Chapter 4 - Standing of the Australian industrial relations commission
‘As I’ve said before, I’m going to
stab it (the Australian Industrial Relations System) in the stomach.’
John Howard, 1992
‘Firstly, we do have a unique institution in this country. It has
served us well for 100 years. You have to think long and hard about changing
its role. We think that the balance that is now in the current legislation
between conciliation and arbitration is about right.’
Robert Herbert, Australian Industry Group, 1 October 1999
Introduction
4.1
The Labor Senators believe that there was no
justifiable rationale in 1996 for the award stripping process. The claim by
this Government to be encouraging ‘choice’ in the employment relationship is
completely at odds with a prescriptive formula for what can and what can’t be
included in an award. The same criticism can be made of the next round of award
stripping proposed by the Bill.
4.2
The Governments proposals to alter the nature
and functioning of the Commission are also without merit. They reflect an
ideological obsession, and have no claim to being in any way good policy.
Impact of the Workplace Relations Act
Impact on awards
4.3
One of the major ‘reforms’ of the 1996 changes
to the Act was to curtail the powers of the Commission by limiting the matters
contained in awards, the so-called ‘allowable award matters’ (section 89A). The
original proposal by the Government was to reduce such allowable matters to 18,
but as a result of negotiation with the Democrats, 20 allowable matters were settled
on.
4.4
The rationale behind the reform was deceptively
simple: awards had, according to the Government, become excessively
complicated, and compliance was a burden to employers.
4.5
In the 1996 Majority Report of this Committee,
attention was drawn to the real potential for disadvantage that would arise
from such a move. The argument advanced there was also a simple one: in
limiting award allowable matters, the Government was simply broadening the
scope for negotiations at the enterprise level, including within that scope
matters which had previously been contained in awards.
4.6
Removing these matters from awards provided
employers with a windfall for negotiations. There was no requirement that
existing terms and conditions would be picked up in agreements – employees were
required to bargain for their old conditions all over again, trading off
productivity or other benefits to regain access to their old entitlements. This
is particularly unfair, given that many awards had already been through a
couple of rounds of restructuring in return for productivity under the former
Restructuring and Efficiency and Structural Efficiency Principles.
4.7
Further, in situations where a significant
disparity in bargaining power existed between employer and employee, these
matters were unlikely to be resolved in favour of the employee. Where equality
in bargaining was extant, the conditions removed from awards could be regained
through agreements. But the real victims were the most disadvantaged, those
with little bargaining power who were further marginalised in an economic and
social sense:
The ACTU submits that the award system has been seriously
weakened as a result of the 1996 amendments to the Act, with the effect of
reducing the foundation of minimum standards which underpins agreements.
Employees have lost significant award entitlements as a result of the
application of items 49-51 of the Workplace Relations and Other Legislation
Amendment Act 1996, which require the removal of award provisions not
expressly permitted by section 89A of the Act.[1]
Bray and Waring (1998:74) have argued that under award
simplification many groups of employees that previously enjoyed award
protections have since lost them. These employees...are unlikely to possess the
industrial strength to persuade employers to include equivalent provisions in
enterprise agreements. Employers of such employees will correspondingly enjoy a
significant and uncompensated increase in managerial prerogative.[2]
4.8
There was evidence that particular groups of
workers that are heavily reliant on awards had lost not just conditions of
employment, but that their take home pay had been reduced as a result of
changes to awards made under the WR Act:
CHAIR—The other issue that I
want to raise is in relation to outworkers. As some present would know, we had
an inquiry into outworkers in 1995. It reported in 1996 and 1997. Is the
condition of outworkers worse now than it was in 1995?
Ms Curr—Outworkers tell us
that they are getting less money now than they were then.
CHAIR—In 1995?
Ms Curr—Yes.[3]
4.9
For many workers, take home pay has been reduced
as a result of the removal/limitation of penalty rates and overtime payments
that has occurred through award simplification. Also, and this is a particular
problem in the clothing, textile and footwear industry, employers may be paying
employees below award standards and getting away with it, as the Government no
longer takes an active role in inspecting and enforcing award breaches.
4.10
Many individual employees made submissions to
the Inquiry, indicating that employees are very angry about the effects award
simplification has had on their working conditions:
The fact that the Government has said that no worker will be
worse off does not hold with us. Since the introduction of the first part of
the Bill people are unsure of the future, are working longer and losing
conditions that have helped produce a healthy Australian way. When talking to
family members, work mates and people in general they also are unsure of the
future and are very apprehensive.[4]
The average worker, like myself, has worked and fought hard
along with our unions to obtain our rights and conditions of employment for
decades. I do not want to see all of this wiped away with the stroke of a pen...[5]
Reduction in pay has also occurred, as the CEOs have cut the
individual nurses’ hours by reducing ‘change over times’, cutting out time for
allowance of education sessions and with unrealistic time schedules, lowered
the standard of care to the patients.[6]
Why doesn’t the government for once think of the families that
are struggling, what type of world do we live in, everything revolves around
money and not people. We are not robots, we are humans, push people too far and
society will crack.[7]
4.11
This report considers in more detail the impact
of award simplification on vulnerable workers in Chapter 7. However, it should
also be noted that award simplification has affected all workers, not just
those reliant on awards. By reducing the number of conditions and entitlements
in awards, the no-disadvantage test has also been reduced. This means that
agreements are now being assessed against a lower safety net standard of pay
and conditions:
...award simplification has affected the operation of the ‘no
disadvantage test’. The problem for employees and their unions is that awards
against which certified agreements and AWAs are to be compared have narrowed
considerably in scope as a result of award simplification at the same time as
the substantive provisions of awards fall further and further behind enterprise
agreements. As firms and unions were negotiating second, third or even fourth
round agreements in 1997, 1998 and 1999, awards were a far less relevant
benchmark than they were in 1993. The ‘no-disadvantage test’ has therefore
become a weaker test in 1997-99 than in 1993-4, providing greater scope to
employers to negotiate conditions less than the last agreement, but higher than
the relevant or designated award.[8]
In terms of the no
disadvantage test, our concerns are this: the no disadvantage test, originally
introduced under the previous act, was introduced in an environment where there
was, arguably, at that time, a strong award safety net. The rates of pay,
indeed at that time, let alone the conditions, bore some relationship to what
was really going on in the industries. We now have a situation where, when one
is testing an AWA or a certified agreement against the award safety net, we are
finding that, because of the progression of time and pay increases largely
moving in many sectors through certified agreements, the relevance of the award
safety net is becoming less and less.[9]
4.12
The Newcastle Trades Hall Council recommended
that the no-disadvantage test for agreements should therefore be changed to
allow the Commission to develop appropriate and relevant standards against
which agreements could be assessed. Other submissions also questioned whether
the current no-disadvantage test was adequate, and suggested that new
agreements should possibly be tested against the agreements which they would
replace:
There is a question as to whether the primary benchmark for
employees already covered by agreements should be (i) the award or (ii) the
pre-existing certified agreement. Approach (ii) ensures that people entering
into agreements are no worse off than they were beforehand, whereas (i) only
ensures they are no worse off than under the award. The key issue is the extent
to which the award system maintains its relevance. If it does not, then
approach (i) increasingly offers no protection.[10]
4.13
Professor Keith Hancock also suggested that AWAs
should be tested against certified agreements that would otherwise apply to the
employee:
...a true no disadvantage test
would take as the starting point where you are before the AWA is entered into,
which means that in the relevant case you would refer to the enterprise bargain
rather than to an award.[11]
Conclusions
4.14
Contrary to the Government’s ‘rock solid
guarantee’ that no workers would be worse off, the WR Act has operated to
significantly disadvantage many employees. Those reliant on awards have lost
terms and conditions of employment, with little chance of replacing them
through agreements. Those employees able to negotiate agreements with their
employers have had their agreements tested against a continually withering and
irrelevant safety net.
4.15
The Labor Senators consider that the
no-disadvantage test needs to be amended, to ensure that conditions of
employment are tested against fair and relevant employment standards. The Labor
Senators support the proposals put forward by the Newcastle Trades Hall
Council, Dr David Peetz and Professor Keith Hancock in this regard. Either the
Commission must be given the power to develop and maintain relevant safety net
standards for all industries, occupations and classifications, or the
no-disadvantage test must be radically changed to ensure that new agreements
are tested against the terms and conditions most recently applying to
employees. This is the only way to ensure that workers are not disadvantaged.
Impact on the Australian Industrial
Relations Commission
4.16
The amendments introduced by the 1996 Act
indicate an antipathy on the part of this Government to the role played by the
Australian Industrial Relations Commission in governing the relationship
between employer and employee. For the first time, the Commission’s broad
discretion in determining the contents of awards, only fettered by
Constitutional limitations, was to be limited by boundaries set by Parliament.
The award making power, the central feature of the Commission (and it’s
predecessors’) functions since the establishment of such a body in 1904, was
severely limited. One employer group which appeared before the 1996 Inquiry,
condemned the stripping of awards, stating:
In terms of schedule 5, the awards, ARTIO does not believe it is
sound policy for a government to legislate what should or should not be the
content of an award when it itself is not the direct employer... Once you start a
process of dictating what you will and will not have in an award, then any
government can add anything it wants to an award. We do not believe that it is
sound to freeze awards. They have historically been developed over a period of
time. Although the process of change is very slow, they do, in fact, take into
account changes within our industry and in society generally. We believe it is
vital not to restrict this evolutionary process.[12]
4.17
This attitude of resentment, perhaps even
contempt, was reflected in many of the other changes proposed by the Government
in 1996:
- removing the Commission’s power to ensure that awards were
‘relevant, consistent and fair’;
-
removing the Commission’s power to make paid rates awards, and
consequently, the power to prevent or settle an industrial dispute by making a
paid rates award;
- making arbitration by the Commission a ‘last resort’ in dispute
situations, rather than allowing arbitration ‘where necessary’;
- amending section 111 to reverse the presumption of public
interest against the making of a Federal Award where employees were
attempting to flee an inadequate state system; and
- allowing state enterprise agreements to override federal awards.
4.18
The Committee did not receive a great deal of
evidence dealing with the impact of the WR Act on the Commission itself. Not
surprisingly, present Commissioners probably did not think it appropriate to
make submissions to this Inquiry. However, a former Commissioner and Deputy
President, Professor Joe Isaac, provided a submission to the Committee which
set out his views on the Commission’s reduced discretion:
Until recently, the changes in principles and procedures of the
federal tribunals have been driven not so much by legislation as by the
exercise of the wide discretion available to tribunals within the statute. This
discretion manifested itself in a number of ways, including the introduction of
economic capacity as a constraint on wage increases, awarding equal pay for
work of equal value regardless of gender...the formulation of a coherent and
comprehensive set of wage fixing principles; showing flexibility and
sensitivity to changing economic circumstances by operating in a centralised
mode when it was warranted and...moving to a decentralised system of wage fixing
with a workplace-improved-work-practices focus. All these changes were made on
the basis of submissions in proceedings by parties and interveners, including
governments, without legislative prompting. Since 1993, legislation has been
the prime mover in the changed approach of the...Commission to the settlement of
disputes and determination of awards.[13]
Conclusions
4.19
The Commission, which is equipped with the
industrial and economic expertise to effectively settle and prevent damaging
industrial disputes (and to determine whether its involvement in a dispute is
appropriate at all), is no longer equipped with the statutory power to fully use
this expertise.
4.20
Instead of a system where the independent expert
can make decisions based on a balanced considerations of the submissions of all
of the parties to a dispute, we now have a Commission circumscribed by
legislative proposals made by a Government which only ever seems to take into
account the views of employers. The amendments now proposed to further limit
the Commission’s arbitral functions are yet another example of the unbalanced
and unfair approach of this Government.
4.21
Labor Senators recommend amendments to the Act:
- to provide a greater role for the AIRC in prevention and
settlement of industrial disputes and to act in the interests of fairness and
in the national interest;
- to provide the Commission with the power to arbitrate on all
employment-related matters in order to ensure that employees have the
protection of effective awards which provide fair and relevant terms and
conditions of employment; and
- discretion be provided to the Commission to arbitrate in cases
where negotiations to conclude an agreement have failed within a reasonable
period.
Amendments set out in the Bill
4.22
In the proposed legislation, the Government
continues along the path of reducing the power and effectiveness of the
Commission, and goes even further, by proposing changes that will have the
effect of compromising the Commission’s independence. Below is a brief summary
of the proposed changes affecting the AIRC:
- limited seven-year terms will be introduced for
Commission members (Item 18 – Subsection 16(1A);
- the Government will be able to appoint Acting
Commissioners for a specified period;
- Commissioners may be compulsorily re-trained as
determined by the President;
- allowable award matters are further reduced,
with the following being excluded:
- skill based career paths;
- tallies and bonuses;
- long service leave;
- notice of termination;
- leave for jury service;
- superannuation; and
- trade union training leave, and union picnic days;
- a new section will be introduced to specifically
remove the following as incidental allowable award matters:
- minimum or maximum hours of work;
- transfers between work locations;
- transfers from one type of employment to another (eg part time to
full time);
- training and education;
- recording of work times;
- accident make up pay;
- union representation for dispute settling procedures;
- union picnic days;
- limitations of numbers of employees of a certain types; and
- tallies;
- the requirement that the Employment Advocate
refer an AWA to the Commission when uncertain about whether or not it
disadvantages employees is removed;
-
the Commission’s power to compulsorily
conciliate during an industrial dispute will be limited to those matters where
compulsory arbitration is available, that is, allowable award matters;
- the Commission may, if requested, provide
voluntary conciliation on matters including non-allowable award matters, which
will attract a fee;
- a voluntary mediation service will be
introduced, providing an alternative to voluntary conciliation by the
Commission. Mediation is to be conducted by independent third party mediators,
accredited through a newly created Mediation Adviser. The Adviser is appointed
by the Minister and subject to his discretion, in the same manner as the
Employment Advocate; and
- in unfair dismissal matters, the Commission’s
discretion is reduced in certain circumstances (see Chapter 9 ‘Job Security’ of
this report).
4.23
The Committee received and heard a great deal of
evidence concerning these proposals during the inquiry. The most persuasive and
authoritative evidence concerning these matters came from three sources:
Professor Keith Hancock, of the National Institute of Labour Studies[14], Professor Joe Isaac AO, a
Professorial Fellow at the University of Melbourne’s Department of Management
and former Commission Deputy President[15],
and Professor Ronald McCallum, foundation Professor in Industrial Law at the
University of Sydney and Special Counsel in Industrial Law to Blake Dawson
Waldron.
Limiting the terms of Commissioners
4.24
Item 18 of Schedule 2 to the Bill would amend
the WR Act to allow Commissioners to be appointed for fixed terms of seven
years. The Government submitted that fixed term appointments to the Commission
would:
...allow for the Commission to respond more flexibly to changing
workloads and pressures...The proposed provisions will...provid[e] the Government
with greater flexibility to assist the Commission, in terms of staffing numbers
and required expertise, to meet changes in its workload.’[16]
4.25
However, the introduction of fixed terms
appointments has the potential to undermine the Commission’s independence and
integrity, and many people believe that this independence and integrity is more
important than flexible staffing arrangements. Professor Hancock observed the
following in his written submission to the Inquiry:
It is a vice of this proposal that it undermines the apparent,
and perhaps the actual, independence of the Commission. Governments are
parties and interveners in the Commission. Even when they are not formally
represented, they often articulate views about the preferred outcomes of
Commission deliberations. Under the terms of the Bill, they will be in a
position to reward or punish Commission members who give decisions that
governments do or do not favour. Whether or not they exercise that option,
they will exert an influence which goes beyond the legitimate one of presenting
cogent submissions.[17]
4.26
Professor McCallum submitted:
...in my considered judgement, it would be a mistake for the
Parliament to permit seven year appointments, certainly for presidential
members of the Commission. After all, it is Australia’s foremost tribunal with
a pedigree stretching back to a superior court of record. In a time of rapid
industrial and employment, it is essential to have the fairness compact
overseen by a fully tenured and independent tribunal.[18]
4.27
Professor Isaac agreed:
I think it would be bad for
the standing of the commission and the public’s perception of its independence
from government influence for the proposed provision to be allowed to go
through on the justification that it would allow a more ‘flexible’ appointment
arrangement.[19]
4.28
Employer groups also expressed reservations
about the introduction of fixed term appointments to the Commission:
ACCI’s objective is to ensure that decisions are balanced and
take full account of employer views, operations and concerns. Members of the
Commission should also be independent of control or influence by the Government
or any other party appearing before them...ACCI has in the past proposed a
statutory objective of balance in appointments between employer and employee
practitioners. It is not clear what contribution the Bill would make to
improving achievement of these objectives.[20]
...we express some caution about the proposal to legislate for
fixed term appointments. While the Ai Group acknowledges that it is a matter
for the Government it is most important to ensure that the independence and
neutrality of the Commission is not compromised. Appointments to the Commission
should be made on merit and the particular expertise of the individual
concerned.[21]
4.29
Most other witnesses strongly opposed the
amendment:
...the proposed introduction of fixed term appointments to the
Commission will remove its independence and authority. Members of the
Commission will, in exercising the jurisdiction, be mindful of the effects on
the likelihood of them continuing with a further appointment. This would
particularly be the case in hearing matters to which the Government (or its
instrumentalities) was a party. Would there not be an argument about the
potential for conflict of interest in the event that a member was hearing a
case involving the person who held the power to remove or maintain them in
their positions?[22]
..fundamental to the effective operation of the AIRC is the
public’s perception that decisions of the AIRC have been made independently,
that they have not been influenced by outside or irrelevant considerations and
that they have not in any way been influenced by the government of the
day...The introduction of fixed term appointments to the AIRC has the potential
to disturb this perception as concerns may arise that the AIRC is not
adequately protected from external influences, and in particular the influences
of the executive government. In this respect Justice Teague of the Victorian
Supreme Court has commented: ‘through tribunalisation, the executive arm of
government is able to exercise power in a number of ways...The executive
exercises power in making the appointments of presiding and other members of
tribunals, with the shorter the period of appointment, the greater the
potential for the continuing exercise of power.[23]
The proposed power to appoint new members for a fixed term
rather than for life is open to abuse and could result in the independence of
the Commission being undermined. The power is very wide and no safeguards have
been built in. The reasons for new provisions appear unclear. Until now it has
been considered necessary for members of the Commission to have life tenure and
nothing seems to have changed as to the functions of the Commission to warrant
a departure from this settled position.[24]
Conclusions
4.30
While the Commission is not a judicial body, but
a tribunal exercising executive arbitral powers[25], it is nevertheless required to exercise these functions in a
quasi-judicial manner, analogous to courts.[26] Commissioners hear evidence, apply legislative provisions and legal
precedents, and make binding decisions affecting the rights of parties. It is
therefore essential to ensure that the Commission is free from improper
influence and that public perceptions of its independence are maintained.
4.31
The Government’s proposals have been widely
criticised by those who made submissions to the Inquiry and appeared at Inquiry
hearings, including employers. The Labor Senators consequently reject the
proposal to limit the terms of Commissioners on a form of precarious
employment.
Reducing allowable award matters
4.32
The number and nature of allowable award matters
to be reduced is dealt with briefly above.
4.33
The proposal here is to move further down the
path of award stripping embarked on in 1996, and to effectively remove any
discretion from the Commission in supervising that process. At the time of
writing, the transitional provisions relating to award simplification in the Workplace
Relations and Other Legislation Amendment Act 1996 are being considered by
the High Court, which is hearing an application from the CFMEU that the
provisions are beyond the Commonwealth’s constitutional power. In these
circumstances, the Government should at least consider being a little more
circumspect in proceeding with these changes. If the provisions are found to be
unconstitutional, Australian employers and employees will be thrown into
turmoil, and the proposed amendments would only increase uncertainty and
confusion.
4.34
The removal of discretion from the Commission in
this instance reflects a continuing unwillingness on the part of the Government
to accept the decision of a properly constituted independent statutory
tribunal, with a significant degree of expertise in the subject it is dealing
with.
4.35
It also reverses one of the positions agreed
between the Government and the Democrats in the negotiations that secured
passage of the WR Act in 1996. In the Government/Democrats Agreed Statement of
Position, October 1996, the following appeared under the heading ‘Award
Simplification’:
2.2 The scope of allowable matters is to be expanded as
follows. Superannuation will be included (on the basis that it will be removed
when superseded by legislation – see attached letter from the Australian
Democrats on this matter). In relation to hours, specific reference is to be
made to rest periods and variations to hours and notice periods to make it
clearer that such variations are covered in the allowable matters. This would
reinforce the desired emphasis on regularity and predictability of working
hours. Reference will also be made to skill based career paths (complementing
the existing classification of employees); including cultural leave in the
relevant section; and protection for outworkers. The Commission may also
include in an award provisions that are incidental to the allowable matters and
necessary for the effective operation of the award.
4.36
Professor Isaac rejected the need for further
reductions in allowable award matters, and warns against its consequences in
the following terms:
The significance of this reduction in the list of allowable
matters, is not merely that it reduces the role of the Commission (and one may
ask why this is justified?), but more importantly, that it effectively reduces
the size of the ‘safety net’ on which weaker sections of the workforce and
those that are unable to engage in enterprise bargaining rely. This group is
on the safety net because it does not have the capacity to engage in enterprise
bargaining or is unable to secure more favourable terms through enterprise
bargaining. Close to one-third of employees are in this category; and while
this group spans remuneration levels up to $1000 per week, it is dominated by
low wage earners, women and migrants, a large proportion of whom are part-time
workers.[27]
4.37
In Chapter 7 of this report, we deal with the
deleterious impact of the 1996 amendments on disadvantaged workers. The Bill
would further reduce the Commissions ability to deal with the factors in
employment that lead to and exacerbate disadvantage. In particular and by way
of example, the express prohibition which would prevent the Commission from
dealing with minimum or maximum hours of work, transfers between one type of
employment and between work locations, and the recording of working times are
most pernicious for those most at risk. As considered in Chapter 7, there has
already been a striking deterioration in the working conditions of certain
groups in our society. This would do even more damage.
4.38
It is not intended to cover the evidence on
every proposed amendment to allowable award matters. However, this report
covers three areas which received a great deal of criticism during this
Inquiry: training and skill-based career paths, tallies and long service leave.
Training and skill-based career
paths
4.39
Items 2 and 13 of Schedule 6 to the Bill would
preventing awards from including clauses relating to training and skill-based
career paths. The Department submitted that the amendments were necessary
because:
Many simplified awards have retained training and study
provisions as either directly allowable, or incidental and necessary to, skill
based career paths. It was not the intention that training or education
provisions would fall within the scope of either section 89A(2) or section
89A(6) of the WR Act (for example, the WROLA96 Implementation discussion paper
included study leave as an example of matters that would with award
simplification ‘be for determination at the enterprise or work level.[28]
4.40
However, there was very little support for the
Government’s position, even from employer groups:
Ai Group does not agree that
this matter is more appropriately dealt with exclusively at the workplace or
enterprise level. A number of very significant awards have been restructured in
such a manner as to encourage employees to undertake training based on approved
industry training packages and acquire additional skills for which they will be
rewarded by being classified at a higher level ...the answer would not appear to
us to lie in scrapping skill based career paths from awards. What Ai Group will
be striving to achieve...is a structure that is compatible with the industry
training packages but which, at the same time, is not a straitjacket that
limits the scope of enterprises to put in place their own classification and
training arrangements.[29]
4.41
The Australian Catholic Commission for
Employment Relations, which represents the Catholic Church as employer of
hundreds of thousands of Australians, said:
..the removal of skill based
career structures from the award has the potential to disrupt the internal
relativities between the various classifications in each award. This in turn
will lead to grievances about the appropriate rate of pay for work to be
performed.[30]
4.42
Unions and community groups also opposed the
amendment, some expressing disbelief:
It was a complete surprise
to us that the minister put forward a provision which removes skill based
career paths and the essential underpinnings of training and skills development
that we have all been working on over the last 10 years to get this country to
a stage where it competes on the basis of skills and not on the basis of low
wages. I hope that this provision is one that would receive unanimous
endorsement for rejection by members of the Senate inquiry, because its whole
nature flies in the face of joint union worker and employer activity over the
last 10 years to bring forward an extensive skills regime that can help not
only current workers but also our children come through a structured training environment.[31]
ACOSS is particularly
concerned with the Government’s proposed deletion of skill-based career paths
from the allowable matters...This, together with the removal of training and
staff development provisions in the 1996 Act, undermines efforts to encourage
increased productivity in Australian workplaces through investment in human
capital.[32]
Do we really believe
that...undoing all of the effort and the work by all parties which went into
establishing skill based career structures and the associated processes are
going to make Australia a better place?[33]
Nothing could be more
illustrative of how out of step this provision is, not just with the union, but
with the employers of our members in all states and territories.[34]
4.43
The Queensland
Government also strongly opposed the proposal:
Our view is that any
industrial relations system that is going to contribute to better employment
impacts should not be looking at removing things like skills from awards. We
did not see any reason why that should be removed, and we certainly see it as a
negative. We believe awards should continue to provide for them.[35]
4.44
Some submissions
raised the point that the amendment would disproportionately affect workers in
industries with mobile workforces:
The effect of this amendment
would lead to a situation where awards would contain a classification structure
but no detail on how employees can progress through the structure by reference
to training requirements and acquisition of skills. Such a proposal would be
detrimental to building workers who do not have the luxury of years of
continuous employment with one employer...At a time where the Commonwealth, with
the assistance of the States, is pursuing a national training framework with
nationally recognised skills and qualifications, it is unbelievable that the
same Government would seek to remove skill-based career paths from national
awards that complement the system.[36]
4.45
Other submissions
emphasised the need for training and skills development for low paid workers,
many of whom continue to rely on awards to set their actual conditions of
employment:
These changes will
particularly affect low-paid employees, who are more likely to be reliant on
awards for their wages and conditions. Clear, accessible career paths provide
one of the few means available to low-paid employees to obtain higher wages[37]
4.46
Ms Petty Li, a
witness employed in the clothing industry as an outworker, echoed these
concerns:
...if award standards are
stripped back we will not even get the minimum standards we are currently striving
for, which include ...opportunities for training to improve our skills...[38]
4.47
In this regard,
the Committee received evidence from Dr Iain Campbell about an increasing trend
in Australia where low paid workers are ‘trapped’ in low paid jobs. Dr Campbell
urged a greater emphasis on training and skills development to reverse this
trend:
...there are enough grounds
for concern to suggest that contemporary labour market trends are developing
this kind of enclosed segment at the very bottom of the labour market...In principle,
if we are going to look at policy solutions to try to break down that trend,
renewed effort around training and skills would seem to me to be the answer. I
suppose there are grounds for concern that, for example, casual employees get
far less access to skills and training than most employees, and certainly
someone who is a job seeker and who moves into a short-term casual job is not
going to have the opportunity in that job to build up their skills.[39]
4.48
Another relevant
issue in considering this proposed amendment is whether the current skills and
training arrangements in Australia are sufficient to meet the demands of the
labour market. The Committee did not receive a great deal of evidence on this
point, however, one union raised particular concerns about the rail industry:
...there has been a diminution
in the skill formation within the industry. It was traditional that railways—as
big employers—also undertook to provide an enormous amount of training. To give
you an example, the State Rail Authority here in New South Wales had its own
training college at Chullora—or the apprenticeship school, I think it is
called. That has now closed. The training college that the State Rail Authority
has at Petersham in the inner suburbs of Sydney has been hived off as a
separate entity. What we are also finding is that in the training of
railway-specific...skills such as the driving of a locomotive...the new employers,
with some exceptions like the National Rail Corporation, are not providing that
training at all. They are relying on the publicly owned systems that we still
have, be it Queensland Rail or FreightRail here in New South Wales, to train
locomotive drivers and then seek to employ them. A number of the employers at
this point are simply relying on ex-railway employees to provide the work, be
it shunting, examining wagons and carriages, or driving. We are very concerned
that—and as you will note in our submission we talk about an ageing work force,
which the railways have—within the space of a few years there will be a dearth
of persons competent and qualified to perform a broad range of railway
functions because the training is simply not being done at the moment.[40]
Long
service leave
4.49
The Bill would prohibit award clauses relating
to long service leave. Department submitted that ‘long service leave
arrangements are already provided for in all State and Territory jurisdictions
through legislation. There are some differences between long service leave
provisions across the States/Territories and between the various legislative
provisions and federal award provisions, with some federal award provisions
more generous than the relevant State/Territory legislation and other less so.’[41]
4.50
This amendment attracted widespread opposition,
even from many employer groups, who thought that removing long service leave
from awards would cause additional administrative burdens for employers, and
result in increased long service costs to some businesses:
...the abolition of long service leave as an allowable award
matter would mean that in several States, particularly South Australia where
the State standard is higher than that generally contained in Federal Awards,
the outcome would be an increase in employer costs, notwithstanding the
proposed transition period of 2 years.[42]
We would see that that would create administrative burdens to
members, especially where they have national businesses operating across state
borders. Removing the long service provisions from federal awards for our
members—those like Pedders, Kmart, Mazda Australia, Hyundai Australia and
Midas, and also businesses which operate franchise type arrangements—would
subject these sorts of businesses to a multiplicity of different arrangements
across different states, including different access times to long service leave
and different outcomes in relation to the amounts of leave that are due. So
what we currently have under the federal award is one set of conditions of
employment under the vehicle industry repair services and retail award, which
applies to our member businesses across various states, and it provides for
consistency and ease of administration as well as a standard set of outcomes.
From our end, we would have some real concerns with the removal of long service
leave from federal awards. That would create difficulty and complication.’[43]
We understand the argument:
why should something be duplicated in the award if it is in legislation
elsewhere? The reality in a lot of those smaller workplaces is that they do not
have CCH subscriptions to that legislation. It becomes a bit of a practical
difficulty for people to be going between three or four different pieces of
legislation to find out what should be done on a particular matter. They find
administrative and workplace convenience by being able to look at one document
and say, “That is what it says about that”, even if it is superannuation or
long service leave.’[44]
4.51
Unions were also
opposed to the amendment, particularly because it would affect employees in
itinerant industries, such as construction, where employees do not work for the
same employer for very long, and therefore rely on specific industry-wide long
service leave schemes, enabling portability of long service leave entitlements:
The best example of why you
should not remove long service leave is the Oakdale issue. Oakdale workers were
retrenched. They were owed $6.3 million. The only money they got before it was
finally resolved was their long service leave entitlement, and they got that
for two reasons. Firstly, there was a centralised long service leave fund
available for the industry set up under Commonwealth law—and which Minister
Reith is on record as wanting to abolish. Secondly, there is an award provision
detailing the entitlement level, as well as other aspects of it—for example,
that it is based on industry service, it is portable, et cetera. If those
elements are removed and Minister Reith abolishes the fund, then there is a
direct removal of workers’ entitlements because we would fall back on the state
act, which is a lot less attractive than what we currently enjoy. So there will
be a direct loss of entitlements if it comes out of the award.’[45]
4.52
The Australian
Chamber of Commerce and Industry agreed that the proposed amendment would
result in some loss of entitlements for employees in some cases:
‘The only areas where there
might be some effect on the pay packet is in relation to the deletion of long
service leave from the list of allowable matters and replacement of the few
federal long service leave awards with state legislative long service leave
systems and also a change in the area of allowances which would affect some
extreme interpretations of allowances, but, apart from that, the pay packets
would remain the same.’[46]
Tallies and bonuses
4.53
The Bill would amend section 89A, so that ‘piece
rates’ remain allowable award matters, but ‘tallies’ and ‘bonuses’ would be
non-allowable (however, under pressure from the Fair Wear campaign, the
Government has made some last minute changes to the Bill to ensure that bonuses
for outworkers would remain an allowable matter).
4.54
The main impact of this amendment would be in
the meat and agricultural industries, where various forms of tallies, bonuses
and piece rates are widely used to set wage rates.
4.55
The Australasian
Meat Industry Employees’ Union provided a very detailed submission to the
Inquiry about the impact that the amendment would have on meat workers. It
seems that it is meat industry tallies that the Government is specifically
targeting with this amendment:[47]
Immediately after the [1998]
federal election, Peter Reith made some statements to the meat employers’
conference. He indicated the Government would be supporting attempts by
employers to strip awards that meatworkers had enjoyed in the first instance by
participating in the AIRC hearings in support of an application by some
companies, including the American ConAgra, in the leat industry to remove the
tally provisions from industry awards. The minister said that he was ready to
legislate if necessary if the AIRC did not support the application of these
firms. [48]
4.56
The Union’s
submission made the following points:
Removing tally provisions,
given that most employers would maintain some form of incentive system, would
destroy the effectiveness of the award safety net, as well as possibly leading
to grossly unfair results for employees who would be stripped of substantial
bargaining power. Award tally provisions represent a key award entitlement,
which must be maintained in order to avoid substantially reducing the award
safety net...Employees in the meat industry are not highly paid by community
standards...The effect of making tallies a non-allowable award matter would be to
make it legally possible to reduce a tally workers gross pay by 25%. The safety
net value of the award would become virtually irrelevant.[49]
4.57
During the course
of this Inquiry, the Commission handed down a decision removing tally clauses
from the meat industry award due to the operation of a particular section of
the award simplification transitional provisions[50]. These
provisions require that all wage rates in awards must operate as minimum rates,
and the Commission decided that the meat industry tallies were not operating as
minimum rates.
4.58
The restrictive
and unfair provisions of the existing WR Act have therefore succeeded in
seriously undermining the award safety net for meat industry workers, who will
now have to renegotiate and trade off pay and conditions to regain access to
results-based payments. The Government has achieved its objective and would no
longer seem to need to remove tallies and bonuses from allowable award matters.
4.59
Otherwise this ideologically-driven amendment
will affect vulnerable workers in other industries. For instance:
[In the shearing award] the formula currently, for argument, was
a tally of 500 sheep per week. That is where the award is struck from. It
starts off at a base rate of 500 sheep a week, X amount of dollars. I have not
got the formula with me...Then there are allowances attached to that formula,
which bring it up to the present shearing rate of $168.59. In that instance, if
the second wave goes through, we lose the right to work off that formula to
strike any further pay increases. In that regard, the 500 sheep per week that
our current rate is based on is a tally.[51]
...even though we are
classified as working for piece rate, the first four boxes [of mushrooms] an
hour we pick are classified as normal rate and those after that are classified
as bonus. That would then cause us to possibly lose it, if it is under that
classification, wouldn’t it? You say the piece rate would stay. That is not a
problem. Our classification is piece rate, but they also class it as bonus.[52]
4.60
These two
statements, from members of the Australian Workers’ Union, demonstrate that
there is considerable uncertainty as to whether results-based payment systems
in many awards would be affected by the proposed amendment.
4.61
The ACTU thought
that this confusion about the difference between piece rates, tallies and
bonuses would lead to lengthy proceedings before the Commission:
As piece-work remains as an
allowable matter, there is an immediate problem of uncertainty, as the three
terms are used interchangeably in industries such as clothing and meat. This
uncertainty will lead to lengthy proceedings before the Commission, and could
lead to clothing workers, including outworkers, losing their entitlements to
bonus payments.[53]
4.62
The Government Senators’ report refers to a
confusing, jargon-laden statement from the Department regarding what the
difference is between tallies, bonuses and piece rates. It is clear that not
many people really understand the difference, and for this reason it is
probably best that matters be left in the hands of those Commissioners that
deal with the relevant industries, and who have an expert knowledge of the
area.
Conclusions
4.63
The proposal to remove training and skill-based
career paths from awards indicates that the Government has not properly
considered its amendments to allowable award matters, or is simply motivated by
an unreasonable ideological desire to downgrade the Commission and its awards.
As witness after witness pointed out during this Inquiry, it would be insane to
remove training provisions from awards. It is not in the interests of the
Australian community or the economy.
4.64
The amendment would send the wrong signal to employers
and employees about the importance of training and skills formation. Many
employers and employees have spent a great deal of time establishing
industry-wide training frameworks. If these industry-based structures were
removed, many employers may not have the time, resources or inclination to
renegotiate training and career path structures for their own workplaces.
4.65
Similarly, the amendment to remove long service
leave from awards is another example of the ill-considered,
ideologically-motivated proposals which characterise this Bill. The Labor
Senators note that both employers and employees would be disadvantaged by the
amendment, and that in the main, both employers and employees did not support
this amendment. It should be rejected.
4.66
The proposal to remove tallies and bonuses from
awards was directly targeted at workers in the meat industry. The Government
failed to consider the consequences of this amendment on other workers,
demonstrated by the fact that it has already had to make a Government amendment
to the Bill to exempt outworkers’ bonuses. This smacks of ill-considered policy
making on the run. The Labor Senators believe that the Commission should retain
discretion to make awards containing tallies and bonuses. The Commission has
expertise in this complex area and is capable of simplifying awards to maintain
benefits for workers, while streamlining administrative procedures.
4.67
It is hard to escape the impression that the
amendments relating to awards are motivated by an irrational abhorrence of the
Commission and unions. Just briefly, the Bill would also restrict award clauses
dealing with public holidays to those public holidays declared by State and
Territory Governments. However, there is one important exception proposed by
the Government to this general policy – even if State Governments declare
‘union picnic days’ as public holidays, as is the case in the Northern
Territory and ACT, these could not be included in awards. No explanation has
been proffered for this inconsistency, and it can only be assumed that the
Government wants to obliterate any reference to ‘unions’ in awards.
Restricting the Commission’s power
to conciliate
4.68
The Government submitted that the proposed
amendments to limit compulsory conciliation and introduce a new voluntary conciliation
function:
...are consistent with the policy of encouraging employers and
employees to take greater responsibility for their own workplace relations.
They will also help ensure that voluntary mediation becomes an effective option
as an alternative to the Commission’s voluntary conciliation role...The proposed
changes will not involve a reduction in the role of the Commission, as the
Commission will retain its ability to conciliate in relation to all matters
where it currently exercises conciliation powers. However, it is proposed to
introduce a requirement for the parties to consent to the exercise of this
jurisdiction in relation to non-allowable matters.[54]
4.69
Some employer groups, including ACCI[55] and the Business Council of Australia[56] supported the amendments, as did Mr Des Moore, director and sole
employee of right wing ‘think tank’, the Institute for Private Enterprise:
I ask that the Committee
consider this bill against the urgent need for Australia to reduce labour
market regulation to a minimum and, in particular, to change the existing role
of the AIRC to that of a voluntary adviser and mediator providing
service to both employers and employees, with those on low incomes being
eligible for subsidised or free access.[57]
4.70
However, the proposal to restrict the
Commission’s power to conciliate by reducing allowable award matters and only
empowering the Commission to order compulsory conciliation where the dispute
relates to such matters is impracticable. Professor Hancock makes the sensible
point that there appears to be no justification for this restriction, and if
imposed, it would in all likelihood hamstring the Commission’s ability to
resolve disputes:
Whether or not the principle of allowable and non-allowable
matters is warranted in respect of the contents of awards, it is difficult to
see any basis for limiting the subject matter of the Commission’s conciliation
function. Indeed, it is likely to prove to be an inconvenient restriction.
Disputes often have multiple subjects and, in many instances, the ‘true’ nature
of a dispute only emerges clearly after exploration of the positions of the
rival parties. The proposal threatens the effectiveness of the Commission’s
performance as a conciliator.[58]
4.71
Professor Isaac is similarly critical of the
proposal, remaining unconvinced by the justification put forward by the
Minister in support:
The Minister’s justification for this change in the Act is that
‘compulsory conciliation, will be reoriented, consistent with the increased
emphasis on employers and employees having greater responsibility for their own
workplace arrangements and greater choice of dispute resolution process’. This
is hardly a persuasive argument... (I)f one of the parties is unwilling to take
the voluntary route and the dispute drags on, should the Commission not have
the power to order the parties to a compulsory conference? Is there any
evidence that this traditional procedure has deleterious effects on workplace
relations? Does the exclusion of compulsory conciliation really provide greater
choice of dispute resolution process, as suggested by the Minister, or does it
limit choice?[59]
4.72
Professor McCallum pointed out that since 1904,
the then Commonwealth Court of Conciliation and Arbitration has had broad
powers of conciliation in order to promptly and effectively settle industrial
disputes:
...I regard public and prompt conciliation to be a right of
Australian citizens at work, as it bolsters the fairness compact. Without
compelling evidence showing the failure of Commission conciliation, it is my
view that it should not be watered down by a fee for service which is utilised
only to push voluntary conciliation into the private domain and out of the
public realm.[60]
4.73
There was also considerable opposition to the
proposed limits on compulsory conciliation from unions and employee
associations[61],
lawyers[62],
community groups[63] and
some more moderate employers, who thought the current system of compulsory
conciliation was operating effectively and did not need to be changed:
Ai Group does
not support the proposed distinction between compulsory conciliation and
voluntary conciliation...on the following grounds:
- The existing system of
conciliation is accessible, relatively uncomplicated and supported by Ai Group;
- A division between compulsory and
voluntary conciliation could create confusion as well as opening up divisions
between parties as to which issue falls into one category or the other...[64]
4.74
The Australian Industry Group elaborated on this
submission at the first public hearing in Canberra:
On conciliation and
mediation, we support a continuing role for the Australian Industrial Relations
Commission in an impartial, accessible and affordable manner. The AI Group does
not see value in prescribing a distinction between compulsory and voluntary
conciliation, and the charging of a fee to access voluntary conciliation. The
AI Group members are frequent customers of the conciliation services provided
by the commission, a body which, in our view, retains the respect of both
employers and employees. The AI Group strongly supports a continuing role for
conciliation...We strongly favour dispute resolution through conciliation or
mediation rather than through litigation.[65]
4.75
Others agreed that conciliation by the
Commission is a useful and uncomplicated means of resolving industrial
disputes:
The conciliation function of the
Commission has proved over many years to be a very valuable one. It is
extraordinary that such a radical departure from the Commission’s traditional
and historical role in this connection could be advocated without a single
reference to any practical difficulty which has been thrown up by the system of
compulsory conciliation of industrial disputes.[66]
4.76
Despite this general lack of evidence to support
the proposals, the Department’s submission did provide some hypothetical
examples of situations where the Government considers compulsory conciliation
inappropriate:
...the Commission may (currently) exercise conciliation powers in
situations where one or more of the parties may consider its involvement to be
inappropriate or premature, and on occasions, may become involved in matters of
a relatively minor nature. While there are no statistics that provide
information on the extent to which this occurs, the potential to involve the
Commission in such circumstances conflicts with the objective of ensuring that
the primary responsibility for determining matters affecting the relationship
between employers and employees should rest with employers and employees.[67]
4.77
However, Professor Isaac, who is a former
Commissioner, did not agree with the Department’s assertion that the Commission
becomes involved in disputes at inappropriate times. He pointed out that most
conciliation undertaken by the Commission has not been on a compulsory basis,
and submitted:
The Commission has generally exercised this power with
discretion and sensibility on the timing of its intervention and the handling
of the conciliation process.[68]
4.78
It is unfortunate that the Department could not
provide any concrete examples of cases where it considered that the Commission
had exercised its conciliation powers inappropriately.
4.79
On the other hand, many other submissions and
witnesses provided examples of situations where the Commission had exercised
its conciliation functions in relation to non-allowable matters with beneficial
outcomes, that would in their opinion not have been resolved without
conciliation. For example:
I made reference to two
particularly lengthy disputes in Victoria in 1997. We will use Email as an
example. The picket lines got quite robust, both parties were intractable on
the issues between the parties and the employers were seeking action in the
Supreme Court and the Federal Court to try to force workers back to work. What
resolved those two disputes, and others to follow, was the ability to force the
parties together to conciliate. It was true hands-on conciliation. The
commission in those cases was very tenacious and really drew out the issues
amongst the parties. It would not have been resolved if it had been a case of
voluntary conciliation. The employers would have hung out and probably hung
their hats on litigation, which would have inflamed the dispute. I suggest that
those disputes would have lasted a lot longer than they did.[69]
The conciliation powers of the Commission provide an informal process
of resolving disputes, and one that is not burdened by complex and
time-consuming legal processes... Typically, matters referred to the Commission
by the union for conciliation have not secured the agreement of the employer...In
the past 12 months the list of items referred for conciliation by the union has
included matters as diverse as staffing levels; workplace harassment and
contractual obligations. It is highly doubtful whether, given the choice,
employers would have ‘agreed’ to any of these items being referred to
conciliation.[70]
4.80
Most of those who objected to the amendments
were primarily concerned about the inability of the Commission to intervene to
resolve a dispute where one party to the dispute has significantly less
bargaining power than the other. It was submitted that in these cases, the
party with greater bargaining power would simply refuse to agree to
conciliation:
Commission conciliation processes...assist in evening up the
imbalance between employers and employees with little bargaining power. In a
situation where an employer simply refuses to negotiate on a staffing or work
overload issue, for example, the employees can (currently) invoke the authority
of the Commission in conciliation, even though there is not arbitral
jurisdiction in relation to the matter. While it may be that in some disputes
the parties will agree to voluntary conciliation, this will not always be the
case, and is less likely in cases where employees have little bargaining power,
meaning that the employer is in a strong position to impose its view.[71]
The maintenance of a strong
and independent industrial tribunal is seen as essential to ensure that the
principles of fairness, equity and justice are maintained for employers and
employees alike, and to ensure the protection of vulnerable parties. The ACCER
suggests that the bill would narrow the ability of the commission to carry out
this role by allowing compulsory conciliation on arbitral matters only (and)
introducing voluntary conciliation for other matters on a fee-for-service
basis...[72]
4.81
The Committee was
provided with evidence about how a similar system of voluntary conciliation in
Victoria had operated to the detriment of vulnerable employees:
The experience of Victorian employees...was that consent of
employers was difficult, if not impossible, to secure. The facilities of the
State Commission were severely under-utilised, even though no fee was charged
for the services available. The Victorian system fell into virtual disuse...We
consider that, in any federal system of voluntary conciliation or mediation,
the problems encountered in Victoria would recur and that the requirement to
pay a fee would be a further disincentive to using such a system.[73]
4.82
While of course it will normally be employees
who are in a position of weaker bargaining power, the Committee was also
provided with one example of a group of employers who were alarmed by the
proposed amendments because of the industrial strength of their employees:
The position of contractors on building sites makes them commercially
vulnerable to industrial action. Almost universally notification of industrial
disputes to the Commission is made by an employer or employer organisations in
an attempt to enlist the aid of an independent third party to bring pressure to
bear on the CFMEU to cease industrial action, constructively negotiate etc.
There are a range of issues which are likely to fall outside of matters where
the Commission can compulsorily conciliate. ...Voluntary conciliation requires
the agreement of both parties. It would be our expectation that the CFMEU would
not generally agree to voluntary conciliation as it has the knowledge that it
is able to exert considerable commercial pressure on subcontractors through the
pursuit of industrial action...MBA Inc considers that the restriction of
compulsory conciliation to allowable matters deprives employers in the building
and construction industry of the ability to utilise the services of an
independent third party...crucial given the nature of working arrangements on
construction projects.[74]
Because of the mobility of
labour, the ability to be able to move from site to site quickly, you could
have, practically, a situation where one employer is singled out for industrial
action and neither the union nor the employees have any desire whatsoever to
agree to conciliation because they are able to simply put so much pressure on
the builder that they have to cave in.[75]
4.83
It was generally acknowledged that there were
many employers and employees who would behave responsibly under the proposed
system of voluntary conciliation, but many witnesses were concerned that it is
not these employers and employees who generally become involved in protracted
industrial disputes:
It is possible that some non-government school employers may
agree to voluntary conciliation although it is the employers most likely to be
in dispute who will be least likely to agree.[76]
4.84
Another concern was that, in general, limiting
the Commission’s power to intervene to conciliate industrial disputes would
lead to an increase in disputation, or at least length of disputation:
To limit this (compulsory conciliation) power could lead to
prolongation and festering of disputes as well as stoppages as one or other
party, usually the stronger party, resists conciliation. This is hardly a
recipe for good industrial relations...should the economy move to fuller
employment, the absence of compulsory conciliation may well lead to more
frequent and longer industrial action.[77]
It is hard to conceive how a costly voluntary conciliation
process, where the Commission is unable to make an order or award or compel a
person to do anything, could possibly be effective or provide an improvement on
the existing system...It actually limits early intervention.[78]
Conclusions
4.85
The Labor Senators accept the evidence presented
opposing this limitation of the Commission’s powers and reject the proposed
amendment. In our view, the case for this change is marked by a paucity of
logic and evidence, and the potential risks are very real. For these reasons,
we recommend that this not be agreed to.
4.86
The proposal to create a regulated mediation
system is also rejected. The fact, as noted by both Professor Isaac and
Hancock, is that private mediation has always been available. The route has
rarely been taken. In this context, we agree with Professor Hancock’s comment
that this proposal is nothing more than a ‘gratuitous expression of no
confidence in the Commission’.
4.87
Finally, we reject as completely without merit
the proposal that a fee be charged for the service of conciliating a dispute
through any process in any circumstance. As noted by Professor Isaac, this
proposal has one simple effect, it ‘puts the financially weaker party at a
disadvantage.’
Navigation: Previous Page | Contents | Next Page