New IR system not fair, says expert


New IR system not fair, says expert

Former Deputy President of the AIRC, Paul Munro, recently spoke on the changes to the Australian workplace relations system at the Industrial Relations Society of WA.


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Former Deputy President of the AIRCPaul Munro, recently spoke on the changes to the Australian workplace relations system at the Industrial Relations Society of WA. Here is an edited version of some of his concerns and observations about its fairness.

Discrimination on industrial grounds 

The legislation will prohibit discrimination against another person on the ground that the employment of the second person’s employees are covered or not covered by a particular kind of industrial instrument or an industrial instrument made with the particular person.  

Ostensibly that provision is to protect freedom of association and some might think it just a variant on an existing prohibition against detriment to an employee for the reason that the employee is entitled to the benefit of an industrial instrument. That is not what the workplace relations system (WRS) says.  

As I understand it, the prohibition would render unlawful and penalisable by fine almost any public recrimination, be it of a citizen or even of another employer, against a person thought to be exploiting low-wage AWAs or sham collective agreements.  

Would joining in a consumer boycott, or even publicly withdrawing one’s account from a pharmacy that had discarded a long established State award in favour of an OEA template AWA, amount to unlawful conduct penalisable on application by the Minister’s Office of Workplace Services (OWS)?. 

Employer greenfield agreement 

Even more extraordinary, because it is likely to inflict friendly fire on many Government employer supporters, is the ‘exciting’ new proposal for an employer greenfield ‘agreement’. This quaint instrument will protect by law, for a 12 month term, conditions that the employer agrees, presumably with itself, to cover new businesses, new projects and new undertakings which do not yet have employees. 

An employer conducting a business vulnerable to underbidding might soon be exposed to some very competitive contract bidding from the beneficiary of an employer greenfield agreement. In the absence of explanation, I wonder whether this is market ideology turned manic. It might seem so to employers who have stable teams of employees paid above the minimum.

AIRC arbitration powers lost 

The AIRC will be left only with:

  • vestigial arbitral determinative powers;

  • transitional award rationalisations;

  • variations of some provisions of existing awards within new statutorily restricted limits;

  • essential service or like workplace determinations.

No compulsory arbitral function at all will survive in the AIRC after it has been reworked, but not re-badged by the amending legislation. Moreover, not only will the AIRC’s traditional role to hear and determine industrial disputes (the section 99 power) be ended, dispute settlement powers under existing awards will be abruptly reduced to what will prove to be in effect, a by-consent-only process. 

The announced legislative intention will effectively terminate the functional life of independent third-party compulsory arbitration of minimum employment conditions in Australia. Such arbitration is embedded in the Australian culture from the Constitution onwards. The provision in the Australian Constitution for the prevention and settlement of industrial disputes by conciliation and arbitration proceeds upon an egalitarian value and principle. 

The Americanisation of our IR system 

The proposed changes represent a very abrupt step toward what Bob Hawke has deplored as the Americanisation of industrial regulation. The substantial immediate effect of the impending changes will be the removal of the AIRC from the most substantive determinative function of establishing and maintaining a safety net of fair minimum wages and conditions of employment.

An ad hoc agency of hybrid exotic origin, the Australian Fair Pay Commission, (the A-F Pay Commission), is to be installed. It is to set a single adult minimum wage, adjust classification wage rates and junior and training rates and set casual loadings. Parliament itself will set directly, by statute, other components of a standard that all new agreements will be required to meet; that standard is to operate ‘universally’. 

Low paid jobs and the welfare system 

The stated objective of the reform agenda is to provide more jobs, but then is unable to deliver any proposal that will fundamentally help the unemployed to secure employment. Removing wage setting powers from the AIRC to a new Australian Fair Pay Commission is very unlikely to make much difference.  

Ultimately, creating more competitive wage structures for low-wage workers without damaging the incentive to work requires a fusion of welfare, tax and labour market policies. Simply changing the way minimum and award wages are set will, on their own, make little difference.

Eliminates the safety net 

No test for reduction in overall terms and conditions of employment against a safety net of fair minimum wages and conditions is to be applied in future.  

WorkChoices continues to use the expression ‘safety net’. It is a misrepresentation of the expression to still apply it in the changed context of the new regulatory system. 

The no disadvantage test has no place in the WRS. Actual or putative loss of entitlements attributable to pattern of working time restrictions, loadings and allowances hitherto embedded by arbitral award as conditions of employment that form part of the safety net standard will be irrelevant except in the bargaining process. 

‘Protected by law’

It is asserted in WorkChoices the seven types of award conditions protected are ‘protected by law’. Until one sees the protection in legislative form, and even then, the ascertainment of what particular award right is ‘protected’, in relation to what particular employees, and to what working arrangements of the relevant employer identity sought to be bound, seems highly problematic.

The enforceable protection by law of any entitlement to a minimum attendance payment or an overtime rate for a particular time and place, may prove to be another ‘fog-fact’. 

Prohibited content 

The content of the agreement will also be regulated by the statute, with mandatory content and prohibited content.  

It will be mandatory to have conditions equal to or exceeding those of the minimum standard, and a model dispute settling provision.  

Prohibited content:

  • may be removed by the OEA

  • will be unenforceable

  • will not render the agreement invalid

But lodgement of an agreement containing prohibited content will be unlawful conduct, attracting a penalty of up to $33,000.

This is an extraordinary provision. It is manifest that a just cause dismissal and binding determination procedure will be a prohibited content item. Such provisions have long been common in collective agreements in the United States.

WorkChoices elevates the OEA to the effective position of censor of the content of agreements. His approval may be pleaded as a defence against prosecution. It will give his agency, widely perceived as a partisan promoter of AWAs, an extraordinary power to be a third-party intermeddling in relationships between employer and employee.  

Effectively, the OEA will rule on what he thinks pertains or does not pertain to that relationship. Enforcement or compliance responsibilities associated with breach of agreements or awards will pass to the OWS. 

‘Fire at will’

A jurisdictional barrier will be brought about by denying applications against a dismissal where the reason given for the termination of the employment includes redundancy or operational requirements. 

How many employers will be so lacking in guile that any other reason will need to be found? Perhaps only those larger employers who face major severance benefit liability on redundancy will have to find another valid reason for termination. 

However, redundancy and severance benefit provisions are not protected award conditions in bargaining. In effect, the changes to the unfair termination of employment remedy will reinstate a common law ‘fire-at-will’ capacity, qualified only by dismissal for a prohibited reason, which remains unlawful.  

Rules and regulations

The Coalition Government proposes now to throw out not only the AIRC version of the minimum wage; it hopes to throw out with it many other rules and regulations promoting fairness. The ostensible reason is to reduce the too many rules and regulations that make it hard for many employees and employers to get together and reach agreement.  

However, at the same time, the WRS will bring in a raft of new rules and regulations to undercut the ability of unions to secure and maintain collective agreements, to organise industrial action, or to operate as an effective presence and voice for employees in their workplaces.


In an observation made by a writer for the UK Guardian, no less applicable to Australia:

‘Flexible is a polite word for low pay. In service industries, this has nothing to do with global competition. Shelves can’t be stacked in Singapore nor grannies bathed in Bombay, nor airline food packed anywhere but Heathrow.  

‘Cheaper service-sector jobs do nothing much for the wider economy: they only provide the better-off with services that are cheaper than the true cost. Eating in a restaurant where kitchen staff can’t survive on the pay means the worker half starves or, if they have children, the state picks up our tab in tax-credit subsidies.  

‘Low-paid work is the greatest growth sector, but the government should frown on it, not encourage and subsidise it. Meanwhile, manufacturing fails for lack of investment in apprenticeships and R&D. You can’t export cheap services or thrive on unskilled work.’

Impact on employees 

As to the impact of the changes on employees, the points to which I give most prominence are:

  • The removal of the no disadvantage test and effectively of the safety net will have a phased and relatively targeted impact on employees. Predominantly it will be employees in less skilled service industries, who will come under early pressure, especially in relation to contract renewal, ostensible transmissions of business, and greenfield agreements. As existing certified agreements expire, renegotiation to retain protected award conditions, and other important benefits and conditions not listed by WRS will expose both unions and employees with collective commitments to unprecedented pressures.

  • The impact of the exemption from the unfair termination remedy, plus the new jurisdictional barrier to it, will almost certainly result in employees feeling and experiencing less security in their job. In substance, the jurisdictional change would appear to make selection for a redundancy related to operational requirements entirely a matter for employer discretion.
  • The working environment will inevitably be one in which there is a reduced representative voice for employees.

Impact on unions

As to the impact on unions, the points to which I give most prominence are:

  • the object of the WRS and result of the implementation of it, will be a marked weakening of union power to collectively bargain; and correspondingly of any collective organisation or representation of employees in their workplaces;

  • the shrinking base for traditional organisation of unions has long been recognised and is unlikely to change;

  • bargaining units related to single enterprises and union coverage patterns represent an obstacle to effective voice and representation;

  • the use of AWAs, and of independent contractors, reflects a strategy to minimise collective pressure on employers and in the labour market generally. Union policies and structures which fail to develop tactics that minimise the effects of that strategy appear to ignore fundamental elements of the boundaryless workplace.

  • The new patterns of employment and the obstacles to giving voice to employees in a deregulated labour market should stimulate a comprehensive review of union bargaining practices and objectives.

The full speech can be found here.


Federal IR changes 2005   


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