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Award Simplification: Progress Report
Steve O'Neill
Economics, Commerce and Industrial Relations Group
10 November 1997
Contents
Major Issues Summary
Introduction
What are awards?
Industrial matters: managerial autonomy challenged
Award simplification: the Hawke-Keating Governments'
approach
The Coalition Government's approach
Transitional Provisions of the WROLA Act
Who is covered by awards?
Award simplification: the test case
Related award simplification developments
A Conclusion?
Endnotes
Major
Issues Summary
The Workplace Relations Act 1996 (the WR Act)
stipulates in section 89A that awards of the Australian Industrial Relations
Commission (AIRC) can only deal with or regulate certain issues within
the employment relationship. The legislation introducing this Act, the
Workplace Relations and Other Legislation Amendment Act (WROLA
Act) prescribes a timeframe within which current awards are to be simplified,
so as to conform with allowable award matters (i.e. by July 1998). At
the end of this time, award provisions falling outside the allowable matters
will be rendered unenforceable. Transitional provisions are provided in
Part 2 of Schedule 5 of the WROLA Act for an award review process to ensure
that awards comply with section 89A.
The current award simplification process will counter
a trend towards broadening the provisions which could be included in awards.
Provisions concerning occupational health and safety, technological change
and consultation over major organisational change were included in awards
over the 1980s as the content of these provisions was interpreted to fall
within the definition of industrial matter.
The awards nominated for review before the Australian
Industrial Relations Commission in a test case are: the Graphic Arts-General-Interim
Award 1995; the Hospitality Industry-Accommodation, Hotels, Resorts and
Gaming Award 1995, the SDA (Shop Distributive and Allied Employees' Association)
(Victoria Shops) Interim Award 1994, the SDA (Food and Liquor) Interim
Award 1994, the SDA (Booksellers and Stationers) Interim Award 1994 and
the Nurses (ANF-WA Private Hospitals and Nursing Homes) Consolidated Award
1991.
There is a certain irony to the award simplification
program as awards no longer exercise the direct influence over wages and
employment conditions which they once did. Certified Agreements (both
union and non-union), Enterprise Flexibility Agreements, Australian Workplace
Agreements as well as facilitative provisions within awards can override
award provisions. It also appears that many employers have agreed to include
provisions which may be excluded from awards into enterprise agreements.
There are a number of provisions which employer organisations
want removed from awards. The Australian Chamber of Commerce and Industry
(the principal employers' organisation) has argued that 53 conditions
from the Graphic Arts Award be removed; these include: minimum and maximum
hours for part-time workers; union right of entry and preference clauses;
reduction in the rate of penalty rates on Sundays and Public Holidays
(the reduction in penalty rates is being argued under section 143 of the
WR Act (that award provisions should not hamper productivity); training;
stop work meetings; notification to the CES during retrenchments and provision
of after hours transport.
The period to conduct the review has been narrowed (from
three years under section 150A of the previous Industrial Relations
Act to 18 months). In addition, the WR Act's requirement of narrowing
award provisions to the prescribed allowable award matters (while being
vague on the treatment of non-allowable matters) has possibly heightened
difficulties inherent to the task.
It is anticipated that a decision on the test case will
be given on 17 November 1997. Much is at stake, particularly after the
employers and non-Labor Governments proposed a reduction of penalty rates
as part of award simplification. Should a decision supporting such submissions
be determined, it is likely that the unions will consider a challenge,
presumably in the Federal Court. More likely might be the provision of
guidelines which might then be applied to awards on a case by case basis.
Introduction
The ongoing role of industrial awards is much in contention
currently. Awards have been criticised as being overly prescriptive in
their role of governing employment relationships. As the Federal Minister
for Workplace Relations and Small Business said recently:
Over 90 years, a system of highly prescriptive arrangements
have [sic] been developed which dictate to business the terms
and conditions under which people are employed, regardless of the
actual circumstances facing those businesses.(1)
Therefore simplifying awards is intended to make employment
less burdensome for employers and therefore alleviate unemployment. The
irony of the concern with prescriptive awards and recent award simplification
programs is that, as will be explained, awards no longer exercise the
direct influence over wages and employment conditions which they once
did. Certified Agreements (both union and non-union), Enterprise Flexibility
Agreements, Australian Workplace Agreements as well as facilitative provisions
within awards can override award provisions.
This paper provides an outline of the processes which
lead to the making of federal awards. It reviews processes involved in
formulating and serving a log of claims and the role of ambit in order
to attract federal jurisdiction. It describes interpretations of 'industrial
matters' as prescribed in earlier federal industrial legislation processes.
It then discusses the review of awards initially prescribed in the Industrial
Relations Act 1988, and the simplification of award provisions as
required by the Coalition Government in the Workplace Relations Act
1996 (the WR Act). The paper reviews recent initiatives by employers
to reduce the provisions of awards to allowable matters, and the response
by unions to this process.
The paper notes that a process of simplifying award provisions
has essentially received bi-partisan political support. An ongoing review
of awards, in some form, would therefore appear unavoidable as well as
being prime facie constructive in its intent-it is difficult to avoid
the conclusion that some awards, particularly industry-wide awards are
complex, provisions tend to be more readily added to awards rather than
removed, and provisions may reflect the times (and work processes) for
which they were designed.
However requiring awards to conform with 'allowable matters',
as the most recent simplification process requires, would appear to add
degrees of complexity and potential resistance without an enormous amount
of goodwill shown by all sides. This is why it is helpful to describe
the procedures which give rise to awards. An additional constraint of
the current review is a narrow timeframe. There remains about nine months
to determine award simplification guidelines, and then apply these to
almost 3000 active awards before certain provisions may become unenforceable.
In addition, transitional provisions express an intent that the parties
should alter the award by agreement and do not preclude the option of
including provisions found to be non-allowable in enterprise agreements.
What are awards?
Awards are legal instruments which, when active and operating,
underpin an individual's contract of employment with an employer by expressing
a range of entitlements and requirements which must be met, mainly, by
the employer. The pertinent award provisions readily recognised by most
employees are pay, hours of work and leave entitlements. Awards contain
many other provisions. This paper deals with federal awards, although
similar instruments have featured in many State industrial jurisdictions,
notably New South Wales, Queensland, South Australia and Western Australia.
The Australian Capital Territory and the Northern Territory operate within
the federal industrial jurisdiction.
Federal awards are derived from collective bargaining
deliberations, and are determined through a formal process of conciliation
(forming 'consent' awards) and, if this fails, through arbitration between
employers, unions and Australian Industrial Relations Commission (AIRC).
So, awards are determinations made by the AIRC and are made, in the federal
system, to settle interstate industrial disputes in accordance
with the conciliation and arbitration power of the Commonwealth under
section 51(35) of the Commonwealth Constitution. Note however that there
are arguments suggesting that broader authority for the AIRC might be
available in the prevention of industrial disputes under the same
constitutional power.(2) Federal awards arise from a unique procedure
involving logs of claims served by registered organisations of employees
(i.e. trade unions registered under the WR Act) on organisations of employers
also usually registered under the Act (note that employers need not be
registered to be served with a log of claims).
Most often, the union will serve the log and the employer
may either refuse to accede to the claim by responding to the effect that
the employer will continue to abide the terms and conditions of the relevant
award, or respond with a counter log of claims. Such action forms a 'dispute'
and the limits of the claims contained in the log will form the ambit
of the claim. The next important step is for the AIRC to make a finding
of a dispute.(3) The size of the components of an ambit (e.g. $3000 per
week for 25 hour week) often alarms employers, and may cause problems
for unions as well by falsely building up expectations of members.
Over time, the ambit of the components of the original
log may be exhausted through variations to the award.(4) Increases in
award pay rates over ten or more years, for example, may reach those demanded
in the original log. Thus at different times, the dispute creating process
which created a particular award will need to be repeated, just to retain
the award. It is the dispute procedure which attracts the jurisdiction
of the AIRC.(5) It is also important that certain requirements expressed
in the Act and its regulations are complied with:
- that each component of the log be regarded as a legitimate industrial
matter(6)
- that the claim is genuine and is to be negotiated in accordance with
the rules of the organisation(7)
- that the rules of the organisation contain acceptable procedures for
notifying industrial disputes(8)
- that the employee organisation is eligible to cover the classifications
(or the callings of an industry as the case may be) itemised in the
log.(9)
Some of these matters may be contested by award parties
in hearings before the AIRC. The Australian Industrial Registry (AIR)
monitors organisations' rules compliance with the Act's provisions and
regulations. Assessments of an organisation's compliance with its own
rules vis-a-vis the requirements of the Act may ultimately determine
whether the organisation is allowed to continue its registration. Matters
concerning disputes over compliance with rules can be determined by the
Federal Court.
In short, the procedures underpinning the creation of
federal awards reflect mainly the constitutional requirements concerning
'interstate industrial disputes', and to a lesser degree the organisational
procedures for initiating and solving industrial disputes. They also reflect
an era when resort to prolonged industrial conflict to achieve (or resist)
claims was not legally sanctioned, nor condoned. The compulsory referral
of disputes to conciliation and arbitration processes was the central
attraction of the Australian (and pre-1991 New Zealand) approaches to
dispute resolution because, it was thought, the harmful effects of industrial
disputes, certainly prolonged disputes, could be mitigated if not averted.
The requirement that the contents of awards be confined
to industrial matters has constrained the issues that awards have been
able to address, although the 1980s witnessed a widening of these issues.
In section 4 of the Conciliation and Arbitration Act 1904, industrial
matters were defined (but not necessarily limited) to the following areas
of employment:
- all matters or things affecting or pertaining to work done or to be
done
- the privileges, rights and duties of employers and employees
- the wages, allowances and remuneration of persons employed or to be
employed
- the piece-work, contract or other reward paid or to be paid in respect
of employment
- the question whether piece-work or contract work or any other system
of payment by results shall be allowed, forbidden or exclusively prescribed
- the question whether monetary allowances shall be made by employers
in respect of any time when an employee is not actually working
- the hours of employment, sex, age, qualifications and status of employees
- the mode, terms and conditions of employment
- the employment of children or young persons, or of any persons or
class of persons
- the preferential employment or the non-employment of any particular
person or class of persons being or not being members of an organisation
- the right to dismiss or to refuse to employ, or the duty to reinstate
in employment, a particular person or class of persons
- any custom or usage in an industry, whether general or in a particular
locality
- any shop, factory or industry dispute, including any matter which
may be a contributory cause of such a dispute
- any question arising between two or more organisations or within an
organisation as to the rights, status or functions of the members of
those organisations or of that organisation or otherwise, in relation
to the employment of those members
- any claim that the same wage shall be paid to persons of either sex
performing the same work or producing the same return or profit or value
to the employer
- any question as to the demarcation of functions of employees or classes
of employees, whether as between employers and employees or between
members of different organisations, and
- the provision of first aid equipment, medical attendance, ambulance
facilities, rest rooms, sanitary and washing facilities, canteens, cafeteria,
dining rooms and other amenities for employees.
These are a reasonably broad set of parameters for their
time; nevertheless, they do not broach management practices, nor work
organisation issues, nor other matters concerning management-staff consultation.
The effect of so limiting industrial matters to those specified was to,
inter alia, protect management's discretion to operate an enterprise
as it saw fit.
Industrial matters: managerial
autonomy challenged
However, the view that industrial matters should be so
confined came under increasing challenge in the 1960s. Some notable disputes
include the One Man Bus cases(10) concerning the reduction of numbers
in bus crews operating in the Melbourne public transport system. Later
in the 1970s in the Federated Clerks Case(11) concerned the union
receiving advanced warning on, and being consulted over technological
change. In the Social Welfare Workers Case(12) the High Court moved
away from the notion that 'industrial disputes' be confined to disputes
in productive industry and organised business carried on for the purpose
of making profits. Later, the High Court recognised in Cram's case(13)
the right of unions to be consulted over management issues such as
the determination, or change to manning levels in the operation of an
enterprise. In a unanimous decision the Court held:
...Many management decisions, once viewed as the
sole prerogative of management, are now seen as directly affecting
the relationship of employer and employee and constituting an 'industrial
matter'.
A dispute about the level of manning is a good example.
It has a direct impact on the work to be done by employees: it affects
the volume of work to be performed by each employee and the conditions
in which he performs his work. So also with the mode of recruitment
of the workforce. The competence and reliability of the workforce
has a direct impact on the conditions of work, notably as they relate
to occupational health and observance of safety standards.(14)
The long standing Conciliation and Arbitration Act's
definition of industrial matters remained until the Industrial Relations
Act 1988 replaced the former Act and deleted the definition of industrial
matter. The new legislation incorporated a key recommendation of
the Hancock Committee's review of Australia's industrial relations system
which sought for the federal industrial tribunal the:
widest possible jurisdiction within the constitutional
power of section 51(35) to hear and determine industrial disputes
involving employers and employees and/or their representative organisations.(15)
Recently, a full bench of the AIRC affirmed its authority
to arbitrate on managerial issues in relation to the Queensland coal industry
in the statement:
Undoubtedly, in a proper case (i.e. where a bargaining
period and protected action are not involved) the Commission has a
power to arbitrate about the issue of a reduction in the workforce
and the terms upon which that may occur and would be able to make
an award. So too could the parties reach an agreement about a reduction
in hands that did not operate in a way contrary to any provisions
of the Act.(16)
In summary, by the end of the 1980s, there had been a
discernible trend to broaden the matters which could be addressed in awards.
Provisions concerning occupational health and safety, technological change
and consultation over major organisational change were included in awards
as the content of these provisions was interpreted to fall within the
definition of industrial matter.
Nevertheless, widening the scope of awards did not ensure
that the documents were necessarily 'modern'-they have often included
clauses and classifications describing operational structures which industry
may have long by-passed.
Award simplification:
the Hawke-Keating Governments' approach
Guidelines or principles for modernising federal awards
were adopted by the Australian Conciliation and Arbitration Commission
in its national wage case decision of August 1988.(17) The cause for restructuring
awards was at that time also championed by the then Treasurer, Mr Keating
and a strategy to modernise awards was canvassed in the 1988-89 Budget
Papers. There it was contended:
Most awards have become outdated, their classification
structures and conditions no longer appropriate to modern economic,
technological and industrial circumstances...They are in need of substantial
review and restructuring...
At its simplest level, award restructuring can merely
involve overhauling an existing award by deleting irrelevant job categories
and reducing their number by grouping together job classifications...award
restructuring, however, goes beyond the revision of job classification
structures (and) can include a range of issues, for example, work
organisation and working time arrangements and payment systems, depending
on the particular award and the circumstances of the industry...
Award restructuring is not a new phenomenon. Limited
changes have occurred over the past few years using the mechanisms
available under the wage fixation principles applying at the time,
such as Work Value Change.(18)
Section 151 of the Industrial Relations Act 1988,
accordingly, introduced a requirement that the Australian Industrial
Registrar review federal awards over five years, to check that they were
still active and had not been dispensed with or been superseded by other
instruments or arrangements. For the 2973 consolidated awards then maintained,
the Registry reported in the first section 151 review (1993):
Pursuant to section 151 of the Act, the first review
of the currency of awards of the AIRC commenced in May 1993. At this
stage approximately 390 awards have been identified as not being varied
for at least five years. These awards will be referred to the parties
for clarification of their status. The review should be completed
early in the new financial year.(19)
It was later reported by the Registrar that 196 awards
were set aside arising from the section 151 process and the number of
consolidated awards numbered 2733.(20) Section 151 essentially remains
the same provision in the WR Act, and the latest annual report from the
AIR/AIRC indicates that since the initial section 151 review, 1272 awards
have been identified for review with over 50 per cent of these being set
aside.(21)
Proposals to take the award reform process further were
canvassed both in amendments to the Industrial Relations Act and also
announced in Working Nation.
The Industrial Relations Reform Act 1993 incorporated
an additional award review requirement in a new section 150A. This provision
required a three yearly review of federal awards to see that award terms
were up to date and relevant; that terms did not discriminate against
employees on a number of criteria including race, colour, religion and
others; that provisions were not otherwise obsolete; that the award was
expressed in plain English; that provisions were structured in a reasonably
understandable way and that matters were not prescribed in unnecessary
detail.
However, the Commonwealth's submission to the AIRC's
Safety Net Adjustment and Review in 1994 suggested that the s.150A award
review could be used to assist the transition to enterprise bargaining:
...s. 150A goes beyond a 'housekeeping' exercise
for awards and represents an important factor in facilitating the
effective transition of the system as a whole to direct bargaining
at the enterprise and workplace level. Encouraging bargaining over
a wide range of issues will help ensure that arrangements are appropriately
tailored to the enterprise or workplace so that productivity gains
and associated benefits are maximised ...
The Commonwealth considers that the s. 150A process
should not result in a gutting of conditions from awards. Rather s.
150A is an important factor in developing clearer and more relevant
protections under awards which will underpin and facilitate the transition
over time to an increasing number of matters being addressed by direct
bargaining.(22)
The AIRC established a pilot review of selected awards
and the formation of central working parties to conduct the review. In
its next report of the progress of these structures, the AIRC identified
that key issues to be pursued under section 150A would be the development
of an anti discrimination model clause, a review of the enterprise flexibility
model clause, facilitative and majority clauses in awards and agreements
and updating awards to reflect test case standards.(23) The AIRC's emphasis
on enterprise flexibility, facilitative and majority clauses recognised
the need for quick changes to enterprise procedures (e.g. start and finish
times) with simple agreement of employees, or, where a multiplicity of
provisions from different awards addressed the one issue in the enterprise,
the clause which covered the majority employed would be taken to be the
one used. The AIRC later produced a resource guide for industrial parties
on award simplification.(24) Agreement was reached in the Australian Public
Service to rationalise some 70 awards and replace these with one award.(25)
Working Nation outlined the Keating Government's
urgency to modernise awards and provided more detail on the Government's
objectives:
The Government sees the process of further reforming
awards and removing detailed prescription as vital. The process of
overhauling the classification structures of awards, allowing for
multiskilling, flexible job design, and clearer career paths has been
a major initiative...In addition there is a need to simplify awards
to make their operation more flexible, while retaining their safety
net function. An important role of the AIRC is to review substantially
all federal awards within a three year time frame and to remedy any
deficiencies, such as obsolete and unnecessarily detailed provisions.(26)
The Coalition Government's
approach
The content of federal awards was highlighted in the
Coalition's industrial relations election platform statement Better
Pay for Better Work in February 1996.(27) There it was put:
We will require the AIRC to expedite and make more
effective its existing review of awards and to remedy any deficiencies
such as obsolete and unnecessary detailed provisions. Over time, existing
paid rates awards should become minimum rates awards after consultation
between the relevant parties. The process of award simplification
will not be a device to reduce wages.(28)
In the event, a potentially far reaching award review
exercise has been prescribed in the Workplace Relations and Other Legislation
Amendment Act 1996 (WROLA, which, in respect of most of its
21 schedules, became operative in January 1997).
The WROLA Act introduced a requirement that all federal
awards be reviewed within 18 months (the 'interim period') of Schedule
5 of the Bill coming into effect (1 January 1997), i.e. by July 1998.
Section 89A prescribes the issues which award provisions could address,
these are:
- classifications of employees and skill-based career paths
- ordinary hours of work and the times within which they are performed,
rest breaks, notice periods and variations to working hours
- rates of pay generally (such as hourly rates and annual salaries)
rates of pay for juniors, trainees or apprentices, and rates of pay
for employees under the supported wage system
- piece rates, tallies, bonuses
- annual leave and leave loading
- long service leave
- personal/carer's leave including sick leave, family leave, bereavement
leave, compassionate leave, cultural leave and other like forms of leave
- parental leave
- public holidays
- allowances
- loadings for working overtime, or casual or shift work
- penalty rates
- redundancy pay
- notice of termination
- stand-down provisions
- dispute settling procedures
- jury service
- type of employment (full-time, part-time, casual, regular part-time
work and shift work)
- superannuation, and
- pay and conditions for outworkers but only to extent necessary to
ensure that their overall pay and conditions of employment are fair
in comparison with pay and conditions of employment specified in a relevant
award or awards for employees who perform the same kind of work at an
employer's business or commercial premises.
However, as has been noted, award provisions now incorporate
issues other than those specified above, but the simplification (or 'award
stripping') process requires non specified provisions to be reviewed.
Also, section 89A provides that the AIRC can only make minimum rates award
(s.89A(3)). There are limits put upon the power of the AIRC to make award
provisions concerning part-time work (section 89A(4), (5)). Section 89A(6)
allows for award provisions incidental to the 20 allowable matters where
it is necessary for the effective operation of award. Under section 89A(7)
an exceptional matters order can be made re matters not falling within
the 20 allowable matters (see also section 120A). Under section 106(1)
a full bench of the AIRC may establish principles concerning the making
or varying awards regarding each of 20 allowable award matters.
Transitional Provisions
of the WROLA Act
Transitional provisions are provided at Part 2 of Schedule
5 of the WROLA Act to conduct an award review process to ensure that awards
comply with section 89A. These transitional provisions are detailed here
because they form the basis of much argument in current AIRC proceedings
to simplify awards.
Item 49(1) of Part 2 of Schedule 5 of the WROLA Act allows
one or more of the parties to an award to apply for a variation of the
award during the interim period. Importantly, under item 49(4), the AIRC
may only deal with the application by arbitration if it is satisfied that
the applicant or applicants have made reasonable attempts to reach agreement
with the other parties to the award about how the award should be varied
and the treatment of matters that are not allowable award matters
(emphasis added). Item 49(5) requires the AIRC to convert rates awards
to minimum rates awards. But also under item 49(7), the AIRC must, if
it considers it appropriate, review the award to determine whether or
not it meets the following criteria:
(a) it does not include matters of detail or process
that are more appropriately dealt with by agreement at the workplace
or enterprise level
(b) it does not prescribe work practices or procedures
that restrict or hinder the efficient performance of work (in this context
note also section 143 of the WR Act which requires award provisions
to not prescribe restrictive work practices, nor contain provisions
which hinder productivity)
(c) it does not contain provisions that have the
effect of restricting or hindering productivity, having regard to fairness
to employees.
Under item 49(8) the AIRC must also review the award
to determine whether or not it meets the following criteria:
(a) where appropriate, it contains facilitative
provisions that allow agreement at the workplace or enterprise level,
between employers and employees (including individual employees), on
how the award provisions are to apply
(b) where appropriate, it contains provisions enabling
the employment of regular part-time employees
(c) it is expressed in plain English and is easy
to understand in both structure and content
(d) it does not contain provisions that are obsolete
or that need updating
(e) where appropriate, it provides support to training
arrangements through appropriate trainee wages and a supported wage
system for people with disabilities, and
(f) it does not contain provisions that discriminate
against an employee because of, or for reasons including, race, colour,
sex, sexual preference, age, physical or mental disability, marital
status, family responsibilities, pregnancy, religion, political opinion,
national extraction or social origin.
At the time of the 1996-97 Budget, the Government argued
that award reforms along these lines would assist negotiations at the
workplace level:
(Award simplification) should help to reduce prescription
in workplace practices. This will be assisted by the proposed insertion
of provisions which will allow for the more flexible application of
award provisions by agreement at individual workplaces...As a result
employers and employees should, over time, more easily develop work
practices which best suit their needs.(29)
The most recent award simplification process has been
substantially prescribed under the WR Act, but the period to conduct the
review has been narrowed (from three years under section 150A of the previous
Act to 18 months). In addition, the Act's requirement of narrowing award
provisions to the prescribed allowable award matters (while being vague
on the treatment of non-allowable matters) has possibly heightened difficulties
inherent to the task..
Who is covered by awards?
With the complicated task of simplifying federal awards
legislatively mandated, it is pertinent to ascertain the extent of award
coverage. The Australian Bureau of Statistics (ABS) released data on the
coverage of workers by awards in 1990, the last time it conducted such
a survey.(30) The ABS distinguished coverage between under federal and
under State awards and reported that the overall incidence of award coverage
had slipped over the previous two years falling from 85 per cent of the
workforce covered, to 80 per cent. Of award covered employees, almost
40 per cent were then under federal awards, leaving the majority of award
workers under the combined State jurisdictions.
The study is now very dated and there is evidence of
a move of award workers from the State to the federal jurisdiction since
the 1990 study.(31) However, the Australian Centre for Industrial Relations
Research and Teaching (ACIRRT) which reviews most of the key federal and
State workplace agreements (including individual contracts ) suggests
that given the move to enterprise bargaining in all jurisdictions, it
is more useful to focus on the split of coverage between enterprise agreements,
individual contracts and award only coverage as displayed in the table
below .(32)
Coverage of employees between awards, agreements and individual contracts
|
Form of regulation
|
Percentage of employees
|
|
Awards only
|
35
|
|
Awards and enterprise agreements
|
30
|
|
Registered enterprise agreements
|
5
|
|
Individual contracts
|
30
|
Source: ACIRRT, ADAM Report No.11, December 1996
Information concerning the number of employees covered
by an enterprise agreement provided at the time of certification provides
the basis for ACIRRT's estimates. This table shows that regulation of
workers by awards only has been surpassed by the combined advance of coverage
of workers under individual contracts and enterprise agreements.
The move from dependence on awards to agreements was
also canvassed by the AIRC's Vice President Ross in the recent 'Living
Wage' case.(33) His decision relied on data compiled in the Federal Government's
Workplace Agreements Database (WAD). This showed that 3989 certified agreements
were formalised in 1995-96 as compared with 2563 agreements in the 1994-95.
An additional 1061 agreements were formalised in the September quarter
of 1996. The WAD also showed that about 1.74 million employees were covered
by federal agreements in September 1996, having risen from 1.26
million employees so covered at the end of 1994. Vice President Ross concluded
from this evidence that the increase in numbers of agreements and those
covered by them:
supports the conclusion that there has been a decline
in the number of employees who depend on the award safety net.(34)
The reduced role of awards was also confirmed in the
1995 Australian Workplace Industrial Relations Survey (AWIRS) undertaken
by the (then) Department of Industrial Relations. The results of this
survey have recently been published.(35) It found that workplaces with
award coverage declined from 98 per cent to 96 per cent over the five
years since the last survey; and in 1995, almost 40 per cent of workplaces
(not individuals) had agreements which partially or wholly overrode the
award.(36) In summary, there is strong evidence suggesting that awards
(of all jurisdictions) do not exercise the influence they once did. This
is because of the growth of contracts and agreements.
Award simplification:
the test case
Applications to expedite the removal of non-allowable
award matters were made by affiliates of the peak employer body, the Australian
Chamber of Commerce and Industry (ACCI) to the AIRC in February 1997-not
long after the relevant WROLA schedule came into force. The ACCI sought
that a full bench be established to ensure that awards fell within section
89A (and section 143) specifications by selecting certain key awards with
which the AIRC would develop simplification principles.(37)
The awards nominated in the review applications are the:
- Graphic Arts-General-Interim Award 1995
- the Hospitality Industry-Accommodation, Hotels, Resorts and Gaming
Award 1995
- the SDA (Shop Distributive and Allied Employees' Association) (Victoria
Shops) Interim Award 1994
- the SDA (Food and Liquor) Interim Award 1994
- the SDA (Booksellers and Stationers) Interim Award 1994 and
- the Nurses (ANF-WA Private Hospitals and Nursing Homes) Consolidated
Award 1991.(38)
One important employers' organisation, the Metal Trades
Industry Association (MTIA) initially sought a separate path from the
ACCI and reported to the AIRC that it would propose a number of award
simplification options for its members to consider. The union counterpart
to the MTIA, the Metal Trades Federation of Unions resolved to exhaust
conciliation processes before conceding to arbitration. The resulting
MTIA agenda concerns the adoption of facilitative clauses, whereby an
individual in a workplace can agree with an employer about the application
of an award clause and the spread of ordinary hours (to reduce the application
of penalty rates).(39) This more cooperative approach appears to be producing
good results, with agreement being reached to rewrite the very complex
Metal Industry Award, with all but a few issues requiring further deliberation.(40)
The ACCI was granted a full bench reference for its section
89A applications in April and a three point direction was issued by the
AIRC which, inter alia, indicated that members of the AIRC would
be made available to conduct conferences for each of the six awards if
requested.(41) ACCI members have submitted draft replacement awards which,
they believe, embody the award simplification principles.
Unions have a different view: in the application to simplify
the Graphic Arts Award, the relevant union (the Australian Manufacturing
Workers Union or AMWU) sought to ascertain precisely which provision of
the Act that the ACCI was relying on to remove each of the 18 award provisions
it targeted, and what the grounds for removal were.(42)
The AIRC full bench hearing the ACCI test case applications
issued a statement on 27 June stating that it would begin arbitrating
on the test case award simplification process if it was satisfied that
by a 23 July report back, conciliation had been exhausted. As well, the
then AIRC president (Justice Deirdre O'Connor) required that all heads
of panels commence a review of all federal awards to be run in conjunction
with the test case applications. The AIRC indicated that it would continue
to assist with conciliation proceedings, but if in later report-backs
it was satisfied that conciliation had been exhausted, it would proceed
to program for arbitration of the outstanding issues. The AIRC also indicated
that it was not satisfied that conciliation had been exhausted.(43)
Concerning the application to simplify the Hospitality
award, the relevant union, the Australian Liquor, Hospitality and Miscellaneous
Workers Union (ALHMWU) has sought to retain right of entry award provisions
for its officials by arguing that right of entry is incidental to avoiding
industrial disputes (i.e. falls within section 89A(6)) and will also try
to maintain certainty of hours of work for part-timers by specifying pay
rates. While in respect of another of the awards listed, the Australian
Nurses Federation (ANF) drafted a revised WA private hospitals and nursing
homes award and considered it as coming entirely within allowable matters
thereby rejecting employer assertions that, for example, ten provisions
concerning rostered days off needed to be excised from the earlier document.(44)
In the hearing of 23 July, the ACTU responded to ACCI
and Federal Government submissions for the AIRC to arbitrate, by arguing
that employers had refused to hold meaningful negotiations and the AIRC
could not arbitrate without first actively assisting the parties to reach
agreement as required by item 49(4) of the WROLA Act. The ACTU argued
that any arbitration should only proceed on an award by award basis having
regard to the circumstance of each award-the situation has been summarised
thus:
Employers and unions hold starkly contrasting views
on which award provisions fall within the 20 allowable matters.(45)
The parties were to report on progress by 26 August.
On 17 August 1997 Geoffrey Guidice was appointed President of the Australian
Industrial Relations Commission. He is to head the full bench which will
arbitrate on award simplification in the hospitality industry award.
On 1 September, the full bench stated that it proposed
to deal with the Hospitality Award by arbitration, but it was not satisfied
that conciliation had been exhausted with respect to the Graphic Arts
and Nurses Awards.(46)
At further hearings on 15-16 October the ACCI argued
that 53 conditions from the Graphic Arts Award be removed. These include:
- minimum and maximum hours for part-time workers
- union right of entry and preference clauses
- reduction in the rate of penalty rates on Sundays and Public Holidays
(the reduction in penalty rates is being argued under section 143: award
provisions should not hamper productivity)
- training
- stop work meetings
- notification to the CES during retrenchments and
- provision of after hours transport.(47)
The Commonwealth's submission supports the ACCI. Further
hearings are planned for early November and a final hearing date of November
17. A decision on this test case is expected then or soon after.
Related award simplification
developments
In a number of award simplification rulings, developments
have been taking place away from the test case review. For example, a
full bench did not accept that section 89A prevented the AIRC granting
the Finance Sector Union's application for accident pay to be inserted
into the Bank Officers award. It also accepted that a claim for medical
expenses for the costs of an injury incurred at work was an 'allowance',
but refused the claim for impairment insurance.(48) Elsewhere, a training
clause in the National Metal and Engineering On-Site Construction Industry
Award was held by Senior Deputy President Watson to be necessary to give
effect to a new skills-based classification structure.(49)
A recently made award, the Hotels (ACT) award was also
submitted by the Australian Hotels Association for a review of provisions
(to comply with section 89A). The Australian Liquor, Hospitality and Miscellaneous
Workers Union relied on an argument that the Acts Interpretation Act
upheld the right of the union for effect to be given to the award, and
a full bench found in favour of the union (which meant that the allowable
award matters issue did not need to be considered).(50)
The New South Wales Government has received advice from
the NSW Solicitor-General concerning the validity of sections of the WR
Act, particularly section 89(A)(3) which specifies that when making an
award, it should be confined to a minimum rates award. This, the Solicitor-General
argues, imposes restrictions on the AIRC's power to settle industrial
disputes. The NSW Government is considering whether to challenge the WR
Act in the High Court.(51) It might be noted that at the time when the
Bill was being debated, Professor Ron McCallum a respected academic on
federal industrial law, felt satisfied that the Bill would withstand legal
challenge on its key provisions.(52)
Another development appears to have been the adoption
of award clauses in enterprise agreements. A review of 100 recent enterprise
agreements has concluded that many employers have agreed to roll award
entitlements into their enterprise agreements:
A huge amount of time, effort and manpower is going
into the Award Simplification process. But on the other side of the
coin, there is a very clear case that a lot of employers are simply
incorporating all the award provisions into an EBA (or are having
written into the agreement, that the agreement should be read in conjunction
with the award at such and such a date).(53)
Also, the AIRC has refrained from removing provisions
which prefer union members over non-union members in respect of termination
of employment from the main Australian Public Service General Employment
Conditions Award. Arguments put by the Community and Public Sector Union
that the preference issue was subject to bargaining processes within APS
agencies (therefore the clause forms part of the no disadvantage test)
were accepted, however the application to delete right of entry provisions
in the same award was granted.(54) Unions are interpreting this decision
as having a potential for delaying award simplification in any circumstances
where an enterprise covered by the award is conducting enterprise negotiations.
The situation where 'mirror' State awards parallel federal
awards creates the possibility of having non-allowable clauses of federal
awards 'enforced' through the State award. This avenue has been used in
the past where the federal award contains a 'savings' clause, which saves
a matter for State regulation. Note however that the Hancock report did
not favour such an approach, and preferred that the AIRC be able to hear
most industrial disputes.(55) In any case, it is too early to judge whether
a 'savings' approach would work, and if it did, it is most likely to operate
in a piecemeal way.
A Conclusion?
It is helpful to ask what will be gained if award simplification
proceeds, at least to a point where clauses are removed from awards, or
nominated as being unenforceable. The main gain (for employers) will be
that the bar for the no disadvantage test (NDT, as applies in the Act
to various forms agreements) will be set lower, given that award provisions
will be less. This will mean that in future enterprise bargaining rounds,
it will be easier for an agreement to meet the NDT, and this is the main
force behind employers' push to simplify awards. Therefore as noted by
The Australian there is much at stake:
For the Government and employers, it is vital that
this case puts the tightest possible interpretation on what falls
into the 20 allowable matters stipulated in the Act, and removes award
clauses that fall outside. Unions have been arguing for the widest
possible interpretation of the 20 allowable matters.(56)
Nevertheless, award simplification or modernisation as
has been outlined, has been a concern of ALP and now Coalition governments.
A mild form of review commenced in 1989 leading to more than one hundred
awards being set aside (some four years later). This review process was
augmented in 1994 by section 150A review process intended to run for three
years. This review, in part, developed streamlined and structure award
formats in 1995, but debates over the pace of award review, held within
the safety net review (the successor to national pay cases), allowed the
then Government to argue for a more widespread award review to hasten
enterprise bargaining, and so attracted the hostility of unions.
The current review under the WR Act creates an urgency
to award review by stipulating that by July 1998 award provisions not
coming within allowable matters are rendered unenforceable, but also the
Act does not state clearly how other provisions are to be treated.
Should a decision be given on 17 November to delete award
clauses without providing direction on their treatment outside of the
award, it is likely that the unions will consider a challenge, presumably
in the Federal Court. More likely might be the provision of guidelines
which might then be applied on a case by case basis.
Endnotes
- The Hon. Peter Reith MP, Minister for Industrial Relations, Edited
Address to Austcham, 10 April 1997. The Department of Industrial
Relations became the Department of Workplace Relations and Small Business
from 18 July 1997.
- Outlined in the 1997 Foenander lecture delivered by Professor Ron
McCallum, see Workforce 1136, 10 October 1997.
- Section 101 of the WR Act.
- Applications to vary awards can be made under section 113 of the WR
Act.
- The AIRC's power to make and/or vary awards is found at section 111
(1) of the WR Act. The provision is based on the conciliation and arbitration
power of the Australian Constitution at section 51 (35), and interpretations
of this provision in the WR Act (and its predecessors) by the High Court.
- For example, the payment of union subscriptions by deduction from
the employer's payroll has not been accepted by the AIRC as an industrial
matter. Recently, the Australian Workers Union has sought to reverse
this through protracted legal proceedings.
- According to Brian Brooks in Why Unions? (CCH 1980) the process
of unions consulting with their members in award-making processes is
thus:
Members are asked for their opinions as to what sort
of matters should be demanded at meetings on the job. The next step
is for the union to establish a negotiating committee...The members
are then consulted on the form of the final log of claims which is sent
to the employers. Usually the employers reject the claims and state
that they will offer the wages and conditions which are found in the
present award. Once this statement is delivered to the union it then
notifies the AIRC (AIRC) that there is a dispute.
- Section 195(b)(vi) of the WR Act.
- Section 195 (a) and section 204 of the WR Act.
- 108 Commonwealth Law Reports (C.L.R.) 166, 113 C.L.R.
228, 115 C.L.R. 443.
- 1984 Australian Industrial Law Review (A.I.L.R.) paragraph
272.
- 57 Australian Law Journal Reports (A.L.J.R.) p. 574.
- Re Cram: Ex parte New South Wales Colliery Proprietors Association
72 Australian Law Reports (A.L.R.) p. 161.
- ibid., p. 169.
- Recommendation 13 of the Australian Industrial Relations Law and
Systems: Report of the Committee of Review, Volume 2: Report, AGPS,
Canberra 1985, p. 376.
- AIRC, Print P0859, 12 May 1997.
- AIRC, Print H4000, 12 August 1988.
- Labour Market Reform: The Industrial Relations Agenda, Budget Related
Paper No.9 (1988-89) circulated by the Hon. R.Willis, Minister for
Industrial Relations.
- Australian Industrial Registry Annual Report 1992-93.
- Australian Industrial Relations Commission/Australian Industrial Registry
Annual Report 1995-96, p. 6.
- Australian Industrial Relations Commission/Australian Industrial Registry
Annual Report 1996-97, p. xiii.
- Department of Industrial Relations, Safety Net Adjustments and
Review July-September 1994 Commonwealth Government Submissions and Exhibits,
AGPS Canberra, 1994.
- Australian Industrial Relations Commission, Third Safety Net Adjustment
and Section 150A Review, 9 October 1995.
- Australian Industrial Relations Commission, Making Federal Awards
Simpler (1995).
- See Attachment B of Schedule 1: 'section 150A Review and Award Rationalisation
and Simplification' in Continuous Improvement in the APS, Enterprise
Agreement 1995-96.
- The Hon P. J. Keating Working Nation, policies and programs, AGPS,
Canberra, 1994, p. 33.
- Better Work for Better Pay, The Federal Coalition's Industrial
Relations Policy, February 1996.
- ibid., p. 8.
- Budget Statements 1996-97, Budget Paper 1, pp. 2-46.
- ABS, Award Coverage Australia, Cat. No. 6315.0.
- The 1995 workplace industrial relations survey confirmed that federal
award coverage increased, while that of State awards fell between 1990
and 1995, see Morehead, A. et al. Changes at Work: The 1995 Australian
Workplace Industrial Relations Survey, Longmans, Melbourne,
1997, p. 208.
- Australian Centre for Industrial Relations Research and Teaching,
Agreement Database and Monitor (ADAM) Report No.11, December
1996.
- Australian Industrial Relations Commission, Print P 1997, 22
April 1997.
- ibid., p. 67.
- Morehead, A. et al. Changes at Work, op. cit.
- ibid., pp. 207, 210.
- Workforce 1104, 21 February 1997.
- Award simplification hearings have been listed under C.60081/97 (and
others)
- See Industrial Relations and Management Newsletter, Vol. 14,
No. 8, September 1997.
- 'Overhaul for Metal Industry Award', The Australian Financial Review,
6 November 1997.
- AIRC, Print P0391, 23 April 1997.
- Workforce 1106, 7 March 1997.
- In transcript of hearing 26 June 1997; see reference in AIRC Print
P 3469, 24 July 1997.
- On unions 'shoe-horning' award provisions into allowable award matters
(in draft awards), see Workforce 1122, 4 July 1997.
- 'No hope of a union deal on stripping back awards' The Australian
Financial Review, 24 July 1997.
- AIRC, Print P4530, 1 September 1997.
- 'Hotel employers put the squeeze on penalty rates', The Australian
Financial Review, 16 October 1997.
- AIRC, Print P1297, 29 May 1997.
- AIRC, Print P4026 25 May 1997. The industry panel (of commissioners)
may review this decision.
- AIRC Print P1116, 23 May 1997.
- 'High Court challenge to IR laws', The Australian Financial Review
4 October 1997.
- 'Laws must cross a divide' The Australian Financial Review, 24
May 1996.
- Industrial Relations and Management Newsletter, Vol.
14, No.8, September 1997.
- AIRC, Print P4693, 2 September 1997.
- Australian Industrial Relations Law and Systems: Report of the Committee
of Review, Volume 2: Report, AGPS, Canmberra, 1985, p. 351.
- 'Welcome to arbitration-90s style', The Australian, 18 September
1997.
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