Unions’ argument for bargaining fees leaves many questions unanswered

It’s an issue that won’t go away – union bargaining fees, write Steven Amendola and Brendan Milne.

This time around, the jungle drums started beating at the beginning of the year. An issue that was settled in the early 2000s by a combination of the High Court in the Electrolux case and the Workplace Relations Amendment (Prohibition of Compulsory Union Fees) Act 2003 – that bargaining fees can’t be sought by a union in an agreement – had reared its head again with unions launching a concerted campaign to achieve this very end. Employment and Workplace Relations Minister Tony Burke has been hosing the issue down, but given the vehemence of the union push, no one really believes it has gone away.

The unions’ latest campaign has no doubt been motivated, in part at least, by the latest Australian Bureau of Statistics figures showing the nation’s proportion of union membership has tumbled to a historic low of 12.5 per cent (and only 8 per cent in the private sector) after almost 50 years of decline.

Although introspection as to the myriad reasons why unions don’t appeal to workers must be occurring behind closed doors, these numbers are being used to argue for a bargaining fee as one way to address the slide. As Tim Kennedy, national secretary of the United Workers Union, said, “it is an expectation this minority of workers will carry the burden for up to 50-60 per cent of the workforce … so you’ve got a lot of free riding going on”. For Gerard Hayes, national president of the Health Services Union, it’s a moral issue. “The ongoing case before the Fair Work Commission to land aged-care workers a 25 per cent pay rise could raise some workers’ pay packets by $10,000 a year. That $10,000 that non-union employees would get for nothing,” Mr Hayes said.

Although Mr Kennedy concedes unions must constantly demonstrate their relevance, their comments about a bargaining fee stem from the belief that unions are institutionally baked into the system and, therefore, must be assisted to maintain that guaranteed role. Is this not the antithesis of persuading workers to join unions because it benefits them? 

Before posing some questions about how a bargaining fee would work in practice, one fallacy needs to be exposed. There has been an assertion by some unions that the concept of freedom of association has been turned on its head in industrial relations – that it principally relates to freedom not to join a union – is just wrong. The Fair Work Act ensures there can be no discrimination against union members. It does so in strong and absolute terms, coupled with serious penalties for those who do not.

So, should bargaining fees be imposed on all employees to whom an award applies when a union makes a successful award variation application, as was suggested by Mr Hayes? In the federal system, no bargaining is involved. Awards are common rule. Is it seriously suggested that “bargaining fees” should be applied to every employee of every employer to whom an award applies if they are not union members? That seems to be its own form of free riding given employees are not provided with any choice or even a chance to vote. In most variations, no employees are even aware that applications have been made.

If “bargaining fees” are restricted to enterprise agreements, if non-union members are going to be charged, there are some legitimate questions that need considering – the same questions that were considered and rejected by the previous Labor government when drafting the current laws.

These include: Do they get any services for that levy, or does the levy only relate to the negotiation of an enterprise agreement? What happens to those employees who vote against the enterprise agreement? They didn’t want it, so are they still going to be levied?

What about a self-appointed bargaining representative? Do they pay a fee, too, although they were involved in the bargaining? 

If a union opposed an enterprise agreement but then applied to be covered by it, should it be permitted to impose a bargaining fee? 

In terms of multi-employer bargaining, if a union that wasn’t involved in the negotiation of a multi-employer agreement seeks to rope in employers – a process involving no bargaining or agreement making – do they get to charge a bargaining fee for non-union members?

What will be the enforcement mechanism? Are employers going to be expected to collect the levy and pass it on, noting that unions would not have the details of non-union employees?

Finally, the free-riding argument is pitched as an issue of fairness. There is an alternative solution to deal with the issue of free riding aside from imposing bargaining fees. It could be achieved by removing the provisions in the FWA that do not allow an employer to discriminate between employees in the terms and conditions of an agreement that apply to them. Then a union can bargain for its members alone and reach an agreement for its members that will apply only to them. This would properly reflect both the efforts of the union and the commitment and resources of the members.

The employer can then negotiate and reach an agreement with the non-union employees, or not as the case may be. This is the system in New Zealand.  This way, no one is free riding, and union members are not doing the heavy lifting for non-union members. If, as unions assert, those non-union members will be and will remain worse off, that may be a reason to join a union.

Steven Amendola and Brendan Milne are partners at Kingston Reid.