CHAPTER THREE
Federal - State Arrangements
Existing Arrangements
3.1 Since the Constitutional debates, it has been long recognised that
both the cause and the effect of industrial disputes often extend beyond
the States in which action is taking place. Given that the interest
in the prevention and settlement extends beyond one State, it was recognised
that a robust Federal system of industrial relations was necessary.
3.2 In addition, it has long been recognised that there is a national
interest in ensuring that Australia meets its international obligations
in the provision of labour processes and standards. Again such interest
extends beyond that which can be adequately catered for by individual
States.
3.3 It is for these reasons that the existing Act reflects long established
and widely accepted constitutional arrangements, that laws (including
awards of the Commission) override State awards to the extent of any
inconsistency. While it is possible for a State award to operate in
tandem with a Federal award to the extent that there is no inconsistency,
more often however, Federal awards completely displace any State regulation
as they are intended to 'cover the field'.
3.4 The Industrial Relations Act also recognises Federal Australia.
Thus, the provision of a Federal system of conciliation and arbitration
will only displace State systems to the extent that the dispute extended
beyond the limits of any one State. The result is that there is great
emphasis in the Act on ensuring that there the Federal Commission first
'find' that an interstate dispute exists before exercising powers and
that there is a public interest in exercising that power. Further, the
Act specifically recognises that the Commission may determine that the
public interest lies in leaving particular matters to State systems.
(section 111(1)(g)). This discretion does not apply in relation to State
systems that do not provide for compulsory arbitration. (section 111(1A)).
Government Proposals
3.5 The Government claims that the Bill will increase harmonisation
between State and Federal systems, in a number of areas.
- Enabling parties to a Federal award to enter into agreements under
State law, which would then override the Federal award.
- The provision for State agreements to override Federal awards.
- The ability for Federal agreements including AWAs (as opposed to
awards) to operate to the exclusion of any State award that might
otherwise apply.
- Making it harder for employees under State awards to apply for Federal
awards. The Bill removes the 'fast tracking' provisions for access to
Federal awards for employees who do not have access to compulsory arbitration
under State law (as in Victoria). [1]
The Bill also reverses the test for making these awards by providing
that the Federal Commission must cease to hear a dispute in respect
of State award employees unless satisfied that so ceasing would not
be in the public interest. [2] The
views of employers and employees and the history of the regulation of
employment must be considered by the Commission in determining the public
interest.
- Unfair dismissals.
- Freedom of Association provisions.
3.6 In functional terms, this means that:
- when an employee is covered by a State agreement, it will not be
possible for a subsequent Federal award to apply to that employee;
- it will be possible for employees covered by a Federal award to
opt out of that award by entering into a State agreement;
- it will be more difficult for State award employees to achieve Federal
award coverage; and
- the Commission will not be able to deal with a dispute if there
is a State award in place, unless the applicant can prove that it
is in the public interest to do so.
3.7 The Government's rationale for this proposal is to provide for
a simpler system where the complexities of overlapping coverage are
removed by mutual recognition of State and Federal jurisdictions.
Employer Support for Harmonisation
3.8 Employer groups generally agreed with the Government's changes to
simplify federal-state industrial relations. Employer groups argued that
the increasing trend towards centralisation through the replacement of
State awards with Federal awards, often against the wishes of employers,
has caused problems. Thus the provisions in the Bill would allow greater
harmonisation between federal and state systems. [3]
The submission from the South Australian Government also expressed this
view. [4]
3.9 However, while the Australian Chamber of Commerce and Industry supported
the move towards increased coverage by state jurisdictions, it commented
that the priority should be to promote enterprise agreements whether
registered under the State or Federal system, in preference to total regulation
under any award system. [5]
Consequences of Change to State/Federal Jurisdiction
3.10 The Workplace Relations Bill will reverse to a substantial extent
the long standing principle that Federal awards and orders take precedence
over State awards. It will be harder for workers to attain a Federal award
and there will be increased emphasis on State systems. In short, the likely
effect will be to increase the number of workers under State jurisdictions.
[6]
3.11 Because there are differences between the various State systems,
the impact that the Bill may have will vary widely between States. All
State industrial relations systems have, in the past 10 years, undergone
significant change, primarily in moving away from awards towards collective
and individual agreements. Some States, such as Victoria and Western
Australia, have made more radical changes than others.
3.12 There are marked differences between the States in wage setting
mechanisms and criteria. In Victoria, for example, the Employee Relations
Commission is able to set different rates of pay for different classifications
(juniors, pieceworkers, part-time and casual employees) but there is
no provision for the Commission to set minimum hourly rates of pay and
no provision for setting overtime or penalty rates.
3.13 In some States awards apply as a 'common rule' as is the case in
Tasmania. [7]In other States this is
the general position, although more specific awards may be made. In yet
other States, awards are binding only on those persons expressed to be
bound. Thus, a greater emphasis on State awards may mean that, in the
absence of an agreement, that general awards apply rather than specific
enterprise arrangements.
3.14 Further, some State award systems, and the protections that they
provide, have the capacity to be undermined by administrative action.
In Western Australia, for instance, the Minister has the power to suspend
all or part of a State award where a number of employees bound by that
award are also bound by a Federal award or seek to be bound by a Federal
award. The Commission is then prevented from making an award or order
which extends to employees to whom the award would usually apply. If
the whole of the award is suspended, the Minister may apply to the Commission
to cancel the award (section 37A). If the Minister were to suspend or
cancel a State award because a union was in the process of seeking a
Federal award, employees could be left without protection, perhaps for
a significant period of time, while awaiting the outcome of the Federal
decision. The additional barriers to obtaining a Federal award introduced
by the Workplace Relations Bill could significantly delay the making
of an award (especially if the application is opposed).
3.15 While all State systems have provisions allowing for enterprise
bargaining, the details differ in many ways and may be subject to frequent
legislative change. Such differences include the level at which bargaining
is available, minimum conditions that apply to agreements, procedural
matters, the role of bargaining agents, the nature and level of public
scrutiny, enforcement provisions, the right for appeal and review, and
the interaction between State awards and State agreements. [8]
3.16 Minimum conditions underpinning enterprise bargaining also vary
widely. In Victoria, for instance, the Victorian Employee Relations
Commission can not set overtime or penalty rates, or minimum rates outside
standard hours. In Western Australia, a minimum wage of $317.10 is set
by the Minister, and applies regardless of an employee's classification
and is applied pro rata for employees working less than 40 hours in
a week. This minimum can be waived by agreement for employees who are
permanently or temporarily physically or mentally disabled. In Tasmania,
the minimum wage rate for an agreement is the lowest hourly rate in
the relevant award while the other minimum conditions for annual leave,
sick leave and parental leave are the lowest minimum in any Tasmanian
award.
3.17 Victoria no longer has a system of compulsory arbitration. The
Victorian Employee Relations Commission can only exercise its arbitral
powers with the consent of both parties.
3.18 Requirements for lodgement of agreements are also less comprehensive
under some State legislation than others. In Victoria, for instance,
there is no requirement that individual agreements be lodged and, although
collective agreements must be registered, there is no role for the Commission
to ascertain whether they comply with the legislation.
3.19 In Tasmania and South Australia, hearings are conducted in relation
to the approval and registration of an agreement. In Western Australia,
the Commissioner for Workplace Agreements must vet agreements to ensure
compliance: as with the Workplace Relations Bill, minimum entitlements
are deemed to be included. In evidence, the Committee heard of problems
in Western Australia where an accepted agreement can specify different
conditions to what the actual conditions are in law. [9]
3.20 State provisions for unfair dismissal are also, in some instances,
weaker than either those current or proposed under the Federal system.
In Victoria, for example, all casuals are excluded from unfair dismissal
procedures, as are employees who have a right of review or appeal under
a contract. The State legislation does not contain specific prohibitions
on unlawful terminations, and remedies are confined to reinstatement,
with financial compensation available only where reinstatement is also
ordered, not as an alternative. [10]
In Western Australia, unless specified otherwise in an agreement, claims
for unfair dismissal must be heard in the local magistrates court.
Conclusions
3.21 The broader effect of these matters is dealt with in Chapter 4.
For the purposes of this Chapter, we wish to focus on those aspects
of these provisions which affect the balance between the Federal Act
and the State systems.
3.22 One of the questions for this majority of the Committee is whether
it is necessary or desirable to change the balance between the Federal
and State systems as envisaged by the Bill. In the majority of the Committee's
view, there would need to be a compelling argument to change the long
standing principle that Federal awards and agreements override inconsistent
State awards or agreements. In the majority of the Committee's view,
none of the evidence suggested why this basic principle should be overturned.
3.23 Firstly, the amendments to section 152 and the limitation on access
to the Federal system, ignores the proper role that the Federal Parliament
plays in setting standards for the conduct of industrial relations where
there is a national interest. The provisions of the Industrial Relations
Act are designed to protect the national interest and the interests
of the industrial parties. They promote an appropriate balance between
providing for the ability of an employer to efficiently conduct their
business and adequate protection for employees. The protections include
the provision for minimum conditions, ensuring negotiations are conducted
in a fair manner and the protection of the right of parties to take
industrial action in the negotiation of agreements
3.24 These protections should not be avoided by individuals entering
agreements under the State systems. The changes proposed, which permit
a State employment agreement to override a Federal award (with no requirement
that the agreement contain adequate minimum conditions or protection against
undue influence) is completely inconsistent with the present system which
ensures employees who enter into enterprise agreements cannot be disadvantaged.
As the evidence has shown, the effect of the proposal would be to allow
employers to avoid even the minimal obligations for bargaining imposed
by the Bill. In relation to this point the majority of the Committee agrees
with Emeritus Professor J E Isaac who stated in his submission that 'if
AWAs are to be introduced with a meaningful safety net provided by the
relevant minimum award provisions, then the possible opening into State
provisions, lower than the safety net, should be closed'. [11]
In fact the majority of the Committee is of the view that this statement
is equally applicable to all provisions of the Act that provide protection
for employees.
3.25 It was suggested in support of the proposals that the proposed
arrangements would simplify the confusing and complex overlap between
State and Federal jurisdictions (see Paragraph 3.8). This has little
substance. Both the premise and conclusion of this argument appear to
be in error.
3.26 Firstly, the submissions ignore that while there is scope for
State and Federal awards to coexist in relation to employees conditions,
the reality is that most workplaces operate under either State or Federal
arrangements and not both. There was no evidence to suggest that any
inconsistencies between the systems caused great difficulties. The existing
principle that Federal awards prevail is the most likely to provide
for streamlined operations. Alternatively, existence of conflicting
State/Federal systems might also lead to the conclusion that there should
be a unified industrial relations system administered by the Federal
Parliament. This matter was not significantly debated in submissions
and as a result we do not consider this point further.
3.27 Rather than simplifying these issues, the effect of the proposals
is to complicate this area. Proposed section 152A still acknowledges
a coexistence of State and Federal awards. Further, the effect of the
Bill is to allow for some employees to be on Federal awards only, some
to be on a combination of Federal award and agreement, and others to
be on Federal award overlayed by a State agreement all of which are
processed in different ways, all of which are subject to different minimum
standards and different protections. It is difficult to see how this
will simplify things.
3.28 Thirdly, the arguments ignore the 'Federal' nature of our Constitution
which recognises that it is proper for a Federal body to deal with issues
of national interest and for State bodies to deal with their State's
interest. This leads to quite inconsistent results.
3.29 For instance, on the one hand, the support for changes to section
111(1)(g) ignores the fact that the changes place onerous, bureaucratic,
costly and time consuming barriers in the way of what should be a simple
process of ascertaining if the public interest lies in obtaining Federal
regulation. This is so especially given that an interstate industrial
dispute has already been found. In this regard, the majority of the
Committee recommends that the onus, process and criteria used to determine
public interest not be altered in the way proposed by the Bill.
3.30 Ironically, some areas of the Bill support the extension of Federal
regulation (ie AWAs and Freedom of Association principles) to override
State regulation to areas where there is no national interest involved.
3.31 The majority of the Committee believes that there has been no
evidence to indicate a case for the Parliament to make laws extending
Federal regulation to the exclusion of State regulation in these areas.
No complaints were made about lack of access to individual bargaining
under the State schemes nor was their comments about the sufficiency
or otherwise of State provisions dealing with freedom of association.
In the absence of this, we find this to be an unwarranted intervention
into State jurisdiction. The majority of the Committee therefore
recommends that provisions dealing with these issues (the content of
which is dealt with in other parts of this report) are restricted in
their applications to employees who are the subject of a Federal award.
3.32 The Australian Democrats Member of the Committee agrees in
principle with this conclusion and recommendation but has additional
concerns that are outlined in his Supplementary Report.
3.33 The Government members of the Committee disagree with the conclusions
and oppose the recommendations.
Footnotes
[1] Industrial Relations Act 1988,
sections 111(1)(g), 111(1A), 111(1G).
[2] Bill, Schedule 6, item 20, section 111AAA.
[3] Submission No. 905, pp. 37-38, ACCI.
[4] Submission No. 413.
[5] Submission 905, p. 5, ACCI.
[6] However, it should be noted that if Victoria
confers its powers in relation to industrial relations to the Commonwealth,
which has been suggested in the press, this would ironically result
in even more Victorian workers being covered by the Federal system.
[7] 'Common Rule' awards apply generally to
the industry, occupation or class of employees concerned and are not
dependent on respondency.
[8] For an overview of these differences see
submission No. 1016, DIR, pp. 30-41.
[9] Evidence, pp. E 1547, E 1555.
[10] Submission No. 1017, pp.101-102, ACTU.
[11] Submission No. 1391, p. 8, Emeritus
Professor J E Isaac, Department of Management & Industrial Relations,
University of Melbourne.