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Australia – Playing Outside The Rules: Union Permitted To Represent Non-Eligible Members.

5 June, 2014

 

 

Mr Errol McCarthy v CDJV Construction Pty Ltd, Mrs Gabriel McCarthy v CDJV Construction Pty Ltd [2014] FWC 3072 (28 May 2014) 


What You Need To Know

 

  • The Fair Work Commission recently allowed a union officer to represent two unfair dismissal applicants despite the applicants not being covered by the membership eligibility requirements set out in the union’s registered rules. 
  • The decision seems to disregard the longstanding principle that a union’s rules prescribe the legitimate field of operation in which a union can be interested and in which its officers and employees can be involved. 
  • Employers may also see greater activity by a union in industries where to date that union has little or no role to play in representing employees as it does not have coverage under its rules. 
  • The decision has been appealed and a hearing has been listed for 3 July 2014.
 

What You Need To Do

 

  • Pending the outcome of an appeal, be prepared for the possibility that employees may seek and be entitled to representation before the Commission by officers or employees of unions, by which the employee is not legitimately covered. 
  • Be aware that the appropriate way to deal with alleged breaches of registered rules by a union is by an application to the Federal Court of Australia for an order rectifying such breach. Only members of the relevant union have standing to do this. Other relief from the Federal Court may be available to prevent proceedings being progressed.

 

The Fair Work Commission has recently allowed a CFMEU industrial officer to represent two applicants seeking relief for unfair dismissal before the Commission, despite the applicants not being covered by the membership eligibility requirements of the CFMEU. 

 

The Decision 


In Mr Errol McCarthy v CDJV Construction Pty Ltd, Mrs Gabriel McCarthy v CDJV Construction Pty Ltd [2014] FWC 3072, an industrial officer of the CFMEU sought to represent the two applicants who had enrolled as members of the CFMEU, in their unfair dismissal application before the Commission. Under section 596 of the Fair Work Act 2009, a lawyer or paid agent must be granted permission to represent a person in proceedings before the Commission. An exception to this rule is that an “employee or officer” of an “organisation” (which includes a union) is not taken to be a “lawyer or paid agent” and therefore does not need to seek permission to represent a party. The CFMEU officer argued that he came within this exception and therefore he did not require the permission of the Commission to represent the applicants. 


The employer objected to the applicants’ representation by the CFMEU officer, claiming that the CFMEU’s capacity, right and authority to engage in any course of conduct is circumscribed by its registered rules. The applicants had been employed by the employer to drive light vehicles. They therefore came within a specific exclusion for “motor truck drivers” under the CFMEU Rules, and were not eligible to be members of the CFMEU.

 

Commissioner Spencer held that the exception under section 596 refers only to an “employee or officer” of an “organisation” representing a person. The Commissioner stated that, when given its plain and ordinary meaning, the relevant provision “does not mention “coverage” or that the “organisation” must have coverage of the person”. There was no evidence that the CFMEU officer was a lawyer or had received a fee to represent the applicants. Commissioner Spencer found that because the CFMEU officer was also an “employee or officer” of the union, that he came within the exception, and was permitted to represent the applicants in the matter. 


Implications For Employers 


Can A Union Act At Large? 


The decision appears to disregard a longstanding principle established by the High Court of Australia that a union may only represent the industrial interests of employees who are eligible to be its members under its registered rules. The rules of the union prescribe the legitimate field of operation in which a union can be interested and involved. 


Pending the appeal of the McCarthy decision, Commissioner Spencer’s findings suggest that an employee or officer of a union may be permitted to represent any applicant before the Commission, without needing to obtain prior permission to do so, regardless of whether the applicant is actually eligible to be a member of the union. It implies that officers of unions may act at large, despite the limitations contained in the eligibility rules of their union. 


The decision also appears to be inconsistent with other provisions of the Act and the Fair Work (Registered Organisations) Act 2009 which recognise the limit placed on unions by their registered rules. For example, provisions of the Act dealing with “bargaining representatives” and right of entry recognise these limits and restrict a union to only being able to exercise relevant rights in relation to employees that are eligible to be members of the union under its registered rules. 


Section 596(4) requires, by necessary implication, that a person being represented by a union meets the union’s membership eligibility requirements. By “representing” the employee, the limitation imposed by the union’s registered rules necessarily applies. The Explanatory Memorandum to the Act states that individuals can be represented by officers or employees of organisations “of which they are a member”. This suggests that a member of an organisation has met the membership eligibility requirements. It is not sufficient that the employee has merely enrolled in the union and paid membership fees, regardless of whether the employee is eligible to be a member of the union under the union’s registered rules.

 

The Potential For Increased Representation 


On one view, the implication that a union can act beyond the scope of its eligibility rules under section 596 of the Act, has the potential to increase representation of employees in the Commission by officers of unions who are not otherwise entitled to represent the industrial interests of the relevant employees. 


An increase in representation is only a possibility at this stage though. Officers and employees of unions are likely to only agree to represent an employee whose employment falls within the scope of its rules, or is closely related to the industry or area of work in which the union usually operates. 


The decision may also pave the way for greater activity by a union in industries where that union to date has little or no role to play in representing employees as it does not have coverage under its registered rules. 

 

Where To Rectify Breach Of A Union’s Rules 


In her decision, Commissioner Spencer indicated that the correct forum to deal with alleged breaches by unions of their rules was by an application to the Federal Court of Australia under the Fair Work (Registered Organisations) Act. That Act provides for remedies in relation to such breaches. It is unclear whether a finding by the Federal Court that a union has breached its rules by representing a person who is not eligible to be a member of the union in proceedings in the Commission, could be used to stay or dismiss any proceedings in the Commission. In any event, this avenue may prove unhelpful to employers as only a member of the relevant union may apply to the Federal Court for such an order. A member would generally be unlikely to challenge the validity of its own union’s conduct. 


An application for other relief from the Federal Court would appear to be necessary to prevent the Commission from continuing to deal with such proceedings. 


Impact On Employers 


Commissioner Spencer’s decision also applies to employers. Usually, employers would need to seek leave of the Commission to be represented by a lawyer or paid agent. It would be feasible however, for an officer or employee of an employer association, whose interests are broadly aligned with that of aparticular employer, to agree to represent the employer at the Commission, even though the employer may not meet the membership eligibility requirements of the employer association. This approach would bypass the requirement to obtain permission from the Commission for representation under the Act.


Acquiescence Of Conduct Beyond Union Rules? 


Commissioner Spencer’s reasoning draws on a point submitted by the employer that permitting a union to represent a person not eligible to be a member, may give the appearance of acquiescence by the Commission in the use of union resources for activities beyond the scope of the union’s registered rules and objectives. 


This is at a time when the Federal Government has established a Royal Commission into unions and the use of union resources. 


What’s Next? 


The employer has appealed the decision and a hearing has been set down for 3 July 2014.
The entire Fair Work legislative scheme, as it relates to unions, hinges on whether a union is entitled to represent the industrial interests of a person. It goes without saying that such entitlement would stem from legitimate membership of the union, where a member satisfies all membership eligibility requirements. The scheme has been established to be consistent with long standing principles established by the High Court that a union has a legitimate field of operation which is prescribed by its eligibility rules. The scheme is aimed at ensuring clarity of union rules by their registration, for the purpose of achieving industrial harmony and to avoid demarcation disputes amongst unions. 


Section 596 of the Act would stand out as a legislative anomaly if Commissioner Spencer’s interpretation stands. 


Making The Case: Insights from Geoff Giudice 


In most cases a party to proceedings under the Fair Work Act can only be represented by a lawyer or a paid agent if the Commission gives its permission. Registered organisations, however, are exempt from this requirement. An officer or an employee of an organisation does not need permission to appear for a party – even if the officer or employee is a lawyer or a paid agent. 


The Commission’s decision in McCarthy v CDJV Constructions extends the right of parties to be represented by registered organisations to cases in which the party may not be eligible to join the organisation. Although the decision concerned the right of an employee to be represented by an organisation in an unfair dismissal application, the reasoning could be applied in other Commission proceedings. On that reasoning, a lawyer employed by a registered organisation, either an employee or an employer organisation, has an unqualified right to represent a party even if the party is not eligible for membership and to charge the party a fee for doing so.

 

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For further information, please contact:

 

Vince Rogers, Partner, Ashurst 
vince.rogers@ashurst.com 


Trent Sebbens, Ashurst 
trent.sebbens@ashurst.com

 

Geoffrey Giudice, Ashurst 
geoffrey.giudice@ashurst.com 


Nicola Giarratana, Ashurst 
nicola.giarratana@ashurst.com

 

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