Bills Digest No. 177  1999-2000Workplace Relations Amendment Bill 2000

Numerical Index | Alphabetical Index

WARNING:
This Digest was prepared for debate. It reflects the legislation as introduced and does not canvass subsequent amendments. This Digest does not have any official legal status. Other sources should be consulted to determine the subsequent official status of the Bill.

CONTENTS

Passage History
Purpose
Background
Main Provisions
Endnotes
Contact Officer & Copyright Details

Passage History

Workplace Relations Amendment Bill 2000

Date Introduced: 11 May 2000

House: House of Representatives

Portfolio: Employment, Workplace Relations and Small Business

Commencement: The operative provisions of the Bill may come into effect on a date to be set by proclamation but otherwise no later than 6 months after the date of Royal Assent. The Government has indicated that it is hopeful that the proposed legislation will be operative by 1 July 2000.

Purpose

The Bill proposes a number of amendments to the Workplace Relations Act 1996 (the Principal Act).

Major amendments proposed by the Bill:

• deny legal protection otherwise available under the Principal Act to unions, union officials and employees who engage in industrial action as part of a campaign of 'pattern bargaining'
• require the Australian Industrial Relations Commission (AIRC) to act within 48 hours on applications under 127 of the Principal Act to stop industrial action
• provide for the AIRC to suspend access to legal forms of industrial action, and
• give the Federal Court express power to determine if industrial action is 'protected action' for the purposes of the Principal Act.

Background

This Bill seeks to revive proposals last advanced as part of the Workplace Relations Legislation Amendment (More Jobs, Better Pay) Bill 1999 (the MOJO Bill).⁽¹⁾

The MOJO Bill proposing an extensive range of changes to the Principal Act was introduced by Minister Reith on 30 June 1999 and is still before the Senate although not under active consideration.

Bills Digest No.94 of 1999-2000 recounts the background and legislative history of the MOJO Bill up to and including 6 December 1999 by which time it was generally accepted that that Bill would not be passed by the Senate.⁽²⁾

The provisions of the MOJO Bill were analysed at length during the inquiry conducted by the Senate Employment, Workplace Relations, Small Business and Education Legislation Committee and in that Committee's detailed report tabled on 29 November 1999.⁽³⁾

The present Bill was referred to Senate Employment, Workplace Relations, Small Business and Education Legislation Committee on 11 May 2000 and the Committee is due to report on 5 June 2000. The Committee sought public submissions and hearings involving major interest groups were held in Canberra on Friday 26 May and Monday 29 May 2000.⁽⁴⁾

In essence, the new Bill proposes a number of measures designed to restrict or else clarify access to what are commonly referred to as the protected bargaining provisions of the Principal Act.

At common law and under federal industrial laws until 1993, all strikes and other forms of industrial action were unlawful. Reforms introduced by the Keating Government and continued in modified form by the present Government provide a limited right to strike during negotiations pursuant to new industrial agreements.⁽⁵⁾ Legislation now also confers on employers a restricted right to 'lock-out' employees during the course of a disputes over new agreements. This immunity from legal proceedings in either case is not absolute, can only be accessed under certain conditions, and may be curtailed where the national interest is at risk.

As part of the 1996 amendments to federal industrial law, the Howard Government altered the objects of the Principal Act to provide that '...primary responsibility for determining matters affecting the relationship between employers and employees rests with the employer and employees at the workplace or enterprise level.'⁽⁶⁾

Other changes to federal laws have reduced the AIRC's arbitral powers, restricted the matters that may be dealt with under federal awards and limited legal protections to those instances where industrial action relates to proposed single employer or single workplace agreements.

The proposed amendments arguably arise from the Government's desire to promote a system of workplace relations that in the main supports outcomes based on local circumstances and mutual interests in the workplace over wider but nonetheless sectional goals.

Although estimates vary, it is clear that at both the federal and State levels there has been a marked shift to enterprise level bargaining over the past decade.⁽⁷⁾ Evidence from government surveys suggests that only 22 percent of the workforce now rely solely on old style awards as the legal basis for their terms and conditions of employment.⁽⁸⁾ A further 22 percent are covered by over-award payments and unregistered agreements, 42 percent are covered by registered collective agreements including certified agreements made under the Principal Act, and a further 14 percent rely on individual contracts (including federal and State workplace agreements). Allowing for some definitional changes, these figures contrast with the position a little more than a decade ago when only 15 to 20 percent of the Australian workforce was 'award-free'.⁽⁹⁾

At issue here is whether it is necessary or desirable to further bolster the trend to enterprise and workplace bargaining by curtailing the already constrained right of workers and unions to take protected action in relation multi-business bargains. Related issues include:

• whether the changes proposed by the Bill strike a proper balance between the rights of employers and workers,
• whether the proposed changes are necessary, given existing limitations on access to protected bargaining under the Principal Act,
• whether the amendments increase or further restrict the capacity of the 'industrial umpire' to exercise a genuinely independent discretion in adjudicating on matters brought before it,
• whether the proposed changes leave virtually no scope for effective pattern bargaining by unions,
• whether some of the proposed amendments expose unions, their members and individual employees to the threat of legal proceedings (which even if ultimately unsuccessful) would dissuade them from pursuing any form of protected action under the Principal Act, including in relation to single enterprise agreements,⁽¹⁰⁾
• whether the proposed law would operate to abrogate for all practical purposes what some argue is already an unacceptably constrained right to strike, and
• whether or not the proposed law is at odds with Australia's international treaty obligations, principally International Labour Organisation Conventions No.87 and 98 on the right to organise and the taking of collective action.⁽¹¹⁾

The Government and many employers are clearly of the view that the legislation is necessary to prevent unions finding ways of subverting the objects of the Principal Act by mutating enterprise bargaining processes into forms of industry-wide bargaining. The Government has also argued that the shift to enterprise bargaining since 1991 has produced a more robust economy characterised by higher rates of productivity growth.⁽¹²⁾ Further, the Government might say that the proposed law does not outlaw pattern bargaining or unduly restrict the capacity of unions and workers to organise according to industry or workplace specific requirements. The proposed law merely clarifies some existing rights and ensures that the integrity of workplace bargaining is maintained. Supporters of the Bill might also argue that the restrictions on any right to strike are not unreasonable when the wider industrial context, which includes alternative dispute resolution machinery, is taken into account.

Those opposing the Bill may say that the measures are directed at further weakening the capacity of unions to pursue better conditions of employment for their members. Others see the legislation as largely unnecessary or else as providing for a rather rigid and technical regime of enterprise bargaining which truncates the freedom of employers and unions to bargain collectively. Critics may also contend that certain proposed changes to the law will further limit the AIRC's discretion when dealing with industrial matters under the Principal Act.⁽¹³⁾

It may also be noted, however, that although the focus of the relevant parts of the Act is now on promoting workplace or enterprise level agreements, scope still remains for the conclusion of multi-employer agreements under section 170LC of the Principal Act. Such agreements may only be certified by a Full Bench of the AIRC and only where the AIRC is persuaded that such a course is in the public interest. Furthermore, the present wording of the Act suggests that it is not possible to take protected action in relation to multi-business agreements. Once certified, any multi-business agreement is inoperative to the extent that it is inconsistent with a single-business certified agreement [subsection 170LC(5)].⁽¹⁴⁾

Main Provisions

The same course is followed here as in the Minister's Second Reading Speech where the Main Provisions of the Bill are discussed under five distinct groups of amendments.

Orders relating to unprotected industrial action

Items 1-5 of the Schedule deal with the power of the AIRC to stop or prevent industrial action under section 127 of the Principal Act. Items 1 and 3 seek to make it clear that the AIRC's power to stop industrial action also relates to disputes connected with certain pre-1996 industrial agreements.

Item 2 clarifies the meaning of subsection 127(1) of the Principal Act. The AIRC's power to stop strikes and other forms of industrial action under section 127 may not be invoked in respect of 'protected action' or action that would be 'protected action'.

Item 5 arguably contains one of the more significant provisions in the Bill. Presently subsection 127(3) provides that the AIRC must hear and determine an application for an order to stop unprotected industrial action as quickly as practicable. The proposed amendment will require the AIRC to deal with such applications for relief within 48 hours. Where the AIRC cannot complete its deliberations within 48 hours, it must issue an interim order to stop or prevent industrial action.

Items 3 and 7-15 of the MOJO Bill provided for a more detailed and comprehensive series of amendments to section 127. It may be noted that the amendments proposed under the MOJO Bill made it plain that section 127 could be used to halt employer 'lock-outs'.⁽¹⁵⁾ The present amendments leave largely unresolved such doubts about the application of the section to industrial action engaged in by employers.⁽¹⁶⁾

Items 14 and 15 are application and transitional provisions that deal with current or ongoing matters that may be subject to a section 127 order.

Industrial action and pattern bargaining

'Pattern bargaining' is a bargaining process in which unions or employers may attempt to achieve common outcomes across different enterprises in an industry or sector, for example by the adoption of standard agreements or a specified wage increase.⁽¹⁷⁾

Because of the prevalence of awards, industry-wide agreements and multi-employer agreements under the conciliation and arbitration systems, the term 'pattern bargaining' has until relatively recently not been widely used in Australian industrial relations literature. In a sense, 'pattern bargaining' was pretty much the norm.⁽¹⁸⁾ The term had no precise legal meaning and may have been regarded as something of a term of art even though 'pattern bargaining' in a generic sense was an established and deeply ingrained part of the industrial culture. In the federal arena, it was perhaps not until governments sought to promote enterprise bargains, that 'pattern bargaining' became an issue and the term acquired more of a pejorative meaning.

The Bill does not make 'pattern bargaining' unlawful. Instead it seeks to discourage pattern bargaining by unions by denying them, their members and officials access to the protected action provisions of the Principal Act where industrial action is undertaken as part of what can be characterised as a campaign of pattern bargaining. The Bill places no such limitation on the right of employers or employer organisations to act in a similar manner.

Union driven 'pattern bargaining' has been a feature in a number of industries including building, transport and sections of manufacturing. Impetus for the speedy enactment of the present Bill in part stems from a foreshadowed industrial campaign by the Australian Metal Workers Union (AMWU). That campaign will involve a coordinated effort to re-negotiate in the order of 500 to 1000 separate enterprise agreements at the end of June 2000.⁽¹⁹⁾

Pattern bargaining has the support of some sections of industry and this may explain why no explicit bar is placed on employers engaging in pattern bargaining. From the perspective of some more powerful and many larger employers, pattern bargaining often reduces the costs of the bargaining process.⁽²⁰⁾

Commenting on proposals to limit pattern bargaining in the MOJO Bill, Professor Joe Isaac, AO, a long time practitioner and leading commentator on Australian industrial relations, noted:

Moreover, strategies analogous to pattern bargaining are not the sole preserve of the unions. As Justice Munro observed in AIRC proceedings involving the AMWU's Campaign 2000 strategy:

The Commonwealth public sector is itself no stranger to strategies closely analogous to pattern bargaining. This is despite the fact that individual Departments and Agencies, while they formally act on behalf of a single legal entity, the Commonwealth, are ostensibly free to strike their own unique bargains and agreements with their employees.

Central coordination arrangements within Australian Government establish policy parameters within which about 100 Commonwealth Departments and Agencies must develop individual enterprise bargains. The Commonwealth Department of Employment, Workplace Relations and Small Business issues these parameters and the associated guidelines. They are aimed at achieving a degree of uniformity with respect to some employment conditions across the Australian Public Service and limit the capacity of the heads of APS Agencies to bargain with absolute freedom with their employees.⁽²³⁾ The Government also issues guidelines and instructions as to the manner in which Departments and Agencies should conduct 'agency' bargaining.⁽²⁴⁾ Moreover, the amount of funding supplementation available to Departments and Agencies to negotiate wage increases is determined centrally. Principal responsibility for setting the common level of supplementation rests with the Department of Finance and Administration. In addition, the Government's so called annual 'efficiency dividend' applies to all Agencies and Departments and has the effect of levying all affected government bodies for a notional 1 percent productivity improvement each financial year. This uniform 'dividend' must be paid by agencies out of available funds and in effect reduces the pool of productivity savings that are available to individual agencies to distribute to their staff through Certified Agreements and Australian Workplace Agreements (AWAs).

There would appear to be no plans to restrict the use of pattern bargaining techniques by either public or private sector employers. However, restrictions on union action may indirectly influence the willingness of some employers to either initiate pattern bargaining or else give tacit support to union sponsored pattern bargaining campaigns.⁽²⁵⁾

The Principal Act does not define 'pattern bargaining'. Item 6 of the Bill inserts a new Division 1 into Part VIB of the Act commencing with a new section 170LGA.

The new provisions ostensibly leave it to the AIRC to determine whether a particular course of conduct amounts to pattern bargaining. The AIRC's discretion under proposed section 170LGA must be exercised by reference to the legislation.

Proposed subsection 170LGA(1) defines pattern bargaining to be bargaining which forms part of a campaign that extends beyond a single business and is contrary to the objective of encouraging agreements to be 'genuinely negotiated between parties at the workplace or enterprise level.'

Proposed subsections 170LGA(2)-(5) seek to identify the forms of conduct engaged in by employee organisations and their members that constitute pattern bargaining. The onus is on employee organisations to establish that where any common conditions are being sought in more than one enterprise, the union is not engaging in pattern bargaining.

New subsections (2) and (3) further limit the AIRC's discretion in determining whether a wages or conditions claim is contrary to the objects of the Act. These new provisions deem conduct to be contrary to the objects of the Act where any of the entitlements being pursued are common to more than one enterprise and are capable of being pursued at the single business level. New subsection (4) provides that the AIRC, must have 'particular regard to the views of the employer who is a negotiating party to the proposed agreement' when determining a dispute as regards the existence of pattern bargaining.

These provisions appear to leave very few instances where the AIRC would be able to satisfy itself that an industrial campaign involving more than one business does not amount to pattern bargaining. This is principally because the Bill as presently worded defines all forms of multi-business bargaining to amount to pattern bargaining except where each common matter in dispute is not capable of being dealt with at the single enterprise level. Some disputes, potentially those regarding mobility and the portability of employee entitlements between business, may be incapable of being resolved at the single business level. However, most other industrial matters will be able to be resolved on an enterprise by enterprise basis. Whether such an enterprise by enterprise approach is appropriate or desirable is not to be within the AIRC's jurisdiction.

Proposed subsection 170LGA(5) provides that industrial action to promote the inclusion in agreements of Full Bench decisions establishing national wages and conditions standards does not amount to pattern bargaining for the purposes of the Act.

Item 7 amends the note to subsection 170MI(1) of the Act to make it clear that the initiation of bargaining periods (periods when protected action is permitted) is subject to other provisions of the Act. These are to include the proviso in item 13 of this Bill that requires the AIRC to terminate a bargaining period where pattern bargaining is occurring contrary to the Act. Item 13 further provides that the AIRC may also (in the public interest) restrict the ability of employees and unions to initiate a new period of protected bargaining.

Item 10 inserts a new subsection 170MP(1A) into the Act. The Principal Act provides that union members who are engaged in industrial action are only protected from legal proceedings where the union genuinely tries to reach an agreement with an employer.⁽²⁶⁾ The amendment makes it plain that for the purposes of the Principal Act, a union has not 'genuinely tried to reach agreement with an employer' if it engages in pattern bargaining in pursuit of its claims against that particular employer. In such circumstances the individual unionist would also not be able to rely on the protected bargaining provisions of the Principal Act.

Item 13 inserts new section 170MWB that provides that the AIRC must, where it is satisfied that the union involved is engaged in 'pattern bargaining, on the application of an interested party, terminate a bargaining period. In other words, an employer may successfully bring to an end a period of protected industrial action as soon as it can establish that it is subject to a campaign of pattern bargaining.

Limiting protected industrial action to persons directly involved

Item 8 of the Bill amends paragraph 170ML(2)(b) of the Principal Act in relation to the making of new agreements. The amendment deals with circumstances where persons who will not to be covered by the proposed agreement take part in industrial action in support of that proposed agreement. The Explanatory Memorandum suggests that this is a technical change which will 'close a loophole in the legislation.'⁽²⁷⁾ The stated intention is that persons not to be covered by an agreement must not engage in protected action in support of that agreement. The proposal would extend existing obligations on those pursuing industrial action, principally in sections 170ML and 170MO of the Act.

From a practical perspective, however, the proposed change would appear to assume that all employees will know at the time that industrial action is being contemplated whether they will or will not be subject to the particular agreement being negotiated. There are a number of reasons why an employee or other party might think that they are to be covered by an agreement when this is not the case. During the course of negotiations the precise terms and coverage of an agreement may change. The complexity of provisions in the Act dealing with the inter-relationship of awards, certified agreements and AWAs may also cause confusion.

The proposed amendment also has the potential to cause confusion and uncertainty. For example, an employee covered by an AWA that had not reached its nominal expiry date but who has no real expectation that the AWA would be renewed might be hard pressed to know their rights were the proposed subclause to be enacted. In such a case, the employee would have to decide whether they are entitled to take industrial action to support a campaign for a new certified agreement setting a new 'floor' under conditions contained in their unexpired AWA.

Item 9 replaces section 170MM of the Principal Act. New section 170MM removes legal protection from those engaged in industrial action where that industrial action is also engaged in by persons who are not at law entitled to do so. Again this is an extension of existing obligations under the Principal Act.

On its face, the proposed amendment makes no explicit allowance for cases where a third party, who is not entitled to take protected industrial action, innocently takes part in an industrial campaign.⁽²⁸⁾ A concern would be that innocent or mistaken third party involvement may have the effect of rendering the otherwise lawful actions of a union and its members unlawful. Likewise an industrial campaign organised (in whole or in part) by persons, other than those who are lawfully entitled to benefit from it, would lose its protected status [proposed subsection 170MM(2)].

The counter to this argument is that the intended provisions principally catch conduct engaged in 'in concert'. It could be argued that the expression 'in concert' narrows the scope of the new provisions by confining them to intended (joint) conduct by those seeking to rely on the protected bargaining provisions. The use of 'in concert' certainly raises an evidentiary barrier to the bringing of an action against an allegation that persons had engaged in unprotected industrial action. It is less clear, however, whether the 'in concert' argument would fully immunise the conduct of the principal disputants from unintended legal and other consequences of mistaken third party involvement in industrial action of the type regulated by proposed section 170MM and related provisions.

This proposal, like that contained in item 8, is also open to the criticism that it does not take sufficient note of workplace realities, particularly the uncertainties that naturally arise from the fluid nature of bargaining arrangements under multiple forms of agreement-making available present federal and State laws. Together items 8 and 9 may introduce an added layer of complexity and legal technicality into the laws regulating access to protected action. Such a level of uncertainty could operate to discourage employees from exercising their full range of rights under the law.

Court to determine if action is protected action

New section 170MTA, inserted by item 11, would explicitly confer on the Federal Court of Australia jurisdiction to determine whether industrial action is protected action for the purposes of the Principal Act.

Less straightforward is the seemingly innocuous change made by proposed subsection 170MTA(2). This subclause would prohibit the Federal Court from issuing anti-suit injunctions in respect of proceedings seeking a stop to industrial action. This provision appears related a to series of Federal Court decisions that may restrict employers' ability to commence common law actions against workers who had taken protected action under the Principal Act.

As discussed above, the Principal Act enables employers, unions and employees to engage in industrial action subject to certain conditions and in limited circumstances. Section 170MT of the Principal Act confers immunity from legal proceedings, including a limited respite from potential proceedings at common law, for industrial action taken during a (protected) bargaining period.

Section 166A of the Principal Act requires that the AIRC, on the application of an interested person, and after recourse to due process, issue a certificate allowing the applicant to commence common law proceedings against those undertaking industrial action.

In four recent cases, the Federal Court has interpreted the relevant provisions of the Principal Act to limit employers' scope for taking common law action after the issue of a section 166A certificate. A common thread in the Court decisions has been that the threat of such legal action by an employer may itself constitute unlawful coercion where it is used not to obtain compensation, but as a weapon in an incomplete bargaining process.⁽²⁹⁾

Identical provisions formed part of Schedule 11 to the MOJO Bill (Item 35).

Power to order cooling-off periods

Item 12 inserts new section 170MWA which empowers the AIRC to suspend a 'bargaining period' thereby temporarily removing the capacity of the negotiating parties to engage in protected action. Such an order may not be made until the affected parties have had a chance to put their views on a cooling-off period to the AIRC.

Endnotes

1. See Schedule 11 of the MOJO Bill.
2. http://www.aph.gov.au/library/pubs/bd/1999-2000/2000BD094.htm
3. Refer: http://www.aph.gov.au/senate/committee/eet_ctte/index.htm
4. At the time of writing, copies of the Submissions to the Senate Committee and transcripts of proceedings are not yet printed.
5. Industrial Relations Reform Act 1993 and Workplace Relations and Other Legislation Amendment Act 1996.
6. Refer section 3(a) of the Workplace Relations Act 1996.
7. Although it should be recognised that workplace level bargaining had always been a central feature of the Australian wages system through over-award payments and common law contracts.
8. CCH/ACIRRT, Agreements Database and Monitor Report, Number 24, March 2000, p 3. The report cite results presented to the Joint Governments' Submission to the 2000 Safety Net Adjustment case in the AIRC.
9. Whilst such figures underline broad trends in bargaining arrangements, direct comparisons can be difficult or misleading as the ongoing influence of the awards system in terms of providing the footings on which collective and individual bargains are built is still strong.
10. Refer items 8 and 9 of the Schedule to the Bill.
11. The International Labour Organisation has made a series of requests and 'observations' in recent years regarding what is alleged to be the unsatisfactory state of Australian laws protecting the capacity of workers to engage in collective bargaining free of legal sanctions.
12. http://www.dewrsb.gov.au/ministers/reith/mindiscu/mindisc1.pdf The link is to a recent but undated Discussion Paper prepared by the Department of Employment, Workplace Relations and Small Business entitled: Workplace Agreements: The Benefits for Jobs, Wages and Economic Security.
13. Minister Reith has in fact claimed that all the proposed changes give more power to the Industrial Relations Commission. Refer Lateline, 'Working it Out', 22 May 2000. http://abc.net.au/lateline/archives/s129821.htm
14. Breen Creighton and Andrew Stewart, Labour Law: an introduction, 2000, p. 151.
15. See Schedule 11, item 7 of the MOJO Bill.
16. Breen Creighton and Andrew Stewart, op cit, p.389.
17. Department of Industrial Relations, Enterprise Bargaining in Australia: Annual Report 1995, p.209.
18. Until 1993 the principal federal law recognised explicitly the goal of achieving uniformity in hours and conditions generally. Refer section 94 of the Industrial Relations Act 1988 (repealed 1993).
19. Refer Lateline, op cit, 22 May 2000.
20. Refer comments from the Master Builders Association National Industrial Director reported in the CCH Industrial News of May 1999. See also Minister Reith's remarks on Lateline, 22 May 2000.
21. Submissions to Senate Employment, Workplace Relations, Small Business and Education Legislation Committee, Inquiry into Workplace Relations Legislation Amendment (More Jobs, Better Pay) Bill 1999, volume 12, Submission 377, pp. 2692-93.
22. Australian Industrial Relations Commission, C No.24275 of 1999, Sydney 25 November 1999.
23. http://www.dewrsb.gov.au/workplaceRelations/publicSector/default.asp
24. http://www.aph.gov.au/senate/committee/submissions/fapa_aps/02%20CPSU%20Attach.pdf
25. Such campaigns have the effect of ensuring that competitors are not able to undercut each other on account of differences in wage rates. Such an outcome promotes a degree of certainty which benefits the majority of employees and employers in the sector covered by the multi-employer bargain.
26. Subsection 170MP(1).
27. At page 5.
28. For example, where a non-unionist participates in industrial action supporting a union-only (section 170LJ) certified agreement.
29. CCH, Australian Industrial Law, April 2000, pp. 7-9 and 15. Australian Workers Union & Others v Yallourn Energy Pty Ltd [2000] FCA 65. CFMEU v Multiplex Constructions [2000] FCA 101; CFMEU v Master Builders' Association of Victoria (No.1) [2000] FCA 168; CFMEU v Mirvac Constructions Pty Ltd [2000] FCA 341.

Contact Officer and Copyright Details

Bob Bennett and Steve O'Neill
30 May 2000
Bills Digest Service
Information and Research Services

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