Publications

The Last Frontier: The Trade Practices Act and industrial relations

OCCASIONAL PAPER

| Glenn I Simpson

(Please note: The following was the basis for Mr Simpson's talk, which was accompanied by detailed overhead material)

 

Introduction

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    • These are my personal views, not HIA's
      • HIA keeps out of industrial arena where possible
    • Views based on RC findings
    • and personal experience of 12 yrs.
    • Particular case I have chosen is because RC has fully documented it (no defamation!)
    • Commercial, as RC didn't look at housing
    • I will not be looking at individuals -
      • may be charges pending
    • Focus is on Qld, but other States in generally similar position.

How the Building Industry Works

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    • Unions have a monopoly of labour supply
    • Head contractors are forced to agree with unions
    • or risk lost contracts, huge costs, delay damages, etc.
    • Unions then use their industrial power to exclude those builders/contractors who use subcontractors or Award employees;
    • Thus preventing entry of lower cost competitors into this market.
    • Could legally be done under TPA without any union involvement (s.51(2)),
    • but in fact is driven by unions.

What is the Result?

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    • Result is to stabilise labour costs between contractors working on major jobs---level playing field.
    • Costs of commercial construction are 20% higher than they would be in a free market.
    • Contractors can opt into this system if they wish to work in the commercial area.
    • But, having signed an Enterprise Agreement, they cannot easily opt out.
    • And will have priced themselves out of housing.

Negotiation Framework (Qld)

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    • QMBA negotiates with CFMEU/BLF/CEPU (Building Trades Group of Unions) each three years
    • on behalf of major QMBA builder members (opt-in).
    • on wage rates and conditions of employment.
    • Result embodied in 'Statement of Intent' (SoI)
      • sets standard content of CAs/EBAs
      • for next 3 years
      • on all 'commercial' sites
      • Requires union EBA for all employees on site.

Other Supporting Agreements

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    • National Major Contractors also have national agreements with CFMEU
    • Covering 'union encouragement' by all their subsidiary companies in all States
    • While unions put pressure on State Govts to require all workers to be under a union EBA as a condition of tender for public works---i.e. no subcontractors or non-union labour.

Matters Covered in SoI

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    • Pay rates and standard hours
      • Rostered days off---no flexibility
      • Redundancy contributions paid to BERT
      • Super flat $ rate, paid to CBUS/BUSQ
    • Union membership 'encouraged'
    • Only limited subcontracting allowed;
    • No cash in hand, or labour only subbies
    • Disputes procedures, other agreed matters.
    • Some topics arguably not within s.51(2) TPA!

Forcing EBAs Down the Chain

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    • Easier for unions operating in a fragmented building industry to compel contractors to do their work for them, through SoI obligations.
    • Unions also check that all contractors that come on to "Statement of Intent" sites (installers, delivery men etc) have an EBA in terms of the SoI.
    • Great majority of contractors do sign SoI and standard union EBAs.
    • Covers all contractor's workers on all sites,
    • incuding any subbies they engage;
    • for fixed term (usually 3 years).
    • Non-SoI States---first-in principle.

Contractors' choices

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    • EBA obtainable only from unions
    • Unless EBA is signed, contractors will in practice not be able to work on larger commercial jobs
    • If they do sign, they are no longer competitive on housing jobs
    • some builders operate a two company structure
    • problems with licensing requirements re adequacy of capital etc
    • Dawson Report ??

A Two Tier Industry

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    • Union sites vs non-union sites
    • Cottage housing not unionised but:
      • Medium and high density housing is.
    • Commercial sites are unionised
      • country and suburban jobs less so.
    • Divide runs through '6 pack' units
    • Unions seeking to extend union sites to low and medium density housing
    • builders seeking to avoid high costs of union sites.

Case Study From the Files of the RC

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    • See full account by RC in Vol. 18 pp.7-198 for details.
    • RC found unlawful conduct.
    • That is a matter for the courts
    • My account intended merely to illustrate problems of applying existing TPA provisions;
    • and is necessarily somewhat abbreviated.

Nambour Hospital Dispute

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    • Major State Government contract in provincial city 2 hours drive from Brisbane.
    • Tender won by a Rockhampton builder, J M Kelly, in January 2001 (JMK)
    • one of the few major builders in Queensland that has not signed an EBA
    • Tendered on basis of using non-union employees and subcontractor labour
      • Tender was $12.9m, $0.5m lower than next
      • And $2m lower than Qld Govt estimate

Summary of Dispute

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    • 8 week industrial dispute
    • Involving strikes and an intimidatory, at times violent picket line;
    • CFMEU, CEPU, BLF tried to force builder into SoI or an EBA
    • Qld govt also put pressure on builder to sign up
    • Builder more or less successfully resisted.

Significance of Case

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    • Aggressive competitor seeking to expand business;
    • Into State Government commercial work
      • (Which is 40% of all Qld commercial work);
    • At expense of National Major contractors;
    • In a 'fringe' area
      • Took a chance on union interference
      • No interstate exposure
      • But sister company which had signed an EBA had other union sites in Brisbane.
    • How did they assess/price the risks?

Union Actions (1)

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    • May 2001---CFMEU, CEPU, BLF became involved after dispute between JMK and a contractor about safety of a loading bay.
    • State OHS inspectors declared site safe to work
    • And so did independent safety consultants;
    • But unions declared the whole site unsafe
      • And called strike for what union Official said were "unspecified safety concerns"
      • Which they refused to disclose or explain to JMK.

Was it really a safety dispute?

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    • Royal Commissioner said 'no'.
    • Union officials had said -
    • "We're out to get JMK ... We're going to screw every project of JMK's in Queensland';
    • Kellys haven't signed an EBA. We're not happy about that. They shouldn't have this job.
    • It's a Government job. If Watpac or someone had this job, the boys would be better off.
    • If they had a builder that had an EBA, they'd all be better off.
    • 'We've been after Murphy for years, and now we're going to kick his arse. This is it---now, we've got him'.

Union Actions (2)

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    • Unions then demanded that JMK sign an EBA
    • When refused, proceeded with their illegal strike
      • which some workers joined (but no JMK employee)
      • which went on through May and June
    • Also established an intimidatory picket line
      • (partly using unionists bussed from Brisbane,
      • picketers paid $100 a day by union.
    • JMK's contractors (crane operators, scaffolders) and suppliers would not cross picket line
    • for fear of union retaliation against them personally (and their families) or their vehicles and property.

Union Actions (3)

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    • When this was ineffective, unions applied pressure to State Govt to terminate JMK's contract
      • Unions were allegedly promised that all Qld govt jobs would have EBAs
    • Called various walkoffs at CBD and Qld Govt sites
    • Also tried to stop concrete pours on another JMK related site in Brisbane involving construction of a supermarket
      • But workers there refused union directions
    • Officials threatened families of JMK employees and others who crossed (or tried to cross) the picket line

Builder Actions (1)

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    • Sought help from HIA, QMBA & solicitors
    • Sought hearing in QIRC, which merely recommended that industrial action cease;
    • Threatened common law action against
      unions and officials;
    • Called the police (who cautioned the picketers);
    • Sought involvement of Office of the Employment Advocate -
      • Unsuccessfully---it was not a federal award site

Builder Actions (2)

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    • Sought support from State Government for an EOT or waiver of liquidated damages (or additional funding to pay EBA rates)
      • Govt was not supportive
      • And in fact put pressure on JMK to sign SoI.
    • JMK Required subcontractors to continue work or be held in breach of contract;
      • Subcontracts terminated and relet
    • Hired private security agency to protect site and video/tape picket actions
    • Which provided very useful evidence.

Outcome---Who won?

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    • JMK eventually settled;
    • But on favourable terms;
    • And without signing SoI;
    • And finished the job on time;
    • But with $250K extra costs;
    • And with what future?

R.C.'s Analysis of Legal Position

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    • Unions may have committed torts:
      • Unlawful interference with contractual relations
      • Intimidation
      • conspiracy by unlawful means
      • nuisance
    • And unions & officials may have committed criminal offences
      • Assault
      • ss.45D and 45DC of the Trade Practices Act;
      • s.185 of the Industrial Relations Act 1999 (Qld);

TPA Issues 1---s.45

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    • Is the Statement of Intent an exclusionary provision of an agreement contrary to Part IV of the TPA?
    • Seemingly, yes---it is
      • An understanding between competitors
      • to limit their acquisition of subcontract services
      • By excluding those subcontractors without an EBA made under State IR Act
      • Which was obtainable only from the union with coverage of the work involved.
    • Would it be different if Certified by AIRC?

TPA Issues 2---s.51(2) Defences

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    • Is the exclusionary provision saved by s.51(2)?
    • No---it relates to matters well beyond:
      • "the remuneration, conditions of employment, hours of work or working conditions of employees "
    • Includes provisions re:
      • Requirement for all workers be under the union EBA
      • No choice of superannuation and redundancy funds
      • Training arrangements, apprentice numbers
      • Union encouragement, site delegates, etc
    • Includes an understanding to not contract with subbie who does not have an EBA, irrespective of the content of that EBA.

TPA Issues 3---s.45D

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    • RC found that, in relation to S. 45D -
      • Actions of officials were actions of unions (s.45DC);
      • Officials organised, directed and paid picketers
      • And were personally among the worst behaved.

Elements of s.45D

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    • Picket line's purpose as found by the RC was to force JMK to sign up to the SoI;
    • None of the people on the picket line were employees of JMK and many of them were not employees of subcontractors
    • Picketers' violent and intimidatory conduct:
      • hindered or prevented subcontractors providing services to JM Kelly
      • and suppliers from providing goods to subcontractors.
        • (one subcontractor lost $5,000 per day as a result),
      • It also hindered or prevented JMK acquiring services from the subcontractors,
      • or the subcontractors acquiring goods from suppliers

Was s.45D contravened?

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    • Royal Commissioner said 'yes'.
    • But see ABLF v J-Corp (1993) 114 ALR 551
      • Purpose must be judged subjectively;
      • Must be "for the purpose of causing substantial loss or damage to the business" of JMK;
    • Not for the purpose as found by RC:
      • Which was to force JMK to sign up to SoI.
    • Illustrates limits of usefulness of s.45D.

Defences---s.45DD(3)

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    • No action was directed to the actual employers of those on strike, but only against JMK, the head contractor.
      • so RC said that the s.45DD defence was not applicable.
    • But s.45DD requires only that the dominant purpose of the action substantially -
      • related to remuneration etc. of that person.
    • Arguably the signing by JMK of SoI
      does so relate, as a practical matter.
    • So a good defence may exist.

TPA Issues---4

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    • S.45E---not subject to ss.45DD or 51 defence
    • Would prevent head contractor agreeing with union for the purpose of preventing or hindering head contractor's usual subcontractor from supplying goods or services;
    • such a term which would hinder would be a term requiring all subbies to have an EBA
    • Could be an effective section but still subject to a 'purpose' test.

TPA Issues---5

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    • S.60---physical force or undue harassment
    • By a corporation (including a union)
    • In connection with the supply of goods or services
    • To a consumer.
      • See ACCC v MUA [2001] FCA 1549 (5 Nov 2001).
    • Hill J found MUA picket line contravened s.60;
    • Should be "freedom in the flow of goods and services from conduct of the kind proscribed"
    • Could apply to many intimidatory or violent pickets
    • Single Judge---Needs further testing in Full Federal Court

Action by ABCC?

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    • Can seek injunctions under s. 80 TPA against negotiation of SoI/VBIA type centralised agreements -
    • Unless they are confined to "the remuneration, conditions of employment, hours of work or working conditions of employees".
    • Will be effective against (and welcomed by some) employers .
    • Also injunctions in ss.45D/E & 60 cases.

Other ABCC actions

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    • Can prosecute under WRA if unions attempt to impose 'No Ticket No Start' through understanding with head contractors;
      • or unlawfully oppose AWAs & Non-union collective arrangements.
    • Very much depends on enforcement by well funded and well motivated public authority
    • State police forces unlikely assist.

Summary

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    • S.45 can be used to attack industry agreements like VBIA and Qld SoI between head contractors
    • Unless they are in the form of a Certified Agreement under the Workplace Relations Act 1996. (?)
    • State EBAs may immunise anti-competitive conduct if all employers individually forced by union power to sign up to a standard union agreement.
    • Ss.45D & E are of limited use against violent picketing because of 'purpose' test, but s.60 may be useful;

Are There Solutions ?

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    • Best remedy---enforce Freedom of Association provisions to allow contractors to fairly compete.
    • Remedy requires restoration of the rule of law in the industry
    • And changing public attitudes so that industrial violence is as unacceptable as domestic violence.

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