Chapter 2 - Objects of the workplace relations ACT 1996
Part A of the Committee’s terms of reference
required it to examine the impact of the Workplace Relations Act 1996. As part
of this the Committee was asked to assess whether the principal objects of the
Act (particularly paragraphs 3(j) and (k)) have been fulfilled in practice.
Section 3 of the Workplace Relations Act 1996
outlines the principal object of the Act which is to provide a framework
for cooperative workplace relations which promotes the prosperity and welfare
of the people of Australia. This chapter reports on the evidence presented to
the Committee on the performance of the WR Act against a range of key
objectives. It should be noted, however, that some of these received little if
any attention in submissions or in oral evidence to the inquiry.
Encouraging the pursuit of high employment growth,
improved living standards, low inflation and international competitiveness
through higher productivity and a flexible and fair labour market.
The Committee was presented with various views
on the impact of the Workplace Relations Act (WR Act) on the Australian
economy. These views ranged from the view expressed predominantly by unions
that the WR Act has had no discernible impact on economic growth and
employment, to the employer groups and some economic research organisations who
argued that these changes had fostered significant productivity improvements
and that this was important for Australia’s competitiveness both domestically
and internationally. In addition were the views of some academic witnesses who
suggested that it was simply too early to determine the overall impact on the
Australia has enjoyed a relatively sustained
period of economic growth since the recession of the early 1990s. The economic
indicators point to a high average rate of growth in GDP, amongst the highest
in the OECD, particularly in 1997-98.
The economic recovery from this recession has been compared to other economic
recoveries, in particular that following the recession of 1982-83. The current
recovery is noteworthy in a number of respects. The recovery from this latest
recession was not as rapid as was observed in the mid 1980s and certainly did
not produce the same rates of employment growth in its initial stages. The
ACTU notes in particular the relatively slow growth of full-time employment. However growth has continued
at a relatively steady pace, and has included growth in full-time employment.
Associated with this has been a gradual decline in the unemployment rate, with
more significant falls in the last year, bringing the rate of unemployment to
its lowest levels since the beginning of the decade.
The Committee has considered the effect of the
introduction of the WR Act in 1996 on economic outcomes. While the Committee
heard a number of differing opinions on the economic impact of the WR Act there
was little in the way of research presented which could illuminate the issue.
The area most likely to yield some information is the change in labour
productivity, an area which the WR Act was directly attempting to improve.
Data on labour productivity shows that there have been significant improvements
over the last 10 years and that in the last 2 years there has been a
particularly strong improvement. Australian Business Limited had the following
comment to make with respect to productivity improvements:
There is no disputing that Australia’s recent impressive
productivity performance is largely a result of microeconomic reform, of which
labour market reform has been one of, if not the most significant aspect.
The Business Council of Australia, highlighted
in its submission the difficulty of quantifying the direct impact of the WR Act
on economic outcomes but suggested that:
At a time when productivity and employment growth is strong and
inflation, interest rates and industrial dispute incidences are at low levels
there is no reason not to assume that the reforms to the Australian workplace
relations system introduced by the 1996 legislation have contributed to these
Improving living standards is also an
objective. This area was contentious with arguments put to the Committee that
while the living standards for some have been improved under the WR Act, those
in weaker bargaining positions have not enjoyed the same increase.
Evidence was presented to the Committee of
growing levels of income inequality, both between the highest and lowest paid
as well as between men and women. However, while the gap may have been
increasing, it was also the case that average real wages for all earnings
levels has increased in recent years. While some have been doing better than
others, even the low paid have received the benefit of real wages increases.
The growth in real wages in part reflects the low inflation environment that
has been maintained in recent times. A flexible labour market, inter alia,
helps to restrain labour costs and therefore reduces the pressure on business
to increase prices for goods and services.
Any gap between male and female earning may
reflect a number of factors. One witness suggested that in highly feminised
industries, that is those with a high proportion of female employees such as
nursing, a greater proportion of employees were reliant on the award rather
than certified agreements and therefore wage increases were usually much lower
than those negotiated under certified agreements. The Women for Workplace Justice
Coalition stated that:
Women are not in a job long enough to participate in the
negotiation of a certified agreement or Australian Workplace Agreement...
Where women are concentrated in less secure employment, such as
casual or part time employment, they may feel less able to negotiate with their
employer over the terms of a certified agreement.
[Women] will rarely have the bargaining power to contradict what
their employer wants in a certified agreement of Australian Workplace
A counter argument put to the Committee was that
women were more likely to trade off large pay increases for other conditions of
employment which allowed them to better balance family and work
The Committee notes that the ACTU is pleased
with the current economic outcomes and conceded that the WR Act 'has not made
anything worse' and is, at least partially, the cause of these positive
In addressing economic considerations relating
to the WR Act the ACTU said:
...it is true that the economic parameters are
very good and we are very proud of that...but...all these outcomes...low inflation
rates and good GDP growth are not something that has just happened because of
the Act...these trends of low inflation and high levels of productivity are not
just simply the outcomes of the 1996 legislation. The 1996 legislation has not
made anything worse...
Whilst it is difficult to isolate the impact of
the WR Act on overall economic performance, the Committee believes that the WR
Act has been an important component in restructuring the Australian economy,
creating a foundation for continuing economic growth and ensuring Australia
remains internationally competitive.
Ensuring that the primary responsibility for determining
matters affecting the relationship between employers and employees rests with
the employers and employees at the workplace or enterprise level
There is little doubt that the WR Act has
achieved this objective which has, in principle, received the support of both
political parties, trade unions and employers over the last ten years. These
changes were in response to the recognition that to be internationally
competitive, workplaces needed to be flexible and a large part of this was to
allow individual workplaces the discretion to determine the most appropriate
working arrangements for their circumstances. The WR Act continued this
evolutionary path, a key component of which was the introduction of a greater
degree of choice with respect to the types of agreements that could be entered
into by employers and employees, and the simplification of awards.
The provision of a formal option for
individualised agreement making was generally accepted as a positive aspect of
the legislation. More concern was raised about the use rather than the
principle of AWAs. The rationale for the simplification of awards is to retain
them to provide a safety net of enforceable minimum wages and conditions.
Thereby encouraging employers and employees to enter into agreements.
Simplifying awards involved removing certain award provisions that were either
covered by other legislation or were deemed to be issues better determined at
the workplace level. It was the latter which generated the most comment.
Employer groups who made submissions to the
Committee believed the changes to agreement making were beneficial to
The NSW Minerals Council suggested that the WR Act had been essential in the
restructuring of the coal industry and highlighted in particular the benefits
of AWAs and having awards focused on providing a safety net only.
The passage of the Workplace Relations Act (together with the
consequential measures, particularly section 150A overhaul of awards) has been
arguably the most important policy initiative for the coal industry in terms of
its reform and restructuring since the 1940s.
With respect to award simplification the New South Wales
Minerals Council said:
In May 1998, the Australian Industrial Relations Commission
bought down its decision in relation to non allowable matters in the coal
industry awards. This decision removed key provisions which had been major
impediments to the efficiency of mining operations including seniority and
preference to unionists.
The removal of seniority from awards has been a significant
milestone. Seniority and the associated preference to retrenched workers
provision had had a pervading influence on the coal industry, impacting on
recruitment, retrenchment, training, shift allocation and leave allocation
Some employer organisations believed that unions
were using pattern bargaining to subvert the intention of the legislation which
was to allow for the establishment of agreements at the enterprise or workplace
level. They therefore supported the proposed changes in the current Bill to
prevent pattern bargaining occurring. Others believed that industry wide
agreements were logical in some circumstances and promoted their use.
Enabling employers and employees to choose the most
appropriate form of agreement for their particular circumstances, wether or not
that form is provided for by this Act.
The WR Act introduced a much wider range of
choice in agreements than was previously available in Australia’s industrial
relations system, allowing employers and employees to choose a form of
agreement which best suits their individual circumstances. The WR Act provides
for individual agreements in the form of AWAs as well as collective agreements
which can be either negotiated between a union and an employer or directly with
employees. Multi-employer agreements have also been available under sections
170LB(2) and 170LC.
The Department of Employment, Workplace Relations
and Small Business provided the Committee with information on the take-up of
the alternative forms of agreement. The statistics reveal that while certified
agreements are the dominant form of agreement, the split between union and
non-union certified agreements as well as the growth in AWAs and continued use
of multiple employer agreements suggests that employers and employees have
embraced the increased choice in agreement making.
The Queensland Branch of the Australian Workers’
Union commented in its submission to the inquiry on the requirements under
section 170LC of the WR Act for establishing a multiple-business agreement.
They argued that requiring certification by a Full Bench of the Commission,
which must only approve the agreement if it is considered to be in the public
interest, was cumbersome and a deterrent to many who may wish to institute a
The data presented by the Department of Employment, Workplace Relations and
Small Business, indicates that 14 agreements were certified under this
provision between 1 January 1997 and 30 June 1999 covering 761 employers. The
data also shows, however, that while there is little difference in the total
number of multi-employer agreements certified under the WR Act compared to the
previous legislation, there are around three times as many employers who are
party to such agreements.
Providing the means:
- for wages and conditions of employment to be determined as far as
possible by the agreement of employers and employees at the workplace or
enterprise level; and
- to ensure the maintenance of an effective award safety net of fair and
enforceable minimum wages and conditions of employment.
It was put to the Committee that there were
sectors of the economy that were dependent on awards, particularly in the TCF
and manufacturing sectors, despite the availability of enterprise bargaining
since 1991. The ACTU argued that employees had lost significant award
entitlements as a result of the award simplification process, particularly in
workplaces where no certified agreements existed.
The submission from the Department of
Employment, Workplace Relations and Small Business drew the attention of the
Committee to the Award Simplification Decision of the Full Bench of the
Commission on 23 December as evidence of the fact that award simplification is
not about reducing entitlements. The Department stated that the only way in
which the level of an award entitlement can be reviewed under award
simplification is within items 49 (7)(b) and (c) and 51(6)(b) and (c) of the
Workplace Relations and other Legislation Amendment Act 1996, which concern
productivity and efficiency.
Providing a framework of rights and responsibilities for
employers and employees, and their organisations, which supports fair and
effective agreement-making and ensures that they abide by awards and agreements
applying to them.
The Committee heard evidence of attempts by both
employers and unions to subvert the agreement making process. It was alleged
that such instances had become more prevalent since the introduction of the
A particular concern of many unions was that
while the Act provides for unions to represent individual members in AWA
negotiations where they have been nominated as the bargaining agent, they are
often unable to have any substantial impact.
The Department indicated to the Committee that
the framework established by the 1996 legislation aims to achieve a balanced
and fair system which effectively meets the needs of both employers and
employees. They state that the success of the new framework is reflected in
the acceleration in agreement making under the WR Act since the new provisions
came into affect.
Ensuring freedom of association, including the rights of
employees and employers to join an organisation or association of their choice,
or not to join an organisation or association.
It was put to the Committee that freedom of
association relates to the basic human right, as defined in the International
Labor Office (ILO) Constitution, for employees to join a collective
organisation if they wish to do so and is not about not joining one if they do
not wish to.
It was suggested that union preference clauses were completely within the
spirit of the ILO definition provided that they did not force employees to join
and argued therefore that they should not be considered as objectionable
clauses under the WR Act.
The Committee heard allegations of employee
victimisation by employers for either being in a union or seeking to join a
union. However the Employment Advocate indicated that the largest proportion
of complaints received by his office were actually from employees claiming to
feel pressured to join the union.
The Office of the Employment Advocate was
criticised by unions for being biased in its operations to enforce the freedom
of association provisions of the legislation. It was claimed that the OEA
particularly targeted unions to ensure that they did not attempt to pressure
employees into joining but ignored employers accused of preventing or
restricting the ability of employees to join a union. The Employment Advocate
denied these allegations, stating that his office investigated every complaint
that it received. He explained that they received significantly more
complaints from employees regarding forced unionisation than complaints about
not being able to join a union.
The submission from the Department of
Employment, Workplace Relations and Small Business indicates that they have
identified gaps in the operation and coverage of Part XA of the Act relating to
freedom of association in the context of the Employment Advocate’s
investigations of possible breaches. The Department stated that these were
taken into account during the policy development process for the Workplace
Relations Legislation Amendment (More Jobs, Better Pay) Bill 1999. Amendments to this part of
the Act are discussed in Chapter 12.
Ensuring that employee and employer organisations
registered under this Act are representative of and accountable to their
members, and are able to operate effectively.
Unions were critical of some aspects of the
legislation, which they claim have not allowed them to operate effectively.
Their complaints focused on the right of entry provisions and the prohibition
of union preference clauses included in awards and agreements.
Evidence was given that the current rules
surrounding right of entry unduly restrict the operations of unions and their
ability to meet with and recruit new members. It was claimed that employers
often sent a member of the managerial staff along to meetings or they were
conveniently located nearby and that this resulted in many employees either not
attending or being too intimidated to raise issues of concern with the union
The Committee also heard evidence from employers
and employer organisations about the abuse of right of entry provisions by
unions. A particular complaint arose in relation to construction sites upon
which there are usually a number of different employers. The WR Act requires a
union to give an employer at least 24 hours notice of the union’s intention to
exercise its right of entry. However, it was claimed that, once on a building
site, union representatives sought to talk to all employees or investigate the
records of any employer despite the fact that they may have notified only one
of them. It was also claimed that unions were issuing notices of their
intention to enter a workplace, sometimes with up to ten union officials
listed, at anytime between two given dates, usually a week, and then often did
not turn up.
Unions submitted that under the WR Act there had
been a significant increase in demand for union resources and legal
representation which was placing a significant financial drain on them. Unions were critical of the
current Act which they claimed restricted their ability to recruit new members.
Enabling the Commission to prevent and settle industrial
disputes as far as possible by conciliation and, where appropriate and within
specified limits, by arbitration.
Some witnesses claimed that the WR Act reduced
the role of the Australian Industrial Relations Commission and were critical of
its perceived weakened role. These claims are discussed in Chapter 3.
It was put to the Committee that the inability
of the Commission to arbitrate beyond the 20 allowable matters has resulted in
more protracted industrial disputes and an associated disharmony in the
workplace, as was allegedly the case in the waterfront dispute.
The Commission has retained some discretion,
under section 170MX, to arbitrate on non-allowable matters in limited
circumstances. That is, where the Commission believes that there is no
prospect of agreement between the parties and the parties have been customarily
covered by a paid rates award or where industrial action threatens serious harm
to the community or the economy.
Evidence presented in the submission from the
Department of Employment, Workplace Relations and Small Business showed that
there have only been a few cases which have been arbitrated under section 170MX
since its introduction in January 1997.
Assisting employees to balance their work and family
responsibilities effectively through the development of mutually beneficial
work practices with employers.
It was put to the Committee that flexibility in
hours of work could create greater uncertainty, particularly for part-time and
casual employees which made it harder to balance work and family
Award simplification has enabled employers to distribute working
hours and incidence of work in ways which dislocate private life and family
commitments...The ‘flexibility’ that was much touted as the end product of the
1996 amendments has tipped the scales in favour of flexible outcomes for employers
at the expense of those employees with reduced industrial muscle.
The Committee was told that the ability to
change rosters with only a week’s notice and an increased span of standard
working hours could result in people starting or finishing work outside of the
hours of operation of child care centres.
The Committee accepts that there will be cases
where the arrangements in some workplaces do not suit everyone and was
presented with examples of this throughout the course of the inquiry. However,
many people have secured much better arrangements for balancing work and family
responsibilities at their workplace. The Department of Employment, Workplace
Relations and Small Business's publication, Work and Family State of
Play 1998, indicates that a significant proportion of agreements contain at
least one family friendly provision.
Senator Collins questioned the Department about
how family friendly provisions were defined for this study and referred to
comments that other witnesses had made that what were recorded as family
friendly provisions were, at the workplace level, actually family unfriendly.
In response the Department stated that they did not accept this criticism,
having been careful to include only those provisions which they judged to be
beneficial to employees. The Department informed the Committee that:
...in the hours of work area,
the sorts of flexibilities that we have included, and we say they are likely to
benefit employees and families, are time in lieu of overtime at ordinary and
penalty rates, hours averaged over an extended period, flexible start and
finish times, flexible system in operation, hours of work negotiated by
employees or decided by the majority of employees, make up time and banking and
accrual of RDOs. With each of those the department would say that they provide
substantial potential benefits to employees and their families. In compiling
the report we have attempted to ensure that only those flexibilities which we
judge have a beneficial effect are included.
Similarly, the Employment Advocate stated to the
I understand the argument
broadly from people like ACIRRT that flexibility is all one way—I think even if
you forget about the flexible hours, there are still a lot of family friendly
provisions in a high proportion of AWAs. But on the flexible hours issue our
experience is—and this is based on spending quite a lot of time talking to
employees about this—that many employees do appreciate flexible hours. Of
course, there might be some situations where a ‘flexible hour provision’ may be
to the detriment of an employee. There may be some circumstances but there are
many, from our experience, where it is actually at the request of the employees
that those flexible hours have been put in there. Often it is a win-win
Respecting and valuing the diversity of the work force by
helping to prevent and eliminate discrimination on the basis of race, colour,
sex, sexual preference, age, physical or mental disability, marital status,
family responsibilities, pregnancy, religion, political opinion, national
extraction or social origin.
Submissions and oral evidence were given to the
Committee in relation to the issue of the gender pay gap. The data used in
most cases was ABS data on the ratio of male and female average weekly ordinary
time earnings or data compiled by the Department of Employment, Workplace
Relations and Small Business. Drawing conclusions based on the ABS data should
be done with caution. This is because it is an aggregate figure revealing
little about the underlying reasons for the discrepancies. For example, it is
not clear how much of the pay differential reflects the industrial and
occupational composition of employment for both males and females.
Traditionally, the industries and occupations dominated by female employment
tend to be lower paid compared to traditionally male dominated industries and
Academic researchers and women’s groups
interested in the impact of the WR Act and in particular the introduction of
AWAs on female employees were critical of the lack of available data. It was
argued that until detailed information was made available on the wages and
conditions contained in AWAs it would not be possible to assess the impact of
Data presented in the submission from the Human
Rights and Equal Opportunity Commission (HREOC) from ACIRRT’s Agreements
Database and Monitor (ADAM) provides a breakdown of annual average wage
increases by industry and cross-references this with the proportion of women in
the workforce. The largest increase was in the construction and mining sector,
a male dominated industry.
The Committee heard from the New South Wales Minerals Council that award rates
of pay in this industry are over twice the levels in other industries. Therefore, any gender pay gap
may not necessarily reflect direct or even indirect discrimination by employers
but may reflect the occupations and industries in which males and females
The submission from the Human Rights and Equal
Opportunity Commission also includes data on complaints received under the Sex
Discrimination Act, a high proportion of which related to employment. The
submission also states that there has been an increase over the past three
years in the number of complaints relating to employment although they did not
claim that the WR Act has contributed to this increase.
The WR Act requires the AIRC to prevent and
eliminate discrimination in the performance of its award making and award
simplification functions and to refuse to certify an agreement if it is
discriminatory on any of the specified grounds. Similarly AWAs must contain
anti-discrimination provisions. The Department’s submission indicates that
these provisions seem to be working effectively with few, if any, examples
where the AIRC has been required to take remedial action to ensure that awards
or agreements do not contain provisions that discriminate on the specified
The Department also notes that the provisions
under the Sex Discrimination Act and the WR Act which allow the Sex
Discrimination Commissioner to refer discriminatory awards or agreements to the
AIRC have so far not been used. According to the Department one explanation for
this is that the requirements of the Commission have ensured that few, if any,
awards or agreements contain discriminatory provisions. The Department also indicated
a range of agencies including themselves, the OEA, the HREOC, the Affirmative
Action Agency and State and territory labour and equal opportunity agencies
undertake activities to raise the awareness of both employers and employees of
Allegations about access to parental leave and
discrimination on the basis of pregnancy were also bought to the Committee’s
attention. The submission from HREOC, and evidence given by the Sex
Discrimination Commissioner at the Sydney hearing on 26 October, made reference
to the report of the National Pregnancy and Work inquiry, Pregnant and
Assisting in giving affect to Australia’s international
obligations in relation to labour standards
The Committee received written submissions and
heard oral evidence from a number of witnesses who argued that some provisions
of the Workplace Relations Act 1996 breach Australia’s international obligations
with regard to a number of International Labour Organisation Conventions to
which Australia is a signatory. In particular they point to the Committee of
Experts report which highlights the concerns of the ILO in relation to the
changes to Australia’s industrial relations laws that were introduced in 1996,
particularly relating to freedom of association and protection of the right to
organise and the right to bargain collectively.
The International Centre for Trade Union Rights
(ICTUR) argued that Australia plays an important part in the community of
nations and is highly respected internationally and for these reasons it is
important that Australia demonstrates leadership in the observance and
application of international human rights instruments.
The majority of the Committee understands the
concern expressed in terms of Australia’s compliance with ILO conventions but
notes that the ILO has not made a final judgement on whether Australia’s
industrial relations legislation is in breach of any convention. The
Department of Employment, Workplace Relations and Small Business informed the
Committee at its public hearing in Canberra on 1 October that while the ILO had
made an observation and expressed concerns, dialogue between the Government and
the ILO is continuing.
A majority of the Committee considers that it is
inappropriate to comment on this matter until discussions between Australia and
the ILO have been finalised.
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