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Declining trade union membership

Geoffrey Beckman

Trade union rights

Trade unions rights are restricted by an array of anti-union laws that limit trade union power. It is self evident that trade union power and membership numbers are connected. The greater union power the more reason people have to belong to unions; and the greater the union membership the greater is union power. Cause and effect become reinforcing.

It is my contention that these anti-union laws are the primary cause of low trade union membership and that these laws must be abolished before this decline can be reversed. If this contention is correct, it follows that a primary objective of trade union activity should be legislative reform as well as shop-floor organisation.

The struggle for trade union rights is part of the struggle for political rights in general. These political rights were originally called the Rights of Man. We shall begin by looking at the political principles that underpin democratic society. Upon this basis we can begin to understand the position of trade union rights within the body politic and thereby gain an appreciation of the repressive and undemocratic nature of present industrial legislation. We shall also look at the role of compulsory arbitration within the industrial relations system. The paper ends with some general comments on the modern relevance of the doctrine of the Rights of Man.

Political principles

Marxists assert, that the history of all hitherto mankind is the history of class struggle. There is a lot of truth in this assertion. But political history may also be viewed as a struggle for rights. Among the rights that are today taken for granted, but in fact had to be fought for and won, are universal suffrage, the right to a trial, habeas corpus1, and protection against arbitrary search and seizure. Just as all these rights have been recognised and put into law, so should the rights of trade unions be recognised and put into law.

Modern democratic rights first came into existence as a result of the American and French revolutions. One of the key protagonists for these rights was Tom Paine. We shall for the most part use his writings as our political template.

Paine was born in Britain in 1737. He moved to America where he was prominent in the American Revolutionary Movement. He published a number of significant pamphlets advocating an American Declaration of Independence and attacking the British Government and King. He returned to Britain and published a defence of the French Revolution called 'The Rights of Man'. For this he was charged with seditious libel and convicted. He fled to France where he was a Girondin Party (moderate) delegate to the Revolutionary Convention in Paris. He opposed the execution of the French King and was consequently arrested and imprisoned for nearly a year. He went on to publish a number of other political pamphlets including a no holds barred attack on Christianity called the 'the Age of Reason'. This finished him politically.

There are three political principles upon which political rights are based. These are, Democracy, Justice and Liberty.


Paine believed that that the foundation of democracy is that the people themselves form a 'social compact' upon which they found a government and this compact is written and is called a Constitution. Paine also states that legitimate government has no existence separate from the people. Some of the key features of a democracy as identified by Paine are listed below.

It has been thought a considerable advance towards the establishing the principle of freedom, to say that the government is a compact between those who govern and those who are governed: but this cannot be true, because it is putting the effect before the cause; for as man must have existed before governments existed, there necessarily was a time when governments did not exist, and consequently there could originally exist no governors to form such a compact with. The fact therefore must be, that the individuals themselves, each in his own personal and sovereign right, entered into a compact with each other to produce a government: and this is the only mode in which governments have a right to arise, and the only principle on which they have a right to exist.2

A constitution is not an act of government, but of a people constituting a government; and government without a constitution, is power without a right.3

Government is not a trade which any man or body of men has a right to set up and exercise for his own emolument, but is altogether a trust, in right of those by whom that trust is delegated, and by whom it is always resumable. It has of itself no rights; they are altogether duties. 4

The foundation of democratic government is the sovereignty of the people. The people elect the parliament for the purpose of exercising political power. Part of the exercise of this power is the granting of rights and the imposition of duties upon citizens. When parliament votes to enact a law it makes a decision by majority rule but it makes that decision as a parliament representing the nation as a whole. It makes the laws as the result of political conflict but enacts them in the name of all the people not just the majority.

Bertrand Russell in his history of Western Philosophy questions the basis in reason and morality of submitting to the majority opinion. He states,

It should be observed that the view that substitutes the consensus of opinion for an objective standard has certain consequences that few would accept. What are we to say of scientific innovators like Galileo, who advocate an opinion with which few agree, but finally win the support of almost everybody? They do so by means of argument, not by emotional appeals or state propaganda or the use of force. This implies a criterion other than the general opinion. In ethical matters there is something analogous in the case of great religious teachers. Christ taught that it is not wrong to pluck ears of corn on the Sabbath, but it is wrong to hate your enemies. Such ethical innovations obviously imply some standard other than the majority opinion, but the standard, whatever it is, is not objective fact, as in a scientific question. This problem is a difficult one and I do not profess to be able to solve it.5

Russell was one of the foremost philosophers of the twentieth century and what he is saying essentially is that the will of the majority is not intrinsically moral.

Democracy is not rule by the majority it is rather rule by those elected by the majority and those that are elected have a duty to make laws for the common good. That is governments have a duty to act morally. Governments have a duty to protect the rights and interest of individuals and minorities as well as to act for the majority.


In his pamphlet Agrarian Justice Paine argues in a pre-industrial society for the provision of work for all families and government assistance to those in need. He puts the case for social justice with conviction.

It is not charity but a right - not bounty but justice, that I am pleading for. The present state of what is called civilisation, is as odious as it is unjust. It is the reverse of what it ought to be, and it is necessary that a revolution be made in it. The contrast of affluence and wretchedness continually meeting the eye is like dead and living bodies chained together. Though I care as little about riches as any man, I am a friend to riches because they are capable of good. I care not how affluent some may be, provided that none be miserable in consequence of it.6

Paine's view is straightforward. When you see it, injustice is self-evident. Social justice is not based on envy but rather on compassion. Social justice is a right.


'Men are born free but everywhere they are in chains,' Rousseau's famous words in his book the Social Contract were an appeal for liberty that was an inspiration to the French Revolution.

Rousseau argued that the purpose of the State is to protect the freedom of the individual and that the State was only justified in inhibiting individual freedom in order to protect the freedom of another individual. Thus, if Rousseau were writing a constitution of victimless crimes such as prostitution, illicit drug use or euthanasia would be beyond government power. Although this principle is logical as far as I know no constitution in the world, including the French has seen fit to limit government power to this extent.

I believe that people should be free to do as they please unless there is a good reason for stopping them. Individual liberty should not be used as an excuse for people to avoid their obligations to other individuals or society. Nor should it be used as an excuse for the perpetuation of injustice.

Although the exercise of government power may be for the protection of individual liberty as advocated by Rousseau, it does not rest on this for its' legitimacy. The exercise of government power is legitimate because it is democratic.

The right to strike

Trade unions have the right to take industrial action whenever they choose, against whoever they choose and for whatever industrial objective that they choose. The basis of this right is the injustice of the unequal bargaining relationship that exists between the individual worker and the employer.

The power of employers is based on a social/legal relationship called managerial prerogative. I shall define managerial prerogative as the set of laws that give managers control over workers and over industry in general. Managerial prerogative has its' historical origin in the legal/social relation of worker and capitalist and along with property rights is a right protected by law.

Employers have the power to 'hire and fire', that is, they control the economic security of workers. The result of which is the unfair distribution of national income7 that favours employers; the lowest 20per cent of income earners earn only 3.8per cent on national income, whereas the top 20per cent earn 48per cent of the income.

It is the struggle for justice that is the basis in reason for trade union rights and it is the struggle for justice that makes the use of trade union power legitimate.

The penal powers

We saw above that governments have a duty to make laws for the benefit of all. The law recognises managerial prerogative but places great restrictions on the right of unions to take industrial action in the defence of their members interests.

There are two sources of law in Australia. The Common Law that was inherited from England and Legislative Law, the laws passed by the Federal or State Parliaments. Legislation takes precedence over the Common Law. In this section I will survey the history of the Common Law and the Legislative restrictions on the rights of trade unions. The body of law that restricts trade union power is known as the Penal Powers.

The common law

Australian Common law was inherited from the English common law which in turn had its' origins in Feudal England. The English Courts during Feudal times held that the employer (The Master) had the right to physically punish the employee (The Servant).

if a master gives correction to his servant, it ought to be with a proper instrument, such as a cudgel, etc. And if by accident the blow give death, this would be but manslaughter (R v Keite, 1697). 8

The English Courts originally saw workers as sub-human.

The main tort (civil wrong actionable by a court) used by employers against unions is the tort of 'interference'. Under this tort it is illegal for one party (the union) to interfere with the contractual relations of another party (the employer). That is the union cannot directly prevent or hinder the flow of goods or services from or to the employer.

The tort of interference started with an opera singer in England who was induced to break her contract to sing at Covert Garden by the owner of Her Majesties theatre, the courts awarded damages in favour of Covert Garden. Through a string of decisions the courts developed this tort into a near prohibition on union industrial action.

The courts have drawn a distinction between indirect interference (strike action) that would prevent an employer fulfilling his contracts with other parties and direct interference (picketing). The Privi Council (the highest court of the British Commonwealth) found a limit to the tort of interference based on this distinction. Denning MR stated,

Indirect interference is only unlawful if unlawful means are used. I went too far when I said in Daily Mirror Newspapers Ltd v Gardner(1968) 2 QB 762, 782 that there was no difference between direct and indirect interference. On reading once again Thomas (DC) & Co. Ltd v Deakin (1952) Ch 6746, with more time, I find there is a differenceÂ…The distinction must be maintained or else we should do away with the right to strike altogetherÂ…. A trade union official is only in the wrong when he procures a contracting party directly to break his contract or when he does it indirectly through unlawful means.9

What the distinction drawn by the Privy Council is saying is, that to strike and therefore indirectly to prevent the employer supplying his customers because he has no product to sell is lawful but to picket and thereby to directly prevent the employer from suppling his customers is unlawful. In 1975 the Supreme Court of South Australia accepted this limit to the tort of interference.10 Thus it appears that strike action is not, in itself unlawful.

Another tort that may be used by employers against unions is the tort of intimidation. This tort began with an English case Rookes v Barnard in 1964. Essentially a union took industrial action in order to have a non-unionist dismissed in breach of a specific no-strike agreement. The court awarded damages to the dismissed employee.

Morgan v Fry 1968 was a case similar to Rookes v Barnard but where there was no specific no-strike clause. The Privi Council held in this case that the tort of intimidation did not apply and refused to award damages against the union. Significantly the Court found that strike action is not a breach of the contract of employment. Denning MR stated,

The truth is that neither employer or workman wish to take the drastic action of termination if it can be avoided. The men do not wish to leave their work forever. The employers do not wish to scatter their labour force to the four winds. Each side is therefore content to accept a strike notice of proper length as lawful. It is an implication read into the contract by the modern law as to trade disputes. If a strike takes place, the contract of employment is not terminated. It is suspended during the strike: and revives again when the strike is over. In my opinion, therefore, the defendants here did not use any unlawful means to achieve their aim. They were not guilty of intimidation: because they gave a strike notice of proper length. They were not guilty of conspiracy to use unlawful means: because they used non. They were not guilty of conspiracy to injure: because they acted honestly and sincerely in what they believed to be the true interest of their members.11

(Note that there is no concept of unfair dismissal within the common law. Notice of termination is generally all that is required.)

It may appear that given lawful notice that the tort of intimidation does not apply to industrial action but this need not always be the case. In Latham v Singleton 1981 the Supreme Court of NSW held that that Morgan v Fry did not apply12. Essentially the case involved strike action by local government workers against a fellow worker who had refused to pay a Broken Hill Barrier Industrial Council fine. There was no formal claim on the employer to dismiss the worker and the Court held that the strike action was not in furtherance of a trade dispute and therefore they were not bound to follow the Privi Council decision in Morgan v Fry. The Supreme Court of NSW proceeded to find twenty-seven trade unionists guilty of the tort of intimidation.

The third tort that may be used against individual unionists is the tort of conspiracy to injure. If a group of people agree amongst themselves to cause damage to another party and they do so for predominantly malicious reasons then this tort may apply. Note that the tort does not require that the conspirators act illegally only that their motives be predominantly to injure the other party. If unions avoid personally attacking the employer they should not fall fowl of this tort.

All the torts were used against the Confectioners Union in the Dollar Sweets case. The union placed a picket on Dollar Sweets P/L. The employers sort and were granted an injunction to end the picket on the grounds that the union had committed the torts of interference with contractual relations, intimidation, nuisance and conspiracy to injure.13

The viewpoint of the Courts with regard to the penal powers was summed up by the Supreme Court of South Australia when hearing an appeal by the TWU over the granting of an injunction against the union for the tort of interference. Union members had refused to work with non-unionists. The union put pressure on the employer to require a sub-contractor not to hire non-union labour. The tort was that the union had interfered in the contract between the employer and the subcontractor to the detriment of the sub-contractor. The Court said,

It would be regrettable if the trade unions should see the recent development of the tort of inducement to breach of contract as one more demonstration that the courts are ranged against them. They are not so arranged, but they have to take the laws as they find it. The truth is that here two important values come into collision. The first is the principle that the terms and conditions of employment should be fair and just and properly safeguarded and the organisation of the workers into trade unions is an essential weapon for this purpose. The other is that contracts should be honoured and promises kept and that third parties should not be permitted to induce by threats or otherwise one of the parties to the contract to break his bargain. All the courts can do is to resolve that conflict in particular cases by the application of principles laid down by statute or authoritative precedent. If those principles are to be altered then Parliament must do it.14

The Court went on to find against the Union.

The trade practices act

The Trade Practices Act 1974 prohibits union secondary boycotts. Strike action is a primary boycott against the employer. A secondary boycott would be in place if workers placed a ban on the customer or a supplier of their employer. Strictly speaking if strikers picket a site and stop the movement of goods in or out this is also a secondary boycott. The secondary boycott is against the third party receiving or delivering the goods to the site. The Trade Practices Act 1974 was originally aimed at anti-competitive behaviour by companies and therefore unions were exempt from its' provisions. In 1977 the Fraser government removed the union exemption.15

After the Fraser amendments if a union supported fellow unionist with industrial action aimed not against their own employer but against the employer of their comrades in dispute (a secondary boycott proper) then the union could be fined. At present if the purpose of the picket is the furtherance of an industrial dispute with the picketers employer the action is exempt from prosecution under the Act. It should be remembered that the picket would still constitute a tort of interference against the employer and this would be actionable. The Meat Workers Union were fined under this legislation in the 1978 Mudginberri Station dispute and in 1979 in the Tillmanns Butcheries dispute.

Trade unions are most powerful when they co-operate. The Trade Practices Act strikes at the heart of trade union unity, that is, it strikes at the heart of trade union power. Secondary boycotts are particularly effective in helping workers in weak bargaining positions win disputes. Secondary boycotts are a legitimate use of trade union power and the anti-union provisions of the Trade Practices Act should be repealed.

The Australian conciliation and arbitration act 1904

Australia federated in 1901 shortly after the defeat of the trade union movement in the great strikes that took place during the 1890's economic depression. The constitution gave the federal government the power to create tribunals for the prevention and settlement of industrial disputes by conciliation and arbitration that extend beyond the limits of any one state. The theory was that arbitration was to replace industrial action and on this basis the Australian Conciliation and Arbitration Act 1904 provided for compulsory arbitration but made both strikes and lockouts illegal.

The prohibition on industrial action was repealed in 1930 and the insertion of bans clauses into awards became the main sanction against unions. Bans clauses are award clauses prohibiting industrial action, the disobeying of which amounts to an illegal act. During the 1950's and 1960's there were heavy fines imposed on unions, but unions often refused to pay the fines. In the late 1969 matters came to a head. Clarrie O'Shea from the Tramways Union was jailed for refusing to pay fines, a general strike ensued that resulted in O'Shea's release and the curtailment of the use of Bans Clauses16 but not their repeal.

The workplace relations act 1996

The Australian Conciliation and Arbitration Act 1904 was repealed in 1984 and replaced by the Industrial Relations Act. This act was repealed by the Howard government in 1996 and replaced with the Workplace Relations Act. The Bans clause provisions have been removed from the Workplace Relations Act.

The scheme of the Workplace Relations act is to provide for two streams of industrial regulation. An enterprise bargaining stream that provides for industrial action that is protected against tort prosecution (Part VIA Division 2 and 3) and a stream outside of this dealing with industrial disputes and the setting of safety net wages and conditions.

The Act provides for 'protected action'. That is for a period of time (the bargaining period) the union may take industrial action against the employer for the purpose of negotiating an enterprise agreement and this action is protected against the tort of direct interference with contractual relations.

Use of protected action has a number of significant restrictions. Firstly the Commission under Section170MN of the Act may remove the protected action if the union is deemed to be not bargaining genuinely [subsection 170 MN (2)] or causing significant damage to the economy [subsection 170 MN (3)]. During the life of a certified agreement all industrial action in pursuit of claims against the employer are illegal. And finally protected action does not apply to secondary boycotts.

Part VIA mandates the arbitration of disputes that are notified to the Commission under Section 99. But Section 127A allows the commission to declare industrial action illegal and thus subject to tort prosecution. The Commission has shown itself ready and willing to issue Section 127 orders.17

The Workplace Relations Act guarantees the right of workers to join or not to join a union. Therefore closed shop agreements between employers and unions are illegal and thereby substantially weakening trade union power. The right to join a union is clearly founded on justice because of the need to redress the power imbalance between individual workers and the employer. The legislated right not to join a union is based on a totally different political principle, that of individual liberty. Respect for individual liberty to justify the undermining of trade union power. Respect for liberty should not be allowed to be used as an excuse for the perpetuation of injustice. The right not to join a trade union should be repealed.

As we have seen governments have a duty to legislate for the good of all the people but the Penal Powers exist to restrict the rights of the many for the benefit of the few. Unions have the right to take whatever industrial action they choose, whenever they choose and for whatever industrial objective they choose. The Penal Powers are a totally illegitimate use of political power and should be repealed.

Arbitration rights and collective bargaining

Both employers and employees have a right to have any industrial dispute settled by compulsory arbitration. That is, both parties (union or employer) had the right to have industrial disputes settled by arbitration without the necessity of the other party agreeing to that arbitration. The only time industrial action should be illegal is when arbitration proceedings are on foot.

The employers' need the right to compulsory arbitration so as to protect them against abuse of power by strong unions. Unions need the right to compulsory arbitration to protect them from abuse of power by strong employers. The government requires the power to order compulsory arbitration so as to protect society from the economic damage of long disputes in key sectors of the economy.

Under the conciliation and Arbitration Act 1904 unions and employers were granted by the Federal government the right to have disputes settle by compulsory arbitration. The arbitrated awards usually set minimum wages and conditions and the parties were free to bargain collectively about over-award wages and condition. Thus there has always been an element of collective bargaining in the arbitral system.

The system of compulsory arbitration offered a number of advantages to unions. The system obviously required someone to represent workers, hence the legal recognition of the legitimacy of trade unions as part of the system and the exclusion of non-unionist from representation. Under the principle of comparative wage justice workers in weak bargaining positions were able to win improved wages and conditions through arbitral proceedings that would have been impossible by collective bargaining. Although arbitrated decisions have often gone against unions, on balance the arbitration system has been the great benefit to workers and the nation as a whole.

Under the Hawk Labor government the ALP/ACTU18 Accord took the collective bargaining element out of the system totally so as to lower wages in the hope lowering unemployment. The losses to workers were supposed to be made up by improved government services and benefits. To what extent this was successful I will leave unanswered. What it did do was strangle shopfloor union democracy and organisation.

The Keating government swang to the opposite extreme with the Industrial Relations Reform Act 1993 and not only allowed collect bargaining above the award but they also restricted the Commission from addressing the merits of the agreements and turned the Commission into a rubber stamp without the power to amend or reject industrial agreements. A critical difference between this enterprise bargaining regime and that which went before is that under the Reform Act the parties were allowed to negotiate away award conditions so long as they met a 'no disadvantage test', prior to this award conditions were not negotiable. The Reform Act also allowed for non-union agreements.

The Howard governments' election brought further substantial restrictions on the activities of the Commission and Unions. The power of the commission to make awards was restricted to 20 allowable matters. Unions retained protected action and the right of entry and inspection but contracting out of awards through individual contracts called Australian Workplace Agreements was made legal.

Disputes that can be settled in the field should be. The right to an arbitrated settlement is needed for the protection of all the parties and society. All restrictions on the right to arbitration and the arbitration process itself should be repealed.

The limits to employer rights

The majority of the Labor Movement has never been socialist in the sense of supporting the abolition of capitalism. If we accept the reality of capitalism then we must accept the existence of employer property rights. Paine believed that citizens have a duty to protect the rights of other citizens or risk losing their own rights. If trade unions are to stand for rights they must stand for the rights of all citizens including the employers.

Employers claim, as part of general property rights, the right to manage their enterprises and this takes its' legal form in the set of laws we have called managerial prerogative. It is obvious that managerial prerogative does not give the employers the right to act unfairly, unjustly or unreasonably.

The Workplace Relations Act allows employers to take protected industrial action against employees (lockouts). This only makes the power imbalance in favour of employers' worse. This protection should be repealed.

What needs to be done

Unions must win their rights. The Trade Union Movement has lost 200,000 members in the four years since the ACTU released its' blueprint for increased membership, unions@work19. Present legislation forces unions to organise with one arm tied behind their back. The gaining of trade union rights is a necessary condition for the reversal of falling trade union membership.

The union movement needs to put legislative reform at the top of its' agenda. The issues are clear, repeal of the penal powers, restoration of all the Arbitration Commissions' power, restoration of the rights of unions and employers to compulsory arbitration and the legal recognition of the rights of union members, delegates and officials. The struggle for union rights will be a battle for hearts and minds. It will be a battle fought out in the workplace, in the parliament and in the courts. It is a battle that must be won.

The rights of man

In 'The Rights of Man' Paine does not advocate very many rights at all. He is a strong advocate for the right to vote, as it is the basis of all other rights. He says there are natural rights, which have their origin in the religious view of creation, these natural rights then provide the basis for rights such as equality and free speech. He does think the separation of Church and State is a good idea as politics corrupts religion, he supports the separation of powers and that's about it.

The significant of Paine's book for me was the realisation that rights exist in the mind of man and take their concrete form in legislation.

The modern struggle for democratic rights began with the American and French revolutions in the eighteenth century. Universal suffrage was not won until the twentieth century.

Australian unions are still to win their rights. And when these rights are won, unions will have to fight to keep them. You do not change bad laws by complying with them. You do not win rights by being passive, you win rights by fighting, by going to prison if need be, you win rights by being fearless. This is the message of Tom Paine. These are the Rights of Man.


Geoffrey Beckman is an Australian Labor Party member and former trade union organiser. He has been working in the finance sector for the past four years.



1. The right (after arrest) to be brought before an independent and impartial judge. 2. Rights of Man, Common Sense and Other Political Writings, Thomas Paine, Oxford University Press 1998, p. 121-2. 3. Ibid., p. 240. 4. Ibid., p. 242. 5. History of Western Philosophy, Bertrand Russell, Routledge 2001 (First Published 1946), p. 134. 6. Rights of Man, Common Sense and Other Political Writings, Thomas Paine, Oxford University Press 1998, p. 425. 7. See Appendix 1. 8. Labour Law Materials and Commentary. Creighton Ford and Mitchell, The Law Book Company 1983, p. 116. 9. Australian Labour Law, Pittard and Naughton 4th Edition, Butterworths 2003, p. 953. 10. Ibid., p. 597. 11. Ibid., p. 979. 12. Ibid., p. 981. 13. Industrial law Butterworths' Student Companion. By Peter Rozen, p. 30. 14. Australian Labour Law, Pittard and Naughton 4th Edition, Butterworths 2003, p. 959. 15. Ibid., p. 1076. 16. Ibid., p. 1195. 17. Australian Labour Law, Pittard and Naughton 4th Edition, Butterworths 2003, p. 1198. There were 414 Section 127 applications in 2001-2002. 18. ACTU (Australian Council of Trade Unions), ALP (Australian Labor Party). 19. This was a paper published by the ACTU outlining a program for increasing union membership by focussing on workplace organisation.


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