and the introduction of indexation, was the Agricultural Employees Case,8 a judgment of the Commission in Court Session arising from an application by the unions affiliated to the Labour Council to apply to New South Wales awards the decision of the Commonwealth Conciliation and Arbitration Commission in the Metal Trades Margins Case of December 22, 1966. In this case, the Commission had to re-assess earlier decisions and to articulate new, enduring guidelines as to the account to be taken of economic factors when fixing wages. Previously, under the authority of the 1964 Teachers Case,9 the Commission had attempted to retain a system within which work value and economic considerations were assessed simultaneously. Each award was to be made in the light of prevailing economic conditions. That is, the two operations were to "go hand in hand".10 Thus, it was both relevant and essential for arbitrators to consider "the general circumstances of the community", together with the "value of money at the time of the arbitration", the level of the basic wage, movements in price indices and the economic indicators used by the Commonwealth tribunal.11 All this was dramatically altered by the Agricultural Employees Case. The Commission reviewed a number of developments which pointed to the need for changes in the New South Wales principles, including the emergence of "margins" enquiries by the Commonwealth Commission as annual economic determinations of general applicability.12 It was swayed by the fact that, notwithstanding the prevailing principles, economic adjustments flowing from Federal decisions had found their way into State awards. There was a consequential need to adjust the principles to meet industrial reality. As a result of the Agricultural Employees Case the New South Wales Commission adopted, prima facie, Federal adjustments made solely on (372) economic grounds. Thus State awards were re-opened by the Commission and the results of National Wage Cases applied unless reasons to the contrary were accepted as valid. In fact, since 1967, New South Wales economic adjustments to State Awards have simply been applications of increases determined Federally in National Wage Cases. It is evident that these principles marked a fundamental change from those previously used. They prescribed a segregation, into distinct cases, of economic and work value considerations. When awards expire, work value cases could be undertaken before the tribunals. However, such reviews must take place "on the understanding that exclusively economic factors, existing at the time the award is made will have been covered by the current Commonwealth decision in this regard".13 An assessment of “just and reasonable" rates for file work14 was based on the assumption that formerly relevant economic factors will be dealt with quite separately. Such factors were no longer relevant for the arbitrator to take account of, apart from the consideration of National Wage Case increases by the Commission in Court Session.

A SIGNIFICANT EXCEPTION at factors such as inflation, employment, investment, productivity, trade, overseas reserves etc.: J. H. Portus. Australian Compulsory Arbitration 1900-1970. Hicks Smith and Sons. 1971. pp. 33, 34. It should be emphasized that the lawyer and the economist tend to use the term "economic" differently. This term is used here - by both the author and in the various quotations of the judges - in the narrower sense of general wage increases which occurred in the inflationary environment of 1974. Economists tend to use the term "economic" more broadly. For instance, an economist would likely see a change in work value as a valid "economic" reason justifying a wage increase. See also the critical discussion in E. I. Sykes and H. J. Glasbeek, Labour Law in Australia, Butterworths, 1972, pp, 590-600. In considering wage movements in 1974, however, it is clear that predominantly the large movements in wages were related to inflation and the increasing cost of living. 7 The three stages in the development of such principles are given full analysis in C. P. Mills, New South Wales Industrial Laws, Butterworths, 1969, pp. 192-199. 8 1967 A.R. (N.S.W.) 56. 9 1964 A.R. (N.S.W.) 463. 10 Mills, op. cit., p. 197. 11 1964 A.R. (N.S.W.) at pp. 482-3. 12 1967 A.R. (N.S.W.) at pp. 65-73. 13 1967 A.R. (N.S.W.) at p. 86 14 See Section 23A, Industrial Arbitration Act (N.S.W.) 1940, as amended.

If the State tribunals had been forced to face the economic turbulence of 1974 bound rigidly by these segregating principles, difficulties in their application would have quickly become apparent. It is clear that, in the economic climate of 1974, National Wage Case adjustments were neither the sole nor the major means by which wage-earners were able to keep up with the inflationary spiral. It would be unrealistic not to recognize an economic (or cost-of-living related) component in the widespread general increases in wage rates. Fortuitously, a development in the principles occurred prior to the recent economic difficulties. A proviso emerged which enabled the New South Wales arbitration system to deal with external difficulties practically and with a degree of flexibility. In the 1972 Legal Officers Case15 the Commission in Court Session re-asserted the force and validity of the 1928 Metalliferous Miners Case16 principles which restrict the use of comparative wage data to situations where the work in the areas being compared is properly comparable. This authority is often explained as allowing only the comparison of "like with like" in terms of the nature of the work performed. It was found, for example, to be impermissible to compare the wage rates of legal officers and scientists within the Public Service. In the course of the exposition, the Bench made several qualifications to previous doctrine and, by way of dicta, the Commission indicated that under certain circumstances it was permissible for arbitrators to take (373) account of general movements in wage levels as well as those of specific occupational groups, under certain circumstances. The Commission said: "We think that it is not only inevitable but also proper that, when reviewing the wages payable in a particular industry, members of the Commission should have regard to their knowledge of movements in wages and salaries of widespread application in the community. . . . If there is anything in the judgments which have applied the principle of the Metalliferous Miners Case which suggests that movements in wages of widespread application in the community are forbidden ground for an arbitrator, then we think that they should no longer be followed".17 This embryonic establishment of relevance has been of great utility in dealing with contemporary developments notwithstanding the constraints imposed by the Agricultural Employees Case.

APPLICATIONS OF THE PRINCIPLES IN 1974 Perhaps the most influential application of existing principles to the new inflationary circumstances was the re-opening of the Steel Works Employees (Broken Hill Proprietary Co. Ltd.) Award by Cahill J. in Steel Works Employees Case (No. 1).18 The factual background to the case before his Honour was this: in January 1974, the parties had entered into a consent award with a duration of two years. The result of that bargain was to provide wage increases of between $9 and $13 per week to the employees under the award, as well as prospective increases commencing in December, 1974, of between $5 and $8 per week. It was in the context of this arrangement that, in mid-1974, the Federated Ironworkers' Association sought to re-open their award. It was argued for the union that since the award had been made, widespread and. significant wage increases had occurred which had resulted in the establishment of new general standards. Furthermore, that such developments were not foreseeable by the parties at the time of reaching agreement. These assertions were supported by numerous examples of increases influenced by the settlement in the Metal Industry Award of a $15 per week increase. The Commission accepted the basic tenets of the union's submissions. Cahill J. found that "over the last three months, wage increases of unprecedented magnitude have occurred in significant and widespread sections of industry".19 The judgment took the view that such increases had led to the establishment of new general wage levels. It concluded that this phenomenon, unforeseen by the parties, constituted a good and cogent reason for re-opening the award. The employees concerned were granted increases of between $11 and $14 per week. Thus, the first "general movement" of 1974 had been judicially recognized in New South Wales. It was to Cahill J., also, that the task fell of identifying a second (374)

15 1972 A.R. (N.S.W.) at p.376 16 1928 A.R. (N.S.W.) at p.471 17 1972 A.R. (N.S.W.) at p. 391. 18 June 21, 1974. 19 Ibid., p. 21.

general movement in that year, again of a magnitude justifying the reopening of consent awards. He did so, in relation to the same award, in the Steel Works Employees Case (No. 2).20 As in the earlier arbitration, the employers mounted vigorous opposition to the award being re-opened and to any increases being granted. Again, the applicant union used the evidentiary approach of bringing before the Commission many examples of award movements within the relevant time period of or about the quantum of $9 per week (118 awards were cited by the union). By a process of inductive reasoning, it was sought to show that, from those instances, the conclusion could be drawn that a further and subsequent general movement had occurred. His Honour concluded that the wage increases in significant areas of industry referred to in his earlier judgment had "continued unabated". He was driven to the "irresistible conclusion" that “the magnitude and pervasiveness of those developments have been such as to result in the establishment of new and higher wage levels as compared with those in existence in June. . . .”21 In the view of Cahill J, this subsequent increase was of the order of $9 per week. He, therefore, re-opened the Steel awards and granted increases ranging from $8.80 to $9.60 per week. In the course of his judgment, Cahill J. expressed a convenient and influential "rule of thumb" to measure the economic based increases in wages in 1974. He referred to a "$24 increase standard" of wage movements in 1974.22 It is abundantly clear that the increases awarded in these two cases are unrelated to considerations of valuing the work in the conventional sense. The evidence before the Court did not concern increases in the responsibility or skill of steelworkers, but was concerned with illustrating community-wide wage movements. Clearly, such increases flow from considerations of changes in wage levels which are associated with the economic consequences of inflation. Cahill J. was riot alone in this approach. It has been generally adopted by the Commission and by the Conciliation Commissioners. On August 21, 1974, the Senior Conciliation Commissioner, Mr H. S. Wells, awarded increases of $24 per week to transport workers. This was a decision based, at least in part, on documented examples of general wage increases. An appeal to the Commission by the employers was dismissed by Sheehy J. In so doing, his Honour saw the references to other award increases as being "legitimate" and held that "the many award increases quoted ... were merely illustrative of the marked upward movement in general wage levels in recent months and provided a basis upon which the tribunal could reassess the work value of the wages according to the prevailing standards".23 This authority was later cited by Mr Commissioner Dunn when he, on a similar basis, awarded increases of $24 per week to watchmen, caretakers, cleaners and others on October 11, 1974.

(375)

The Industrial Commission in Court Session (Beattie J., President, McKeon and Cahill JJ.) in the Teachers

Case24 expressly referred to the judgment of Cahill J. in the Steel Works Employees (No. 1) Case as indicative of the widespread movement upon which the Full Bench relied in part in assessing salary increases for State schoolteachers. The Commission took the view that teachers were entitled to have salary adjustments "to keep pace" with such movements. Their Honours said: "The amount of the increases to award rates during 1974 has, indeed, been unprecedented in Australia and it is plain beyond argument that they have been achieved because of economic considerations for which national wage cases were designed to cope. . . Despite the economic rationale of the industry wage increases which have occurred this year in these proceedings we could not carry out our statutory duty to fix rates of salary which we deem just and reasonable to meet the circumstances of the case if we did not give them due weight."25 At another point in the judgment, the Full Bench refers to movements in the rates of average minimum weekly wages, as evidenced by bulletins of the Australian Bureau of Statistics."26 A differently constituted Bench in the Fire Brigade Employees Case27 (Beattie J., President, Sheehy and Cahill JJ.) gave further support to this line of reasoning. The Commission referred to the "flow-on" effect of the $9 increase in the Metal Industry Award as relevant to the fixation of rates for fire brigade officers.28 The President of the Commission expressly referred to the second Steel Works Employees Case judgment of Cahill J. in the Crown Employees (Administrative and Clerical Division Officers) Interim Award Case.29 In that case, Beattie J. awarded interim increases to clerks in the State Public Service which were additional to the $16 per week increase they had received in 1974. One of the President's reasons for that judgment was the 20 December 4, 1974. 21 Ibid.. p. 7. 22 Ibid.. pp. 9-10. 23 In re Transport Industry (State) Award. September 20, 1974 24 November 29, 1974. 25 Ibid.. pp. 18, 19. 26 Ibid., p. 30. 27 December 20. 1974. 28 Ibid., p. 9. 29 January 3. 1975.

"community-wide" movement with which the public servants had not kept pace. In that regard, both the Teachers Case and the Steel Works Employees Case (No. 2) were referred to. It is true that Sheehy J. has remarked that the “$24 standard” does not mean that all awards must necessarily or automatically he adjusted accordingly.30 But this does not detract at all from the propositions concerning general movements of wages. It was expressly contemplated by Cahill J. in the passages previously referred to that "isolated" exceptional cases could validly exist. It may, for example, be unjust in a particular situation to view 1974 movements in isolation front it more comprehensive historical background of wage adjustments. The logic of these cases suited admirably the economic climate of (376) 1974. It allowed the New South Wales tribunals to adjust the rates of pay of those groups of employees who had not, for any number of reasons, been able to keep pace with inflationary spiral by collective bargaining. It avoided the necessity, for "work value" cases which were merely disguised attempts to achieve increases based on general wage movements and allowed the tribunals to devote their resources to genuine cases in which the re-adjustment of rates is justified by work value considerations of special problems of relativity. But it is a logic which sits somewhat uneasily with the rigid division between economic and work value considerations espoused in the Agricultural Employees Case. This is the point at which the previously formulated principles are strained by the realities of economic and social change. There is an understandable tension between the pragmatic demands of industrial relations and the weight of precedent from the past. One member of the Commission, Sheehy J. was explicit in his concern about this conflict. In the Coke Works Employees Case31 his Honour made the point that: “. . . National Wage Cases have proved to be inadequate for the purpose of providing complete wage justice and that in the case of individual award tribunals concerned with applications do in practice, take account of economic factors including inflationary trends. This has undermined the principles of the Agricultural Employees Case to some extent and in so far as those principles tended to extinguish the effect of the 1964 Teachers Case they may now need revision".32 The need for any further explicit revision of these wage-fixation principles to accord with practical considerations was largely avoided by the complete adoption in New South Wales of the "indexation" policy and guidelines. However, in the course of this adoption, the Industrial Commission frankly recognized the anachronistic nature of the Agricultural Employees Case. The State Wage Case 1975 indicated that the pre-indexation principles were “designed to bring in an era when all economic reasons for altering wage cases would be given effect to once a year and would be dependent upon national wage case decisions. But it never worked out that way . . .”33 These developments of wage-fixation principles in New South Wales demonstrate the inter-relationship of arbitral tribunals and their doctrines with the larger social and economic forces of the community. They will again become matters of practical difficulty when and if the indexation method of controlling wage increases is abandoned.

2

Industrial Law (N.S.W.) -Unfair Contracts or Arrangements – Definition of "arrangement"

-Whether Loan Contract with Finance Company part of an Arrangement for Work – Industrial Arbitration Act, 1940 (N.S.W.) as amended, s. 88F

Section 88F Of the Industrial Arbitration Act 1940 (N.S.W.), as amended empowers the Industrial Commission of New South Wales to declare void or vary “any contract or arrangement or any condition or collateral arrangement relating thereto whereby a person performs work in any industry” if it is persuaded that such contract or arrangement is unfair, harsh, unconscionable against the public interest, results in a level of remuneration less than that prescribed for an employee performing the same work, or was designed to or does avoid the provisions of an industrial award or agreement. Further subsections provide the Commission with authority to order payments of money in connection with contracts, or arrangements declared void or varied, and to order costs in the proceedings. (The legislative history of the section is set out in C. P. Mills, New South Wales Industrial Laws, 1969, at p. 350 and G. D. Woods and P. L. Stein, Harsh and Unconscionable Contracts of' Work in New South Wales, 1972, at pp. 6-8.) 30 Laundry Employees Case, February 12, 1975, p. 13. 31 November 1, 1974 32 Ibid., p. 5. 33 Op. cit. p. 21

One member of the Commission, Sheldon J., had labelled the section “a radical law” which is intended to “protect the arbitration system against those who enter its allotted field unprepared to pay the standard price of admission. . . . Thus, the section invades only one bastion in the citadel of private contract and does so, primarily, not because certain contracts are unjust to individuals but because they are subversive of the orderly control of industry” (Davies v. General Transport Development Pty. Ltd., [1967] A.R. (N.S.W.) 371, at 373-374). Such strongly worded judicial pronouncements are symptomatic of the liberal tradition which has emerged in the application of the provision. Professor J. H. Wootten, as he then was, thought that “the judges applying s. 88F have been almost invariably prepared ‘to advance the remedy and suppress the mischief’ with as much vigour as their predecessors of the first Elizabethan era, and at times in language as colourful”. (Foreword to Woods and Stein op. cit.) The creative approach of the Commission in exercising its “massive powers” (Mills. op. cit., p. 351) has not, to any tangible extent, been curbed by the jurisdictional analysis appellate courts (see, for example, Brown v Rezitis (1970) 127 C.L.R. 157, Ex parte V.G. Haulage Service Pty. Ltd.; Re The Industrial Commission of New South Wales [1972] 2 N.S.W.L.R. 81; Barham v. Stevenson [1975] 1 N.S.W.L.R 31.). An important part of this broad approach has been the function of the tribunal in ascertaining the real participants in unfair arrangements without the usual inhibition of the “corporate veil” or of other such restrictive factors. In the course of the High Court's consideration of the section, Barwick C.J. pointed out that “there may be persons involved in the subterfuge who are not parties to the contract or arrangement but who are in reality the actors deriving benefit from the making or the execution of the contract or arrangement”. (Brown v. Rezitis, ante, at 164). A recent judgment of the Industrial Commission in Court Session, Custom Credit Corporation Ltd. v. Goldsmith (25th March, 1976, not yet reported) can be seen, in its view of the scope and utility of s. 88F, as falling appropriately within this tradition, but the importance of the case far transcends a mere affirmation of a judicial tendency. In its extension of the area of inquiry in s. 88F proceedings to finance companies linked with franchise contracts, the commission has placed the activities of money-lenders in a new legal context. One commentator has claimed that the case means that “a financier is placed in the position of watchdog over a franchise seller - a responsibility it can ignore only to its own financial detriment” (The Australian, 21st April, 1976). The litigation arose from a series of contracts between a corporation, Trans Australian Tent Rentals (N.SW.) Pty. Ltd. and individual dealers (called by the Commission “work contracts”). Essentially, the contracts gave the dealers the right to hire out tents or boats, and, after payment of the full purchase price, the title to that equipment. The vendor company was to be paid a purchase price, and a commission upon all rental business given to the dealer by the company. In addition, the vendor and the dealer arranged that if dealers were unable to pay the purchase price, assistance would be given in procuring a loan from a finance company. In each case before the Court, a loan contract had been entered into between he dealer and Custom Credit Corporation Ltd. A number of dealers sought s. 88F declarations that certain arrangements and contracts were void and sought orders for the payment of moneys. Sheehy J., after hearing evidence, made such orders finding, inter alia, that the vendor company and finance company were jointly and severally liable to pay the moneys awarded. This aspect of his Honour's judgment was of crucial practical

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importance because the vendor company was in liquidation. From that decision, the finance company appealed to the Commission in Court Session pursuant to s. 14(8)(b) of the Industrial Arbitration Act, raising issues both as to jurisdiction and the merits. The burden of the appellant's submissions was that the work contract (to which the finance company was not a party) was complete in itself, independent of and divorced from the loan contract (p. 52 roneoed judgment). Furthermore, the legal relationship between lender and worker was not, it was argued, “collateral” to the relationship between vendor and dealer. There was no nexus between the two contracts. Thus, even if the work contract was vulnerable to attack under the statute as being “harsh”, it was not a matter which touched the appellant. No order could therefore be made against the financier. However, the Commission posed a possibility which brought the appellant directly within the ambit of S. 88F, notwithstanding these submissions. If it were possible to characterise the loan contract as merely part of a composite tripartite “arrangement” between vendor, dealer and lender, and if, additionally, that total arrangement were found to he unfair or harsh, then orders designed to rectify the position could validly be made against any participant in the arrangement.

The first difficulty was the meaning of the term "arrangement". After issuing a caveat as to the application of interpretation of words from different statutes, the Commission found some guidance in taxation issues. A judgment of the Privy Council in Newton v. Federal Commissioner of Taxation [1958] A.C. 450, at 465) stated:

“Their Lordships are of opinion that the word ‘arrangement’ is apt to describe something less than a binding contract or agreement, something in the nature of an understanding between two or more persons - a plan arranged may not he enforceable at law.”

Similar expressions can he found in judgments of the High Court, for example. In Jacques v. Federal Commissioner of Taxation ((1924) 34 C.L.R. 328, at 359-360). In earlier s88F proceedings, Sheppard J. (then a member of the Industrial Commission) had extracted two principles from these cases. His Honour found of assistance “. . . first of all the width given to the meaning of the word ‘arrangement’ when it is used together with the words ‘contract’ and ‘agreement’. Secondly, there is the fact that an arrangement will be found to exist where there is a plan or concerted action by a number of people to bring about a particular result” (In re Hall and Alison Clint, Floral Delivery Pty. Ltd. [1971] A.R. (N.S.W.) 56, at 63) As to the width of the term in another context, their Honours found of interest the recent trade practices judgment of Top Performance Motors Pty. Ltd. V. Ira Berk (Queensland) Pty. Ltd. ((1975) 5 A.L.R. 465; noted at 50 A. L.J. 89). Given this assistance, the Commission held that “. . . in one of its meanings ‘arrangement’ embraces transactions which do not give rise to contracts or obligations, that is to say, obligations enforceable at law; but we are also of the opinion that in another meaning it embraces a situation where there exist two or more separate contracts which, notwithstanding their separateness, are, given the facts, so sufficiently associated with each other in a practical sense as to constitute an arrangement of which each contract is a part” (at 63). After a detailed analysts of the facts before them, their Honours found that a deliberate plan between vendor and lender was discernible in the light of the evidence of concerted action by the two corporations. It was not relevant that the finance company's collaboration had been in good faith or followed usual business practice. The result was that the appellant had to suffer the consequences of its participation in a scheme which infringed s. 88F. The case has obvious and serious ramifications for lending Institutions in New South Wales. Their responsibility in liaising with contractors of labour is considerably increased. In expanding the potential scrutiny of financial arrangements, their Honours have acted in consonance with the established principles of' the section’s interpretation, namely “liberality, straightforwardness and lack of technicality” (Woods and Stein, op. cit., at 46)

J.W.S.

3

Reinstatement in Employment: A Note on Developments in the Law

J. W. SHAW∗ The common law powers to dismiss an employee are much cherished by the employers of labour. It is true that the rules governing contractual relationships provide an action for damages, in limited circumstances, to a dismissed servant. The reality, however, is, summarized by Professor Wedderburn as being that beneath the “. . . formal language of an agreement between equals, the law protects in great measure the employer's disciplinary power over the worker”.34 This is the background against which the arbitral powers of certain industrial tribunals in Australia to reinstate a dismissed employee in employment – and their willingness to use such powers to countermand an unfair termination – must be seen. Of course, the intervention of a legal process into labour relations often has as its purpose the provision of “. . . a countervailing force to counteract the inequality of bargaining power which is inherent and must be inherent in the employment relationship”.35 Reinstatement orders seem to me to be fairly radical interventions into the employment relationship and certainly transcend the traditional remedies offered either by Common Law or, Equity.36 Given the substantial proportion of industrial disputes referable to dismissals37 and the dramatic personal consequences for an unjustly dismissed worker, a power to correct the harsh application of an employer's right to dismiss must be considered an important attribute of any system of industrial arbitration seeking to comprehensively regulate labour relations. In two industrial jurisdictions – namely those under the Commonwealth Conciliation and Arbitration Act, 1904, as amended and the New South Wales industrial Arbitration Act, 1940, as amended – developments of significance have occurred in the area of reinstatement which this note seeks to record. For employees under Federal awards new possibilities for using reinstatement remedies have been opened, whilst in the New South Wales system evolutionary developments in the substantive principles applicable to reinstatement cases can be observed.

COMMONWEALTH Conventional wisdom indicates that the Australian Conciliation and Arbitration Commission (the Commission) has no jurisdiction to order the employment of a dismissed worker. The difficulty is, in essence, that a dispute between a trade

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union and an employer in respect of a dismissal will not constitute, for the purposes of the Commonwealth conciliation and arbitration power,38 a dispute extending beyond the limits of one state. Hypothetical examples of inter-state disputes arising from dismissals can perhaps be formulated39 but the vast majority of reinstatement matters can only be characterized as local in nature. This jurisdictional difficulty exists notwithstanding an express reference in the Federal statute to “the right to dismiss or to refuse to employ, or the duty to reinstate in employment, a particular person or class of persons” as part of the definition of industrial matter.40 The response of one member of the High Court to this provision was succinct: “Be it so. You still must have an industrial dispute about that matter extending beyond one State”.41 How can this serious gap in Federal arbitration be rectified? Only, it would seem, by constitutional amendment or by the application of residual State law in respect of reinstatement to employees whose conditions of employment are largely governed by Federal awards. This second, more feasible remedy has been recently

∗ Barrister-at-law, Sydney, NSW.

34 K. W. Wedderburn, The Worker and the Law, Penguin ' 1965, p. 79. 35 0. Kahn-Freund, Labour and the Law, Stevens and Sons 1972, p. 8. 36 The Common Law remedies were confined to debt or damages in this field, whilst the Courts of Chancery would not grant specific performance in relation to service contracts: see E. I. Sykes and H. J. Glasbeck, Labour Law in Australia, Butterworths, 1972, P. 88. 37 According to J. J. Macken, Australian Industrial Laws, Law Book Co., 1974, p. 66. 38 Commonwealth Constitution Act, section 51, placitum (Xxxv). 39 See Sykes and Glasbeek, OP. Cit., P. 89. 40 Commonwealth Conciliation and Arbitration Act, 1904, as amended, section 4. 41 R. v. Gough; Ex parte Cairns Meat Export Co. Pty. Ltd. (1962) 108 C.L.R 343 at 350 per Dixon C. J. See also R.. v. Portus; Ex parte City of Perth (1973) 129 C.L.R. 312.

clarified and facilitated by the judgments of the High Court in Re Clarkson; Ex parte General Motors-Holden Pty. Ltd.42. The Amalgamated Metal Workers Union had created an interstate dispute with General Motors-Holden Pty. Ltd. and thereafter a consent award was made between these two parties in the Commission. Included in that award was a "contract of employment" clause. Following the dismissal of a person employed under this award in South Australia, the union sought reinstatement from the Industrial Court of South Australia relying upon that court's powers pursuant to section 15 (1) (e) of the Industrial Conciliation and Arbitration Act, 1972 (South Australia). However, the court held that it could not act in the matter because of an inconsistency between the State legislation on dismissal from employment and the provisions of the Federal award. Under section 109 of the Commonwealth Constitution, of course, the State Act was, to the extent of the inconsistency, invalid. The union then instituted proceedings in the Commission and obtained a variation of the consent award which had the express effect of continuing the operation of the South Australian legislation as to reinstatement. High Court proceedings were then commenced by the company in an effort to have this variation declared invalid. Two issues arose before the High Court: first, as to whether the variation was within the ambit of the original log of claims and secondly, as to whether such a preservation of state laws was constitutionally permissible. It is this second issue which has wide repercussions. The judgment of Barwick C.J. would certainly have ended this express method of providing an avenue of reinstatement for employees under Federal awards. His Honour said: “. . . it is not, in my opinion, within the Commission's power to decide that State laws and orders shall or shall not apply to employees bound by the award. Whether State laws to apply will depend on their terms and whether or not they are consistent with the terms of the award. Consistency or inconsistency cannot (189)

be determined by express provisions such as those of the purported variation made by the Commission. Those questions depend upon the substantive provisions of the award validly settling the industrial dispute.”43 This view, had it prevailed, would have left open the possibility, in individual cases, of the courts construing particular Federal awards as not evincing an intention to “cover the field”,44 thereby leaving State legislative avenues of redress as to reinstatement intact. It is obvious, however, that an explicit savings clause such as that in the instant case would give certainty and clarity to the legal position. All other members of the Court took the view that such an award provision could validly be made. For example, Jacobs J. held that:

“Every award is made against a background of the general law of each State governing the relationship of master and servant: The award may vary or modify or even wholly displace that law. Demands in an industrial dispute are made against the setting of the existing law which can only be varied, modified or replaced by an award within the ambit of the demands which constitute the industrial dispute. But there is nothing to prevent an award making it clear that it does not intend or propose to go outside the ambit of the dispute and it can make it clear by expressly saving the operation of the State law on a subject matter.”45

It might be expected that such award provisions will now proliferate and that the existing State laws as to reinstatement will have enhanced utility. If this does occur, the developed principles applicable to unfair dismissal cases (discussed below) will be the subject of wider study. NEW SOUTH WALES In the years since the first reinstatement award made by the New South Wales tribunals in 1902,46 a refined body of principles applicable to the dismissal situation has evolved. Whilst the issue of the Industrial Commission's power to reinstate has not gone entirely unquestioned, the position has been sufficiently certain to allow the development of substantive law.47

42 (1976) 50 A.L.J.R. 461. 43 Ibid., at p. 465. 44 Applying the tests formulated in cases such as Ex parte McLean (1930) 43 - R. 472 45 Op. cit. at p.470 46 Newcastle Wharf Labourers' Union v. Newcastle and Hunter River Steamship Company Ltd. 1902 AX. (N.SW.) 1. 47 In any event, the exhaustive historical and legal analysis of the reinstatement power by the Industrial Commission in Court Session in Australian Consolidated Press v. Federated Miscellaneous Workers Union (No. 1) 1973 A.R. (N.S.W.) 181 should have removed any lingering doubts.

A comprehensive summary of the principles discernible from past authorities is to be found in the judgment of McKeon J. in Western Suburbs District Ambulance Committee v. Tipping.48 Although His Honour's decision in this case dissented from the opinion of the majority, the statement of principles contained within the judgment49 has been widely regarded as authoritative.50 (190)

They can briefly be summarized, as follows:

(1) the Commission has discretionary jurisdiction to award reinstatement; (2) the employer's right to dismiss is clear and fundamental; (3) the deprivation of this right is a serious matter; (4) an application for reinstatement is not an appeal from the employers' decision; (5) the onus of convincing the Commission to intervene is on the dismissed employee; (6) the Commission will not simply substitute its own opinion for that of the employer; (7) reinstatement is exceptional; the test is: has there been oppression, injustice or unfair dealing on the part

of the employer? (8) each reinstatement case must largely be determined on its own facts.

In 1971, Sheldon J. of the N.S.W. Industrial Commission was faced with applications for the reinstatement of employees of the Australian Workers Union arising from what he described as a "maelstrom of contention" in that union: In re Loty and Holloway and Australian Workers' Union.51 It was in this judgment that an approach to reinstatement was articulated which is likely to prove resilient. It was an approach of eloquent simplicity. In arguing that the union should, for the purpose of the case, be viewed identically to any other employer, His Honour said:

“If this is so, in order to justify, in its discretion, intervention by the Commission by way of reinstatement, it must be shown in this case that the branch executive exercised its right of dismissal unfairly even though it was perfectly legal and this should be determined by standards neither more strict nor more relaxed than those applicable to any employer. I say 'unfairly' because adjectival tyranny should be resisted and I believe that in the modern context expressions used in the older cases such as 'harsh' 'oppressive' and 'unconscionable' as determinants as to whether intervention by an industrial authority is in its discretion permissible are properly interpreted on the basis simply of firstly deciding in all the circumstances, even though in the dismissal (be it summary or on notice) the employer has not exceeded his common law and/or award rights, whether the employee has received less than a fair deal. Mr Commissioner Manuel in a recent case put it in a nutshell and in language readily understood in the industrial world when he conceived his duty to be to ensure 'a fair go all round'. In my view, the use of the old adjectives, with their overtones from other jurisdictions, tends to distort this basically simple approach in that they can be strained to mean that an employer can be less than fair in exercising his right to dismiss and yet stand outside the permissible area within which an industrial authority in its discretion may act. It is a question of emphasis rather than substance as these adjectives have frequently been used in conjunction with and as alternatives to such expressions as 'unfair', 'unjust' and 'unfair dealing'. The last expression was used as an alternative to 'injustice' and 'oppression' as far back as 1921 in the historic Bank Officers Case, and it is inconceivable that a more rigid test should be applied half a century later. The less fetters there are on the discretion the better (none appear in the Act) but it is all-important that it should he exercised soundly. The objective in these cases is always industrial justice and to this end weight must be given in varying degrees according to the requirements of each case to the importance but not the inviolability of the right of the employer to manage his business, the nature and quality of the work in question, the circumstances surrounding the dismissal and the likely practical

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outcome if an order of reinstatement is made. There certainly may be Cases where the dismissal had many elements of unfairness but an industrial authority if it was convinced of the practical uselessness of trying to re-establish the employer-employee relationship, would not intervene at all. There may be other cases where there are reasonable prospects for the future of the relationship if clarifying conditions are imposed.”52

48 1957 A.R. (N.S.W .) 273. 49 Ibid., at pp. 279, 280. 50 See North West County Council v. Dunn (1970) 127 C.L.R. 247 at 263 per Walsh J. and In re Coccia and Australian Iron and Steel Pty. Ltd. 1971 A.R. (N.S.W.) 111 at 15 per Sheppard J. 51 1971 A.R. (N.SW.) 95. 52 Ibid., at p. 99.

This attractive exposition remained an individual view until given the imprimatur of the Full Bench in N.S.W. Independent Teachers Association v. St. Aloysius College.53 Approval of Sheldon L's dicta may be the most enduring effect of the St. Aloysius Case, but it also provides an important warning to employers who (like the college involved in the litigation) decline to give any reason for the dismissal of an employee with a record of long and satisfactory service. The Commission expressed the clear view that such a factual situation would constitute a prima facie case of harsh and unjust conduct on the part of the employer.54 This is, then, the state of the substantive law on reinstatement in New South Wales. Two other developments, both of a technical nature, should be briefly mentioned in this note:

(a) What is the position of a dismissed employee seeking a remedy under the Industrial Arbitration Act, by

way of reinstatement, who is not supported by his trade union? The matter was considered by the New South Wales Court of Appeal in Roberts v. Mona Vale District Hospital.55 It is now clear that an individual employee can initiate, and in some circumstances be a party to, a compulsory conference convened pursuant to section 25(1) of the Act.56 However, jurisdiction for that conference to proceed to make an award of reinstatement must be based on the objective existence of an “industrial dispute” as defined in that section of the Act. This necessarily involves some collective element, some “factor potentially disruptive of industrial harmony” which was not present in the Roberts Case.57 The court's judgment leaves open the possibility of reinstatement without union support where an industrial dispute none the less exists: “If, for example, the plaintiff's case had been supported by a group of her fellow employees at the hospital, there would have been a shop dispute. If it had been supported by the Nurses' Association it would have become an industry dispute, but while she stands on her own so that it is simply a contest between herself and her former employer, the dispute has no collective element.”58 Clearly, the occasions upon which a lone individual can invoke the tribunal's powers of reinstatement will be rare.

(192) (b) It has been made clear by the Industrial Commission in Court Session, in Australian Workers' Union v.

Commissioner for Main Roads59 that the Commission has no jurisdiction to order reinstatement when the dismissed employee has a right of appeal to a special statutory tribunal constituted under the Crown Employees Appeal Board Act, 1944, as amended (New South Wales). It was held that that Act provided an exclusive code for the many public sector employees within its scope and that the Commission's jurisdiction was restricted accordingly.60

53 Judgment of March 19, 1976; Industrial Arbitration Service, “Current Review” March-April, 1976, pp. 51, 52 54 Ibid., p. 51 55 [1975] 2 N.S.W.L.R. 132. 56 Ibid., per Street C.I. at P. 135 approving Merritt v. Cobar District Hospital1973 A.R. (N.S.W.) 511. 57 Ibid., per Street C.J. at p. 139. 58 Ibid., per Hatley J.A. at p. 142. 59 Judgment of June 24, 1976; Industrial Arbitration Service, "Current Review", July 1976, p. 160. 60 Ibid., at P. 165.

4

Wage Indexation – Has it a Future?

Mr J. W. Shaw, barrister. Trade unions in Australian pressed, during the 1950s, 1960s and early 1970s, for an automatic adjustment of wages based on increases in the cost of living, that is to say based upon the rate of inflation. As that claim was refined during the 1970s it came to mean two quarterly automatic increases in wages, based upon the quarterly figure known as the consumer price index, the major measure of inflation in the Australian economy. In other words, the claim by the trade unions was formulated as a means of keeping wage levels up with the level of inflation or of maintaining the real value of wages, notwithstanding the declining value of money in the community. On 30 April, 1975, a full bench of the Australian Conciliation and Arbitration Commission introduced such a system in a tentative, partial and qualified way. Nevertheless, the result of that decision has been to institutionalise the concept of wages indexation. It is this concept which has entirely dominated the setting of appropriate levels of wages and salaries for employees, whether under state or federal awards, throughout Australia from 1975 to the present time. Background to the introduction of wages indexation

For many years prior to 1953, the then Commonwealth Court of Conciliation and Arbitration applied a system of automatically adjusting the basic wage in each Commonwealth award, during the currency of each award, by increasing or decreasing the rate of pay each quarter according to the variation of an index of retail prices published regularly by the Commonwealth statistician. Such a system did not have the complete effect of preserving the real value of wages, because the basic wages was not the whole of the wage. Margins were not automatically adjusted to keep up with inflation. Nevertheless, the system provided wage earners with some protection from an inflationary spiral. In a very controversial decision of 1953 (see 77 CAR 477) the Arbitration Court abolished the system of automatic adjustment, saying that it was “impossible to justify the continuance of an automatic adjustment system whose purpose is to maintain the purchasing power of a particular wage” largely on the basis that it could not be assumed that the capacity of the economy to pay such a level of wages would remain constant (see page 497). The court took the view that it was “an appropriate time” to abandon the system because the view of the court was that the immediate future was likely to see relatively steady retail price levels and that, therefore, “no real difficulty” would be experienced by wage earners as a result of the elimination of automatic adjustment (see page 498). During the periods of high inflation in the late 1950s and the 1960s, the trade union movement consistently campaigned for the restoration of quarterly adjustments based on cost of living changes. The Australian (91)

Labor Party adopted that position as its policy and, when the Whitlam, government was elected in December, 1972, the Minister for Labor, Mr Clyde Cameron, began working towards the resurrection of some form of wages indexation. Another important part of the background consisted of what happened to wages during 1974. It was in that period that wage earners made great strides towards improving the real level of wages. The metal industry saw two major wage settlements, the first a $15 per week increase and a second increase towards the end of 1974 of $9 per week. The combination of these increases was a sizeable $24 per week which became a magic figure for wage fixation in 1974 and 1975. The increases spread as community-wide wage movements to virtually all employees in the nation. In white collar and professional areas, the figure of $24 was manifested as percentage formula in order to preserve relativities. The effect was a change in the balance of the distribution of national income towards wage earners and away from the earners of profit. In 1974, the consumer price index increased by 16.3 per cent, but the seasonally adjusted average weekly earnings for employed males increased by 27.7 per cent. In federal awards, minimum weekly wage rates increased by 35 per cent for adult males. And so, after some years of profits taking an increasingly greater share of gross national product, wage and salary earners increased their slice of the economic cake. Moreover, it was clear that the institutional framework of conciliation and arbitration, embodied in the Arbitration Commission, had largely lost control of the rate and size of wage increases. Rather, wage increases

were being determined in the market place by collective bargaining between trade unions and employers and merely ratified by the commission in the award making process. The relative significance of the commission had declined. And so a conjunction of factors - support from the Commonwealth Government, pressure from the trade union movement, the need for the Conciliation and Arbitration Commission to reassert its power and influence over wage fixation and a desire by many parties to establish a more orderly system of wage fixation than had existed in 1973 and 1974 - led to the creation of a radically new and centralised mode of regular wage adjustment.

The decision of April, 1975 Some of these factors were evident in 1974. But in that year the commission declined to introduce wages indexation saying that it had a preference “under a system of annual reviews, to keep wage adjustments under its direct control in order to be able to apply the size and form of increases in pay in a flexible way from year to year depending on the circumstances prevailing at the time”. But in its 1975 decision, the commission offered a “package” to the trade unions involving a form of wage indexation provided there were “appropriate wage fixing principles and the necessary supporting mechanisms to ensure their viability”. Even this was only to be on a trial basis, subject to a further hearing following the publication of the June, 1975, consumer price index. But notwithstanding this hesitancy, it is the system essentially formulated in April, 1975, with a significant number of alterations and refinements, which in its essence has endured to the present time. What were the features of that wage fixation system? (92)

1. There would be an adjustment each quarter to award wages in relation to the most recent movement in the consumer price index, unless the commission was persuaded to the contrary by those seeking to oppose the adjustment.

It was this regular review based upon cost of living changes which was the indexation component of the package. The Labor Government had sought only full percentage indexation of award rates up to the level of average weekly earnings, with award rates over the level of average weekly earnings being adjusted by a flat money amount. That is, the Commonwealth Government had advocated plateau indexation. This was a victory for the trade unions. But on the other hand, the trade unions had sought that the adjustment be automatic, as it had before 1953. However, the commission was careful to allow itself a good deal of flexibility in determining the quantum and form of each indexation movement. There was nothing automatic about it. There was to be a full hearing each quarter at which the form and amount of the indexation movement would be determined. And although the commission indicated that it expected the time of such quarterly hearings to be short, that proved far from the case. In addition, there was to be an annual assessment of what increase in wages should be awarded on account of productivity. They were the portions of the package which were favourable to the trade union movement. But apart from these favourable aspects, there were to be very severe curbs upon movement of wages outside the quarterly indexation adjustment. There were only two other bases for obtaining wage increases:

• unions were entitled to argue that their members should be able to catch up with community wage movements. In other words, if workers had not achieved the $24 per week increase or its equivalent, they were entitled to make up the shortfall. , This could be done once only, and the so-called catch-up principle fairly quickly became irrelevant as all wage earners achieved the equivalent of the 1974 wage movements;

• the more enduring principle allowed increases in the rate of pay where workers had shown changes in work value, such as changes in the nature of the work, skill and responsibility required, or the conditions under which the work was performed. The commission indicated that this would normally apply to some classifications in an award, although in rare cases it might apply to all classifications. These constraints on other movements in wages were to apply to consent arrangements between employers and unions as well as in the arbitration of cases where there was no consent.

This latter requirement was to impose some serious difficulties upon the system in later years. But in essence this was what the commission later called a "fragile package", a term which became a cliché of wage indexation debates. On the one hand it promised wage earners regular increases and the opportunity each quarter of restoring the real level of their wages. In so doing, it placed the Australian Conciliation and Arbitration Commission once again at the centre of the fixation of wages in Australia. It was to be a centralised and rational system, based upon objective statistical material. On the other hand, it provided a severe clamp-down upon industry wage settlements, profit sharing and sweetheart deals.

These two components had an inevitable tension which made for difficulties in the next five years. The trade unions favoured the regular adjustment of wages but opposed what they saw as unnecessarily harsh

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restrictions under wage deals in individual industries. The employers and conservative governments (Commonwealth and state) supported the restrictions, thinking them an admirable way of restraining wage increases and hence improving the rate of inflation, but opposed regular movements to the full extent of the consumer price index and in many instances opposed any quarterly increase at all.

Changes in the system since 1975 The principles have not remained static but have developed in an effort to cope with conflicting pressures. The president of the commission has held a number of enquiries and the principles have been debated many times before the full bench. Amongst the alterations has been: the development of a series of safety values, whereby wage increases could be given even where no change in work value could be proved. Such increases were allowed where the parties could demonstrate to the commission that there was an anomaly, a special and extraordinary problem or an inequity. In the first instance, any such allegation must be raised by one of the peak councils of unions rather than an individual registered organisation. The allegation first goes to the president of the commission who determines whether or not there is an arguable case for reference to the full bench. If agreement between all parties and interveners can be reached before the president, then the matter can be settled before him. On the other hand, in the absence of agreement (which is the situation in most cases) the matter is referred for determination by a full bench, assuming an arguable case has been made out. Even where the employers in the industry concerned are agreeable to the increase, the full bench has applied very stringent standards. In particular, it must be demonstrated that the resolution of the anomaly or other problem would take place in rare and isolated circum-stances and that there would be no potential for a flow-on of any increase so obtained. Moreover, the commission needs to be convinced that the impact in the economic terms of any such increase is negligible. The tribunals have rejected a broad interpretation of the term “anomaly” as a situation which involved some departure from an established rule; this had been the interpretation of the term by the tribunals during World War 2 when, in a strict system of wage fixation, a loophole was allowed to correct anomalies. On the contrary, the approach to these situations has been narrow and confined. Another major development has been a changed approach in respect of awarding increases in pay for changes in work value. In the early days, such increases were very difficult to obtain. The tribunals said that changes in the work must be “sudden” and “dramatic”. They insisted that it was far from every change in the work which would justify a pay increase. Increases in volume or workload tended to be rejected as supporting changes. Much emphasis was placed on the idea that there were normal changes in the work which would not be sufficient to warrant a pay increase. But in 1977 and 1978 things began to loosen up. Waterside workers received a general, or averaged, wage increase, notwithstanding that it was acknowledged that the work of some waterside workers had not altered at all. It was the averaging approach which essentially broke down the rigidity of the change in work value guidelines. The landmark of such work value cases was in the metal industry award, where a full bench of the

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commission in a decision of 5 November, 1979, awarded averaged increases of $9.30 per week for tradesmen and $7.30 per week for non-tradesmen. The technical grades of the metal industry award received the percentage equivalent of these flat money amounts. Since that decision, there has been a round of work value cases designed to achieve at least that quantum. About 80 per cent of the Australian work force has now received work value based increases of this dimension. There is no longer any pretence that it is only to be some classifications in an award which receive increases. All of these cases now involve an averaged approach for all classifications. And in many instances there is only a tenuous case based on changed work value. Many of the arguments are now approaching a case based on catch-up of community movements. From the point of view of the trade union movement, the most contentious structural change to the system has been the abandonment of quarterly hearings in favour of half-yearly hearings. This occurred in the 1978 wage fixing principles case, and has caused considerable disenchantment with the system on the part of the trade unions. On the other hand, it has been welcomed by the private employers and by the Commonwealth government as giving some respite from frequent wage increases. The change in this principle was prompted by the view of the commission that the twelve months from September, 1978, were to be “a critical period in the

revival of the economy”. The commission saw the move to half-yearly adjustments as providing employers with greater wage stability and some cost saving (see Current Review, September, 1978, page 486). Serious problems in the operation of the system During six years of life of the system, some major difficulties have emerged. One significant problem has been the opposition of the Commonwealth government to the commission granting regular increases based on the consumer price index. When the Fraser government was elected in December, 1975, it pledged support for the continuation of wage indexation. However, in the Sydney Morning Herald of 12 April, 1976, that newspaper’s industrial editor commented that “the Liberal federal government dealt indexation another serious knock when it announced earlier this yea r that it would ask the commission to increase wages by only half the amount of the CPI for the six months to December. The government claimed that the full 6.4 per cent increase would increase unemployment and inflation and undermine confidence in the economic recovery. It immediately came under attack for repudiating an election promise to support indexation; even Liberal state governments did not support the Commonwealth attitude”. The National Times at the same stage (19-24 April, 1976) proffered the opinion that “. . . if wage indexation is to survive, the government must announce an unambiguous commitment to support the national wage bench's efforts both by desisting from suggesting lower increases than those flowing from the CPI increases and by fiscal action designed to slice around two to three per cent off the index.” Nonetheless, such submissions continued during the course of wage indexation. And it was not only the Commonwealth government taking this line. Other state governments and the private employers can justly be said to have nominally supported wages indexation, so long as wages were never actually indexed by the commission. Each quarterly increase handed down

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by the commission became the subject of more and more governmental criticism, even when that movement was substantially below the full CPI adjustment. Hence, pressure was placed upon the commission to consistently award less than the CP1, i.e., to discount the inflation based increase for various specified factors. The next problem really springs from this lack of consensus, support for full wages indexation. The early promise, of the system was to maintain real wages. That promise has not been fulfilled because the orderly system of wage indexation has, in fact, succeeded in reducing the real earnings of Australian employees. It hardly seems necessary to point out that that fact considerably reduces the legitimacy of the system in the eyes of wage earners. Such a reduction of real income may be possible in times of serious economic down turn and high unemployment. But with the economy improving and the bargaining power of unions in particular industries strengthening, it is hard to see such a situation withstanding the inevitable pressures for the reinstatement of wage levels to their previous real value. From the point of view of the system and the employers, the work value increases of the last two years, to which I have referred, posed a real problem. The original premise of the system was that all wage increases outside of the centralised adjustments would be negligible. It is obvious to all that given the extent of the work value increases, the amount of such improvements in wage levels has been anything but negligible. On any test, it has been significant. Can the system withstand such a threat? The answer of the commission and of the system has been to prohibit in the strictness of terms second round work value increases. Now, such increases are only allowable if the union concerned can convince a full bench of the commission that it has a special and extraordinary problem. Single members of the commission are not allowed any longer to award a further work value increase if the employees concerned have had one average or across-the-board increase since the inception of wages indexation. In the present climate, it is clear enough that the full bench of the commission will be resistant to such an argument in an effort to prevent a full scale second round of wage increases. A further difficulty has arisen from the failure of the system to accommodate bargaining in particular industries. Because of the view that any such bargaining would be incompatible with centralised wage fixation some mutually satisfactory arrangements have been rejected by the commission and others have needed to be dressed up in order to pass muster before a tribunal. The most pointed example of such difficulties occurred in 1976. In July, 1975, Commissioner Clarkson had granted an increase of $9.30 per week to about 90 per cent of the employees of General Motors Holden. A month later, another commissioner refused to give an increase to the remaining 10 per cent. GMH appealed to the full bench and in March, 1976, the full bench held that the increase awarded by Commissioner Clarkson was outside of the guidelines. It ruled that it could not correct an anomaly because the anomaly was based upon a

movement outside of the principles. This left GMH in what the Sydney Morning Herald described (26 March, 1976) as an "intolerable position" of paying about 90 per cent of its workforce one rate and 10 per cent at a lower rate.

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Hence, notwithstanding the Arbitration Commission ruling, the company paid the wage increase to the remaining 10 per cent of its workforce and incurred very severe criticism from the federal government for so doing. The Sydney Morning Herald editorialist was defensive of GMH, saying that it was not particularly constructive of the prime minister to attack others for breaking down wage indexation “when his own government policy means the effective end of indexation, even if he continues to pay the system lip service”. The system breaks down By the end of 1980, it had become clear as a result of these and other problems that there was no longer a wide spread consensus which could sustain the incomes policy known as wage indexation. Both sides of the industrial relations fence were disenchanted. On 9 January, 1981, the Arbitration Commission announced that the system of wage indexation had broken down and was at an end. An inquiry into wage fixing principles was thereupon instituted before a full bench of the commission. This culminated in a decision by the full bench of 7 April, 1981. It is this 86-page document which now represents the crucial guidelines for wage fixation in this country. It has been adopted by the federal system of arbitration and is very likely to be loyally followed by the state systems.

The resurrection of wages indexation Notwithstanding its declarations that the original system was dead, the federal commission has formulated a wages indexation package remarkably similar to that which previously existed. Indexation has risen, phoenix-like, from the ashes. The principles themselves have hardly changed at all. Changes in work value continues to represent the only basis upon which wage movements can ordinarily occur outside of indexation movements. Second round work value increases are restricted as was previously the case. Escape values based on anomalies and inequities remain. Moreover, the central hearings continue to be half yearly. The only major change is this: in the first of the two hearings each year, after the publication of the March CPI figures, the commission will adjust award wages by 80 per cent of the December and March CPI figures. It seems clear that this will be more automatic than the previous hearings provided, but it is still not automatic wages indexation even at the level of 80 per cent of the CPI figure. It is still open to a party to show that there are “exceptional and compelling circumstances” which would warrant an increase of less than 80 per cent of the CPI or no increase at all. But for the first review there seems to he a stronger onus placed upon those who would oppose the 80 per cent movement. By putting the figure at 80 per cent of the CPI, the commission is really only reflecting what has developed into its practice of discounting the CPI figure in any event. While full indexation has been possible under the previous system, the normal result has been something in the vicinity, of 80 per cent of the CPI figure. The second review of each year will occur after the publication of the September CPI figure. At that hearing, the commission will consider adjusting award wages for the remaining 20 per cent from the December and March quarters, the CPI movements for June and September quarters and pro-

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ductivity - movements. It would seem that in this hearing there is to be no presumption that an increase or any particular size of increase is to be granted. It is clear that the second hearing of each year will involve some quite substantial claims by the unions if the present levels of inflation persist. The combination of the residual amount of the CPI from two previous quarters, the full amount of the CPI for June and September plus productivity will make for a sizeable total percentage figure. Economic considerations, the attitudes of governments plus the tendency of any arbitration system towards compromise will tend to make the chances of receiving all of this percentage at the second review each year rather low. All in all, the changes to the system virtually ensure less than full wages indexation and, therefore, the reduction of real earnings. In any event, they institutionalise a significant time lag in passing on wage increases for inflation. Moreover, there is an attempt to integrate conditions claims into the second hearing of each year, in other words to centralise the hearings of arguments about items like the reduction of working hours. For the first time, conditions claims are to be centralised and integrated into the second annual hearing by the full bench.

Productivity bargaining leading to reduction of hours is not to be allowed except for cases part heard before the commission. No longer are these to be dealt with in s