Opinion Number. 1060

Subject

FEDERAL SHIPBUILDING TRIBUNAL WHETHER NAVY IS LIABLE TO PAY EMPLOYEES AT RATES DETERMINED BY TRIBUNAL IN EXCESS OF AWARD RATES: JURISDICTION OF TRIBUNAL

Date

I have been asked to advise as to the liability of the Department of the Navy to pay to some of its employees at the Cockatoo Island Dockyard a sum of 8s 6d per week above the award rates.

The position, as I gather it from the file of papers which has been forwarded, is as follows:

Prior to July 1920, the employers on the waterfront in Sydney, including the Cockatoo Island Dockyard, were paying their employees at day-work rates fixed by the award of the Court of Industrial Arbitration, New South Wales. (See, as to boilermakers etc., N.S.W. Industrial Gazette 1920, p. 177.)

In July 1920, the employers on the waterfront in Sydney agreed to pay their workmen 8s 6d per week in addition to those rates. The Dockyard, however, was not at that stage a party to this agreement, and the Unions concerned, therefore, applied to the Shipbuilding Tribunal for an order that the additional payment of 8s 6d should be extended to the Dockyard employees. This application was agreed to by the Dockyard authorities and sanctioned by the Tribunal. (See decisions Nos 328, 329, 334, 338 and others.) It is stated in the Departmental file that the Department of the Navy agreed to this additional payment 'in anticipation of an award of the Arbitration Court'. So far as I have been able to ascertain, however, the official reports of the cases (which are very brief) merely state that in view of the fact that employers on the waterfront had decided to increase the rate by 8s 6d per week and of the fact that no objection had been made (by the management) to the claim being conceded the Tribunal formally decided that the employees were entitled to the increase. In one case (No.352, Engineers) the question of the continuance of the additional payment above award rates actually came up, the representative of the Navy pointing out that the granting of the claim of 8s 6d per week, then under consideration, would not alter the liability which the employers were then meeting, seeing that the Dockyard in common with other employers, had already been paying 8s 6d per week above award rates. The representative of the Union thereupon pointed out that outside employers had agreed to continue payment of the additional money, in addition to the higher rate allowed by the Court, and the representative of the Navy thereupon agreed that in that event the Dockyard would pay, but not from a date prior to that observed by other employers.

In November 1920, the Court of Industrial Arbitration, New South Wales, increased the rates payable by private employers by 8s per week. The Unions thereupon approached the Shipbuilding Tribunal and asked that the Dockyard be also required to pay the extra 8s per week.

Upon the matter coming on for hearing, the Navy opposed the granting of the claim on the grounds that-

  1. when the payment of 8s 6d per week was agreed to as from 15 July 1920, it was definitely understood and stated that the payment was to be in anticipation of any award of the Court;
  2. the Dockyard had agreed in July 1920 to fall into line because it was understood that all outside employers were making the extra payment then under consideration, whereas in this case some of the outside firms were not making the extra payment; and
  3. already the Dockyard was paying 6d per week over and above award rates.

As regards the first of these grounds, I can find no evidence of this arrangement in the file, or in the reports of the decisions of the Shipbuilding Tribunal.

As regards the second ground, it was found by the Chairman of the Shipbuilding Tribunal in his decision that all employers on the waterfront, except Cockatoo Island Dockyard, had paid the additional amount.

As regards the third ground, there is no dispute.

A further objection was raised by the Management in a letter to the Tribunal, namely, that the Dockyard employees received certain concessions as to transport to and from the Island, payment for public holidays, and annual leave, which were not granted to the employees of private employers.

The Tribunal found in favour of the employees (decision No.405), and directed that payment should be made by the Dockyard as from 5 November 1920.

In delivering the judgment of the Tribunal the Chairman dealt with the question of the concessions granted to the employees which were not allowed by private employers to their employees and advised that he was of opinion that these concessions should be regarded solely as concessions and not as a set-off against the extra wages paid by other employers on the waterfront.

The Government delegate on the Tribunal dissented from the finding of the Tribunal on the following grounds:

  1. That clause 5 of the agreement with the Unions provides for existing agreements being observed and that the payment of 8s per week over and above award rates was not in pursuance of an existing agreement.
  2. That the Tribunal had no jurisdiction to direct that rates higher than award rates should be paid.

The existing agreement relating to shipbuilding work at the Cockatoo Island Dockyard provides, inter alia, that:

(2) The conditions and principles in relation to shipbuilding work set out in or which may be reasonably inferred from the printed statement annexed to the agreement shall be binding on the Commonwealth and the employees.

(4)The rates and hours of labour and conditions already prescribed or hereafter prescribed by any Court of Arbitration or Wages Board under any Commonwealth or State law shall be paid to or any existing agreement shall be observed in respect of all persons working day work in any yard or shop which has engaged on shipbuilding under the Commonwealth scheme.

(5)The Tribunals appointed as agreed to by the Shipbuilding Conference shall not have jurisdiction to deal with the day-work rates and conditions of employment prescribed by such Courts.

The Solicitor-General has advised (1 September 1920(1) that the Shipbuilding Tribunal, though it has not jurisdiction to deal with day-work rates fixed by an Industrial Court, may nevertheless affect day-work rates. Under paragraph (d) of the General Conditions (which are incorporated in the agreement by paragraph (2) above) it can investigate increases in the cost of living, and when the increases reach a certain point the employees are to obtain a corresponding increase of wage automatically. This paragraph applies to employees employed at day-work rate as well as to those engaged on piecework.

I agree with the Government delegate on the Tribunal that the payment of the sum of 8s 6d per week over and above award rates is not in pursuance of an 'existing agreement' within the meaning of clause 5 of the agreement.

With his contention that the Tribunal has no jurisdiction to direct that rates higher than award rates should be paid, I agree also, with this reservation, that if day work rates have been prescribed by the Arbitration Courts-and they have in this instance-the Tribunal may vary them if it has investigated increases in the cost of living and has decided that the increases have reached a certain point (see paragraph (d) of the General Conditions). It is not clear how the point referred to is to be determined, but an investigation by the Tribunal of the increases in the cost of living is clearly provided for, and there is no evidence before me that this investigation has been made. I am of opinion, therefore, that, assuming the investigation has not been made, the Department of the Navy is not under any legal obligation to accept the decision of the Tribunal in this matter.

I deem it, however, my duty to point out the following:

  1. That the Department is in the position of having submitted to the Tribunal and not raised any objection to its jurisdiction.
  2. That in several cases the Department is reported as having through its representative expressed its approval of the principle that it should pay the same rates as private employers, e.g.:
    1. in case No.328 (Boilermakers): 'Mr Hayes said that he offered no objection to the claim being granted, seeing that all outside employers were paying the rate asked for by the Union'; and
    2. in case No.329 (Engineers and Blacksmiths): 'Mr Hayes said that his instructions were not to oppose the application, as the management were of the opinion that it could not fairly refuse to pay the same rate as other employers for the same service'.
  3. That in at least one case (No.352, Engineers) the representative of the Department agreed that if an additional payment over and above award rates was made by outside employers it would be made by the Department also.
  4. That the concessions, upon which the Department now relies as a reason for differentiating its position from that of the private employers, were in existence at the time when the Department raised no objection to, but in fact intimated its approval of, the principle that it should pay the same rate as private employers.

I have no means of ascertaining what wages the private employers on the waterfront in Sydney are paying and whether the State Government is or is not paying the sum of 8s 6d in addition to award rates. As regards the former, the Chairman of the Tribunal found, as pointed out herein, that all employers on the waterfront, except Cockatoo, had paid the additional amount. This, however, is a question of fact upon which information is, I assume, easily obtainable in Sydney.

As regards the question whether the jurisdiction which the Shipbuilding Tribunal has over disputes is confined to disputes in relation to the building of merchant ships or whether it extends to those in relation to warship construction, I desire to point out that, on 1 October 1920(2), the Solicitor-General advised that the jurisdiction of the Tribunal was confined to disputes of the former class.

The fact that the Shipbuilding Tribunal has no jurisdiction regarding disputes in relation to warship construction appears to follow also from a decision of the Tribunal itself. In decision No.328, that body, after making an order as regards the wages of employees at Cockatoo Island, stated that as regards Garden Island ' . . . the Tribunal has no jurisdiction to make an order binding on the Government in respect of work done at this Island'. In that case however, the question of the increased wage being applied there was referred to the Tribunal by the Naval Board, and the Tribunal accordingly advised that as the conditions at the two Islands were practically the same the same rates should prevail. The only ground for distinguishing between Cockatoo and Garden Islands, I take it, would be that naval work alone is carried on at the latter Island. But if the agreement gives the Tribunal no jurisdiction as regards naval work at Garden Island, I see no reason for holding that it gives it jurisdiction regarding similar work at Cockatoo Island.

(1)Opinion No.1002

(2)Opinion No.1015