Harvester Case
The Harvester Case is a landmark legal decision that took place in Australia in 1907, presided over by Justice Henry Bournes Higgins. The case sought to define what constituted a fair and reasonable wage and ultimately established the concept of a living wage, which aimed to provide workers with sufficient income to cover the essential costs of living, such as food, shelter, and clothing for themselves and their families. The case originated from an application by Hugh Victor McKay, the owner of Sunshine Harvester Works, who sought an exemption from an excise tax based on wages paid to his employees. Justice Higgins determined that a fair wage should be based on the needs of an average family, rejecting the common employer practice of basing wages on competitors' rates.
Although the High Court later ruled Higgins's decision unconstitutional, the principles established in the Harvester Case influenced wage-setting practices in Australia for decades. It led to the establishment of a minimum wage system that supported the idea that employers have a responsibility to ensure their workers can meet basic living expenses. Over time, the basic wage set by the Harvester case became a key element in Australia’s industrial relations framework, influencing minimum wage laws until the family wage concept was abolished in the 1970s. The legacy of the Harvester Case continues to impact discussions around fair wages and workers' rights in Australia today.
Subject Terms
Harvester Case
The Harvester case was a case before Justice Henry Bournes Higgins (1851–1929), president of the Commonwealth Court of Conciliation and Arbitration, that defined what a fair and reasonable wage was and established a living wage. In his 1907 decision, Higgins determined a fair and reasonable wage was one based on the cost of living, or the amount of money that allowed a human working in a civilised society to pay for food, shelter, clothing and other basic necessities for himself and his family. This wage was owed workers regardless of whether a company made a profit or was a non-profit. Also called a family wage, this wage later became known as the basic wage and became the basis for Australia's minimum wage system.
Although the Harvester judgement was declared invalid by an appeals court, it was used to set awards in subsequent court cases and was used to determine the minimum wage of workers in Australia until the 1970s.
Background
Workplace relations were a key concern of trade unionists, employers, state legislators and delegates of the Constitutional Convention in the years leading up to the formation of the Commonwealth of Australia in 1901. Industrial disputes—and resulting strikes and violence—had characterised the 1890s and concerned parties sought a way to minimise workplace disruptions and other harm caused by work disputes. The Constitutional Convention delegates addressed this concern by including a clause in the Australian Constitution that gave conciliation and arbitration power to Parliament.
In 1904, Parliament passed the Commonwealth Conciliation and Arbitration Act 1904. This act established an independent tribunal, the Commonwealth Court of Conciliation and Arbitration, to promote the settlement of disputes between employers and employees through conciliation and to make enforceable awards if parties were unable to come to an agreement.
The Australian Constitution also gave Parliament the authority to set and impose customs and excise taxes. The young nation used those powers to pass several acts to raise revenue for the growing commonwealth and to protect its local industries. These acts were the cause of much debate between Australians who favoured free trade and those who advocated protectionism. In an attempt to satisfy supporters of both views, Parliament passed two acts in 1906. The Customs Tariff Act 1906 placed a tax on imported agricultural machinery, particularly stripper harvesters. The Excise Tariff Act 1906 placed a similar tax on goods produced in Australia unless the manufacturer or producer showed that it paid a fair and reasonable wage to its labourers as determined by the Commonwealth Court of Conciliation and Arbitration.
The Hearing and Decision
In 1904, Hugh Victor McKay, the inventor of a stripper harvester, moved his company, Sunshine Harvester Works, to Braybrook (later Sunshine), a suburb of Melbourne, Victoria. Producing one of the first such machines in the world, the company was very successful and became one of the largest employers in Australia.
In 1907, McKay applied to the Commonwealth Court of Conciliation and Arbitration for an exemption to the excise tax. Justice Higgins, the president of the court, selected his application as a test case to determine a fair and reasonable wage. Higgins selected McKay's request out of 112 applications because of Sunshine Harvester Works' size and the variety of workers. Higgins heard the case between 7 October and 8 November that year.
Higgins first needed to define what constituted a fair and reasonable wage. In defining fairness, Higgins rejected a common practice of employers to pay wages based on rates paid by other employers for similar work. Higgins asserted that an employer and employee were not on equal footing, thus any bargaining put the employee at a distinct disadvantage and was unfair. Furthermore, he said if Parliament had expected individuals to bargain with employers for the best contract, it would not have included a provision about fair and reasonable wages in the Excise Tariff Act. In his decision, Ex parte H. V. McKay, Higgins defined a reasonable wage as one that provided for "the normal needs of the average employee, regarded as a human being living in a civilised community". Higgins used the cost of living for a family of five as a standard for establishing what was fair and reasonable.
At the time the case came before the court, labourers at the Sunshine Harvester Works received six shillings a day. In order to determine if these wages met the standard of free and reasonable he had established, Higgins heard testimony from several workers and their wives. Based on their expenditures for rent, clothing, food, and other household items, Higgins decided the wages Sunshine Harvester Works was paying were insufficient for a male worker to provide for his family and were not fair and reasonable. Higgins set the living wage, or family wage, for unskilled labourers at seven shillings a day and for skilled labourers at ten shillings.
Aftermath and Impact
McKay disagreed with Higgins's decision and appealed to the High Court. In 1908, the High Court ruled the decision was unconstitutional and invalid as the Constitution did not give the Commonwealth the authority to set wages. Nonetheless, the Commonwealth Court of Conciliation and Arbitration used the standard established in the Harvester case to make awards in cases that came before it. In doing so, it established a minimum wage for Australia that remained in effect until 1974, when the family wage was abolished by the Commonwealth Conciliation and Arbitration Commission (which had replaced the Commonwealth Court of Conciliation and Arbitration in 1956 and is now Fair Work Australia).
The minimum wage established by the Harvester case was seven shillings a day for a male unskilled labourer. This basic wage was adjusted for skilled labourers by an additional amount known as the margin. Women were entitled to receive the minimum wage only if they worked in a male-dominated job. If they worked in a job performed primarily by women, they received a wage of 54 per cent of the male basic wage. Teenagers who were apprentices or in training also received less than the full basic wage. The basic wage was periodically adjusted to accommodate inflation.
The Harvester case not only established a minimum wage, it institutionalised the premise that in order for Australia to be a civilised society, employers had a responsibility to pay workers wages that allowed them to meet their basic needs. This premise has been the driving force in Australia's industrial relations and wage negotiations since the Harvester decision.
Although Australia abandoned the family wage in the 1970s, it did not abandon the minimum wage. In 2009 it passed the Fair Work Act 2009, which created a new method for determining minimum wages based on an employee's occupation and industry.
Bibliography
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