Definitive Report - Report No 284, November 1992

Case No 1559 (Australia) - Complaint date: 22-NOV-90 - Closed

1. 200. The Committee already examined the complaint of the Confederation of Australian Industry (CAI) at its February 1992 meeting, when it presented interim conclusions which were approved by the Governing Body (281st Report, paras. 326 to 364, March 1992). The CAI presented additional information in a letter of 16 April 1992.
2. 201. The Government sent its further observations on the case in a communication dated 22 May 1992.
3. 202. Australia has ratified both the Freedom of Association and Protection of the Right to Organise Convention, 1948 (No. 87) and the Right to Organise and Collective Bargaining Convention, 1949 (No. 98).

A. Previous examination of the case

1. 203. In its original letter of complaint dated 22 November 1990, the CAI stated that a proposed amendment to the Federal Industrial Relations Act of 1988, contained in the Industrial Relations Legislation Amendment Bill of 1990, unreasonably restricted the registration of new employees' organisations of their own choosing in individual enterprises and small industries and restricted the freedom of employees to choose which union they wished to belong to. It later advised that the Bill had been passed by Parliament with very few changes.
2. 204. Noting that the provisions of the 1988 Act permit the registration of employees' associations subject to their compliance with a number of requirements, the complainant expressed its concern over new registration provisions requiring a minimum membership of 10,000 (section 189(1)(c)(i)). It also noted that a member of the Industrial Relations Commission - the designated Presidential Member - was given the discretion, over a time period stipulated as stage 1 and stage 2, to allow the registration of certain "small organisations" to continue. He could so act if satisfied, when carrying out the review of these registrations, that "special circumstances" exist justifying the association's continued registration (sections 193 and 193A). The time period for review of registrations was to begin on 1 March 1992 and run throughout the two stages to expire at the end of February 1994.
3. 205. The complainant pointed out that the amendment would have the following effects on employers and employers' associations:
   • (a) the provisions restrict the nature of the employees' associations with which employers must deal within the legislative scheme, and in particular hinder the development of enterprise-based and industry-based associations;
   • (b) the provisions require the cancellation of the registration of many employees' organisations with which employer associations have an established relationship (for example, the implementation of the 10,000 membership requirement would require the cancellation of 92 organisations of employees out of a current total of 149);
   • (c) the provisions promote the establishment of very large employees' organisations, thus bringing about an alteration in the relative strength of organisations of employees and of employers and their associations.
4. 206. The Government's detailed reply described the dual purpose of the 1988 Industrial Relations Act: (a) to establish an independent industrial tribunal, the Australian Industrial Relations Commission (the AIRC) with responsibility for the prevention and settlement, through the exercise of conciliation and arbitration powers, of industrial disputes; and (b) to provide for the voluntary registration of employees' or employers' organisations, which results in such organisations having certain rights and obligations within the federal industrial relations system. It denied that the amendments complained of in this case infringed the principles of freedom of association.
5. 207. The Government described in detail how the Industrial Relations Act enables employers' and employees' associations to apply for registration: certain statutory requirements must be met; there is a hearing before the AIRC to determine whether an application should be granted at which registered organisations and other interested parties (e.g. state unions or employers) may object to an association being registered; such objections must be heard and determined before an application is granted. The Government emphasised that registration under the Industrial Relations Act occurs following a voluntary application and is not a precondition to the formation and operation of a trade union. Registration confers a number of benefits on an organisation, but also carries with it certain obligations. The benefits include: (a) the conferral of corporate status on the organisation concerned; (b) a specified area of industrial coverage corresponding to the rules of the organisation with the consequent right to make claims within the AIRC's jurisdiction on employers in relation to members and persons eligible for membership of the organisation; (c) the right to seek enforceable awards, whether by consent or arbitration, from the AIRC in relation to the employment of such individuals; (d) the right to object, in proceedings before the AIRC, to other organisations gaining coverage; (e) the standing to bring proceedings in a court to enforce a federal award to which the organisation is a party; (f) the right to seek the settlement, by arbitration if necessary, of disputes with other organisations over demarcation of work; (g) the statutory protection of members of the organisation against employment discrimination for various reasons, including membership of or participation in the affairs of the organisation. The obligations include: (a) compliance with certain statutory requirements designed to ensure the democratic control of organisations by their members and the protection of their interests; (b) the duty to notify the AIRC of disputes to which the organisation is a party and to appear before the AIRC when required in proceedings in relation to a dispute to which the organisation is a party; (c) acceptance, subject to the rights of appeal, of the decisions of the AIRC in matters affecting the organisation and its members.
6. 208. The Government explained how any association of employees may apply for registration under the Industrial Relations Act and listed the criteria for registration: that the association is a genuine association of the kind referred to in section 188 and is an association for furthering the interests of its members; and that the association has at least 10,000 members who are employees, or the AIRC is satisfied that there are special circumstances which justify registration of the association. As for the review of "small organisations" to ascertain whether their continued registration is justified, the Government acknowledged that the new sections 193 and 193A provide that where the designated Presidential Member is not satisfied that special circumstances exist to justify the continued registration, it shall be cancelled. The review of the registration of "small organisations" is to be carried out in two stages: a stage 1 review covers organisations of employees that have fewer than 1,000 members who are employees and lasts for the period beginning on 1 March 1992 and ending on 28 February 1993; a stage 2 review applies to organisations of employees that have fewer than 10,000 members who are employees and covers the period beginning on 1 March 1994 and ending on 28 February 1995.
7. 209. Noting the allegation that the minimum membership requirement of 10,000 could result in the cancellation of the registration of 92 organisations of employees out of a total of 149, the Government pointed out that, as at 30 June 1990, there were only 139 registered unions and, in addition, the figure of 92 is misleading because a considerable number of federally registered unions is involved in voluntary amalgamations in line with the policy of the union movement.
8. 210. The Government listed a number of factors to prove that the registration requirements, including the minimum membership requirement, do not infringe freedom of association: federal registration is not a precondition to the formation or operation of a trade union (for example, the CAI is not a registered body and of its 34 member organisations and affiliates only eight are registered under the Industrial Relations Act); registration is entirely voluntary; registration under the federal Act would normally be of marginal value to a small enterprise union; the Industrial Relations Act does not prohibit unions with fewer than 10,000 members from being registered: rather it requires them to demonstrate what "special circumstances" exist that warrant their registration; the members of an unregistered union can, if capable of being party to an interstate dispute, come within the AIRC's jurisdiction; provision is made in the Industrial Relations Act to permit the 150 or so non-federally registered unions and other interested parties (including employers) to object to decisions being made by the AIRC in favour of federally registered unions to the disadvantage of parties whose industrial relationships are conducted outside of the AIRC's jurisdiction; various provisions exist under federal and state legislation which facilitate constructive and cooperative voluntary relationships between federally registered unions and state-registered unions; the changes to the Act have the overwhelming support of federal and state trade unions, expressed through the biennial congresses of the Australian Council of Trade Unions. (The ACTU was fully consulted over the changed membership requirements and agrees with them.)
9. 211. The Government stresses that participation in the federal system of industrial relations established by the Industrial Relations Act is not necessary for the successful operation of a union. Fewer than half of the unions in Australia are registered under the Industrial Relations Act. Many unions have chosen to operate solely within the geographical limits of a state. Provisions exist under federal and state laws to facilitate the relationship between federal and state unions, including through permitting membership of a federally registered union by members of a counterpart state-registered union, even though the federally registered union's eligibility for membership rules are not identical with those of the state-registered union. In addition, the Government quoted a previous decision of the Committee on Freedom of Association concerning registration under the federal Act (277th Report, Case No. 1511, para. 229):
   • The Committee considers that it is reasonable for the legislation, and the AIRC, to require adherence to the norms of the system of conciliation and arbitration as part of the quid pro quo for these benefits which derive therefrom. This does not appear to be in any way inconsistent with the guarantees provided by Articles 2 and 3 of Convention No. 87, or by Article 4 of Convention No. 98. Workers can form and join the union of their own choosing. That union can then elect to register under the federal Act if it wishes. Alternatively, it may register under one or more of the state Acts, or it may remain unregistered. Whether registered or not, it may formulate its programmes in full freedom. It may also engage in free collective bargaining.
10. 212. The Government denied that the element of choice is illusory, for example, by claiming that the disadvantages of not being registered are so great that a union must be federally registered or perish, because a union can be formed and operate outside the federal system and because a union which is not federally registered has the right to challenge the use of the federal system by federally registered unions to encroach on its own area of operation.
11. 213. The Government emphasised the irrelevance of the federal system to enterprise unions. For constitutional reasons, the jurisdiction of the AIRC can, in the great majority of cases, only be involved where there is, or is likely to be, an interstate industrial dispute. Yet, the size and geographical dispersion of enterprises in Australia is such that most enterprise unions would have members only in a single state.
12. 214. As for the special circumstances test, the Government stressed that registration under the Industrial Relations Act of a union with fewer than 10,000 members is not prohibited. Instead the union concerned must demonstrate to an independent tribunal (the AIRC) that, although the union does not meet the threshold membership requirement, there are positive reasons which warrant the union's participation in the federal industrial relations system as a registered organisation. The AIRC has a broad discretion and there is a clear legislative intention that the requirement not be applied unreasonably or inflexibly. Any decision is reviewable on appeal.
13. 215. The Government also argued that the formal participation by members of an unregistered union - or an employer - in the federal system belied the complainant's allegations. In Australia, a specific group of employees is capable of being party to a dispute within the jurisdiction of the AIRC and those employees may, in their own right, collectively be parties to a federal award. In practice, such instances are rare, reflecting the generally stable nature of union representation and inter-union relationships in Australia, but they show that the federal system does not exist purely for the benefit of its registered organisations. The central objective of the system, as already mentioned, is to prevent and settle interstate industrial disputes, irrespective of whether the parties are registered under the system.
14. 216. The Government pointed out that, since the 1991 amendments took effect, there has been considerable use of the revised amalgamation provisions. Seventeen amalgamations involving 41 federally registered unions have been approved by the members concerned. A large number of other federally registered unions have begun negotiations for this purpose or are about to do so. Of the 38 federally registered unions with fewer than 1,000 members which were registered when the Industrial Relations Act took effect in 1989, 12 have already voluntarily amalgamated with other federally registered unions and four are currently involved in formal amalgamation processes.
15. 217. Regarding the allegation that the stage 1 and stage 2 reviews and cancellation of registration unless special circumstances exist are an unreasonable restriction on the continued registration of such organisations and infringe the principles of freedom of association, the Government argued that: (a) all unions have had considerable notice of the forthcoming reviews since small organisations with fewer than 1,000 members were given three years from the commencement of the Industrial Relations Act in 1989 to prepare for the review of their continued registration, and small organisations with fewer than 10,000 members were given over two years from the commencement of the 1991 amendments for that purpose; (b) small unions with fewer than 1,000 members and those with fewer than 10,000 members are free to seek to increase their memberships by recruitment or amalgamation, or to remain as they are and instead argue their case before the AIRC; (c) the review will be conducted by a Presidential Member of the independent AIRC with a hearing at which the union concerned can put its case, and there is a right of appeal to a full bench of the AIRC; (d) the Presidential Member has a wide discretion to ascertain whether there are special circumstances and, if so, the union's registration is not to be affected; (e) it is open to the Presidential Member to adjourn a matter, if he or she considers that the small organisation concerned is making all due efforts to achieve the threshold membership requirements.
16. 218. Lastly, the Government contested that employers will suffer, because the structure of the union movement is not dependent on the interests and convenience of employers. The membership requirements will not entail any additional difficulty for unions in forming, or seeking to register, new industry unions. There would be few, if any, industries which do not have 10,000 employees working in them. It claims that it is unlikely that many enterprise unions would be interested in participating in the federal system, since, as a matter of practicality, they would conduct their affairs at the state level. It notes that some enterprise unions have been registered under the federal Act where the employer concerned is a large, national corporation but such unions have become less common, with workers preferring to belong to larger industry or cross-industry unions. In any case, the Government refuted the CAI's argument that unions are likely to become larger, better organised and stronger. The great majority of employers and their representative bodies which participate in the federal system are accustomed to dealing frequently with the largest federally registered unions. In practice, the bargaining positions of employers and workers in the federal system have long been characterised by the predominant roles of employer associations and the larger federally registered unions.
17. 219. In conclusion, the Government stressed that the purpose of the amendments is to strengthen the federal industrial relations system by introducing a mechanism to ensure that participating unions are sufficiently well organised and resourced to represent their members effectively. That mechanism is not designed to lead to the automatic exclusion of smaller unions from the system, but to require them to demonstrate that there are positive reasons justifying their participation in a national level system as registered bodies. Failure to do so does not result in their dissolution or incapacity to function as unions, or in their complete exclusion from the federal system. The legislation does not detract from the freedom of workers to form or to join a union of their own choosing, or for such unions to operate effectively.
18. 220. At its February 1992 Session, in the light of the Committee's interim conclusions, the Governing Body approved the following recommendations:
    • (a) The Committee observes that the 1991 amendments to the Federal Industrial Relations Act have the effect, unless exceptions are granted, of preventing trade union organisations with less than 10,000 members from having access to the federal conciliation and arbitration system.
    • (b) The Committee requests the complainant organisation and the Government to supply information on the consequences of these amendments on the activities that can be undertaken by these trade union organisations.
    • (c) The Committee also requests the Government to describe the nature and scope of the "special circumstances" which may justify granting an exception to the minimum threshold of 10,000 members.

B. The complainant's further comments

1. 221. In its letter of 16 April 1992, the CAI states that the inability to secure federal registration of a trade union has the effect of seriously inhibiting the registration of small trade unions, particularly those in small industries or in enterprises. The effect is in fact similar to the situation of cancellation of registration of a federally registered trade union: namely to place immediately the continuing viability and operation of that union under severe question. This occurs because of (1) the very considerable benefits that trade unions gain from registration, (2) the primacy of the federal system, and (3) the activities of other competitor trade unions.
2. 222. The CAI states that the considerable benefits that trade unions gain from registration include the ability to obtain and vary federal awards, taxation advantages, corporate status and general recognition of the trade union for the purposes of its activities. In practice an unregistered union would find it difficult if not impossible to obtain and service awards, which are the principal functions of registered trade unions.
3. 223. It adds that the primacy of the federal system means that the fact of state registration or ability to gain state registration is only a poor second best alternative for a federally deregistered union. Most state-registered trade unions of any importance are organically linked to a federally registered trade union. This has the effect of seriously inhibiting attempts by other federal trade unions to invade their area of coverage. Those important state unions that are not linked to a federal union are exceptional, and reflect the existence of special circumstances. For example, the Australian Building Construction Employees' and Builders' Labourers Federation (BLF) is not federally registered because its registration was cancelled for industrial misconduct in 1984, although it retains registration under four state industrial systems. Trade unions representing some state public sector areas are typically not federally registered because of the history of the state award coverage of certain state public sector areas, reflecting past interpretations of the extent of jurisdiction of the federal system. According to the CAI, the absence of federal registration is a very serious setback for any trade union notwithstanding state registration for a number of reasons. First, the federal system prevails over state systems because of the effect of section 109 of the Australian Constitution, which provides: "When a law of a state is inconsistent with a law of the Commonwealth, the latter shall prevail, and the former shall, to the extent of the inconsistency be invalid." The same applies under section 152 of the Industrial Relations Act:
   • Where a state law, or an order, award, decision or determination of a state industrial authority, is inconsistent with, or deals with a matter dealt with in, an award, the latter prevails and the former, to the extent of the inconsistency or in relation to the matter dealt with, is invalid.
   • Under these provisions, the AIRC has power to prevail over state industrial systems in making orders or awards relating to an area of employment. In practice it does so frequently.
4. 224. The issue of whether a federal award or state award is to cover an area of employment is commonly determined by proceedings under section 111(1)(g) of the Act, which provides that the AIRC may dismiss a matter or part of a matter, or refrain from further hearing or from determining the industrial dispute or part of the industrial dispute, if it appears: ... (ii) that the industrial dispute or part has been dealt with, is being dealt with or is proper to be dealt with by a state industrial authority; (iii) that further proceedings are not necessary or desirable in the public interest. While detailed statistics do not appear to be available, it is at least as common for the AIRC to issue orders overriding a state jurisdiction as not to issue such orders. Frequently, the two parties to the contest are different trade unions, one pursuing coverage in the federal system and one in the state system.
5. 225. Secondly, the CAI states that cancellation of registration of a federally registered trade union would require that union to seek registration under as many as six state industrial systems. If the trade union does not have that registration, then it would be required to seek it in an attempt to retain the coverage it formerly had. Instead of obtaining award benefits through primarily one jurisdiction it would be required to seek those benefits through up to six state jurisdictions, a very considerable disadvantage in terms of manpower and other costs.
6. 226. Thirdly, according to the CAI, where a trade union has its registration cancelled other trade unions are able to expand their coverage either under section 204 (rule changes) or section 118A (demarcation) of the Act. The main obstacle to a trade union seeking new coverage of an area under section 204 of the Act is what is known as the "conveniently belong" rule, which provides:
   • A designated Presidential Member shall not consent to an alteration of the eligibility rules of an organisation if, in relation to persons who would be eligible for membership because of the alteration, there is, in the opinion of the designated Presidential Member, another organisation to which those persons might conveniently belong.
   • The CAI thus argues that cancellation of registration of a trade union could in many instances produce a "vacancy" in registration, which could be filled by other trade unions without the conveniently belong rule operating to prevent expansion of coverage. While the conveniently belong rule does not apply with respect to section 118A, the existence of a vacancy in coverage would be a factor assisting other trade unions to gain coverage of an area under that section. The result would be that with respect to most if not all trade unions with fewer than 10,000 members any vacancy in federal coverage caused by cancellation of registration would be quickly filled. The only potential inhibitions on this process would be firstly, competition between the remaining trade unions for the area, or secondly, a high degree of preparedness on the part of the members to retain their membership in the union despite its inability to represent them and protect their interests in the federal system. With respect to competition between federal trade unions, this could be resolved by the AIRC, perhaps using its demarcation powers under section 118A. The second potential inhibition, loyalty of the members, would only be a real inhibition in very unusual circumstances.
7. 227. In short, states the CAI, the practical result of cancellation of registration of a trade union with less than 10,000 members would be to place very considerable pressure on the continued viability of that trade union. The threat of cancellation of registration would act in most cases as a very considerable inducement to seek amalgamation partners.
8. 228. One of the most serious threats that would face such a trade union would be a substantial reduction of its capacity to prevent other federal unions from obtaining coverage of its area of operations, seeking to recruit its membership, and seeking to remove its ability to continue as a viable trade union. The ability of a state-registered trade union to protect its area of coverage from encroachment by federally registered trade unions is, for reasons which have already been discussed, considerably more limited than the capacity of a federally registered trade union to protect itself.
9. 229. The CAI states that the process of review of registration of trade unions with fewer than 1,000 members has begun. It attaches the notification of the commencement of the process sent by the AIRC to the small trade unions listed therein, and to the Government, the ACTU and the CAI. The CAI points out that the outcome of these reviews may not be known until 28 February 1993 (the date for completion of stage 1 reviews). The CAI does not consider that there are any good grounds for delaying finalising this complaint in order to await AIRC decisions, which may not be available for some time. The fact of the legal disability which these small unions are under, and the fact that there is a legislative bias against their continued existence is, in the CAI's view, in itself a breach of freedom of association principles, and decisions of the AIRC in exercise of its discretion cannot change that position.
10. 230. The CAI acknowledges that cancellation of registration under the minimum membership requirements is not automatic, and is only required where the AIRC does not consider that special circumstances exist justifying the continued registration of a small organisation. However, the effect of the reviews is to establish a legislative bias against continuing registration of small unions, in that each small union must bear the onus of demonstrating that "special circumstances" exist or face cancellation of federal registration. The fact of being a bona fide and legitimate trade union is in itself insufficient, because something of a special nature must also be established, in the same way that a similar test for large unions would establish a bias against the continuing registration of large trade unions. It is in the CAI's view inconsistent with freedom of association principles to discriminate against a trade union on the basis of size in this way. The question of how the AIRC applies the special circumstances test does not change the fact that small trade unions are placed under a serious legal disability with potentially very serious practical consequences. The fact that the AIRC has a form of discretion and that cancellation of registration is not automatic does not change this position.
11. 231. In conclusion, the complainant states that the latest statistics provided by the Australian Industrial Registrar show that there were 106 federally registered trade unions as of April 1992. Estimates are that between 39 and 40 have fewer than 10,000 members. This is a considerable reduction over the previous figures.

C. The Government's further reply

1. 232. In its letter of 22 May 1992, the Government claims that the Committee's first recommendation (281st Report, para. 364(a)) is not an accurate representation of the effect of the legislation, nor of the relevant parts of the Government's initial response to the CAI's complaint. It repeats that: members of an unregistered union can, if capable of being a party to an interstate industrial dispute, participate in the federal system; and an unregistered trade union can appear before the AIRC for the purpose of protecting its interests in relation to a proceeding before the AIRC. Consequently, the members of any small union which is deregistered as a result of the amendments, and the unions themselves, will still have limited, but significant access to the federal system.
2. 233. As for the Committee's second recommendation (281st Report, para. 364(b)) the Government agrees with the CAI that the effect on unions unable to obtain federal registration would be similar in nature to the effect on those trade unions whose registration is cancelled. It does not, however, agree with the CAI about what those consequences are. It stresses that the "special circumstances" test applies to unions seeking federal registration as well as to registered unions whose registration is to be reviewed under sections 193 and 193A of the Industrial Relations Act. Accordingly, it is only those small unions which seek federal registration but which are unable to satisfy the "special circumstances" test that will be unable to obtain federal registration.
3. 234. As for the effect of cancellation of federal registration of a trade union, the Government does not accept that such cancellation places the continuing viability and operation of the union under severe question. It explains that, other than the ability to obtain and vary federal awards, registration under most state systems gives benefits similar to those derived from federal registration. As to the importance of federal awards, the Government's initial response explained that more workers in Australia have their employment regulated by awards of state industrial tribunals than by federal awards (46.5 per cent and 31.5 per cent respectively). The ability to obtain, vary and service federal awards is of limited or no importance to the majority of trade unions in Australia.
4. 235. With reference to the CAI's claims about the primacy of the federal system, the Government states that it is essential to recognise that, for constitutional reasons, the jurisdiction of the federal industrial relations system is confined to industrial disputes which extend beyond the limits of any one state, that is, to interstate as distinct from intra-state industrial disputes. That is why, in addition to the federal industrial relations system, each state has its own industrial relations system based on legislation which, in general terms, is similar to the federal legislation. Each state system exists to deal with industrial disputes which are confined to that state and which are therefore beyond the jurisdiction of the federal system. In practice there are areas of overlap between the federal and state jurisdictions, and there are federal awards which apply only in one state. The legal underpinning for the making of such awards is, however, the existence of an actual, threatened, pending or probable interstate industrial dispute.
5. 236. The Government points out that on 30 June 1990, less than half the trade unions in Australia were registered under the federal system (139 out of a total of 295). The most recent Bureau of Statistics figures show that as at 30 June 1991 there were 275 trade unions in Australia while the latest statistics from the Australian Industrial Registry, quoted by the CAI, show that in April 1992 there were 106 federally registered unions. The majority of unions not registered under the federal system are registered under one of the state systems. This indicates clearly that the federal system is of little relevance to the majority of trade unions in Australia in the sense that they have not found it necessary to register under the federal system. Their needs are adequately met by participation in the state systems or by operating outside any formal system. One reason for this is that smaller unions are more likely to have members only in one state, and are therefore unable to become involved in interstate industrial disputes. Such unions are likely to find it more practical to be registered under a state system than under the federal system. It adds, however, that some small unions with members in only one state have chosen to register under the federal Act. Such a union could not be a party to an interstate industrial dispute and therefore could not obtain a federal award, which is the chief advantage of federal registration. Accordingly, despite the fact that it has federal registration, such a union must protect the industrial interests of its members by operating outside the federal system. Some small unions have chosen not to be registered under any system, but prefer to engage in direct negotiations with employers.
6. 237. It is therefore apparent that the 1991 amendments have no implications for the activities that can be undertaken by many small unions because those unions are not, and never have been registered under the federal system, and do not, and never have operated within that system. Other small unions have registered under the federal system but in fact operate outside that system.
7. 238. As for the implications for trade unions which are registered and which do operate under the federal system and which have their registration cancelled as a result of the amendments, the Government reports that:
   • - deregistration does not extinguish a union's existence;
   • - deregistration does not affect a union's rules, its membership, its property rights or its legal rights and liabilities (other than under the federal Act); and
   • - deregistration does not prevent a union from bargaining outside the federal system, whether by participating in a state system or otherwise. In short, such a union would be in the same position as the majority of unions in Australia, which are not, and never have been registered under the federal system, but which are able effectively to represent the industrial interests of their members by operating in a state system or by dealing directly with employers outside any formal system.
8. 239. Referring to the CAI's further submission that most state-registered unions "of any importance" are "organically linked" to federally registered unions, the Government states that this is usually because the state-registered union is also a branch of a federally registered union. Such a state-registered union has a dual personality: as a state-registered union it can operate within the state system in its own right and obtain state awards for its members where that is appropriate to their employment, while as a branch of a federally registered union its members can be covered by federal awards where that is appropriate to their employment. The Government considers it unlikely that such unions will be affected in any way by the minimum membership requirements of the federal legislation. In most (and probably all) cases, the members of the state-registered union would also be members of the federally registered body of the union. It is therefore unlikely that the federally registered body would be affected by the minimum membership requirements in the Act.
9. 240. It is true, as the CAI points out, that under section 109 of the Australian Constitution and section 152 of the Act, federal orders and awards prevail over state laws, orders, awards, decisions or determinations to the extent of any inconsistency or duplication of subject-matter. The issue of whether a federal or a state award is to cover an area of employment is commonly determined by proceedings under section 111(1)(g) of the Act and that frequently the parties to such proceedings are different trade unions, one pursuing coverage in the federal system and one in a state system. It is important to note, however, that in such proceedings the non-federally registered union has standing to appear before the AIRC and argue its case as to why the AIRC should exercise its power not to make a federal award. By the CAI's own account, the AIRC commonly exercises its discretion in favour of the non-federally registered union. This shows that a non-federally registered trade union can appear before the AIRC for the purpose of protecting its interests, and that such appearances are frequently successful.
10. 241. Referring to the CAI's assertion that the cancellation of registration of a federally registered trade union would require the union to seek registration under as many as six state industrial systems, and that it would be required to operate in six state jurisdictions at a considerable disadvantage in terms of manpower and other costs, the Government states that this would depend on the circumstances of the union concerned. A union with branches in all states may find it necessary to operate in all the state systems, but in the majority of cases the state branches of the union would already be registered or have recognition under relevant state legislation and would be operating within the state systems. It is, in any case, likely that most federally registered unions with members and/or branches in all or several states would have more than the prescribed minimum membership numbers. A union with members and/or branches in only one or two states would find it necessary to operate in those states only.
11. 242. The Government also replies to the CAI's reference to sections 204 and 118A of the Act concerning the creation of a "vacancy" in registration which could be filled by other unions to the disadvantage of the deregistered union. This could occur because the deregistered union would no longer have the protection of the "conveniently belong" provision of section 204. The Government states firstly that, under sections 204 and 253 of the Act, and regulations 51 and 73 of the Industrial Relations Regulations, a non-federally registered union can appear before the AIRC for the purpose of objecting to the widening of a federally registered union's industrial coverage or to a change of the union's name. A non-federally registered union can, therefore, take action in the federal system to protect its interests. The Government states secondly that the CAI seems to be arguing that the principles of freedom of association require not only that legislation should be such as to permit the free formation and free functioning of trade unions, but that it should also protect trade unions from competition from other trade unions. The Government's understanding is that such a concept has never formed part of the principles of freedom of association. Indeed, the Committee on Freedom of Association has held that inter-union rivalry is outside the scope of Convention No. 98, and that Article 2 of that Convention is designed to protect workers' organisations against employers' organisations and not against other workers' organisations (95th Report, Case No. 448, para. 123; 218th Report, Case No. 1122, para. 346; Case No. 1129, para. 479). The Government does not believe that this complaint justifies a change to the jurisprudence developed by the Committee concerning the application of the principles of freedom of association to inter-union rivalry.
12. 243. The Government acknowledges the importance of the federal industrial relations system. Its significance, however, arises not only from its capacity to deal with national industrial disputes, but also from the influence of decisions made by the AIRC in other matters of national importance such as the National Wage Cases and test cases on key industrial relations issues. In those cases, economic and industrial relations issues are argued by Governments as well as peak employer and union bodies, which represent not only federally registered organisations, but state-registered or recognised bodies of employers and workers, as well as unregistered associations particularly in the case of employer groups. Decisions in such cases are usually followed by the state industrial tribunals, some of which are required by state legislation to have regard to decisions of the AIRC in considering similar matters coming before them. The Government therefore does not accept the CAI's assertion that state registration is only "... a poor second best alternative for a federally deregistered union". The state systems, like the federal system, provide machinery for settling disputes through legally enforceable decisions, including by the making of awards. In fact, in some respects, the state systems have certain advantages, including the capacity to make awards which apply generally in an industry, not only (as in the federal system) to the particular parties involved in a given dispute. Similarly, registration under a state system carries with it, like registration federally, corporate status for the registered body and an equivalent range of rights and obligations within the state system concerned.
13. 244. As for the Committee's third recommendation (281st Report, para. 364(c)), the Government states that the "special circumstances" test is discussed in the Government's initial response and there have been no decided cases on which to base a discussion of it. To explain the intended scope and effect of the test, the Government set out the relevant part of a statement made by the Minister for Industrial Relations during the Parliamentary debate on the legislation. Such a statement may be referred to by a court or other tribunal to clarify the purpose of the legislation to which the statement refers. The Government stresses that, in reviewing the registration of a "small" union, the designated Presidential Member of the AIRC may refer to the Minister's statement to ascertain the intention behind the "special circumstances" test, including the purpose of the test and the kind of considerations that may be taken into account in deciding whether or not the test has been satisfied by the union concerned. It adds that the Minister's statement also gives unions whose registration may be subject to review an indication of the kind of argument they may wish to advance in support of their continuing registration. Examples of criteria which may be used (singly or in combination) by the AIRC in deciding whether or not "special circumstances" exist include:
    • (a) whether there is any other organisation which can represent under the Act the industrial interests of the members of the small organisation and, if so, whether that other organisation is prepared to do so and would do so satisfactorily;
    • (b) whether the industrial interests of the organisation's members are such that those interests would be likely to be better represented under the Act if the organisation remained registered;
    • (c) the views of those members about which organisations should represent their industrial interests for the purposes of the Act;
    • (d) the extent, if any, to which the organisation is attempting by appropriate means - for example, increasing its membership or by amalgamation - to obtain more than the required number of members and whether it would be reasonable to give it a further opportunity to do so;
    • (e) whether cancelling an organisation's registration would be likely to harm industrial relations in the industries or enterprises of employers of persons eligible for membership of the organisation;
    • (f) whether the continued registration of the organisation would be likely to contribute to good industrial relations in those industries or enterprises;
    • (g) the organisation's record of active and constructive participation in industrial relations; and
    • (h) whether the organisation is the major union in a particular area of economic activity of employers engaged in similar or related businesses.
14. 245. Those criteria are not unsympathetic to the continued registration of small unions, and demonstrate quite clearly an intention that, in considering whether "special circumstances" exist, the AIRC is to look to, amongst other things, the views and interests of the members of the small union concerned and the industrial relations consequences of any decision it might make.
15. 246. The nature of the "special circumstances" test is indicated in the Minister's statement, which explains that the test is not intended to be rigidly or narrowly applied, and that therefore the term was deliberately not defined. The term "special circumstances" is well known in other Australian federal legislation, where it is not defined, and has been interpreted expansively by the courts. The nature of the test may be described as flexible and adaptable to the circumstances of particular cases.
16. 247. As to the scope of the "special circumstances" test, the flexibility referred to in the previous paragraph does not mean that it has unlimited scope. It is established law that in exercising any statutory discretion a person or tribunal must have regard to relevant considerations and must not act upon irrelevant considerations. The criteria set out in the Minister's statement give an indication of the kind of considerations which are relevant in applying the test. The scope of the test may therefore be described as covering matters that are relevant to the preservation of good industrial relations and the interests of the members of small organisations.
17. 248. The Government confirms that the AIRC has begun reviewing the registration of unions with fewer than 1,000 members. It notes that the CAI submits that there are no grounds for delaying finalising this complaint until the AIRC issues its decisions, which may not be until February 1993, and argues that the fact that there is a legislative bias against their continued existence is itself a breach of the principles of freedom of association. The Government does not accept that the mere existence of the legislation in question is a breach of the principles of freedom of association. It submits that, because the meaning of the term "special circumstances" is one of the issues in this case, the Committee should consider delaying a final decision until the AIRC has decided sufficient matters to give a clear indication of the manner in which that term is being interpreted and applied. The Government undertakes to communicate such decisions to the Committee as soon as they become available.
18. 249. As to the argument that the mere existence of the provisions amounts to a breach of the principles of freedom of association, the Government first states that it is not correct to say that there is a legislative bias against the existence of small unions. As already explained by the Government, a union which cannot meet the special circumstances test and which is therefore deregistered does not cease to exist, and may continue to operate within one of the state systems or outside any formal system. This is tacitly acknowledged in the CAI's response, which, instead of referring to a legislative bias against the continued existence of small unions, refers to a legislative bias against their continued registration.
19. 250. Secondly, the Government notes that as with the argument concerning protection from competition from other unions, the CAI appears to be arguing for the introduction of a new concept into the principles of freedom of association - namely that a union has an unqualified right to participate in any formal system of industrial relations. This argument would carry some force if the ability to form and to operate a trade union depended entirely upon its acceptance into a particular formal system because that was a prerequisite to the operation of the union and there were no alternatives. As has been already demonstrated by the Government, however, in Australia there are no legal prerequisites to the formation and operation of a trade union, and alternative industrial relations systems are available to a union which, for whatever reason, is unable or does not choose to participate in the federal system. It simply does not follow that not being federally registered is fatal to a union. In fact, the evidence points to the opposite conclusion: a greater influence on the viability of a union is competition from other unions.
20. 251. As to the review proceedings themselves, although the Government has not yet received transcript of the proceedings, which took place on 19 and 20 May 1992, it is understood that of the 22 federally registered unions which have fewer than 1,000 members:
    • - ten informed the AIRC that they are at various stages in the process of voluntary amalgamation with another union;
    • - three indicated that they are defunct;
    • - eight indicated that they wished to present reasons to demonstrate the existence of special circumstances which justify their continued registration, and will be given the opportunity to do so later in the year;
    • - one made no appearance.
21. 252. The Government also notes that the amalgamation process generally is proceeding rapidly among all types of federally registered unions, not simply the smaller unions, in line with the union movement's own rationalisation policies. Since the commencement of the Industrial Relations Act in 1989, there have been 33 concluded amalgamations involving 73 unions. Currently, 20 unions are seeking formally to amalgamate. Many other possible amalgamations are under discussion between the federally registered unions concerned. About three-quarters of the unions involved in the successful amalgamations had memberships below the 10,000 level.

D. The Committee's conclusions

1. 253. In this case, the complainant employers' association alleges that the amendments made in 1991 to the federal Industrial Relations Act prevent certain trade union organisations from having access to the federal conciliation and arbitration system. The Committee notes the complainant's arguments that the 10,000 membership requirement for registration now figuring in section 189 of the federal Act is too high a threshold and thus infringes the freedom of association of enterprise-based and industry-based employees' organisations; according to the complainant, it will lead to the cancellation of the registration of many workers' organisations. According to the complainant, the provisions in the Act permitting continued registration of organisations which cannot reach the 10,000 members minimum if "special circumstances" exist do not provide a sufficient guarantee of freedom of association.
2. 254. The Government, in its detailed replies, stresses that the 1991 amendments - which are fully supported by the workers' organisations of the country - do not infringe the principles of freedom of association since registration under the federal system is in no way compulsory and workers' organisations are free to, and do, exist and operate without federal registration. This they can do either within the state industrial relations systems or without registering at all; unregistered unions can, in certain circumstances (such as when a dispute goes beyond the bounds of one state or when an unregistered union wishes to protect its interests before the AIRC), have access to the federal system anyway. Indeed, the Government points out that nearly 70 per cent of Australian workers are outside the coverage of the federal system and that over 60 per cent of unions are not registered federally. That reflects the fact that the system is designed to facilitate resolution of interstate disputes and that not all unions can, therefore, come within the federal jurisdiction.
3. 255. In replying to the Committee's request for further information, the complainant emphasises: (1) the benefits gained from federal registration (taxation advantages, corporate status, the ability to gain federal awards and general recognition); (2) the primacy of the federal system, according to which use of the state systems "is only a poor second best alternative" (federal law and federal awards prevail over their state equivalents, the inconvenience of having to seek registration or recognition in as many as six state systems); and (3) the possibility of coverage being poached when a vacancy exists. The complainant advises that the review proceedings of unions having less than the required minimum number of members have commenced, and complains that the 1991 amendments have introduced a legislative bias against those unions as they now bear the burden of proving that "special circumstances" exist justifying their continued registration. The Committee notes the figures supplied by the complainant: as at April 1992 there were 106 federally registered unions (around 40 of which have less than 10,000 members), many fewer than the 139 registered in 1990 when the complaint was originally filed. It further notes that none of the original 139 unions has been deregistered because of its size and that the reduction in their numbers has come about as a result of amalgamations, in line with the union movement's own rationalisation policies.
4. 256. The further information supplied by the Government disagrees with the complainant's assessment of the consequences of non-registration or cancellation of federal registration and places great importance on the explanation of the "special circumstances" test, given by the Minister for Industrial Relations during Parliamentary debate on the amendments. It points out that deregistration does not end a union's existence, nor affect its rights or liabilities nor prevent it from bargaining outside the federal system. The Government acknowledges the importance of the federal system, but does not accept that the state systems are merely poor alternatives. It argues that registration under most state systems gives benefits similar to those derived from federal registration and that, in practice, the federal system is of little relevance to the majority of trade unions in Australia. It argues that any inconvenience of seeking registration under several non-federal systems would not affect most unions. It also argues that any unregistered union fearing encroachment upon its coverage has the right to appear before the AIRC to object to such encroachment, and in practice they frequently do so successfully.
5. 257. The Government also states that there are no decided cases on the use of the "special circumstances" test. The Minister's indications as to possible criteria, however, are listed, and it is stated that in other areas the term has been interpreted expansively by the courts. The Government believes that the scope of the test covers matters that are relevant to the preservation of good industrial relations and to the interests of the members of small organisations. It undertakes to communicate to the Committee copies of the decisions being taken by the AIRC now that the first stage of the review process has commenced. The first round of reviews of 22 federally registered unions resulted in ten announcing voluntary amalgamation, three indicating that they were defunct, one did not appear and eight relying on "special circumstances" which will be heard later in the year. The Government suggests that the Committee should consider delaying a final decision until the AIRC has reviewed sufficient registrations so that the Committee can see how the term is being applied.
6. 258. The Committee has carefully examined all the information and arguments placed before it since the complaint was originally presented in November 1990 and considers that it has sufficient facts on which to base its consideration of this case without having to wait for the completion of the first round of review proceedings in Australia.
7. 259. The Committee has had to make a careful assessment of the impact of the introduction of the 10,000 minimum membership requirement for registration on the basis of both theoretical argument and data as to the situation in practice. It has always kept in mind the fundamental yardstick of freedom of association, namely: under this new requirement, are workers free to form and join organisations of their own choosing and, once formed, are these organisations free to further and defend the interests of their members?
8. 260. The Committee first weighed up the Government's argument regarding the optional nature of the federal system against the complainant's belief in the primacy of the federal system over the alternatives. In the past, neither this Committee nor the Committee of Experts on the Application of Conventions and Recommendations had ever found the federal system to be inconsistent with the guarantees provided by Articles 2 and 3 of Convention No. 87. However, the new factor - a very high minimum membership requirement - involves consideration of the situation in a new light. Workers can still form and join unions, but are they now free in their choice? This Committee has always been wary of government pressure or favouritism, whether direct or indirect, which might influence the trade union membership of workers. While often difficult to prove that the government measure lies at the heart of the workers' choice, the fact remains that the treatment facing one union as compared with others risks jeopardising this important right of workers (Digest of decisions and principles of the Committee on Freedom of Association, 3rd edition, 1985, paras. 252 to 254). The government measure in this case - the 10,000 members threshold - could, in the Committee's opinion, influence unduly the workers' free choice of union to which they wish to belong, even when they realise that federal registration is only one of the alternatives available for protecting their rights. The Committee has come to this conclusion bearing in mind what a worker expects from union membership, namely maximum support. It has gauged the importance of the federal industrial relations system established by the Industrial Relations Act and, while noting the statistics provided on the level of state registration, considers that a workers' organisation which has less than 10,000 members and which can come within the IRA's jurisdiction should have the same rights as a larger union to claim access to the benefits deriving from registration under the federal system, as well as accepting the obligations of registration.
9. 261. The question then arises as to whether the exceptions contained in the federal Act answer this claim to access. The Committee has taken account of the Government's arguments that, before the 1991 amendments, non-federally registered unions could have access to the federal conciliation and arbitration system in certain circumstances and that refusal to register and deregistration are not automatic, but can be countered by proving that "special circumstances" exist. The Committee notes the Government's emphasis on the width and flexibility of the special circumstances test, but does not consider that it meets the Committee's concerns. The Committee considers that the new circumstances introduced by the amendments place too great a burden on unions which had previously been able to apply for federal registration (although subject to certain other requirements which have not been found to be inconsistent with freedom of association by the ILO supervisory bodies). Workers, knowing that under-10,000 member unions will be called to justify their continued enjoyment of the benefits of federal registration, could be influenced in their choice of union. Organisations applying for registration, or already registered with fewer than 10,000 members may have been forced to react for fear of being refused those benefits.
10. 262. The Committee is conscious of the support of the peak union body, the Australian Council of Trade Unions, for the amendments. If the current rationalisation philosophy is designed to ensure well-organised and well-resourced unions, the choice of a large size will be a natural reaction from the workers, seeking strength and maximum support; it need not be written into the federal legislation.

The Committee's recommendations

1. 263. In the light of its foregoing conclusions, the Committee invites the Governing Body to approve the following recommendations:
   • (a) The Committee notes that the Government's introduction into the federal Industrial Relations Act of the 10,000 membership requirement for registration could influence unduly the workers' free choice of union to which they wish to belong, even when federal registration is only one of the alternatives available for protecting their rights.
   • (b) It asks the Government to take measures so that it is not a requirement that a union have 10,000 members or demonstrate special circumstances to claim access to the benefits deriving from registration under the federal system.