Coalition Senators recognise the important role that private enterprise,
particularly small business, plays in the Australian economy and strongly
disagrees that Australian businesses are undertaking a campaign of “corporate
avoidance” of the Fair Work Act 2009 (Fair Work Act).
The Coalition understands that Australia needs a stable, reliable
industrial relations system to keep businesses profitable, ultimately allowing
them to employ more Australians, and keep our economy strong. The Coalition
believes that corporate Australia overwhelmingly seeks to operate within the
law, with there being significant legal sanctions and reputational risks to
companies who seek to exploit workers or avoid their responsibilities.
Coalition Senators applaud the Turnbull Government’s recent moves to
strengthen the Fair Work Act to protect vulnerable workers being exploited by
unscrupulous employers. This demonstrates the Coalition’s commitment to
ensuring that rogue businesses are held to account, whilst not punishing the
overwhelming majority who do the right thing.
Unfortunately, it is clear that this inquiry has proceeded on the flawed
and dishonest premise that the commercial decisions of employers to structure
their operations in a way that best suits their needs within the constraints of
the system amounts to “corporate avoidance” of the Fair Work Act. To that end,
it is important to note the submission of the Department of Employment about
“The Fair Work Act 2009 (Fair Work Act) does not
operate so as to restrict employers from structuring their operations as best
suits their needs, including commercial decisions about the mix of full-time,
part-time, casual, labour hire or independent contractors engaged by a
business. This is subject to complying with their statutory requirements
including redundancy entitlements and the transfer of business provisions.
There has been no evidence provided to the inquiry to suggest that there
is widespread avoidance of the Fair Work Act by companies. Instead, Labor
Senators have appeared to rely on that oft-cited maxim of Dennis Denuto from
the movie “The Castle” that “it’s the vibe of the thing” as a basis to
prosecute their attacks on private enterprise, particularly small business, and
benefit their backers in the union movement.
Not only is the premise of this inquiry fundamentally flawed, it has
been misused by a number of unions in an attempt to re-agitate industrial
disputes where they did not get their way. This inquiry has been used to settle
old scores—essentially by re-litigating the John Holland Federal Court case and
punish certain organisations who have acted contrary to demands by the union
movement. In this respect, Coalition Senators consider it to have been an abuse
of the Parliament to allow its forums to be exploited by vengeful unions for
such a purpose.
This inquiry has also been used to push a policy agenda favoured by the
union movement of giving the unions more power and placing new restrictions on
organisations, such as labour hire companies and those involved in the ‘gig’
economy where unions find it difficult to recruit new members. If unions lack
power in these areas it is not due to issues of “corporate avoidance” of
industrial laws, and it is dishonest to attempt to make such a link.
The arguments advanced by unions and Labor Senators in this inquiry are
not only misconceived but are also highly hypocritical given the evidence
provided to the inquiry that many State branches of the Labor Party were
identified as having signed agreements with small cohorts of employees at the
time of the vote—a “corporate avoidance” according to the principles of the
Labor Senators. By way of example, the ALP Queensland branch signed an
agreement in 2013 with only five employees, and the ALP Tasmanian branch signed
an enterprise agreement with just one employee in 2012.
Moreover, the approach of Labor Senators to this inquiry, in attempting
to make unsubstantiated claims of corporate “avoidance” of the Fair Work Act,
completely ignored the extent of deliberate avoidance and breaching of such
laws by significant elements of the union movement.
Coalition Senators are of the view that it is utterly farcical for Labor
Senators to have feigned indignation at imagined “avoidance” of laws by
corporate Australia, when at the same time, the most senior members of their
own union movement are openly advocating that unions should be able to break
those very same laws.
The Secretary of the Australian Council of Trade Unions, Sally McManus,
told the National Press Club earlier this year:
“I believe in the rule of law where the law is fair, when the
law is right... But when it’s unjust, I don’t think there’s a problem with
More recently, two senior leaders of the CFMEU in Victoria—John Setka
and Shaun Reardon—are facing serious criminal charges of blackmail. Their legal
representatives have sought to quash serious criminal charges of blackmail
brought against them on the basis that criminal proceedings cannot apply to
“industrial” behaviour. Remarkably, this situation was met with the response by
Ms McManus that the criminal laws of this country should be amended so that
they do not apply to criminal acts committed by union officials when they
consider themselves to be acting in an “industrial capacity”. In other words, union
officials should be able to use their status to avoid with impunity criminal
laws that apply to every other member of society.
This inquiry has occurred in the context of a serious crisis of
avoidance of industrial laws within the union movement, most notoriously by
Australia’s wealthiest (and most corrupt) union, the CFMEU. The extent of this
crisis has been made clear by numerous court judgements and judicial commentary
on the CFMEU’s deliberate policy of non-compliance with industrial (and other
For example, the Federal Court in Australian Building Construction
Commissioner v Construction, Forestry, Mining and Energy Union and Ors
The conduct of the CFMEU seen in this case brings the trade
union movement into disrepute and cannot be tolerated.
In a liberal democracy, it is assumed that citizens,
corporations and other organisations will comply with the law. Such compliance
is not a matter of choice. The community does not accept that a citizen,
corporation or other organisation may choose to break the law and simply pay
the penalty. The courts certainly do not accept that proposition. Such
acceptance would pose a serious threat to the rule of law upon which our
society is based. It would undermine the authority of Parliament and could lead
to the public perception that the judiciary is involved in a process which is
pointless, if not ridiculous.
In a further case before the Federal Court, Justice Jessup found that:
The CFMEU’s record of non-compliance with legislation of this
kind has now become notorious... That record ought to be an embarrassment to the
trade union movement.
Quite obviously, over the years the CFMEU has shown a strong
disinclination to modify its business model in order to comply with the law.
Judge Jarrett stated in the Federal Circuit Court in 2016 that:
The CFMEU has an egregious record of repeated and wilful
contraventions of all manner of industrial laws.
The CFMEU...through its officers, employees and delegates, has
a long and sorry history of industrial unlawfulness.
Choosing unlawful means to further its industrial objectives
appeared to be the business model of the CFMEU.
The gravity of the offence is substantially increased by the
prior history of the CFMEU and the moral culpability and propensity for
unlawful conduct to achieve its own ends that it so clearly demonstrates. There
is plainly a need to impose punishment to deter the CFMEU and others like it
from treating this country’s industrial laws as little more than an annoyance.
In another case before the Federal Circuit Court in 2014, Judge Burnett
There is ample evidence of significant contravention by the
CFMEU and its ideological fellow travellers. The CFMEU, as a holistic
organisation, has an extensive history of contraventions dating back to at
least 1999. The only reasonable conclusion to be drawn is that the organisation
either does not understand or does not care for the legal restrictions on
industrial activity imposed by the legislature and the courts.
Rather than focus on this questionable commitment to the rule of law
from their union allies, Labor seeks to punish businesses by suggesting
“corporate avoidance” of the Fair Work Act, but without actually providing
evidence to support their cause.
This inquiry has not uncovered “corporate avoidance” of the Fair Work
Act and has struggled to demonstrate circumstances where companies have
breached this Act, an Act which was wholly set up by the former Labor
At the same time, this inquiry has uncovered questionable practices by
sections of the Australian union movement, particularly the Shop, Distributive
and Allied Employees’ Association (SDA).
The Fair Work Act 2009 was introduced by the then Rudd Labor
Government in 2009, and it was touted as a centrepiece of that Government’s
legislative agenda of a new industrial relations system.
The then Minister for Workplace Relations, the Hon. Julia Gillard, spoke
proudly of the objectives of the Fair Work Act in her second reading speech,
which was made a year after the election of the Rudd Government in 2007:
The bill aims to achieve productivity and fairness through
enterprise-level collective bargaining underpinned by the guaranteed safety
net, simple good faith bargaining obligations and clear rules governing
This bill seeks to assist employees to balance their work and
family responsibilities by providing for flexible arrangements.
Less than eight years after the introduction of the Fair Work Act, Labor
Senators are now arguing that the legislation they created as their election
centrepiece is seriously deficient, cannot be trusted to achieve its original
objectives, and is being widely avoided by players in the industrial relations
By Labor’s own admission, they could not be trusted to create the
industrial relations framework in this nation when in government but are now
trying to argue that their recommendations should be adopted and changes made
to the Fair Work Act.
This inquiry, and the recommendations of Labor Senators, included numerous
examples of imagined “avoidance” that was actually compliance, together with
examples of hypocrisy, selective analysis and double-standards. Two examples,
in relation to labour hire and penalty rates, illustrate the flawed approach
that was adopted throughout the inquiry.
Labour hire companies
Coalition Senators recognise that labour hire companies have a role to
play in the Australian economy, providing employment for thousands of
Australian workers and valuable services to business.
The evidence provided by the Department of Employment made it clear that
labour hire companies are subject to the same rules as other employees. This
applied in reference to paying workers redundancy entitlements:
Labour hire companies are subject to the same workplace
relations requirements in relation to redundancy entitlements as other
The NES set out the minimum entitlements in relation to
notice of termination and redundancy pay for permanent employees, including
those employed by labour hire companies.
The Department of Employment also noted that labour hire companies were
not only subject to unfair dismissal provisions, but that the Fair Work
Commission demonstrated a willingness to protect employees of labour hire
The unfair dismissal protections in the Fair Work Act apply
to labour hire employees in the same way that they apply to more traditional
While it will always depend on the particular factual circumstances,
recent decisions of the Fair Work Commission demonstrate a general willingness
to ensure that labour hire employees are afforded protection from unfair
dismissal by a labour hire company.
Further, the Department noted:
As such, the use of labour hire arrangements does not
constitute avoidance of the Fair Work Act provided these obligations are
Labor has not demonstrated that labour hire companies seek to avoid
their responsibilities under the Fair Work Act, nor has the case been made that
there has been widespread attempts by labour hire companies to breach the Act.
Disturbingly, this inquiry uncovered significant evidence about the role
of certain unions in negotiating enterprise agreements which cut penalty rates
and not appearing to represent the best interests of their members. The SDA was
accused of a significant amount of wrongdoing.
Mr David Suter, a former Coles employee, told the inquiry:
At the meeting I attended, the assistant store manager was
waiting at the door of the meeting room and watching who attended, and he was
present throughout the meeting, although he popped out a few times. There was
no objection to this from the SDA representative while I was present. At no
time did any representative of Coles or the SDA advise us that our conditions
were below those set out in the award. At no time did Coles or the SDA advise
us that our take-home pay would be less than if we were on the award.
The Retail and Fast Food Workers Union (RFFWU) noted about SDA negotiated
In the retail and fast food sectors alone, approximately 500
000 workers are employed under SDA negotiated agreements at any one time. The
estimated loss (compared to the minimum remuneration provided by the Award) to
workers employed under these agreements is in excess of $300,000,000 each year.
Coalition Senators are concerned about these reports, along with other
reports in the media after this inquiry stopped taking submissions, which
suggest that the SDA has represented their members poorly and believes the
Education and Employment References Committee should further investigate these
Coalition Senators believe that Australian businesses must follow the
rule of law and strongly disagrees with the assertion by the Labor Party that
there has been a campaign of “corporate avoidance” of the Fair Work Act.
Whilst it appears Labor Senators are concerned with some aspects of
their Act created by the Rudd and Gillard Governments, it appears that
Australian businesses are overwhelmingly complying with their responsibilities
under this industrial relations framework, given the paucity of evidence of any
actual breaches of the Act in the evidence considered.
Coalition Senators welcome recent moves by the Turnbull Government to
make amendments to the Fair Work Act to address a number of specific issues
where genuine problems have been identified. These changes included banning
corrupting payments between employers and registered organisations representing
employees, and protecting vulnerable workers from exploitation.
It is important that Australian employees and employers have the
certainty of a strong industrial relations framework and that large scale
changes are not made unnecessarily. Overall, the Committee’s report has not
demonstrated that there is a widespread problem of “corporate avoidance” of the
Fair Work Act. Instead, the allegation of “avoidance” has been used as a
dishonest vehicle to push union policy agendas that are in reality motivated
more by a desire for greater union power to achieve their favoured outcomes in
certain types of disputes. This inquiry would have been more accurately
entitled an inquiry into “corporate compliance with the Fair Work Act in
various case studies of industrial disputes where particular unions did not get
Coalition Senators are concerned that this inquiry has been conducted in
the context of an environment of deliberate avoidance of the Act by certain
unions, which is apparently of no consequence or concern to Labor Senators or
their union sponsors.
Coalition Senators reject the flawed and dishonest premise of this
inquiry and reject the “findings” of Labor Senators, which have failed to
reveal substantive issues of non-compliance and have instead relied on a “vibe
of the thing” approach.
Coalition Senators reject the recommendations of the Chair’s report
which are based on this false premise and flawed methodology.
Senator Linda Reynolds CSC
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