Australian statutory labour law and the near death experience of the doctrine of managerial prerogatives.

Author:Carrigan, Frank


The study of how the different arms of the state apparatus operate is a fascinating and politically important aspect of a capitalist democracy. One of the key state apparatuses is the judiciary. Law exercises its authority in a number of ways. Whilst it plays a key role in securing the extant social formation it achieves this aim largely in the ideological sphere. Operating as ideological functionaries the judiciary has developed a degree of autonomy from yvested interests that enables it to arbitrate disputes in a society enmeshed in a web of competing financial arrangements. The competitive individualism of capital ensures disunity in its ranks, and this combined with a subordinated working class, provides the elbow room for the judiciary to exercise to a substantial extent a free hand in its dispute settlement procedures. (1) This judicial autonomy is exhibited in myriad ways. For example, judges are conceptual ideologists who engage in the type of creative thinking that is required to solve problems that emerge from economic class conflict. Moreover, in a divided society judges are strategically placed to safely channel the numerous contradictions that bedevil class societies. Operating within the prism of ostensibly depoliticised rules, the judicial apparatus of the state is empowered to mediate relations between rulers and ruled. Following on from this observation, industrial arbitration is a core area where judges can canalise the class issues that emerge from asymmetrical labour contracts into the safe pastures of the courts. Legalism replaces the direct action of strikes or other challenges to the rule of capital. Judges are indispensable agents in facilitating the reproduction of social and power relationships, and they achieve that objective in the context of relative independence from the ruling class. They are not simply mouthpieces of the system. Whilst law is a coercive component of the state machine that serves the power elite it is more than an instrument that simply endorses the selfish requirements of rulers. Judges utilise their partial independence to circumscribe the actions of members of the economic elite threatening the overall stability of the system. In the name of social cohesion judges will assert the rights of unionists who are being confronted by the arbitrary behaviour of employers. State intervention in the judicial sphere is not a one way street. Within the limits set by capitalist relations of production the judiciary will on occasion exercise their power to support and extend the position of workers. The judges are key state actors at the forefront of the battle to perpetuate the age of capital. (2) However, it is important to recognise that they are not one-dimensional figures. They tame the more destructive aspects of the hubris unleashed by property rights. They give pluralist democracy some substance. Their complex and contradictory role can be gauged by investigating the structural forces within Australia during the twentieth-century that shaped the judicial doctrine that ruled in the sphere of statutory labour law. As the epoch of the centrality of the labour power provision of the Constitution in regulating industrial relations in Australia fades from view, it is worth examining the judicial interpretation of the constitutional and legislative texts that governed labour relations in Australia for the bulk of the twentieth-century. Such an analysis sheds light on judicial intervention both retarding or extending workers' rights and how ideological divisions within the judiciary are reflected in legal reasoning. It also illuminates the process of how law acts to allocate political power to the rulers whilst not requiring the complete submission of the ruled.

The High Court is the third branch of government and an integral part of the state and since federation it has been responsible for interpreting the Australian Constitution. The Constitution defines the scope of the Commonwealth's power to issue laws regulating the labour market. This supervisory role of the High Court in relation to its interpretive constitutional function has ensured that the framing of labour law bears a strong judicial stamp. (3) In performing its role of characterising whether the subject matter of legislation was constitutionally valid, the High Court has been kept busy. (4) Not surprisingly, in the course of the twentieth-century as the pace of economic development quickened, and a manufacturing sector expanded, industrial conflict spawned a wealth of litigation. The task of identifying the jurisdiction of the unique Commonwealth compulsory arbitration system that was a product of legislation based on the labour power provision contained in s 51(35) of the Constitution fell to the High Court. As the appellate court of last resort in Australia, the legal doctrine developed by this ultimate court has been instrumental in fashioning the contours of the organisation of work and political power in the workplace. The zone of operation of arbitration tribunals established to set wages, terms and conditions of employment within Australia was circumscribed by the judicial decisions of the High Court. The power of the High Court in shaping the history of Australian capitalism due to its role in interpreting the meaning and scope of phrases contained in s 51(35) of the Constitution, and key statutory clauses in the Conciliation and Arbitration Act 1904 (Cth) governing the ambit of the arbitration tribunals cannot be exaggerated. It offers a striking example of how the judicial state apparatus has relative autonomy and law is more than just an instrument of the ruling class.

This article considers how the High Court during the twentieth-century interpreted the jurisdictional scope of the words 'industrial matters'. This was a pivotal phrase in the 1904 Conciliation and Arbitration Act, and whenever the statute was revised in the course of the century this term retained its preeminent place. It was a term that was a prerequisite to establishing the jurisdiction of commonwealth arbitration tribunals to settle industrial disputes. In effect, the arbitration tribunals could only deal with disputes that fell into the category of 'industrial matters.' For a dispute to come within the ambit of the regulatory powers of the arbitration tribunals it had to be a dispute between parties who stood in an industrial relationship, and be a disagreement about industrial matters such as wage levels and working conditions. Utilising a number of key cases the paper will track judicial decisions that determined the meaning and scope of the phrase 'industrial matters.' The paper will canvass the judicial philosophy that guided the High Court in its role as an arbiter of the parameters of the dispute resolution function of arbitration tribunals. The High Court espoused apolitical legalism as the source of its legal reasoning, but the cases will be excavated to discern to what degree the court adopted the doctrine of managerial prerogatives and thus the sovereignty of capital as its criterion of jurisdiction. The historical backdrop that formed the context of the legal doctrine of the High Court will be sketched, particularly as this relates to the genesis of statutory labour law at the dawn of the twentieth-century. The paper also explores how in the latter part of the twentieth-century there was a brief interlude where the High Court ushered in a progressive expansion of the jurisdiction of arbitration tribunals and what this signalled for the role of managerial prerogatives. Thus the paper will pinpoint how in practice the judiciary acts to consolidate the interests of the dominant class while engaged in a parallel exercise of pursuing reforms that dampen class conflict.

The period of progressive jurisprudence in the sphere of employment law was replaced by a lurch to the right as neo-liberalism unfolded. In essence, the political apparatus of the state moved to restore ground that had been lost by the economic elite as a result of judicial activism. The upshot was the jettisoning of s 51(35) and the body of law developed under its aegis and a move to s 51(20), the Corporations power provision in the Constitution. This stage of constitutional and legislative history is in its infancy. A sustained examination of its evolution is beyond the scope of this study. However, it can be noted in passing that its guiding thread has been a move away from the era of collectivism and the steps towards industrial democracy that was slowly enshrined under s 51(35) statutory law. Its theme is an emphasis on private rather than public regulation. With hindsight, the case law built up during the epoch of s 51(35) that reinforced the pillars of a regulatory system based on compulsory arbitration appears even more impressive when contrasted to the period of deregulation that followed in its wake, as s 51(20) became the touchstone of statutory labour law in Australia.


The 1890s economic crash and resultant industrial upheavals paved the way for the insertion of s 51(35) in the Australian Constitution. (5) This constitutional head of power enabled the Commonwealth Parliament to form industrial tribunals to prevent and settle industrial disputes. The move to statutory labour law at the beginning of the twentieth-century, and the expansion of the role of the state in regulating the labour market, was not embraced by every captain of industry. (6) Intra-capitalist rivalry ensured there was not a unilateral approach on the part of business to a system of compulsory arbitration becoming the arbiter of the rules governing the buying and selling of labour hours.

The embryonic union movement was smashed in the 1890s and many employers wanted to retain the common law regulatory system based on choice, individual bargaining and...

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