New IR laws: tilting the scales too far?


New IR laws: tilting the scales too far?

Despite the complexity the proposed new federal industrial relations legislation is likely to create, and despite the uncertainty that surrounds it until the Bill(s) are actually introduced, one thing seems clear: the bargaining power of employers will be substantially increased and that of employees and unions will be substantially decreased.


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Despite the complexity the proposed new federal industrial relations legislation is likely to create, and despite the uncertainty that surrounds it until the Bill(s) are actually introduced, one thing seems clear: the bargaining power of employers will be substantially increased and that of employees and unions will be substantially decreased.

The result will be inequality in the workplace in the view of Josh Bornstein.

Josh Bornstein, Principal of Maurice Blackburn Cashman, Solicitors, explained how he believed inequality would occur at the Annual Labour Law Conference conducted by the industrial relations research organisation ACIRRT in Sydney last week. Bornstein claimed that two major changes would contribute to inequality:

  1. moving employees from collective agreements to Australian Workplace Agreements (AWAs), which may exploit inequality of bargaining power and undermine collective bargaining; and

  2. collective bargaining by employees not covered by AWAs will be substantially undermined and impaired via a complex variety of methods.

The rise of AWAs

Bornstein noted that the Office of the Employment Advocate has actively encouraged as many employers and employees to enter into AWAs as possible. A case in 2000 determined that employers were free to refuse employment to prospective employees who did not agree to sign AWAs.

While existing employees could not be forced to abandon coverage by collective agreement, new employees lacked that 'protection'. An AWA could thus be the 'price' of obtaining a job, and 'choice' – a word the Federal Government uses extensively – does not exist in practice. Some very large companies have since required all new employees to sign AWAs and have extensively reduced union membership and collective agreement coverage within their workforces.

The fact that there are many identical AWAs within these workplaces shows that individual bargaining over the terms of each AWA does not exist, according to Bornstein. Instead, the AWAs are prepared by law firms and unilaterally imposed on employees. Bornstein quoted an example of an AWA that applies to over 8,000 employees in one large public utility. Its terms allow the employer to substantially increase hours of work, reduce shift payments, reduce hourly rate of pay, reassign employees to other jobs, second employees to other companies, and not pay redundancy pay – all without consultation with the employee.

The decline of collective bargaining

Bornstein claimed that collective bargaining has been undermined by a combination of legislative changes to discourage it, failure to fill some legislative gaps, and administrative measures that hinder it.

The tactics include:

  • active participation by the Government (called an 'interventionist strategy') to assist employers in major industrial disputes, such as the waterfront dispute of 1998, as well as provision of advice and resources to employers;

  • intervention in various legal proceedings before the Australian Industrial Relations Commission; and

  • use of financial or purchasing power (such as threats to withhold Government funding or refuse to consider employers for Government contracts) to distort the collective bargaining process. This is particularly the case in the industries of higher education and construction, where the Government has effectively vetoed agreements reached between the parties and substituted its own terms, for example by forcing the employers to offer AWAs to employees after collective agreements have been negotiated.

Right of entry and other changes

Bornstein described some of the restrictions on right of entry provisions as 'akin to restricting banks from accessing customers'. So far the Government has relied on threats and administrative sanctions, but if the Construction Industry Improvement Bill 2005 becomes law, its intentions will have the force of law.

Other proposed changes that will reduce the impact of collective bargaining include:

  • tougher requirements for protected industrial action and secret ballots

  • prohibition of protected action to support a pattern collective agreement

  • increased court sanctions for unprotected industrial action

  • replacement of the 'no disadvantage' test for AWAs by a basic requirement to meet a list of minimum employment standards

Labour hire and contractors

These two working arrangements are major 'growth areas', but Bornstein sees them as tactics to avoid collective bargaining, particularly efforts to transfer employees to independent contractors.

In practice, many labour hire arrangements have resulted in companies simply delegating the technical task of employment to the labour hire company, with the latter handling payroll, superannuation and workers compensation, but the host company retaining a high degree of control over the workers.

The factors controlled by the host company include the following:

  • hiring and firing decisions, and the manner in which they occur

  • training workers

  • supervising and managing their work

  • determining enterprise bargaining outcomes

This splitting of responsibilities makes it very hard for employees and unions to bargain, as the 'employer' they have to bargain with (the labour hire company) is often not the real decision-maker.

Bornstein described transferring employees to independent contractors as 'basically an exercise in cost and risk transfer'. In many cases, the contractor is totally dependent on getting business from his/her former employer, and may be required to sign a pro forma contract prepared by a law firm on the employer’s behalf. Thus, employers can bypass many legal obligations while retaining a high degree of control over the workers. Bornstein suggests that this is a gap that the Government does not wish to fill.

The effect on contractors of the Government’s proposed changes is to remove them from coverage by industrial relations legislation to coverage by commercial laws such as the Trade Practices Act 1974. Amendments to the latter Act will enable contractors to bargain collectively, but it will be illegal to do so with the involvement of a union.

Any opportunities for unions?

According to Bornstein, the Federal Government’s tougher measures against unions arise from frustration that employers have been reluctant to pursue them through the courts. He suggested that the main objective for unions will now be survival, which some of them will not achieve.

Suggested strategies for unions are:

  • mass communication campaigns to educate and inform people about the impact of the new legislation – there is 'an abysmal lack of understanding' within the overall community;

  • attempting to exercise influence on the political process at all levels, for example locating and supporting politicians who are willing to advocate the interests of employees and a collective system;

  • lobbying State Governments, for example to use their own purchasing powers and commercial influence to protect collective bargaining;

  • in the meantime, locking in collective agreements for as long as possible, and bargaining for provisions in those agreements that preserve employees’ access to 'unfair dismissal' provisions;

  • depending on the final provisions of the legislation, it may be feasible for unions to operate unregistered and negotiate common law agreements.

Further information

Further details of the conference are available from ACIRRT.

Federal IR changes 2005


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